Wormald v Ahmed: The withdrawal by a defendant of a Part 36 offer

26th April 2021

Wormald v Ahmed: the withdrawal by a defendant of a Part 36 offer that had been made six years previously and which the claimant, a protected party, had accepted in the hours before his death was endorsed because it would be unjust for a defendant to be bound by it.

In 2009 the claimant sustained a traumatic brain injury after being struck by the defendant's vehicle. Due to his injuries, he lacked capacity to conduct litigation and was a protected party. In October 2014 the defendant made a Part 36 offer in the sum of £2 million. On 14 September 2020, the claimant suffered a cardiac episode and was in a critical condition. The defendant's solicitors were advised of his admittance to hospital. On 18 September, the claimant's solicitors sent notice of acceptance of the Part 36 offer to the defendant's solicitors. The claimant died later that day. The defendant's solicitors were advised of the death on 21 September and, on 25 September, they purported to withdraw the offer, arguing that it would lead to a significant windfall to the estate as it was based largely on future care.

The claimant sought a declaration that, pursuant to CPR r.36.11(2), a Part 36 offer made by the defendant had been accepted and could not be withdrawn, and an order approving the settlement sum.

Claire Ambrose sitting as a deputy High Court judge had three issues to determine:

Where a protected party accepted a Part 36 offer, was the other party subsequently able to withdraw that offer before approval of the settlement? Rule 36.11 expressly provided that acceptance of an offer was subject to r.21.10, which provided that any settlement reached on behalf of a protected party required court approval. Even though the claimant had died, the settlement offer had been accepted on his behalf prior to his death, so r.21.20 was engaged and remained relevant. The Rules were to be construed to give effect to the express restrictions on withdrawal under Part 36, together with the express requirements of r.21.10, the broader policies of the overriding objective and the protection of protected parties underlying those rules. Taking into account relevant case law and the Rules, the following conclusions could be drawn:

Under r.36.11 and r.36.14, a compromise made on behalf of a protected party by acceptance of a Part 36 offer required the court's approval under r.21.10.
By virtue of r.21.10, a Part 36 offer and a protected party's acceptance of it were not binding to make a valid settlement until approved by the court.
The other party could, prior to approval, resile from its offer by giving notice of withdrawal, Drinkall v Whitwood [2003] EWCA Civ 1547, [2004] 1 W.L.R. 462, [2003] 11 WLUK 124 applied. The withdrawal served a purpose in giving notice that the settlement was challenged.
However, the notice of withdrawal would not in itself be valid for the purposes of r.36.9, in particular in relation to costs consequences.
Either party could apply for approval of the settlement (CPR PD 21). A party resiling from the settlement could raise its position on that application. It was then for the court to decide whether the withdrawal was to be given effect or the settlement was to be approved

On what grounds, if any, could a Part 36 offer be withdrawn and approval of the settlement refused? Whilst the primary considerations under r.21.10 remained the protection of the protected party and their dependents, followed by ensuring that the defendant was properly discharged, the overriding objective required that cases be dealt with justly. The question was whether, in all the circumstances, approval of the settlement would be unjust. Where a protected party had died with no dependants, protection of their interests as a vulnerable person became less significant, and the need to control the proceeds fell away. The estate's interests did not require the same protection as that of the protected person under r.21.10. It would be undesirable for the court to conduct investigations as to whether the settlement was too generous to the protected party or gave rise to a windfall. That was a necessary aspect of a compromise, and part of the inherent contingencies of litigation. It would not in itself be decisive. However, if it was a clear case where the settlement would result in the protected party financially doing significantly better than they would have done at trial then that could go into the balance.

Should the court grant permission for withdrawal of the offer or approve the settlement in the amount offered? On the evidence, it would be unjust for the defendant to be bound by the accepted offer and for the proceedings to be concluded by the court approving the settlement. The court gave effect to the defendant's withdrawal. The costs consequences of the offer and its withdrawal were left open. Final determination of the question as to whether the settlement offer or withdrawal of the offer should be approved was reserved to enable the claimant's estate to apply to adduce evidence to comply with CPR PD 21 and address any appropriate information requests made by the defendant.

Winston Hunter QC appeared on behalf of the Defendant, instructed by DWF LLP.

The judgment can be found here.