Calderbank offer without express time limit could be accepted after hearing had started

The High Court has held that a “without prejudice save as to costs”, or Calderbank, offer to settle detailed assessment proceedings, which did not include a time limit for acceptance, could be accepted after the detailed assessment hearing had commenced: MEF v St George’s Healthcare NHS Trust [2020] EWHC 1300 (QB).

Where an offer to settle is made under CPR Part 36, the rules provide that the court’s permission is required to accept the offer once trial has started. A Calderbank offer, in contrast, is subject to common law rules, and the court refused to “read across” the restriction on acceptance from Part 36.

The claimant was therefore able to accept the defendant’s offer during the assessment hearing as it contained no express cut-off date for acceptance. While it was agreed that the offer would lapse after a reasonable time, the court did not accept this meant by the start of the assessment hearing.

This case serves as a useful reminder that parties making a Calderbank offer may wish to include an express time period for acceptance, or ensure that they review the offer regularly and withdraw it if necessary.

Background

The claimant brought a clinical negligence claim, which was settled in relation to liability on the basis that the defendant would pay the claimant’s costs. The claimant's bill of costs claimed a total of £621,455.57. Detailed assessment proceedings were commenced, with the hearing due to take place 17-19 September 2019.

The defendant made a series of offers to settle costs including, on 27 September 2018, a “without prejudice save as to costs” offer to pay £440,000 in full and final settlement.

On 19 August 2019, 29 days before the detailed assessment hearing was due to start, the defendant wrote to the claimant making a further offer (the “Offer”) in the following terms:

"We shall now proceed to the Detailed Assessment in September. The Defendant's offer dated 27/09/18 is only capable of acceptance subject to the agreement of the Defendant's costs of Detailed Assessment incurred since that date."

The detailed assessment hearing began on 17 September 2019 and, by the second day, it was clear that things were not going well for the claimant. Shortly before the end of the hearing on that day, the claimant sent a letter to the defendant by email purporting to accept the Offer.

The defendant argued that the Offer was no longer open for acceptance once the detailed assessment had started. It argued that the principles were the same for a Calderbank as a Part 36 offer, in that the court’s permission to accept was necessary once trial (or, here, the detailed assessment hearing) had started.

Master Rowley, who was conducting the detailed assessment, rejected that submission on the basis that the Offer did not fall within Part 36 and therefore common law rules applied. He also held that Calderbank offers such as this could not be assumed to stop at the court door. He therefore held that the Offer was capable of acceptance by the claimant.

The defendant appealed.

Decision

The appeal was dismissed by Mr Justice Morris.

He held that while the Master was correct to approach the issues by reference to common law principles of offer and acceptance, rather than by reference to CPR Part 36, the Master did not expressly apply the contractual principle of lapse after a reasonable time. That could be said to be an error of law.

The correct question was whether the ”reasonable time” for acceptance of the Offer was at the point when the detailed assessment hearing commenced on 17 September or whether it continued during that hearing. That was a question of fact. (The claimant accepted that the reasonable time expired by the time the assessment was concluded and a final figure assessed or agreed.)

In deciding that question, Morris J took into account several factors including that the defendant chose to make a Calderbank offer rather than a Part 36 offer. A Part 36 offer would have meant the claimant could not accept without the court’s permission once the hearing had started (but would not provide an absolute bar to acceptance since the court has discretion to give permission). He agreed with the Master that it is not possible for there to be a direct ”read-across” from Part 36 to the contractual position of a Calderbank offer.

The judge also looked at the course and content of the defendant’s prior offers since April 2018 which he considered “highly relevant”. He noted that the first offer made in April 2018 had imposed no absolute time limit; rather, it was open for 21 days and, if accepted after that period, there would be cost consequences for late acceptance. He inferred that later offers were subject to the condition that, if they were not accepted within a reasonable time, the claimant would be responsible for the defendant’s costs (rejecting an argument that the wording of the August 2019 email required the claimant to agree the precise figure of the defendant's costs before the offer could be accepted). In addition, the defendant was aware throughout that it could withdraw the offers made, but consciously decided not to do so. Further, the fact that the defendant kept the £440,000 offer open despite the claimant's claim having weakened, following service of replies to the points of dispute, indicated that it “was not necessarily concerned with the precise amount of the likely outcome”.

The judge therefore concluded that the Offer did not lapse at the door of the court but remained open for acceptance.