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Flynn v Scougall, Court of Appeal, 13 July 2004

22 July 2004
The issues

Part 36 Payment – Application to Withdraw or Reduce Payment In – Procedure to be Followed

The facts

The Claimant was a Fire Fighter injured when his fire engine in which he was travelling was struck by the Defendant’s vehicle. The accident happened on 20th September 1999. A Claim Form was issued on 14th August 2002. It was supported by a medical report expressing the opinion that the accident had accelerated the Claimant’s retirement by 5 years. A Defence was filed admitting liability.

In January 2003 the Defendant was permitted by the Court to rely on a report by their own medical expert provided that it was disclosed by 28th February 2003. Extensions were agreed by the Claimant’s solicitors for service of the report and the second providing for service by 20th March 2003. On 14th March 2003 the Defendant paid into Court £24,500.00. The Defendant subsequently received their report. The writer of the report was of the view that the Claimant’s symptoms had been accelerated by no more than 3 months. They issued an Application on the day of receipt of the report for an Order that £14,500.00 of the monies in Court should be paid out to the Defendant’s solicitors. On the same day they sent a letter and fax to the Claimant’s solicitors telling them of the application and stating that the original Part 36 Payment was withdrawn and that their intention was to make a reduced Part 36 Payment of £10,000.00.

On 25th March before the Defendant’s Application was heard, the Claimant served a Notice accepting the original Part 36 Payment. The Notice was served within 21 days of the original offer. The Deputy District Judge allowed the Defendant’s Application. Subsequently the District Judge set aside that Order. Finally the Judge on appeal set aside the Order of the District Judge and restored the Order of the Deputy.

The Judge allowed the Claimants until 4th November 2003 to accept the £10,000.00 in Court. The Claimant appealed.

The decision

There is a distinction between a Part 36 Payment and a Part 36 Offer.

Rule 36.3 provided 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 made by way of a Part 36 Payment. The policy behind the rule is that a Defendant wishing to make an offer should do so in a way which enables the Claimant to accept the offer in the knowledge that the settlement money is securely available.

Scammell v Dicker decided that a Part 36 Offer (as opposed to a payment) did not exclude the general law of contract and that an unaccepted Part 36 Offer could be withdrawn.

Rule 36.6(5) however provided that a Part 36 Payment could be withdrawn or reduced only with the permission of the Court. The Judge below had taken the view that where a Defendant issued an application to reduce a Payment into Court within the period for acceptance and prior to acceptance, an automatic stay came into existence. Part 36 provided no warrant for this and this solution might generate abuse by unscrupulous Defendants. It was neither satisfactory nor correct.

The Court was concerned to avoid “an unseemly rush to establish procedural advantage”. If a Defendant wishes within the 21 days to withdraw or reduce a Part 36 Payment he should apply for permission to do so and inform the Claimant of his Application. If the Claimant wished to accept the Part 36 Payment within the 21 days without permission he should give the requisite written notice of acceptance. The stage would then be set for the Court to decide the Defendant’s Application in the light of the Claimant’s notice of acceptance. As had been said in Manku v Seehra the fact of the Notice of Acceptance would be an important consideration to be taken into account in deciding whether the Claimant should be given permission.

In this case, the Defendant’s Notice was obviously prompted by the Defendant’s Application to withdraw. However the logic of the Court’s position was that the Court also had power to entertain a Defendant’s Application to withdraw or adduce which had been made after the Claimant had given Notice of Acceptance.

Turning to the facts of this case, the Court was faced with a summary of two reports, the one from the Claimant’s expert which would result in a larger award than £24,500.00 and the one from the Defendant’s expert which would result in damages of less than £24,500.00. The Court did not have either report and were unable to reach any considered view. It was not necessary to do so however. The difference between the two experts was nothing out of the ordinary in personal injury litigation. The Defendant had chosen to make the Part 36 Payment before its report arrived. In doing so the Defendant took a risk that their report would improve their position. The fact that it may have done so was not even close to a sufficient change of circumstance.

The Defendant had not shown that it should be permitted to reduce its Part 36 Payment so as to deny the Claimant’s otherwise unfettered right to accept the full payment within 21 days.

Appeal allowed.

Comments

It is unfortunate that some of the Court of Appeal’s reasoning in deciding what were acceptable excuses for not pursuing mediation are out of step with the guidance just given by a differently constituted Court of Appeal in Halsey.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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