COMMON LAW DOCTRINE OF MISTAKE APPLIES TO PART 36 OFFERS: HIGH COURT DECISION

I am grateful to barrister Richard Wilkinson for sending me a copy of the decision of Master Thornett in O’Grady -v- B15 Group Limited [2022] EWHC 67 (QB).  The Master decided that Part 36 offers were subject to the doctrine of mistake.  A mistake that was obvious was not binding on a party.

“I am satisfied that the doctrine of common law mistake can apply to a Part 36 offer in circumstances where a clear and obvious mistake has been made and this is appreciated by the Part 36 offeree at the point of acceptance. Authority is entirely in support with the application of the doctrine. Nothing about Part 36 being a self-contained code excludes it”

THE CASE

The claimant brings an action for damages under the Fatal Accidents Act.  The Claimant’s solicitor sent a Part 36 offer.

THE OFFER AND ACCEPTANCE

The claimant meant to concede contributory negligence of 20%. Inadvertently the offer said 80%.

23 February 2021: the Claimant’s solicitor put forward a Part 36 on the issue of
liability. The offer (literally) read :-
“The Claimant offers to resolve the issue of liability of on 80/20 basis. For the
avoidance of doubt if the Defendant accepts this offer it will only be required to
pay 20%  of the Claimant’s damages.”
2.5 24 February 2021: Having received the Claimant’s offer by e-mail at 15.51 on
23 February, the Defendant’s solicitor accepted it by e-mail at 10.02 on 24
February;
2.6 24 February 2021: The Claimant’s replied by e-mail at 10.12 to make clear that
the offer that he intended to make on behalf of the Claimant was 80/20 in the
Claimant’s favour;

THE CLAIMANT’S APPLICATION

The claimant made an application for permission to withdraw the offer or change its terms.

SHOULD THE DEFENDANT’S SOLICITOR ATTEND TO GIVE EVIDENCE

The claimant issued an application that the defendant’s solicitor attend to give evidence on whether they suspected, or knew, that this was a mistake. However this was rendered unnecessary by a concession made on the defendant’s behalf.

“Very shortly before the hearing, but very helpfully in terms of narrowing the issues, the Defendant conceded that the mistake relied upon by the Claimant’s solicitor in formulating the offer was of a kind that would render any agreement void if the court Part 36 offers. The hearing on 3 November briefly proceeded instead to explore the procedural issues as remained for consideration. Also helpfully and pragmatically,
counsel agreed that any tensions between them on the correct interpretation and application of r.36.10(2)(b) on these facts could be resolved by agreeing to treat the Application as seeking a declaration that no binding agreement had been reached on the issue of liability in the claim and this did not necessitate formal amendment of the Claimant’s first (and so now as only relevant) Application.”

THE DOCTRINE OF MISTAKE CAN APPLY TO PART 36 OFFERS

The Master determined the issue in favour of the claimant.
The ascertainment and relevance of improbability when interpreting the meaning of a Part 36 offer seems to me to be extremely close, if not contiguous, to the same consideration as an approach to contractual mistake. I remind myself that before the Defendant’s concession discussed at Para 5 above, the Defendant (presumably) would have sought to make submissions as to the plausibility of the Claimant’s offer objectively seeming to have been intended as far as the Defendant’s solicitor was concerned. Thus, if it had suited, to have applied a common law methodology if it had stood a prospect of success. The Defendant’s subsequent concession does not, in my view, negate or displace the obvious commonality of approach derived from the cases of Rosario and Ho: that if a Part 36 offer is objectively implausible or unsustainable on a particular basis from a recipient’s viewpoint, that stands capable of recognition by the court irrespective whether the ensuing consequence is that Part 36 costs apply (Rosario), the Fixed Costs regime applies (Ho) or, as the Claimant submits in this case, the offer is deemed ineffective owing to the doctrine of mistake.”
25. I am satisfied that the doctrine of common law mistake can apply to a Part 36 offer in circumstances where a clear and obvious mistake has been made and this is appreciated by the Part 36 offeree at the point of acceptance. Authority is entirely in support with the application of the doctrine. Nothing about Part 36 being a self-contained code excludes it. On the particular facts of this case, it is entirely compatible with a procedural code that is intended to have clear and binding effect but not at the expense of obvious injustice and the Overriding Objective still has application.
On the facts of this case, I agree with the Claimant’s submission that the Overriding Objective is entirely consistent with the merits of her Application and it should be granted. Conversely, the Overriding Objective provides little support for the Defendant’s position once mistake is accepted as in issue. Indeed, it is difficult to think how the Overriding Objective would support the Defendant’s position at all. Plainly,
“saving expense” [r.1.1(2)(b)] does not have as its primary aim the substantial reduction of a party’s liability for damages owing to the mistake of another “of a kind which in law would render the agreement void”