Flynn v Scougall
| Jurisdiction | England & Wales |
| Judge | Lord Justice May |
| Judgment Date | 13 July 2004 |
| Neutral Citation | [2004] EWCA Civ 873 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 July 2004 |
| Docket Number | Case No: B1/2003/2353 |
[2004] EWCA Civ 873
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NEWCASTLE UPON TYNE COUNTY COURT
HH JUDGE BOWERS
DISTRICT JUDGE LARGE
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Brooke
Vice-President of The Court of Appeal (Civil Division)
Lord Justice Potter and
Lord Justice May
Case No: B1/2003/2353
JEREMY FREEDMAN (instructed by THOMPSONS) for the APPELLANT
QUINTIN TUDOR-EVANS (instructed by SILVERBECK RYMER) for the RESPONDENT
This appeal against the judgment and order of HH Judge Bowers sitting in the Newcastle-upon-Tyne County Court on 14th November 2003 is a second appeal, for which Brooke L.J. gave permission on 21st November 2003. It raises an important point of practice relating to a defendant's payment into court under Part 36 of the Civil Procedure Rules.
Facts
The facts may be shortly stated. On 20th September 1999, the claimant, a firefighter, was injured when the fire engine in which he was travelling was struck by the defendant's vehicle. The claimant's personal injury claim arising out of this accident was issued on 14th August 2002. It was supported, as the rules require, by a medical report in which Professor Gregg expressed the opinion that the accident had accelerated the claimant's retirement by five years. On 12th October 2002, the defendant served a defence admitting liability.
On 3rd January 2003, those acting for the defendant instructed Mr Pinder to report on the claimant's injuries. On 13th January 2003, the court gave directions which included permission to rely on a report by Mr Pinder provided that it was disclosed by 28th February 2003. The claimant's solicitors agreed to extensions of time for the service of this report, the second of which provided that it should be served by 20th March 2003. On 14th March 2003, the defendant made a payment into court of £24,500 net of recoverable benefit of £2,186.28.
Those advising the defendant received Mr Pinder's report on 20th March 2003. This included his opinion that the accident had accelerated the claimant's symptoms by no more than three months. The defendant's solicitors regarded this as affecting the amount of the payment into court. They accordingly issued an application that day for an order that £14,500 of the money in court should be paid out to the defendant's solicitors. This would reduce the amount in court to £10,000. On the same day, the defendant's solicitors sent a letter and fax to the claimant's solicitors informing them of the application to the court and saying that the original Part 36 payment into court of 14th March 2003 was withdrawn. They said that the intention now was to make a reduced Part 36 payment into court of £10,000.
On 25th March 2003, before the hearing of the defendant's application to reduce the amount in court, the claimant gave notice accepting the original Part 36 payment into court. This was within 21 days of the making of that original payment.
On 8th April 2003, Deputy District Judge Mather allowed the defendant's application to reduce the sum in court to £10,000 and ordered payment out of £14,500 to the defendant's solicitors. On 21st May 2003, District Judge Large set aside the order of 8th April. He ordered payment out to the claimant's solicitors forthwith of the £10,000 in court, and ordered the defendant to pay to the claimant's solicitors the additional £14,500 with interest from 25th March 2003. He concluded that a Part 36 payment must remain open for acceptance for 21 days unless within that time and before acceptance the court gives permission to reduce it. The defendant's original payment was made upon a considered decision. In his view, the defendant should have made a without notice application and applied to have it dealt with as urgent business.
The appeal to the judge
The defendant's appeal against this decision was heard by Judge Bowers on 5th September 2003 and his order is dated 14th October 2003. He allowed the appeal and set aside the order of District Judge Large. He gave the claimants until 4th November 2003 to accept, if they chose, the £10,000 in court.
The essence of Judge Bowers' decision was that he considered it to be unjust to allow a claimant to accept a payment into court when he knows, as in this case, that the defendant is withdrawing the offer which the payment constitutes and has made an application to the court for permission to do so. The judge considered that, where a defendant issues an application to reduce a payment into court within the period for acceptance and before it has been accepted, there is imposed automatically a stay or suspension of the time for acceptance of the payment into court until after the hearing of the defendant's application.
The judge recorded the claimant's argument that the defendant had chosen to seek the benefit of a Part 36 payment knowing that the medical report from Mr Pinder was due to be delivered within a few days. He could not argue that the contents of the report represented a change of circumstances sufficient to justify a reduction in the sum in court. The judge did not agree. Bearing in mind that the payment was made on the date when the defendant had hoped to be able to serve the report, the judge considered that the contents of Mr Pinder's report constituted good and sufficient reason for the order originally made by the deputy district judge. The claimant appeals against this decision.
Part 36 of the Civil Procedure Rules
The first issue in this appeal turns on the proper construction of Part 36 of the Civil Procedure Rules. Part 36 must be looked at in the light of the overriding objective in Part 1. The rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly (rule 1.1(1)) . The court must seek to give effect to the overriding objective when it exercises any power given to it by the rules or when it interprets any rule (rule 1.2) . The parties are required to help the court to further the overriding objective (rule 1.3) .
Part 36 contains rules about offers to settle and payments into court, and about the consequences where an offer to settle or payment into court is made in accordance with Part 36 (rule 36.1(1)) . Part 36 does not prevent a party from making an offer to settle in whatever way he chooses; but if such an offer is not made in accordance with Part 36, it will only have the consequences specified in Part 36 if the court so orders (rule 36.1(2)) . As is well known, broadly speaking the Part 36 consequences relate to payments or awards of costs and interest. If an offer to settle within Part 36 is accepted, that effects a compromise. If it is not accepted, there is no compromise and the action proceeds. There are then costs advantages to the party who made the offer, if the outcome of the litigation is less favourable to the offeree than the terms of the offer.
Part 36.2 distinguishes between "a Part 36 payment" and "a Part 36 offer". Each of these is referred to in that rule as an offer. A Part 36 payment is thus an offer made by way of payment into court. A Part 36 payment may only be made after proceedings have started (rule 36.3(2)) .
Rule 36.3 provides that, subject to exceptions, an offer by a defendant to settle a money claim will not have the consequences set out in Part 36 unless it is made by way of a Part 36 payment. The exceptions relate to an offer made by reference to an interim payment (rule 36.5(5)) and a claim subject to deduction of benefits under the Social Security (Recovery) of Benefits Act 1997 where the defendant has applied for, but not received, a certificate of recoverable benefits (rule 36.23) . The policy of rule 36.3 evidently is that a defendant wishing to make an offer to settle a money claim within Part 36 should do so in a way which enables the claimant to accept the offer in the knowledge that the settlement money is securely available. Part 36 payments are obviously not available for non-money claims nor for offers to settle by claimants, who by definition are not offering to make any payment.
A defendant who makes a Part 36 payment must file with the court a Part 36 payment notice stating the matters required by rule 36.6(2) . A Part 36 payment is made when written notice of the payment into court is served on the offeree (rule 36.8) .
A Part 36 offer or Part 36 payment is accepted when notice of its acceptance is received by the offeror (rule 36.8(5)) . A claimant may accept a Part 36 offer or a Part 36 payment made not less than 21 days before the start of the trial without needing the court's permission, if he gives the defendant written notice of acceptance not later than 21 days after the offer or payment was made (rule 36.11(1)) . If a Part 36 offer or Part 36 payment relates to the whole claim and is accepted, the claim will be stayed (rule 36.15) . Where a Part 36 payment is accepted, the claimant obtains payment out of the sum in court by making a request for payment in the appropriate practice form (rule 36.16) .
Thus, a Part 36 payment by a defendant is a payment into court constituting an offer to settle a claimant's claim or that part of it to which the payment is expressed to relate. If the offer is made not less than 21 days before the start of the trial, the claimant may accept the payment without the court's permission and obtain payment out of the sum in court without judicial intervention.
Rule 36.6(5) provides:-
"A Part 36 payment may be withdrawn or reduced only with the permission of...
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