Mind the trap
Date: 03 September 2010
Authors: Dominic Regan
Issue: Vol 160, Issue 7431
Categories: Opinion, Professional negligence
Dominic Regan says the decision in Gibbon has set a new professional negligence trap
The authority of the year on the workings of Pt 36 is Gibbon v Manchester City Council [2010] EWCA Civ 726, [2010] All ER (D) 218 (Jun). It brings welcome clarification but then, tragically, creates new areas of uncertainty.
All practitioners—claimant and defendant—should appreciate the new professional negligence trap set by Gibbon. The claimant made a Pt 36 offer which the defendant rejected unequivocally in writing. Thinking better of it three months later the defendant purported to accept the very offer rejected.
Was this effective? The Rule declares that one can accept an offer despite having later made a counter-offer (CPR 36.9 (2). No mention is made of the ability to accept a rejected offer. The Court of Appeal held that the acceptance by the defendant in Gibbon was good. Part 36 is not a contractual animal but rather a procedural mechanism designed to promote dispute resolution. Since the offeror claimant had not withdrawn the offer made in writing it was still capable of valid acceptance, rejection notwithstanding.
Danger
The danger now is that an offer made today could be accepted weeks or months later, to the detriment of the offeror. A claimant offers to take £10,000, a realistic amount at the time. Six months later and the value of the case has escalated. The defendant can accept and so settle for a figure which is now inadequate. The solicitor for the claimant will need to advise his professional negligence insurers. Equally, a defendant might make an offer but in the light of later acquired evidence realise that it has a decent argument on liability. If it has not withdrawn the offer the claimant will be entitled to take the money. Thus, those making Pt 36 offers need to keep a close eye upon any offer made and should move to withdraw it in writing if need be.
Heard at the same time and subsumed within the transcript of Gibbon is L G Blower v Reeves. This decision pulls back from the troublesome decision of the Court of Appeal in Carver v BAA plc [2009] 1 WLR 113, [2008] 3 All ER 911. Miss Carver rejected a Pt 36 offer and pressed onto trial where she recovered £51 more than the defendant had offered. Historically, the courts would look at the numbers and on that footing the claimant would have recovered her costs for she had bettered, just, the offer made. However, the Court of Appeal decided to take what Ward LJ called an open-textured approach which meant considering non-pecuniary issues such as the delay the claimant experienced in having to go to trial to get her money. The court also assumed that this had generated anxiety for the claimant, a factor upon which there was no evidence before the court. Carver created a new approach then which boiled down to “was it worth it?” Delay and anxiety to generate £51 more than was on the table was emphatically not worth it and so the claimant was ordered to pay the costs of the defendant starting 21 days after the date of D’s offer.
Critical
Sir Rupert Jackson was rightly critical of Carver in his final report. The new test imported real uncertainty. The question never answered in Carver was when would it have been worthwhile for the claimant to carry on? What amount of money would make it worth her while to press on? In Blower (at para 40) the court referred to the Jackson observations. While acknowledging that Carver is still binding upon it the court reverses with elegance by stressing that it is the weight to be attached to these extraneous elements that is important and, in a claim for damages, money is the primary factor to consider. The court should strive to look at matters from the viewpoint of the party and should be slow to substitute the perspective of the court.
The substantive judgment in Gibbon was delivered by Moore-Bick LJ. At para 6 of the decision he declared that Pt 36 should be interpreted “in a way that would be understood by ordinary citizens”. He then proceeds to suggest that one party might be able to make several offers, all of which are concurrently open for acceptance (paras 31 and 32). These obiter comments run contrary, I suggest, to the view of the ordinary citizen. Put simply, if I were to offer to sell a chattel for £10,000 and then subsequently put the price up to £12,000, would I really anticipate that someone would be able to pop up and pay the lesser price? What sort of mess will ensue if we have a string of live offers floating around? Clearly, the only sensible step from now on is to expressly withdraw any offer you no longer want the offeree to be capable of accepting.
That is not all. In his opening comments (at para 2) he describes Pt 36 as “a means by which a claimant could offer to accept a sum of money less than the amount of his claim”. The current Pt 36, implemented in April 2007, requires the claimant to secure judgment as least as favourable as the offer to settle made. Is it right that the claimant must relinquish part of his claim in order to come within the rule? Take a claimant who considers that, on liability, he is entitled to 50%. That is an exact and honest appraisal. The defendant is only prepared to pay 25% and so the claimant is driven to go to trial where he secures judgment for 50%. Is the claimant to be deprived Pt 36 rewards because he did not abandon some part of a valid claim?
Question & answer
There are as many questions as answers here. If Sir Rupert Jackson gets his way Pt 36 will be re-written, again. That may take some time.
Dominic Regan is professor at City University London and a member of the Civil Justice Council costs committee
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