This article appeared in the Solicitors Journal, reference 14 SJ 153/46 8 December 2009 www.solicitorsjournal.com, and was co-written by Karen Rose of Seth Lovis & Co's personal injury department.
Part 36 offers should be carefully considered, particularly when the client’s credibility is at stake, say Robert Webb and Karen Rose
Taking part
While I would never under settle a claim, experience has shown me that sometimes very careful consideration has to be given to part 36 offers on both liability and quantum offers to settle together with offers made at the last minute at the door of the court. The real effect of being on the wrong end of a part 36 offer is devastating for the client and sometimes very bad for business! While we can now insure and protect the client position on them not beating a part 36 offer, very special considerations have to be given to any realistic offer received. Failure to remember the decision of Carver vBAA[2008]EWCACiv 412 may still give rise to an adverse costs order even though technically the offer maybe matched or only just beaten. Where then, does one draw the line at what should be accepted and what should be rejected? Many years ago I dealt with a man who fell off the back of a lorry. We sued two defendants, one on the basis of employment defective equipment (the lorry) and occupiers liability for a dangerous and defective loading bay (the location), and a defence was filed and served by both defendants, not accusing the other in anyway, but both defendant’s laying the accident firmly at the fault of the client for not taking due care. Before the trial began, quantum was agreed at £9,000 (1994) and both defendants proposed a three-way split on liability, which in effect meant the client would receive £3,000 (he was on means tested benefits as well so such an offer was of significant value to him). The defendants also agreed to meet his costs in full between them on a 50/50 basis. Counsel and I advised him to give serious consideration to the settlement offer, but at the end of the day we indicated that it was his call and he decided to reject the offer and the comfort of certainty and to proceed with the trial. Neither defendants called any witnesses and just attacked the claimant’s case in cross examination. Up to the lunchtime adjournment, he handled himself well and withstood the vigorous questioning put to him in cross examination. However, after lunch the judge seemed to turn from God to Devil, and he lost. He was publicly funded (1994) and a ‘pools order’ for costs was made against him. While I was driving him back from court, the reality of deciding to go ahead very much hit home. He was talking of all the things £3,000 would have done for him (now in the region of £4,000 with inflation) – a holiday, sky TV, a new bike, new clothes, and still some to put to one side.
We had strongly advised acceptance but he knew best – or at least he thought he did!
Arguments over quantum
Quantum is normally much more straight forward whereby a realistic approach can be taken. Sometimes you receive an offer which you know you would beat if you did not bother turning up to the disposal hearing, but many of course are not always that straightforward. When it comes to arguments over quantum, causation is nearly always the main reasoning: pain and suffering; pre-existing conditions; future loss; how long the claimant would have been able to work had it not been for the index accident having regard to the injuries sustained as a result of the accident; and any pre-existing injuries that they may have had or any conditions that may have come to befall the claimant in the future even if it had not been for the accident. When these are put forward by the defendant’s team they are normally well argued and reasoned, and some indeed are based on the worst-case scenario for the claimant; but sometimes the worst-case scenario can come to pass – and indeed much worse than that. Always consider and revisit your own case in such circumstances and have respect for your opponent and their team; in particular, have regard to any credibility points that they seek to score against the claimant and most certainly put these points to your client by playing ‘devil’s advocate’. In such circumstances, it is always a good idea to have a colleague sit on such attendances so that thereafter their view can be expressed. Again, consider the implications of not beating the defendant offer. What is the reality to the client of such a result? Who would be the real winner when it comes to costs if the credibility of your client is really dragged through the mire if an offer is only just beaten? Remember the result of the Kirk case and Painting v University of Oxford [2005] EWCA161. On occasions, you may simply not know with any certainty which way a trial will go; and this is where full-blown settlement meetings really play their part, particularly when there is a significant difference between the parties’ respective positions and meritous arguments on both sides – a settlement meeting can iron out the strengths and weaknesses of both sides’ positions.
A loaded gun
Once a part 36 offer is received, your client (unless the part 36 offer was colossus generated) can be looking down the barrel of a loaded gun, and many will be robust in their attitude to proceed. However, do not forget Carver and the terminology of the new part 36 rule. ‘Advantageous’ is key wording and the discretion of the court is wide as to how this can be interpreted. Don’t be shy on these occasions for the use of counsel, perhaps byway of a conference with the client followed by a full opinion; this will give you the ammunition to either say to your ATE provider “we should go ahead with this, we have counsel’s opinion who is fully supportive”, or you can say to the client “sorry this offer is too tight to call and we strongly urge you to accept it otherwise our retainer position may have to change”. Either way, you have fully protected your own position and more importantly the position of your client (though perhaps they won’t always see that if the latter is the choice opted for). Recent case law strengthens the bargaining position of both parties .How many times do we hear defendants stating that they will not consider an increased offer within the negotiations until such time we have taken client’s instructions and their offer is formally rejected? Under the old part 36 rules, this could have presented a problem as contract law still had its place and a rejection or counter offer would hav ekilled the first offer made. This is no longer necessarily the case! However, beware: it works both ways, so if things change in the case and your offer needs adjustment you will have to withdraw it toprevent it from being accepted by a canny defendant. Mr Justice Coulson in Sampla and Ors and Rushmoor Borough Council and MrTimothy Crowley [2008]EWHC2616 (TCC)was asked to decide upon the issue (among others) as to whether the rejection of a part 36 offer meant it could not be accepted at a later date. While clearly there remains a discretion of the court within the rule as cases are fact sensitive, Mr Justice Coulson gave five reasons to show that there is no longer a direct analogy between contract law and the part 36 rules:
- The CPR is silent regarding the rejection of offers.
- The wording of part 36 states an offer can be accepted at any time.
- There is the express wording of 36.9(2) which supports reasons one and two.
- Under the old regime where a payment had been made into court a claimant could still accept that payment, even though it had been rejected on paper by their legal representatives and it was therefore considered that the new rules would not be less flexible than the old rules.
- It would be unjust as a matter of principle and contrary to CPR1.1 if an offer which had been rejected could not be accepted at a later date when the offer’s position could be protected in costs.
A vigorous approach
Always consider any offer carefully and, if the credibility of the claimant is on the line, be vigorous in your approach as to whether such challenge may succeed the hazards of trial. A number of cases have been reported, and no doubt will continue to be so, where credibility issues have reared their head and the cost consequences to the claimant have been severe. If based on causation and future loss, use all the resources available to you in reaching your conclusion to accept or reject and, finally returning to liability offers, consider whether there is a real risk of contributory negligence being made at trial – the effect of not beating a liability offer can be worse than one simply based in monetary terms.
Robert Webb is personal injury claims manager at HSRLaw. He is an APIL fellow and chairman of ACSG. Karen Rose is a legal executive at Seth Lovis & Co and an APIL senior litigator.