The claimant made an offer under CPR Pt 36 to settle her clinical negligence claim against the defendant, which had admitted liability, by accepting a gross lump sum of £7m and a periodical payments order (“PPO”) of £360,000 per annum for life with the first indexation in December 2024. The defendant did not accept the offer. In a judgment on quantum the judge awarded a lump sum of £6,866,615 and an index-linked PPO of £394,940 per annum for life with the first indexation in December 2023. The claimant thus beat the PPO in her Part 36 offer but failed to beat the lump sum. She contended, however, that on a proper interpretation of Part 36 she had beaten her own Part 36 offer at trial because the correct way to determine the total money terms value of the offer and award was to capitalise the PPO by using the agreed life multiplier and then add that total to the lump sum. The claimant applied for an order pursuant to CPR r 36.17 for indemnity costs, an additional award and interest on costs and damages since the date of the offer, on the basis that the judgment against the defendant was “more advantageous” or “at least as advantageous” to the claimant as the proposals contained in her Part 36 offer, being overall “better in money terms” within the meaning of rule 36.17(2).
On the claimant’s application—
Held, application refused. (1) It was relevant to the meaning of “better in money terms” in CPR r 36.17(2) that Part 36 not only permitted the making of a combined offer comprising both a lump sum and a PPO figure stated, which would settle all heads of loss if it was accepted, but also allowed the making of single offers, comprising one or more single lump sum offers to settle specific heads of loss or a single PPO offer to cover some heads of loss. Where single offers were made, and the claimant was awarded a higher PPO at trial, they could then ask the court to award the Part 36 financial advantages on those heads of loss, and could seek indemnity costs for having to prove those heads of loss at trial. However, where a combined offer was made, the offeree could only give notice of acceptance of the offer as a whole (under CPR r 36.18(6)) on a “take it or leave it” basis, and so could not accept just the lump sum or just the PPO. That being so, the proper inference was that where a combined offer was made, no protection was gained for the claimant unless both the lump sum and the PPO offers were beaten at trial, there being crossover between the two in that the quantification of each depended on the multiplicands in each head (about which parties often disagreed), and on which heads of loss were included in each part of the combined offer. If those issues made separate offers a better route for the claimant to take, tactics would dictate the making of separate offers (paras 12–14).
(2) Commensurate with the objectives of CPR Pt 36, to encourage good practice and to create an incentive to settle issues and claims by using sanctions and rewards, the system by which the money terms value of an offer was to be determined ought to be kept simple and clear. Taking that approach, the money terms value of a combined offer had two parts, the figure for the lump sum and the figure for the PPO. The PPO was not to be capitalised, as that would require the court to use the awarded multiplier, which had not existed at the time of the Part 36 offer, and would fail to reflect the uncertainty as to life expectation which was the whole purpose of awarding a PPO. Accordingly, combined offers were to be treated no differently than single offers, whereby the money terms value was the figure stated as the multiplicand. Taking that approach, the claimant had beaten only the PPO part of the combined offer but had failed to beat her lump sum offer, and therefore the combined Part 36 offer was not beaten. Had the claimant wished protection for each part, then individual offers could have been made. It followed that the Part 36 rewards and incentives were not appropriate and the claimant was to be awarded her costs for the claim on the standard basis (paras 15–19).
Richard Baker KC and Sarah Edwards (instructed by Taylor & Emmet LLP, Sheffield) for the claimant.
Sarah Pritchard KC (instructed by DAC Beachcroft LLP) for the defendant.