Judge upholds acceptance of ‘mistaken’ £0 part 36 offer

Empty pockets: Zero offer complied with the rules

A claimant who issued proceedings after the defendant accepted a part 36 offer for £0 – which he said had been made by mistake – has had his claim struck out for abuse of process.

Qualified one-way costs shifting was disapplied and the claimant was ordered to pay the defendant’s costs of nearly £6,000.

City firm Clyde & Co acted for the defendant insurer in the unnamed case, which was an employer’s liability claim. The insurer admitted liability, subject to causation.

In a briefing, the firm said the claimant submitted medical evidence and made a part 36 offer to settle his claim for £0, on the proviso that costs and disbursements were payable.

The letter then set out the outstanding heads of loss, valuing general damages at £4,000 and special damages at £460, yet reiterated that the claimant would “accept the inclusive sum of £0.00 in full and final settlement” of the whole claim on the basis that liability was agreed in the claimant’s favour.

The defendant accepted the offer.

The claimant’s solicitor then attempted to re-send the part 36, amending the amount of the offer. But CPR 36.9(1) says an offer can only be withdrawn, or its terms changed, if the offeree has not previously served notice of acceptance.

The claimant’s solicitors then issued proceedings on the basis that there was no concluded agreement and that the offer of £0 was a mistake.

Clyde & Co said it argued that the claim had been validly compromised, and the claimant could not rely upon the common law doctrine of unilateral mistake because part 36 was a self-contained code.

In addition, the claimant had not discharged the burden of showing that there was a genuine mistake of which the defendant had actual knowledge.

At the hearing in Liverpool, District Judge Metcalf found that it was a valid part 36 offer; it was clearly expressed and unambiguous in its terms.

Furthermore, whilst the proposed settlement terms may have been surprising to the defendant, there may have been legitimate circumstances compelling the claimant to make the offer on the terms that he did.

It was not, the judge ruled, for the defendant to investigate or clarify why the offer had been made on the terms it was.

The fact part 36 was a self-contained code meant the claimant could not rely upon the doctrine of unilateral mistake, the judge continued – there was no rule allowing a compliant part 36 offer to be set aside on that basis.

Allowing the common law doctrine of mistake to be imported would lead to an inevitable lack of certainty and satellite litigation.

The judge also found that the claimant could not establish that the defendant was aware of the mistake: the offer was clearly expressed, the claimant was represented by experienced solicitors who would not be expected to make such a fundamental mistake; and the claimant did benefit from the offer because it provided for payment of costs and disbursements.

As such, said DJ Metcalf, the defendant was entitled to conclude that the offer was intentional, and that the claimant was happy to conclude the claim in this manner which also ensured he was not left out of pocket on costs.

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