IEH v Powell  EWHC 1037 and the late acceptance of a Part 36 offer when the Claimant is a child suffering with brain damage.
The Claimant was involved in a road traffic accident in September 2016 when he was 8 years old, where he suffered multiple injuries including a femoral fracture to his right leg and a traumatic brain injury. Proceedings were issued on 16 February 2016, with liability admitted in June 2018 and judgement was entered for the Claimant on 9 August 2018. Proceedings continued in order to obtain expert evidence and rolling disclosure was ordered.
A Part 36 offer was made by the Defendant on 20 November 2020. The Claimant requested that the offer remain open for acceptance until 11 March 2022 in order to allow the Claimant sufficient time to establish the likely prognosis and value of the claim. The Defendant confirmed they were not instructed to keep the offer open nor were they instructed to withdraw the offer. The offer was accepted on 29 July 2022. Permission was sought from the Court to accept the offer out of time.
The usual rule
The usual rule that would apply in this circumstance would be CPR 36.13 (4) (b), which states that where a Part 36 offer that relates to the whole of the claim is accepted after the expiry of the relevant period, the liability for costs must be determined by the Court unless the parties have agreed the costs.
Furthermore, CPR 36.13(5) states that when CPR 36.13 (4) (b) applies, the partes cannot agree liability for costs, the court must, unless it considers it unjust to do so, order that the Claimant be awarded costs up to the date on which the relevant period expired and the offeree do pay the offeror’s costs for the period from the date of the expiry of the relevant period to the date of acceptance. In this circumstance, it would mean that the Claimant would be awarded their costs up to the expiry of the Part 36 offer made on 20 November 2020, and the Defendant would be entitled to their costs thereafter.
However, CPR 36.13 (6) and (7) permit the court to consider various factors when determining whether it would be unjust to make such an order. The Court must consider:
- The terms of the Part 36 offer
- The stage in proceedings when any Part 36 offer was made
- The information available to the parties at the time the offer was made
-The conduct of the parties with regard to the refusal to give information for the purposes of enabling the offer to be made or evaluated; and
- whether the offer was a genuine attempt to settle proceedings.
In addition, the Court must also take into account all circumstances of the case, including the matters listed above.
The Claimant’s submissions
It was submitted that when considering the reasonableness to depart from the usual rule, consideration should be given to SG v Hewitt  EWCA Civ 1053, which is the key authority and
has a similar factual basis to this case. The case of SG v Hewitt identified three issues of importance, those being:
- The implications of the Claimant being a patient
- The relevance of reasonableness of the Claimant’s conduct in relation to the Part 36 offer; and
- The problem with uncertainties in the value of the claim
Lady Justice Black in SG v Hewitt considered that the Claimant being a patient would not always be sufficient to displace the costs protection usually awarded to a Defendant from a Part 36 offer, but it is a relevant factor. The fact the Claimant is a child or protected party may make it unjust to make it unjust to make a costs order against him.
It was also submitted that the Claimant being a child is of significant importance as if the Part 36 offer is made before puberty or adolescence, there is an added uncertainty to the litigation as the effect the brain injury has on the Claimant is unpredictable. It was submitted this is beyond a normal risk of litigation.
The Claimant submitted that as medical evidence could not have been completed before 2022, the case could not have been properly assessed until then.
The Claimant raised further factors including the fact that the Claimant made an unexpected and unprecedented improvement in his performance, the Claimant was a resident of Morocco during school terms, which impeded the Claimant’s ability to assess the Claimant’s academic performance, the COVID-19 pandemic caused some delays for the Claimant’s performance at school, the Defendant had, at no stage, disclosed any medical evidence and the Claimant’s Solicitor kept the Defendant’s solicitor informed at all stages.
The Court’s findings
When considering the Order to be made, Senior Master Fontaine gave consideration to the age of the Claimant, whether the Claimant’s litigation friend had sufficient evidence at the time the offer was made, the reasonableness of the Claimant’s conduct and the particular circumstances relating to the Claimant.
Senior Master Fontaine considered the age of the Claimant to not always be a factor however, the relevance is stated with the medical evidence that the long term effects of a traumatic brain injury cannot usually be known until a child passes through puberty and adolescence.
It was considered appropriate for the Claimant to refuse to accept the Part 36 offer at the time it was made on the evidence available as the Claimant was 12 at the time, and the expert had advised reassessment at 13. The Claimant, at the time, were working on obtaining evidence for service on March 2022. Senior Master Fontaine went on to suggest it would have been highly unlikely that acceptance of the offer made in late 2020 would have been approved on the basis of the evidence available at that stage.
Senior Master Fontaine considered that the Claimant had taken reasonable and proportionate steps steps after the Part 36 offer was made and rejected that the Claimants would or should have known in November 2020 what the long term prognosis was likely to be. However, the Court criticised the Claimant for failing to disclose relevant evidence to the Defendant.
Considering the factors above, the Court concluded that it would have been unjust to the Claimant to make an Order under CPR 36.13 (5)(b) however, the Court considered it might be appropriate not
to award the Claimant with the entirety of his costs due to concerns relating to conduct. However, as full submissions in relation to conduct had not been received, the decision in relation to conduct was reserved.
This case demonstrates the relatively high bar in order to depart from the usual rule that affords Defendants some costs protection by making a Part 36 offer early in proceedings. This was necessary as it is important not to discourage Defendants from making Part 36 offer early in proceedings while also preventing Defendants from taking advantage of a claim either yet to be fully quantified or with some significant complications that make quantification a near impossibility at that stage in proceedings.
The Court have been very clear that this case should not be used to demonstrate that departure from the usual rule under Part 36 is to be commonplace when dealing with claimants that are either children or protected parties. The court made it clear that it depends heavily on the fact of the individual case and requires the conduct of the Claimant to be under close scrutiny before making such an order
Despite the above, this is also a warning to Claimants to fully disclose all relevant documents to the Defendant during the course of proceedings, as failure to do so in circumstances similar to these may result in an adverse costs order being made.