Four members of Kings Chambers appear in the Court of Appeal in an important Part 36 appeal

Four members of Kings Chambers appear in the Court of Appeal in an important Part 36 appeal. Whilst the appeal was dismissed, the appeal overturns the High Court decision in Mundy v TUI UK Ltd [2023] EWHC 385 (Ch) and clarifies that an order approving a settlement for damages to be paid to a minor amounts to a “judgment” for the purposes of CPR Part 36.

Kevin Latham, leading Fraser Barnstaple, appeared for the Appellant and Craig Ralph, leading Elliot Kay, appeared for the Respondent, before the Court of Appeal in Smithstone v Tranmoor Primary School.

Background Facts

The Appellant, aged 10, was a pupil at the Respondent’s school when he suffered a minor injury when his fingers became trapped in a door. A claim was issued in the county court alleging negligence and breach of the Occupiers Liability Act 1957, limited to the sum of £3,000.

The claim was entered into the Low Value Fixed Costs regime by the submission of a Claims Notification Form into the Protocol portal on 31 October 2018. Liability was denied.

On 13 December 2018, before any medical report had been served, the Appellant made a Part 36 offer to settle liability on a 90/10 basis which was rejected by the Respondent.

The matter was listed for trial on 26th November 2020 when the parties reached settlement at the doors of court in the sum of £2,650. The agreed damages were approved by the court pursuant to CPR Part 21.

First Instance and First Appeal

At first instance, Deputy District Judge Khan refused to order Part 36 consequences on the basis that the Part 36 offer on liability “did not bite”. On appeal, that decision was upheld by HHJ Baddeley who concluded he was bound by the decision in Mundy v TUI UK Ltd [2023] EWHC 385 (Ch).

Court of Appeal

The issues for the Court of Appeal were:

1. Whether an order approving a settlement of damages to be paid to a minor amounted to a “judgment” for the purposes of CPR Part 36;

2. Whether a Part 36 90/10 liability offer can be effective for the purposes of CPR 36.17 given that “at least as advantageous” is stated to mean “better in money terms”;

3. Whether the outcome in this case was “at least at advantageous” to the Appellant as the proposals contained within the Appellant’s Part 36 90/10 liability offer.

The Court held that:

1. The order approving the settlement was both a judgment and an order and thus the threshold of “judgment” in CPR Rule 36 (and in particular r.36.17(1)) was met;

2. Overturning the decision of Collins-Rice J in Mundy v TUI UK Ltd, a 90/10 liability offer can be effective offer for the purposes of CPR 36.17; but

3. On the facts of this case, the matter had settled without any admission of liability nor was liability determined by the court. The outcome could not therefore be said to have been as advantageous to the Appellant as the proposals contained within the Appellant’s Part 36 90/10 liability offer and thus, the Appellant was not entitled to the suite of benefits provided for by CPR r.36.17(4), which would have included an additional amount of damages and costs on the indemnity basis relating to the issue of liability from expiry of his 90/10 offer. DDJ Khan was right to decide that the Appellant’s solicitors were limited to recovering fixed costs only.

Accordingly, the appeal was dismissed. The judgment is available here.

Practice note

There are two important takeaway points for practitioners. Firstly, the judgment of Collins-Rice J in Mundy v TUI UK Ltd is overturned. The Court of Appeal is clear that Part 36 offers related solely to the issue of liability are perfectly acceptable and attract Part 36 consequences in the usual way. Secondly, an order approving a settlement of damages to be paid to a minor amounted to a “judgment” for the purposes of CPR Part 36 and is thus sufficient to trigger the first hurdle requiring a “judgment” in CPR r36.17(4). Practitioners need to take care that settlement terms have not inadvertently triggered a party’s ability to contend that the “judgment” is one that is more advantageous than that party’s Part 36 offer.