A court making an order under r.36.22(9) is not making an order for damages and interest in favour of the claimant

University Hospitals of Derby & Burton NHS Foundation Trust v Harrison 

“A court making an order under r.36.22(9) is not making an order for damages and interest in favour of the claimant”

Background 

The claim arises from an action for damages for clinical negligence. While the general case history has little importance when considering the issues determined by this case, the way in which the case settled goes to the heart of the appeal being considered by the Court of Appeal. 

The defendant made a Part 36 offer in the sum of £421,362.88 on 6 December 2019. The claimant indicated she wished to accept the offer significantly out of time on 8 November 2021. The parties were unable to agree liability for costs, but also further recoverable benefits had been paid to the claimant between the offer being made and the claimant indicating she wished to accept it. Consequently, the claimant was required to obtain the court’s permission to accept and the court had to determine whether any further benefits paid during the interim period were to be deducted from the sum offered. 

At first instance, the issues came before HHJ Sephton KC who determined:

  1. The claimant should have her costs up and including 27 December 2019, with the claimant being ordered to pay the defendant’s costs from 28 December 2019.
  2. However, the defendant could not set-off or enforce the costs order made against the claimant pursuant to CPR 44.14(1).
  3. The deductible benefits paid to the claimant were £48,206.17 and that amount should be deducted from the offer amount, along with the sum of £75,000.00 that had been ordered to be paid to the claimant on account. 
  4. Accordingly, the amount payable to the claimant was £298,156.16.

The Issue

In similar to the recent case of Chappell v Mrozek [2022] EWHC 3147 (KB), the defendant argued that the court granting permission to accept the offer and determining the figure to be deducted from the offer amount in relation to recoverable benefits amounted to an order “for damages and interest made in favour of the claimant” in accordance with CPR 44.14(1). Therefore, the defendant argued that their costs incurred since 28 December 2019 should be set-off against the £298,156.16 payable to the claimant. 

The Decision 

As one might expect, Coulson LJ dismissed the defendant’s appeal, for a number of reasons. However, his main reasoning for doing so was that an order under CPR 36.22(9) is not “an order for damages and interest made in favour of the claimant” as required by CPR 44.14(1). 

In addition, Coulson LJ gave four further reasons why the defendant’s arguments on appeal could not succeed:

  1. If the defendant were right in its argument, then it would elevate form over substance.
  2. There are policy considerations which militate against the defendant’s construction of CPR 44.14(1) as it stands.
  3. That to the extent that previous authorities are relevant, they favoured the claimant’s position, not that of the defendant.
  4. Finally, what the defendant said that CPR 44.14(1) meant in its present form is not what the rule provides for.

In relation to his final reason, Coulson LJ relied on reasoning he gave in Cartwright v Venduct Engineering Limited [2018] EWCA Civ 1654 saying that if the CPRC had intended CPR 44.14(1) should cover all the ways in which a claimant may recover something after the issuing of proceedings, including, settlements, they would have said so. And until recently, they did not.

Even taking into consideration the proposed amendments following the decision in Adelekun v Ho [2021] UKSC  43 relating to set-off against costs, Coulson LJ noted that proposed amendment in its original form appeared to be directed solely at that point and would have no bearing on this case, or potentially any future cases, as they did not specifically address Part 36. However, he noted that a “fuller” amendment had been agreed in principle which would incorporate “agreements to pay” into the scope of CPR 44.14(1). In that respect, Coulson LJ went onto say that the fact that the CPRC were looking to change the rule means it is not unreasonable to conclude that they think that the present rule does not cover “agreements to pay”.

Take Away

Although both this case and the Chappell case deal with similar issues regarding Part 36 acceptance and both resulted in similar outcomes, it is unlikely that these cases will bring an end to defendants challenging the boundaries of the QOCS regime. Moreover if, or more likely when, the proposed rule change envisaged for CPR 44.14(1) comes into force, the whole basis on which the appeal in this case, along with the issues raised in the case of Chappell, will cease to matter. Or will they?

At paragraph 52 of the judgment, Coulson LJ seems to suggest that the proposed amendment in its current form does not expressly address Part 36. In relation to that we would simple observe that one would have thought that a case concluded by way of Part 36 would fall under the banner of an “agreement to pay” as Part 36 is, in itself, a self-contained code which governs a particular type of agreement entered into by parties to litigation. We shall all have to wait with baited breath…

Link to judgment: https://www.bailii.org/ew/cases/EWCA/Civ/2022/1660.html