The defendants made a Part 36 offer to pay the claimants £35,000, in full and final settlement. Before the expiry of the relevant period they admitted liability for part of the claim and paid £17,500. The claimant was eventually awarded £48,400 in damages at trial. Allowing for interest at the end of the relevant period, the claimants would not have beaten the defendants' offer if the offer plus the payment on account are aggregated.
The defendants argued that there should be aggregation, because of the provision in the rules which provides that a defendant's offer which is accepted must be paid within 14 days. Since there was no agreement to the contrary, it was argued that the defendant would have been obliged to pay the full £35,000 if the claimant had accepted the offer after being paid £17,500.
That argument was rejected by the Court of Appeal. The Part 36 offer had been an offer to settle the entirety of the claim for £35,000. Nothing in the correspondence about the admissions payment made any reference to the Part 36 offer. Accordingly, the £17,500 was a part payment in advance of the £35,000: "an admitted payment on account of a claim, following a Part 36 offer in a higher amount must, in the absence of any agreement to the contrary, be taken as being made as much on account of the Part 36 offer to settle the claim as it is made on account of the claim itself".
Accordingly, the claimants had beaten the defendants' offer.
The Court of Appeal acknowledged that this decision conflicts with an earlier Court of Appeal case,Gibbon v Manchester City Council (see Weekly Update 25/10). It was held that comments by Moore-Bick LJ in that case were only obiter and the case is not authority for a general principle as to the relationship between a Part 36 offer and a subsequent payment following admission. It was also a debt, not a damages, claim (and it was said that there may be other distinguishing features in the case which were not reported). However, should it be necessary to do so, the Court of Appeal held that it would differ from Moore-Bick LJ's views.