Part 36 Offers – Dishonest Claimants Beware

In the case of Rehill v Rider Holdings Ltd [2014] EWCA Civ 42 the Claimant suffered injury when he was hit by a bus on a pedestrian crossing. The crossing light was red but the bus driver failed to apply the brake quickly enough. Liability was agreed on a 50/50 basis.

The Defendant made a number of offers that are summarised in the following timeline:

• April 2007 – £75,000 expressed to expire on 1 June 2007 [not accepted];
• November 2007 – Part 36 offer of £100,000 [not accepted] and subsequently withdrawn on 18 January 2008;
• June 2009 – Part 36 offer of £40,000 [not accepted];
• Shortly before quantum-only trial in April 2013, the Claimant accepted offer of £17,500.

A dispute then arose in relation to costs. At first instance the court decided that the Claimant failed to beat the Defendant’s June 2009 offer. The Defendant was therefore ordered to pay the Claimant’s costs up to July 2009. In turn, the Claimant was ordered to pay the Defendant’s costs on the standard basis from July 2009 up to the date of settlement. It was also noted that the Claimant had dishonestly inflated his case by exaggerating his injuries, disputing the expert evidence concerning his recovery, and embellishing his claim for building work to his home. It was further noted that he should have accepted the November 2007 offer and on this basis the Defendant appealed.

The appeal was allowed. While Part 36.14(6)(a) states that the automatic costs consequences attaching to a Part 36 offer did not apply to an offer that had been withdrawn, the Defendant could rely on Part 44.3 which required the court to take into account any admissible offer to settle. The court had to consider the information available to the Claimant at the time the offer was made and, reflecting on this, whether the Claimant was reasonable in rejecting the offer.

The court’s decision was that at the time the Defendant made the £75,000 offer in April 2007, there was still some uncertainty in relation to the orthopaedic prognosis. However, by November 2007 no significant uncertainty remained and the Claimant should have accepted the offer and it was unreasonable for him not to have done so. The Claimant had clearly misled his lawyers, and the reasonableness of rejecting the offer should be judged on what the Claimant himself knew, rather than his lawyers and physicians. The Claimant was therefore ordered to pay the Defendant’s costs from November 2007.

The case illustrates the importance of making well-pitched settlement offers at an early stage. If as the claim develops, there is a risk that the offer could represent an overpayment on the claim, it can be withdrawn. Particularly in cases involving dishonest exaggeration, the Defendant can then look to engage Part 44.3 in order to try and reap the benefits it intended to secure by making the original offer.