SG –v- Hewitt: Court of Appeal

The Claimant was involved in a road traffic accident in March 2003 in which he suffered a serious brain injury. The medical experts at the time that they initially provided their reports stated that they could not predict the outcome of the Claimant’s injuries until he had reached adolescence.

Following service of the initial medical reports, nevertheless, the Defendant made an offer to settle the claim on 2 April 2009 for £500,000.

The offer was accepted in the summer of 2011 and the Defendant then contended for its costs from 23 April 2009 in line with the normal Part 36 costs rule.

At first instance, the Court awarded the Defendant its costs accordingly.

The Claimant appealed.

Claimant’s Case

The Claimant stated that it was only in January 2011 that his clinical psychologists stated that it was possible to confirm with increased confidence what the Claimant’s future prognosis may be. In July 2011 the Claimant’s neurosurgeon agreed that the acceptance of the offer would be to the Claimant’s advantage.

It was at this point that the offer was accepted.

When the offer was made back in April 2009, the Claimant’s solicitors obtained Counsel’s advice. He said that given the uncertainties he could not advise a court to approve a settlement at that stage. He could not put a definitive value on the Claimant’s claim.

Following the making of the offer by the Defendant in April 2009 and receipt of Counsel’s advice, the Claimant’s solicitors advised the Defendant’s solicitors of the position. The Defendant did not withdraw the offer and knew that the Claimant was in fact getting more reports to assist with whether or not the offer would be acceptable.

The Claimant said that they needed a firm prognosis and had no choice but to wait before considering the offer further. The Claimant’s solicitors did not reject the Defendant’s offer and were open with the Defendant about what was happening.

Defendant’s Case

The Defendant alternatively said that there were good policy reasons not to depart from the normal Part 36 rules. The Claimant could have accepted the offer which had a built-in substantial contingency for if the Claimant’s future prognosis was much poorer than anticipated. The Defendant stated that the Claimant did in fact receive a windfall when the settlement was reached and he could have requested an extension of time to accept the offer or alternatively agreed a provisional damages settlement.

Court Findings

Having considered Part 36, the Court held that the perceived windfall was not relevant to the issue of costs. The Defendant could have withdrawn the offer and it was likely that had the Claimant requested an extension of time to accept the offer, the Defendant would have refused because they would not have been able to withdraw the offer at a later stage.

The Court agreed with the Claimant that they could not have accepted the offer at that time because Counsel could not advise the Court to approve the settlement.

The Court therefore found that the Claimant had acted reasonably and that all the costs incurred after the offer was made were in respect of whether or not it would be reasonable to accept the offer so that the Court could approve a settlement.

The Court therefore found that it was unjust to follow the normal costs rule and the appeal was allowed.