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26 October 2020

Insurance litigation round-up: October 2020

Each month we will be sharing updates on recent case law, procedural changes and case highlights. In this first round-up, we will look at the changes to the bereavement award in fatal accidents, the validity of Part 36 offers and Part 18 Questions. Read more below.

Changes to the Bereavement Award in Fatal Accidents

The Fatal Accidents Act 1976 (Remedial) Order 2020 came into force on 6 October 2020 and applies to all deaths which occurred after this date.

The Act now extends the scope of those entitled to the statutory bereavement award to cohabitees and now applies to same sex relationships. The cohabiting partner must have been living with the deceased in the same household immediately before the date of death and, have been living with the
deceased in the same household for at least two years.

Validity of Part 36 offers

Essex County Council v UBB Waste (Essex) Ltd (No 3)

Brief synopsis

An offer was made by the Claimant via email on 7 March 2019, however it was sent after 4.30pm and therefore was deemed served the following day. The letter itself was dated 7 March 2020, and therefore the Defendant argued that this could not be a valid Part 36 offer as the relevant period (21 days) would start from the date of the letter. As valid Part 36 offers could not be for less than 21 days, the offer was purported to be invalid.

Judgment

It was held by Mr Justice Pepperell that:
37.1 First, one must keep in mind that Part 36 is a self-contained procedural code. It has become something of a tradition in Part 36 cases to attribute that observation to Moore-Bick LJ in the important case of Gibbon v Manchester City Council [2010] EWCA Civ 726, [2010] 1 WLR 2081, but since 2015 it has been hardwired into Part 36 by the new r36.1(1). Introducing the rules of estoppel would breach this core principle.

37.2 Secondly, Moore-Bick LJ added in Gibbon that Part 36 is a ‘carefully structured and highly prescriptive set of rules.’ He explained that parties were not bound to follow those rules but that, if they wanted the substantial benefits which flow from Part 36, they had to follow them in every respect. As Coulson LJ observed in King v City of London Corporation [2019] EWCA Civ 2266, [2020] 1 WLR 1517 at [59], that warning is as relevant today as when it was made by Moore-Bick LJ in respect of an earlier incarnation of Part 36. Indeed, this simple point is made by r36.2(2), which reads:

‘Nothing in this Section precludes a party making an offer to settle in whatever way the party chooses, but if the offer is not made in accordance with rule 36.5, it will not have the consequences specified in this Section.

(Rule 44.2 requires the court to consider an offer to settle that does not have the costs consequences set out in this Section in deciding what order to make about costs.)’

In my judgment, r36.2(2) is a complete answer to the estoppel argument.

37.3 Thirdly, Moore-Bick LJ also explained, at [6]:

‘Basic concepts of offer and acceptance clearly underpin Part 36, but that is inevitable given that it contains a voluntary procedure under which either party may take the initiative to bring about a consensual resolution of the dispute. Such concepts are part of the landscape in which everyone conducts their daily life. It does not follow, however, that Part 36 should be understood as incorporating all the rules of law governing the formation of contracts, some of which are quite technical in nature. Indeed, it is not desirable that it should do so. Certainty is as much to be commended in procedural as in substantive law, especially, perhaps in a procedural code which must be understood and followed by ordinary citizens who wish to conduct their own litigation. In my view, Part 36 was drafted with these considerations in mind and is to be read and understood according to its terms without importing other rules derived from the general law, save where that was clearly intended.’

For much the same reasons, I consider that Part 36 should not be construed so as to incorporate the rules of estoppel which would only be apt to introduce yet further uncertainty and complexity into the operation of the Part 36 regime.

37.4 Fourthly, I respectfully agree with the observation of Coulson LJ in Hertel v Saunders [2018] EWCA Civ 1831, [2018] 1 WLR 5852, at [23], that the parties cannot agree that an offer is in accordance with Part 36 if, on analysis, it is not. If they cannot agree that a non-compliant offer is a Part 36 offer then, in my judgment, still less can one party be estopped from taking the point about the defect.

37.5 Fifthly, I consider that, as a matter of policy, the responsibility for ensuring that an offer is compliant with Part 36 should lie squarely upon the offeror and his lawyers. There are two very simple answers to the unrelenting stream of cases which, as Coulson LJ observed in King, litter the law reports in which parties seek to obtain the benefits of Part 36 despite making non-compliant offers:

a) as has been repeatedly stressed by the Court of Appeal and as the rules clearly explain, there is no problem with a party making an offer outside Part 36. Such offers will be taken into consideration under Part 44 but will not gain the special advantages of Part 36;

b) as the commentary in Civil Procedure (the White Book) makes clear at paragraph 36.5.2, much of the difficulty would be avoided if parties would only use form N242A to make their offers. It was therefore held that the date on the letter did not prevent the offer from being a valid Part 36 offer and that there was no estoppel in the construction of Part 36 offers.

Summary

It is clear that there are numerous pitfalls in respect of making a valid Part 36 offer, which is highlighted by the large number of cases which have been heard in this respect. The courts have made it clear that each matter will be heard on a case by case basis and will turn on the matters own specific facts.

In this case the takeaway is that the onus on ensuring that the offer is Part 36 compliant rests with the offeror, and as in the closing remarks, that the use of Form N242A should be used where possible in order to avoid such difficulties arising.

Read the full judgment here.

Part 18 Questions

Kings Security Systems Ltd v King & Anor [2019]

Brief synopsis

In August 2018, the Defendant, Mr King, applied to add an expanded counterclaim to the proceedings to plead tortious abuse of process on the basis that the proceedings had been brought for an improper purpose, to obtain the King family shares at an undervalue and to inflict serious reputational damage. Permission was granted in November 2018.

The Claimant subsequently served an application for further information pursuant to CPR 18 on 26 July 2019 which sough both clarification and further information in relation to the measure and quantum of damages sought by the Defendant in his counterclaim.

The Defendant objected to the application on the basis of firstly the time period since the counterclaim had been served, which was over a year, the fact that the Claimant had already been able to plead to the amended Counterclaim, and that the best possible particulars had been provided prior to disclosure.

Judgment

Master Kaye held that:
50 Part 18 requests should be for the purpose of providing further information strictly necessary to understand another party’s case. There is some force in the argument that the claimant had the draft amended counterclaim for five months before the hearing before Deputy Master Arkush. Deputy Master Arkush was content to give permission on the basis of the pleading that was the subject of the application. There was no suggestion before me that the claimant raised any concern about the draft pleading in specific details rather than their general objection to the counterclaim being allowed. If they did, it was one that Deputy Master Arkush clearly did not take on board and if they did not, it is a matter for them.

51 Whilst the delay in making the application itself is not determinative of the application, I do take into account that in this case the parties are involved in attritional litigation. There was a substantive hearing about whether the amended counterclaim should proceed at all a year ago. The claimant pleaded to that amended counterclaim and despite other hotly contested hearings and applications did not seek to pursue this request until July 2019. It then waited until 14 days before the CCMC to issue the application so that it could be heard at the CCMC. Having had a response from the defendant setting out why they said they did not need to respond as long ago as 6 August.

52 In the meantime, in the absence of further particulars does not appear to have caused the claimant any difficulty in preparing for the CCMC. The request appears to be an attempt to require the defendant to provide early evidence in relation to some aspects of his claim in advance of the exchange of witness evidence. Some aspects of the request are clearly seeking advance notice of the position the defendant adopts in relation to the legal principles and/or is asking them carry out the exercise which is a matter for the trial judge to consider at the end of the trial once he has heard all the evidence.

53 It is not reasonable or proportionate or in keeping with the overriding objective or efficient case management to require the defendant to produce what is going to be primarily fragmented witness evidence. It does not appear to me to be reasonably necessary at this stage given the history of this particular amendment. I am not, therefore, prepared to direct the defendants must provide the answer to the request for further information and that application fails. However, that obviously does not preclude the claimant from making a further application after disclosure and/or witness evidence if appropriate. Such an application would, of course, be considered on its own merits and in the context of the proceedings at that time.

Summary

Considering the timing of any application is crucial. Unless the further information is required in order for the other party to properly proceed and prepare for the case; it is unlikely that any application for further information will be successful until after all evidence has been served, in particular disclosure
and witness evidence.

Read the full judgment here.

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