Crouch v King - Defendants
Crouch v King - Defendants
Peter Crouch v King’s Healthcare NHS Trust; Pema Lucy Murry (by her mother and litigation friend Kathryn Murry) v Blackburn Hyndburn & Ribble Valley Healthcare NHS Trust
[2004] EWCA 1332
In two cases before the Court of Appeal, both concerning individuals suing NHS Healthcare Trusts for damages for personal injury, the effect of ‘offers to settle’ made n cases involving money claims where payments into court had not been made in accordance with Part 36.3 CPR was considered.
Facts
In Crouch, the facts were that the Claimant won his claim but failed to beat an offer of settlement made by the Defendant. The offer was not supported by a payment into court.
In Murry, the facts were that the Claimant (a child) initially rejected the Defendant’s offer of settlement (unsupported by a payment into court), then stated an intention to accept it days later (within the 21 days for acceptance). The Claimant’s counsel, however, was unable to advise approval of the sum accepted so the matter proceeded. Months later, the offer was rejected and the Defendant made clear its intention to make no further offers. More months passed before the Claimant wrote to the Defendant stating an intention to accept the offer. The Defendant responded, stating that its offer had been rejected and there was therefore no longer any offer open to be accepted.
The common thread between the two cases was that the respective Defendant NHS Healthcare Trusts had sent letters offering settlement which, it was expressly intended, were to be treated as if Part 36 payments had been made, but without Part 36 payments in fact being made.
Decision at first instance
In Crouch, it was held that the Defendant had not successfully protected its position on costs because it had not paid money into court under Part 36 CPR. The Defendant was therefore required to pay all the Claimant’s costs.
In Murry, it was held that implicit in the Defendant’s letter offering settlement was an undertaking that it would not withdraw the offer ‘otherwise [than] in accordance with the terms of Part 36 as if the offer had been converted into a Part 36 payment’. The Judge treated that undertaking as effective and refused to allow the offer to be withdrawn on the basis that there had been no change of circumstances.
Argument on appeal
The Defendant appealed in both cases.
In Crouch, it sought to argue that even if Part 36 CPR was not engaged directly, the Judge at first instance had a discretion as to costs under Part 36.1(2) CPR or Part 44.3 CPR; he should have exercised his discretion and make an order that the Claimant pay the costs from 21 days after the date of the Defendant’s offer letter, as if the Defendant had made a payment;
In Murry, it did not seek to argue that the rules of Part 36 did not apply to the situation (which would have been inconsistent with its desire generally to make offers of settlement having the consequences of Part 36 CPR but without making payments into court). It simply sought to argue that the Judge at first instance had exercised his discretion wrongly in refusing to allow the Defendant to withdraw its offer.
In both cases, the Defendant sought the approval of offer letters such as had been sent in these cases, and a ruling that judges should be bound in future to exercise their discretion as if such letters were Part 36 payments.
The Court of Appeal’s decision
The Court of Appeal gave the following guidance.
(1) It was not open to any defendant to decree unilaterally that where a money claim was being made against it, it would not make a payment into court but would make a written offer on the basis that Part 36 would apply as though he had made a payment into court;
(2) That said, there was no reason in principle why parties by agreement could not treat an offer in writing as if it were a payment into court so as to bring into play the Part 36 consequences. However, such agreement would have to be clear. In Murry, it was doubted (although the point was not subject to appeal) whether there was sufficiently clear agreement that the offer should be incapable of withdrawal without permission, like a Part 36 payment;
(3) There was no reason why under Part 36.1(2) a defendant (even in a money claim) might not during the currency of proceedings take an offer letter to the court and seek a direction that it should be treated as a Part 36 payment with the consequences that flow from that being so;
(4) Such an offer was admissible and by virtue of Part 44.3 CPR could be taken into account amongst all other circumstances in considering the proper order for costs. The discretion to treat an offer as having Part 36 consequences under Part 36.1(2) is similar to that under Part 44.3. In the exercise of that discretion, absent special circumstances, such as it being shown that the offer was not a serious one, or that the defendant would not be good for the money, a court should usually treat an offer like a payment in.
The Court of Appeal therefore allowed the appeal in Crouch. The appeal in Murry was dismissed, it being confined to the question of how the judge exercised his discretion.
Comment
The purpose of Part 36.3(1) CPR was, arguably, to require the defendant in a money claim to put its money where its mouth was: only by paying money into court in support of any offer of settlement could it take advantage of the costs rules pursuant to Part 36 CPR. By such payment, the claimant could be sure of the genuineness of the offer, of the defendant’s ability to pay and of the terms of the proposed settlement.
This decision can be seen as a watering down of that principle, with potential disadvantages to the claimant and advantages to the defendant. It would seem that a defendant can now, in the ordinary case, make an offer of settlement in a money claim, unsupported by a payment into court, and still be able to rely on Part 36 CPR as to costs consequences in the event that the offer is not accepted. An offer of settlement in this form will be treated as the equivalent of a Part 36 payment (so as to give the defendant a costs advantage) if either there is a clear agreement that this is the case, or the court makes a decision to that effect (under Part 36.1(2)); and absent such agreement or decision, the offer is admissible and should be taken into account under Part 44.3 CPR. Of particular note is the court’s indication that, as to the discretion under Part 36.1(2) and 44.3, the court will usually treat mere offers like payments in, unless, for example, it can be shown that the offer was not genuine or that the defendant was not good for the money.
If this is right, it seems that a defendant can, by making a mere offer, be fairly confident of obtaining the costs advantage of a Part 36 payment, without the downside of the inability to withdraw it without permission unless there is a clear agreement to that effect.