A warning when making non time-limited Calderbank Offers
May 29, 2020 | Rebecca Humble
A recent ruling by Mr Justice Morris in the case of MEF v St George’s Healthcare NHS Trust [2020] EWHC 1300 (QB) found that a calderbank offer to settle made during the course of detailed assessment proceedings was open for acceptance by the receiving party after the detailed assessment hearing had commenced.
The Claimant (a protected party) brought a clinical negligence claim in relation to severe hypoxic brain injury caused during his birth. Agreement as to liability was reached and approved by the court on 25 April 2017, with an order for assessment of the Claimant’s liability costs forthwith. The Claimant produced a Bill of Costs amounting to £621,455.57 and detailed assessment proceedings were commenced on 6 April 2018.
During the subsequent 16 months, the parties made several offers, including the Defendant’s calderbank offer dated 27 September 2018 in the sum of £440,000. This was the final sum offered by the Defendant and the same did not include a time limit for acceptance. The offer was referred to by the paying party at several subsequent stages during the negotiations and at no point did the Defendant consider that the offer had lapsed by the expiry of a reasonable time.
The offer was reinstated for the final time on 19 August 2019, with the added provision that the same was only capable of acceptance subject to the agreement of the Defendant’s costs of detailed assessment incurred since the sum was initially offered, on 27 September 2018. The receiving party did not respond to this proposal and the matter proceeded to a three day assessment commencing on 17 September 2019.
By lunchtime of the second day of the assessment, the Bill of Costs had been reduced to lower than the Defendant’s offer of £440,000. Before the end of that day’s hearing, the receiving party sought to accept the offer of £440,000 by email. However, the paying party argued that the offer was no longer capable of acceptance as the assessment had commenced and acceptance of the offer would compromise the process.
The issue was heard in the first instance by Master Rowley on 19 September 2019. The Defendant adopted the argument that the principles of CPR 47.20(4) were the same whether the offer was made under Part 36 or by way of a calderbank letter and that once the detailed assessment had commenced it then became too late to accept an offer. The Claimant contended that the offer was not time limited, was not withdrawn, was not a Part 36 offer and was therefore open for acceptance at the end of the second day of the hearing.
Master Rowley found in favour of the receiving party, commenting that the Defendant had chosen to make Part 44 offers, which were subject to the common law principles of offer and acceptance as opposed to Part 36 offers which would have given the Defendant the protection of the Claimant requiring the Court’s permission for acceptance once the detailed assessment hearing had begun. The Defendant’s failure to protect its position was not reason to find that the offer had not been validly accepted.
Mr Justice Morris heard the appeal, with judgment handed down on 22 May 2020. It was found that Master Rowley had correctly applied the common law principles, but had failed to apply the contractual principle of lapse after a reasonable time. The Court expressly noted that the content of the Defendant’s prior offers was “highly relevant context”. None of the prior offers had an absolute time limit. It was further noted that it had always been open to the Defendant to put a time limit on the offer or indeed to withdraw the same at any time, including during the assessment hearing. As such, the appeal was dismissed.
The full judgment can be found by following this link: https://www.bailii.org/ew/cases/EWHC/QB/2020/1300.html
How Elite Law Solicitors can help
Rebecca Humble is an experienced Costs Lawyer and can provide specialist advice in relation to all aspects of legal costs.
If you have any queries relating to any of the issues mentioned in this article, please get in touch with Rebecca by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or completing our Free Online Enquiry Form.
