ACCEPTING A PART 36 OFFER DURING A TRIAL: A MATTER OF JUDICIAL DISCRETION: CLAIMANTS HAD LOST THEIR CHANCE

I am grateful to barrister Simon Mills for sending me a copy of the judgment of Mr Justice Morgan in Houghton (Stanley) -v- P.B. Donaghue (Haulage & Plant Hire Ltd & Ors) 2017] EWHC 1738 (Ch). It relates to the question of whether a part should be allowed to accept a Part 36 offer once a trial has started.*

“I think that the philosophy exists that where a claimant decides to take his chances with the trial and then repents of his earlier decision to turn down the offer of settlement because the trial, he thinks, is going less well or more badly than predicted, that the court will often take the view that it is not right to give permission to impose a settlement on the reluctant defendant.”

THE CASE

During the course of litigation the defendant made a Part 36 offer of £360,000. That offer was not accepted, it was not withdrawn. The trial started and evidence was heard over two days. During the trial the claimant applied for permission to accept the Part 36 offer. The defendant objected.

THE RULES

CPR 36.11 means that a party requires permission of the court to accept a Part 36 offer in certain circumstances.

“(3) The court’s permission is required to accept a Part 36 offer where—…

(d) a trial is in progress.”

THE JUDGE’S REVIEW OF THE AUTHORITIES

“6. I have been shown a number of authorities which are said to bear on the approach I should adopt. The three authorities are Capital Bank Plc v Stickland [2005] 1 WLR 3914, Sampla and others v Rushmoor Borough Council and another [2008] EWHC 2616 (TCC), and Nulty v v Milton Keynes BC [2012] EWHC 730 (QB). It is right that the rules under part 36 were different at the time of those cases. Version 1 was considered in the Capital Bank case; version 2 was considered in the two TCC cases; and now we have version 3, which came in I think in 2015.
7. I am particularly struck by the approach and the comments of the judges in the two TCC cases. They indicated in strong and, I have to say, persuasive terms that if an offeree, when he sees the way the wind is blowing in the trial, changes his attitude and wants to accept an offer that he previously did not want to accept, that is a change of circumstances which means that it may no longer be appropriate to allow the offeree to accept the offer which is still on the table subject to the court’s permission.”

EXERCISE OF THE DISCRETION

9. Effectively, what I am asked to do is to impose upon the defendant a liability to pay £330,000, which it is no longer willing to do because it has asked the court to refuse permission. The defendant now wishes to take its chances with the trial continuing, so the court is imposing a result, imposing a settlement which is not a voluntary settlement any longer.
10. I think that the philosophy exists that where a claimant decides to take his chances with the trial and then repents of his earlier decision to turn down the offer of settlement because the trial, he thinks, is going less well or more badly than predicted, that the court will often take the view that it is not right to give permission to impose a settlement on the reluctant defendant.

NOT A GENERAL RULE BUT APPLIES IN THIS CASE

The judge concluded

“11. Taking that approach does not mean that permission will never be given. In the course of argument, examples were given of when permission would be appropriate, but those examples do not apply to this case. Having endeavoured to assess the points in play, my overall conclusion is that the just result here is to refuse permission to the claimant to accept the part 36 offer.”