Costs News

24 March 2021
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Court of Appeal stresses importance of precision in wording part 36 offers

The Court of Appeal has stressed the importance of precision in making a part 36 offer, especially in low-value claims.

Lady Justice Asplin made the comments in Seabrook v Adam [2021] EWCA Civ 382, a road traffic accident claim where breach of a duty of care was admitted but causation denied in relation to a whiplash injury and a lower back injury.

The claimant, Scott Seabrook, made two similar but not identical part 36 offers: the first was for 90% of the claim for damages and interest, on condition that liability was admitted; the second was for 90% “to agree the issue of liability”.

The offers were not accepted. At trial, the claimant was awarded £1,575 in relation to the whiplash injury. But causation was not proved in relation to the back injury and that none of the damages awarded related to that head of loss. Approximately £10,000 had been claimed in total.

District Judge Reeves, who dealt with costs, considered that the offers were not genuine attempts to settle and ordered costs without taking them into account, a decision upheld by Her Honour Judge Walden-Smith.

She held that it was the defendant, Jhasen Adam, who had bettered the part 36 offers because liability was limited to damages for only one of the two alleged injuries.

Giving the appeal court’s ruling, Sharp LJ held it was clear from the natural meaning of the words used and from the way in which the relevant boxes on the respective N242A forms were ticked that the first offer was framed in respect of the whole claim and that the second offer addressed an issue in the claim, being that of liability.

Mr Seabrook’s counsel, the well-known barrister Gordon Exall, argued that the offers were genuine attempts to settle: their effect was that, in return for an admission that some damage had been caused by Mr Adam's breach of duty, he would benefit by receiving a 10% discount on the damages he had to pay.

He also submitted that, having accepted either of the offers, judgment would have been entered and Mr Adam would still have been able to argue issues of causation on an assessment of damages and, therefore, could still have disputed causation in relation to the lower back injury.

Sharp LJ said: “It seems to me that the real question here is how these part 36 offers should be construed. They must be interpreted in the light of the pleadings and, in particular, in the light of the fact that Mr Adam had admitted breach of duty which had been referred to as ‘primary liability’ but had disputed causation in relation to both heads of damage.

“With that context in mind, it seems quite clear that the reasonable reader would have understood both offers to be addressing liability and causation and to relate to both heads of damage…

“It seems to me, therefore, that it is not open to Mr Exall now to suggest that Mr Adam was only being asked to accept that ‘some damage’ had been caused. That is not what either of the part 36 offers say and is contrary to their natural and ordinary meaning.”

It was also not right to say there was room to accept either offer but still dispute causation – both required the defendant to accept causation.

“It seems to me, therefore, that the judge was right to conclude as she did… It follows that as he was only found liable in relation to the neck injury, he bettered both part 36 offers.”

Asplin LJ concluded: “Cases of this kind turn, inevitably, on the precise wording of the pleadings and the particular terms of the part 36 offer.

“In order to avoid the kind of dispute which has arisen here, especially in a low value claim, it is important to make express reference in the part 36 offer to whether the offer relates to the whole claim or part of it and/or the precise issue to which it relates, in accordance with CPR 36.5(1)(d).

“In particular, if the issue to be settled is ‘liability’, it would be sensible to make clear whether the defendant is being invited only to admit a breach of duty, or, if the admission is intended to go further, what damage the defendant is being invited to accept was caused by the breach of duty.”

Gordon Exall (instructed by Atherton Godfrey) for the appellant. Simon Browne QC and Anthony Johnson (instructed by Keoghs) for the respondent.

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