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Crouch v Kings Healthcare NHS Trust & Murry v Blackburn NHS Trust, Court of Appeal, 15 October 2004

18 October 2004
The issues

Payment Into Court – Amber v Stacey – The Maersk Colombo – Whether The Defendant Could Rely On An Amber v Stacey Letter In Place Of A Physical Payment Into Court

The facts

In Crouch the Claimant’s claim for personal injuries were successful at Trial to the sum of £29,000.00. (There was a subsequent and unsuccessful appeal by the Claimant).

By a letter dated 8th August 2003 (the “Amber v Stacey” letter) the Defendant Trust had offered £35,000.00. The Defendant sought costs 21 days from the date of the letter. The Judge refused and Ordered the Trust to pay all of the Claimant’s costs.

In Murry the Trust offered by letter £150,000.00 in respect of the Claimant’s pre-natal injuries. The offer was first rejected then accepted within the 21 days. The Trial date was vacated save for an approval hearing. At the approval hearing following withdrawal of public funding Counsel for the Claimant stated he could not advise approval pending the appeal on public funding. The approval hearing was therefore adjourned. Limited public funding was restored. There was a meeting on 18th June 2003 when the offer of £150,000.00 was rejected by those advising the Claimant.

The matter was re-listed for Trial when on 23rd January 2004 the Claimant’s solicitors wrote indicating that they now wished to accept once again the offer of £150,000.00. The Trust responded by saying that as the offer had been rejected there was no offer to accept. The matter came before the High Court Judge. The Claimant argued either that there was an offer which had been accepted or that the Trust’s original offer could be treated as a Part 36 Payment with the consequence that it could not be withdrawn without the permission of the Court. The Judge took the view that the Claimant should be entitled to accept the offer and approved a settlement on those terms subject to an Order that the Claimant pay costs from 24th March 2003 (the date of the first approval hearing) and further that there be no order for costs in respect of the hearing on 5th March 2004.

In both cases the Trusts appealed.

The decision

There were two relevant parts of the Rules to consider, namely Part 36 and Part 44. It was clear that where a case involved a money claim, a Defendant in order to have the protection of the consequences that flow from Part 36 and the presumption in Part 36.20 (that a Claimant who is awarded less than the Payment In will pay the Defendant’s costs from 21 days from the date of possible acceptance) must pay into Court.

Part 36.1.2 stated that nothing in Part 36 prevented a party making an offer to settle in whatever way it chose but it would only have costs consequences if the Court so ordered. Part 44.3 stated that the Court had discretion as to whether costs were payable by one party to another and as to the amount of costs and the date when they were to be paid. The general rule was that the unsuccessful party would pay the costs of a successful party but the Court could make a different order having regard to the conduct of the parties, whether a party had succeeded on part of his case or had not been wholly successful, and whether any Payment into Court or admissible offer to settle had been made by a party. The effect was that a Calderbank offer was permissible even in money claims and that the Court thereafter had the power to make orders that such offers should have the consequences specified in Part 36. Calderbank offers were therefore admissible in money claims and by virtue of Part 44.3 could be taken into account amongst all other circumstances in considering the proper order for costs.

It was doubtful whether there was any real difference in exercising the discretion under Part 44.3 as opposed to Part 36.1 (2).

In the Crouch case the Judge had exercised his discretion in a way that was plainly wrong. The Court of Appeal would exercise its discretion afresh. The Court was entitled to take into account the factors that the NHS Trust stressed in their standard letter – essentially that the Trust was bound to be good for the money. This form of offer from an NHS Trust was as sound as a Payment In and unless there was some factor which was special about the circumstances of the case, a Court should treat such an offer in the same way as a Payment In. On that basis the Claimant would be ordered to pay the NHS Trust’s costs as from 21 days after the date of the letter.

In the Murry case the NHS Trust would have been entitled to withdraw the offer and the Judge’s finding of a contract would not have been upheld had it been appealed. However, no appeal against that finding had been made and therefore the Court of Appeal restricted its approach to considering the basis on which an Application could be made to withdraw a Payment in under Part 36. These had been recently summarised by the Court of Appeal in Flynn v Scougal. There had still to be a sufficient change of circumstance since the money was paid to make it just that the Defendant should have an opportunity of withdrawing or reducing his payment. The Judge exercised his discretion in a proper way. However to withdraw public funding might well produce a change of circumstances but a Payment In was intended to reflect an evaluation of the merits of a case and the question of whether a Claimant could not afford to fight the case or the view of the legal services commission should not be a circumstance in which a Defendant should be entitled to rely as affecting that evaluation.

The appeal of the Defendant Trust in Murry would be dismissed.

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