Clarity, certainty and finality: Part 36 settlements in the context of mixed claims.

The question of whether an offer ‘in full and final settlement of the whole of the Claimant’s claim’ had settled all losses arising out of a RTA, recently became the subject of an appeal, heard by HHJ Freedman.

Martin Ferguson, instructed by DAC Beachcroft, argued that letters sent by the defendant insurer, Somerset Bridge Ltd, were clear and unambiguous and that the present claim should therefore remain struck out as all losses arising from the accident had already been settled. The Claimant argued at first instance and on appeal that only the personal injury claim had been settled because at the time of the Part 36 offer, separate agents were liaising with the defendant insurer regarding the claimant’s claim for vehicle hire costs, the hire of that vehicle was ongoing and the personal injury claim had not progressed to stage 2 of the MOJ Portal.

The appeal principally concerned the correct approach to be applied when interpreting Part 36 settlements, in particular whether the focus should be on the language used, or whether the starting point should be to look at the entire context.

HHJ Freedman agreed with the Defendant that clarity and certainty underpin the self-contained Part 36 regime. Whilst it is legitimate to apply principles of statutory construction in order to construe a Part 36 compromise, the clearer the natural meaning, the more difficult it is to justify departing from that natural meaning. The court is not justified in embarking on an exercise of searching for or constructing drafting infelicities in order to facilitate a departure from the natural meaning.

On that basis, the first instance decision was upheld, specifically that the language of the Defendant’s offer was clear and unambiguous and thus the words could be looked at in isolation without having regard to the overall context. Those words conveyed an offer in settlement of the entirety of the Claimant’s claim. Even if there was a need to consider the context, it was evident that the judge at first instance had done so and HHJ Freedman reached the same conclusion – the settlement was final in respect of all losses.

Of note, the Claimant’s suggestion that because the matter had not reached Stage 2 of the MOJ Portal and thus vehicle related damages claims would ordinarily be dealt with separately was not considered persuasive. As HHJ Freedman held:

The fact that a Part 36 offer is being made in advance of the Stage 2 process does not, of itself, indicate that it is not a global offer.  It seems to me that it is open to a defendant insurer, at any stage, to make an offer (whether Part 36 or otherwise) which covers all elements of the claim.  That is what happened in the instant case.

As is often the case, the question of permission to appeal and the appeal hearing itself were rolled into one. Having considered substantial written argument and after reserving judgment, HHJ Freedman went on to refuse permission, there being no real prospect of success.

Martin Ferguson advised the defendant insurer in advance of the application to strike out the claim for over £45,000 of vehicle hire costs. In February 2023 Tom Emslie-Smith successfully obtained the order striking out the claim. Martin then advised and represented the insurer in relation to the appeal hearing.

For further information, or to instruct Counsel, please contact our Clerking Team.

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