DE MINIMIS BREACH OF RULES DID NOT LEAD TO PART 36 OFFER BEING INVALID

In Momonakaya v the Ministry of Defence [2019] EWHC 480 (QB) HHJ Blair QC considered whether a claimant had properly accepted a Part 36 offer.  It was held that an offer that breached the rules in a de minimis way was still a valid offer.

 

in my view, the failure to comply with that one sub-rule in r.36.22(7) is de minimis. It is not of any lasting consequence; no prejudice has been suffered. There was clarity between all parties as to what was being agreed and therefore I have come to the conclusion that Part 36 does apply so as to stay these proceedings.”

THE CASE

The claimant brought an action for damages for personal injury. On 30th April 2018 the defendant made a Part 36 offer. This was not accepted within the 21 days.  The claimant’s solicitor later came off record. However on the 8th November 2018 the claimant instructed the solicitors to act again. They wrote to the defendant stating that they were now instructed to accept the Part 36 offer.  The claimant then disputed that the matter had been resolved.

THE FAILURE TO COMPLY WITH CPR PART 36.22(7)

A potential complication occurred in that an updated CRU Certificate had not been applied for and was not applied for within seven days of the offer being made.

THE JUDGMENT
    1. On the face of it that seems clearly an acceptance of a Part 36 offer. The only small difference, identified by the defendant’s solicitors before me today, is that in the code provided by r.36, at r.36.22(7), it indicates that if at the time the offeror makes the Part 36 offer the offeror has applied for but not received a certificate (this is concerning CRU), the offeror must clarify the offer by stating the matters referred to in the preceding subparagraph not more than seven days after receipt of the certificate. It is conceded that that appears not to have been done.
    2. It is argued on behalf of the defendant that the purpose of that rule in the scheme of things seems pretty clearly to be directed at assisting a court in determining whether, after a judgment following trial, the claimant has recovered more than a Part 36 offer, and the importance therefore of everyone being able to be clear what CRU deductions there may be for the period of time after the Part 36 offer was made and before the judgment. But according to the wording of the rules it is correct to make the concession which the defendant did today as to that non-compliance.
    3. In the Civil Procedure Rules (the White Book 2019at p.1176, para.36.2.4, there is commentary about formal or technical defects. In the second paragraph of that commentary it reads:

“In spite of the wording of rule 36.2.2 it has been held that if there are formal or technical defects to a Part 36 offer, provided they cause no real uncertainty or other prejudice to the offeree, the court may order that the usual Part 36 cost consequences will follow.” Some case law is then quoted, but then Lord Justice Davis’s views in the case of F&C Alternative Investment (Holdings) Ltd v Barthelemy (Costs) in 2012 are given, “It is not permissible wholly to discount a number of failures to comply with the requirements of Part 36 as the merest technicality. Perhaps there can be de minimis errors, or obvious slips, which mislead no-one, but the general rule is that for an offer to be a Part 36 offer it must strictly comply with the requirements.”

  1. Miss Greaney, for the defendant, essentially invites me to conclude that this is no more than a de minimis error which misled no-one and, therefore, non-compliance with Part 36.22(7) (when everyone knew that the deductions were to be made) was a mere matter of arithmetic. The figures not having changed, it should be treated de minimis and not regarded as a breach of the comprehensive code in Part 36.
  2. The defendant’s alternative argument is (if they are wrong about that) nevertheless the 30 April 2018 offer letter is the equivalent of a Calderbank letter. For those who aren’t lawyers in this courtroom, that is the name of a case which established a mechanism whereby offers could be made to try and settle litigation and, if accepted, could lead to a binding compromise of the litigation. It is argued on behalf of the defendant that there could be no serious dispute in concluding that if Part 36 has not been adequately strictly complied with there is a contractually concluded agreement between the parties. There may be different nuances to how costs would then be resolved in relation to the case, but nevertheless the litigation would have been settled.
  3. Mr Momonakaya has, for someone who is not a lawyer, done his best to explain to me his significant disagreement with the defendant’s position and has sought to argue that, for a number of reasons, it would be wrong to conclude that this case has been settled by either a Part 36 acceptance of an offer or by a compromise evidenced through the correspondence. He points to the fact that within three days of his then instructing solicitors’ emails of 8 November, he made very clear that he had had a change of heart in an email sent at 5.26 p.m. to his solicitor and to the defendant’s solicitor. He heads it: “Cancel Part 36 offer. Can you please cancel that Part 36 offer?” And he goes on a little later to say, “I have second thoughts about accepting the offer from the MoD” and explains his reasoning for that.
  4. He goes on to say, “I know that you won’t be happy with this but I’ve come to the conclusion that I have nothing to lose” and he says he can ask the High Court for his claim hearing to be adjourned to a later date and seek another solicitor to represent him. He refers to approaching the ombudsman (I suspect he means the Legal Services Ombudsman) to complain about how he has been advised by his solicitor and makes some further comments about his situation and his claim. The correspondence continued later from Mr Momonakaya himself reasserting or asserting the sort of level of settlement that he required. He argued that the offer that had been made to him was unjust and he made the assertion that he was under duress.
  5. Miss Greaney, for the Ministry of Defence, has sought to address each of those points in a skeleton argument presented to me today. She explained during oral submissions that it is too late for him to change his mind; once acceptance has been given it has been given; that his counter offer, again, came after the acceptance of the defendant’s offer; claims about the lack of justice of the figure that was offered in settlement is neither here nor there ; if it has been accepted it has been accepted; if he didn’t want to accept it he shouldn’t have accepted it – he had a trial date in February ahead of him. In relation to ‘duress’ she makes some reference to Foskett on Compromise and how a very high hurdle would have to be overcome to satisfy the court that an acceptance had been made under duress.
  6. I have heard Mr Momonakaya on this topic. Whilst I appreciate the points that he made very clearly: as to the pressures that were upon him and how he felt cornered; being pushed into a situation where he felt he had little alternative at the time; nevertheless, his complaints (if there are any that are justifiable) I regret to have to say must be directed at those who were then advising him. I have no hesitation in concluding that the solicitor who was communicating with the defendant’s solicitor on 8 November last year did so whilst on the record and instructed by Mr Momonakaya and in the clearest of terms. This does not permit of any disagreement concerning what was being accepted and the pressures that Mr Momonakaya may have been feeling are not ones that could possibly, or even arguably, reach the very high hurdle that has to be established for any argument of acting under duress.
  7. Therefore, I turn to the question of whether this is simply a common- law ‘offer and acceptance’ compromise, or whether Part 36 was fulfilled in the offer and the acceptance of it. I have made reference to the rules, to the commentary upon it and, in my view, the failure to comply with that one sub-rule in r.36.22(7) is de minimis. It is not of any lasting consequence; no prejudice has been suffered. There was clarity between all parties as to what was being agreed and therefore I have come to the conclusion that Part 36 does apply so as to stay these proceedings.
  8. If I am wrong about that, I would in any event have come to the conclusion that the matter has been compromised by way of ‘offer and acceptance’ in the same way outside Part 36 but, as I have said, with a possible nuanced alternative approach to the assessment of costs. That is a matter that remains to be determined and I will hear from the advocate for the defendant and Mr Momonakaya himself, and his former solicitor, who has helpfully attended court today on the question of costs, to see where the consequences of my rulings take us.