It would be unjust for a defendant to be bound by the acceptance of a six-year-old part 36 offer on behalf of a protected party just hours before their death, the High Court has indicated.
The fact that the defendant was unaware that the protected party was in a critical condition at the time meant there was “a lack of equal footing” on the decision to settle.
Ms Clare Ambrose, sitting as a deputy High Court judge in Wormald v Ahmed  EWHC 973 (QB), reserved her final decision until the claimant – the protected party’s mother and executor – provided all the information required to approve the settlement.
Lyndonne Wormald suffered a serious brain injury as a pedestrian in a road traffic accident in 2009. Proceedings began in 2013 with his mother as his litigation friend, as he lacked capacity.
The following year, the defendant made a part 36 offer for £2m and, after a preliminary ruling on liability, judgment was entered in the Mr Wormald’s favour for 60% of his damages.
Quantum was due to be decided in a nine-day trial listed for this October.
Last September, Mr Wormald was back in hospital having suffered a cardiac episode. Four days later, on 18 September, the claimant’s solicitors accepted the 2014 offer; later that day, Mr Wormald died. The defendant’s solicitors purported to withdraw the offer a week after.
The case raised a novel point. Judge Ambrose said the CPR were not clear on whether the offeror could withdraw an offer accepted by a protected party before its approval.
However, she said, “the wording, purpose and case law on part 36 suggests a firm intention that the strict terms of part 36 do not prevail over part 21 [the requirement for court approval of a settlement involving a protected party] or the overriding objective more generally”.
This meant the acceptance was not binding to make a valid settlement until approved by the court and so until then the other party could resile from its offer by giving notice of withdrawal. The court would then decide whether the withdrawal was to be given effect.
The judge held that approval was still needed despite the protected party’s death, given that it was accepted before.
How the court should exercise its discretion in these circumstances was also a difficult question, she went on.
Where, as here, the protected party had no dependants, “the protection of his interests as a vulnerable person becomes less significant, and the need to control the proceeds falls away”.
The judge continued: “The court is not policing the compromise to see whether it is too generous to the protected party (or his estate) or gives rise to a financial windfall…
“However, if it is a clear case where the settlement will result in the protected party (or his estate) financially doing significantly better than he would have done at trial [as the defendant here argued], then this may go into the balance.”
Judge Ambrose accepted that Mrs Wormald was in “an exceptionally difficult situation” and rejected any suggestion that her acceptance of the offer was opportunistic.
But she continued: “The change in prognosis that led to the acceptance of the offer would not in itself justify departing from the normal rules for a part 36 offer. Parties rarely have equal knowledge in deciding to conclude a settlement.
“However, Mr Wormald’s prognosis was critical to any fair assessment of the value of the claim. The disparity between the parties’ respective knowledge, and the defendant’s lack of opportunity to take advice and respond to the changed prognosis was significant.
“It meant there was a lack of equal footing on the decision to settle.”
It was also relevant that the acceptance would result in the estate recovering “substantially more” than Mr Wormald would have recovered if the actual prognosis had been known, and that the settlement would only benefit his estate.
“On the evidence and submissions before me, all these considerations show that it would be unjust for the defendant to be bound by the accepted offer made on 15 October 2014 and for the proceedings to be concluded by the court giving approval of a settlement made under these circumstances.
“The court would give effect to the defendant’s withdrawal of its offer and grant permission for this if necessary. The costs consequences of the offer and its withdrawal were not the subject of argument and are left open.”
The judge reserved final determination until the claimant had provided all the information required under the practice direction for an approval of the settlement and fully answered the defendant’s requests for medical records.