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You are in: Home Page | About Thompsons | Information and Resources | Briefings and Responses | Department of Constitutional Affairs - Her Majesty’s Courts Service - Additional Consultation on Part 36: offers to settle and payments into court

October 2006

Department of Constitutional Affairs - Her Majesty’s Courts Service - Additional Consultation on Part 36: offers to settle and payments into court

Response by Thompsons Solicitors

Thompsons is the UK’s most experienced trade union and personal injury law firm. It has a network of offices across the UK, including the separate jurisdictions of Scotland and Northern Ireland.

Thompsons only acts for trade union members and the victims of injury, never for employers or insurance companies. At any one time the firm will be running 70,000 claims.

The firm participates regularly in government consultations on legislative issues, and previously responded to the DCA consultation on Part 36 of the Civil Procedure Rules.

We understand that this second consultation is in order to seek further views on specific issues where the CPRC has not formed a firm conclusion. However, we believe it is necessary to comment again where the CPRC has reached a decision that we cannot agree with, in order that our further views are understood in the broader context of the consultation.

Question 1 – 3: Removing the requirement to make payments into court from defined categories

Thompsons does not support the proposal to abolish altogether payments into court in support of Part 36 offers. Nor do we support the CPRC’s conclusion that payments into court should be abolished for public sector and insured defendants and “similar”.

Whilst it ought to be possible to assume that government departments, multinational companies and household names are “good for the money”, that is not always the case.

And claims are not always against such organisations.

Large multinationals can become insolvent. In these cases, where there has been no payment in, an injured claimant will simply become another creditor with no guarantee of recovering compensation that may have been offered previously.

Such a person will inevitably cost the state more in benefit payments, as a result of being unable to recover compensation.

But also, even if they are good for the money, they frequently delay in making the payment after settlement. There should be no question of removing Part 36 payments without strict requirements to make immediate payments after settlement with easily enforceable interest applicable for delays.

We expand on these points in the ‘additional consultation’ section.

Question 4: Should the court be able to extend or abridge the time for accepting a Part 36 offer?

Thompsons agrees that CPR 36 should provide for the court to abridge the period but only when an offer has been made less than 21 days before trial.

However this should only be allowed where it would not have been possible to make an offer prior to 21 days before trial ie when further medical evidence was awaited, and should not permit abridgement earlier than the morning of the trial up to the commencement of the trial. Otherwise defendants would be able to abuse the Part 36 system by making late payments/offers and routinely applying for abridgement.

Courts must decide whether the reason given for the delay in being able to make an offer is justifiable. This should be done at the costs assessment time and should in no way delay the claimant receiving their damages.

We also believe that the court should be allowed to extend the period for acceptance where circumstances mean that the offer cannot be properly accepted within the 21 day period. Such circumstances would include where outstanding evidence is awaited or where further documentation is sought from an opponent or third party to fully evaluate a claim.

Additional Consultation

Should the need for payments into court be dispensed with (a) altogether or (b) only for public sector and insured defendants?

We refer to the points we have made in response to the CPRC’s conclusions in Q 1 – 3 above. Our response to the original DCA consultation stated:

Thompsons does not support a blanket removal of the requirement to make payments into court. We believe whether a defendant is good for money needs to be guaranteed. An agreed list, drawn up in full consultation with claimant law firms, which specifies those organisations such as government departments which do not have to pay in, may be a part alternative.

Thompsons remains firmly of the view that payments into court should not be dispensed with altogether. We believe that if a defendant is serious about settling a claim then they should be prepared to illustrate that seriousness by “putting their money where there mouth is”.

And we are concerned and disappointed that the CPRC has concluded that all public sector defendants, insured defendants and “similar” (we are alarmed at the lack of definition of “similar”) should not be required to make payments in.

Not all these categories of defendant can be assumed to be “good for the money” (GFM), even though they ought to be.

Certain NHS employers, including Foundation Hospitals which are separate companies, are not GFM. They are at risk of going into liquidation.

Our response to the original DCA consultation pointed to how the insolvency of big name insurers and companies including Turner and Newall, Independent Insurance and Chester Street has left thousands of claimants waiting for their compensation.

T&N was insured but Royal and Sun Alliance disputed that this covered asbestos liabilities. Its claimants became creditors, some way below the administrators and lawyers which were hired. T&N claimants will now receive just 20p in the £1 – a fraction of what their compensation should have been.

It is not unusual for small companies to fail to have Employers Liability Compulsory Insurance. And not all accidents are covered by it.

Given the CPRC’s own concerns about how abolishing payments into court for GFM defendants might encourage defendants who were not so clearly good for money to make unsupported offers, we advise that the requirement to make payments in should be retained for all defendants.

This would also deal with the difficulty the CPRC has in devising a clear and workable definition of organisations that should not be required to pay money in.

We repeat our assertion in our original response to the consultation that whether a defendant is good for money needs to be guaranteed and we would want an obligation to use a Calderbank letter in all cases.

There should also be strict time limits and penalties for missing those time limits. We know it is a concern to the DCA that there is inconsistency in enforcement of time limits by courts and this is the opportunity ensure a blanket approach.

If defendants are serious about settling claims then they should be prepared to make a payment into court. There is no prejudice to defendants in paying into court as any interest earned while the money is in court is repaid to them when the sum is accepted.

If the CPRC is intent on allowing certain organisations to not make payments into court, then it is clear that there needs to be further discussion on the definition of those that are exempt.

It should also be noted that it is easier for defendants to resile from an admission if they haven’t made a payment into court, and also easier to reduce a payment.

We would request that when considering Thompsons’ response to this consultation, it is done so alongside the firm’s response to the HMCS consultation on pre-action admissions, submitted on 6 October 2006. This is because there are clear consequences for the way in which defendants treat and make pre and post action admissions arising out of any decision to remove a requirement to make payments into court.

If (a) does the revised rule 36.13 provide sufficient deterrent against default or spurious offers? Or should it go further e.g by providing for penal interest or loss of without prejudice status?

We believe that the revised rule 36.13 does go someway to acting as a deterrent against default or spurious offers, but it does not go far enough. There should be financial penalties for delayed payment. The rule should be extended to provide for a set amount of penal interest for each day that the payment is late.

The claimant should also be awarded indemnity costs, as standard, for any enforcement proceedings they have to take to obtain payment or for any continuation of proceedings in respect of any unpaid balance.

Do you agree that a withdrawn offer should have no costs consequences at all? Or is it sufficient to provide that it does not affect costs incurred after the date of withdrawal?

A withdrawn offer should have no cost consequences at all. It is not sufficient to ensure that it does not affect costs only after the date of withdrawal. This would be an encouragement to a defendant to make a spurious offer where he knows that a claimant cannot accept it, for example because they are awaiting an operation or further financial details are being sought to finalise special damages.
Thompsons had a case where the defendant made an offer of £3,500. At the time of the offer, the medical evidence strongly indicated that the claim was worth more than that, so we could not advise the claimant to accept it. The claimant rejected the offer and the offer was withdrawn. Further medical evidence however indicated that the claim was worth less than the original offer, and the claimant eventually accepted £3,250.
The defendant argued that as they had offered a higher sum, even though it was withdrawn, the claimant should pay costs beyond the date when the claimant could have accepted. This would be unfair on the claimant, who found, as many do, that the prognosis was uncertain or inaccurate.
If a defendant makes an offer and then withdraws it, they cannot seek to rely on it in the future when issues of costs are decided. An offer withdrawn, with or without permission, should be treated as if it never existed.

Do you agree that normal costs rules should apply to offers to withdraw with permission? Is this appropriate under both the above options?

The normal cost rules should apply and this is appropriate both where an offer is withdrawn with or without permission. A claimant has more to lose from not accepting an offer and will not reject one lightly. To allow a defendant a benefit in costs, which is then withdrawn encourages high offers to be made at a stage where evidence is not complete and so the claimant is not in a position to properly consider the offer. That offer can then be withdrawn and a lower offer made, which a claimant either accepts or beats. It would not be fair if the defendant could then seek to rely on the earlier spurious offer.

Thompsons Solicitors
October 2006

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