Pump Court Chambers

Part 36: Is there any value in a split liability offer?

Blog 27th March 2023

In the recent case of Mundy v TUI UK Ltd [2023] EWHC 385 (Ch), the High Court (Collins Rice J) provided helpful clarification about when Part 36 offers deal with an apportionment of liability.

Mr Mundy went to Mexico on an all-inclusive holiday supplied by the Defendant, TUI. Unfortunately, Mr Mundy suffered from food poisoning and brought a claim for damages, valued at between £25,000 – £30,000.

In November 2018, Mr Mundy had made two Part 36 offers. One was in monetary terms, offering to settle the claim for £20,000. The other offer (made at the same time as the first) was to apportion liability 90:10 in Mr Mundy’s favour. TUI did not accept either of these offers, but subsequently made its own Part 36 offer in November 2019 to settle the claim for £4,000. Mr Mundy did not accept.

The trial judge, HHJ Parkes KC sitting in the County Court at Swindon found for the Claimant, awarding damages of £3,805.60 on a 100% liability basis.

Following judgment, Mr Mundy argued that as judgment was made on a 100% liability basis, he had obtained judgment at least as advantageous as the proposals in his Part 36 offer (CPR r.36.17(1)(b)). HHJ Parkes KC held that although TUI had pleaded contributory negligence, it was a hopeless pleading that had no chance of success, so the offer must have been taken to mean that the Claimant would accept 90% of the value of the claim (which had not been achieved or beaten). In contrast, the Defendant had made a clear monetary offer and the Claimant had recovered less than that amount.

On appeal, Mrs Justice Collins Rice explained that CPR r36.17 “required a comparison between judgment and offer, and an evaluation of which is the more advantageous to a claimant.” [21] In money claims, this would be an assessment “in money terms” (CPR r36.17(2).

It was held that Mr Mundy’s 90:10 liability offer was not an offer to settle the claim or a quantifiable part of or issue in the claim. [40] The court went onto hold that “[a] simple case like this in which liability is not fought on a distinct issues basis but in its entirety cannot produce anything other than a 100% result on liability either way; the value of a win on liability ‘in money terms’ is difficult if not impossible to separate from the quantum of damages awarded, and that will always and axiomatically be more advantageous to a claimant than 90% of it. There is a problematic degree of artificiality in all of this.

Collins Rice J concluded at paragraph 42 “I am unpersuaded this rejected 90/10 liability offer can be fitted in to the terms of CPR 36.17(1)(b) consistently with the wording, integrity and practicality of the CPR 36.17 mechanism. Trying to do so strains the language of the provision, undermines its careful balance, and introduces a degree of complexity and uncertainty which I am not persuaded is within its contemplation. It is a provision that relies on its clarity, simplicity and predictability for the incentivising effects which puts it at the heart of the Part 36 code.” [42]

So is there any remaining value in a tactical, 90:10 offer? Collins Rice J left a glimmer of hope for the strategic Part 36 offeror noting that there may be cases where a court might be persuaded that it would be unjust to visit the consequences of a claimant failing to beat a defendant’s Part 36 offer. [43] That aside, in a simple case where there is no genuine issue of split liability, the value of an offer to apportion liability may simply be the increased likelihood of reaching a settlement, but without any benefit of Part 36 consequences for a failure to accept the offer; as Collins Rice J put it “all carrot and not stick”. [44]

As the court noted, where offers on “liability” are to be made, those making the Part 36 offer should consider, and set out, whether the offer is intended to pertain to breach or duty alone, or to extend to causation and if so, to what extent. Without such clarity courts faced with offers so drafted are likely to disregard them.

Finally, returning to paragraph [41] of the judgment, it seems likely that parties attempting to rely upon a minor split liability concession tactically will face an uphill struggle: “…the effect proposed by Mr Mundy in this appeal goes far beyond incentivising the avoidance of a liability trial. It makes a 90/10 liability offer into a means for a claimant, who fails to beat a money offer to settle his claim, to recoup a substantial premium for ‘winning’ the case nevertheless. It is an attempt at a unilaterally imposed insurance policy to reverse the losses otherwise provided for by CPR 36.17. It is, in other words, an attempt to use CPR 36.17 against itself, contrary to both its letter and its spirit.”

By Timothy Salisbury. For further information about Timothy’s practice, or any other members of our Personal Injury team, please contact Tony Atkins, Senior Clerk or Jonathan Cue, Senior Civil Clerk on 020 7353 0711 or via email: clerks@pumpcourtchambers.com.

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