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Drinkall v Whitwood, Court of Appeal, 6 November 2003

11 November 2003
The issues

Settlement agreements – compromises – Part 36 – resilement.

The facts

The Claimant was aged 14 when as she was cycling home from school she was struck by a motorcar driven by the Defendant. She was seriously injured and suffered a severe closed head injury, which left her with some permanent brain damage. Before proceedings were issued, the Claimant made a Part 36 Offer under Part 36.10 to settle the issue of liability on an 80/20 basis in her favour. This offer was accepted on the 7th April 2000. 18 months later, the Defendant withdrew from the settlement agreement in order to argue that the Claimant should have had a higher degree of contributory negligence because she had not been wearing a cyclist’s helmet. In January 2002, the Claimant issued Particulars of Claim, relying on the exchange of letters with regard to the purported settlement and arguing that it constituted a binding agreement on the issue of liability. The Defendant argued that since the Claimant was a minor, the parties had been unable to enter into a binding settlement without Court approval and that consequently no binding agreement had been reached. As a preliminary issue, the question of whether or not there was a valid compromise was ordered to be tried. The District Judge found the agreement valid and binding. On Appeal to the Judge, the District Judge’s decision was upheld. The matter came before the Court of Appeal (the Court of Appeal noted that the Appeal had been wrongly routed and that it should have been made directly from the decision of the District Judge to the Court of Appeal).

The decision

1. The relevant part of the CPR was Part 21.10 which read “where a claim is made by or on behalf of a child÷ no settlement compromise or payment and no acceptance of money paid into Court shall be valid so far as it relates to the claim on behalf of the child without the approval of the Court”. The Judge had taken the view that the approval requirement and the provision of the Part 21.10 related only to claims made in proceedings and not to claims made before proceedings began.

2. That could not be the right approach since paragraph 2 of Part 21.10 precisely envisaged the commencement of pre-issue proceedings under Part 8.

3. This matter had already been adjudged by the House of Lords in 1969 in the case of Dietz -v- Lennig Chemicals Limited. In that case, Lord Pearson had specifically stated that in the case of approval of a settlement of a claim of an infant or a person under disability “the Court needs, for the purpose of protecting his interest, full control over any settlement compromising his claim÷ either party could lawfully have repudiated it at any time before the Court approved it”.

4. Regrettable though it might seem, following Dietz the Defendants were entitled to renege on their agreement.

Appeal allowed.

Comments

The Court of Appeal suggested that those acting for child Claimants in future would think it prudent to issue proceedings to obtain the Court’s approval for any partial settlement of the claim to avoid repudiation by a Defendant. The Court of Appeal noted with surprise that Dietz did not appear either in the White Book or the Green Book and should now be brought more clearly to the profession’s attention. They also commented that estoppel might have been available to the Claimant if he could have shown that he had acted to his detriment in reliance on the settlement agreement. However, no such argument had been put before the Court of Appeal.

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