James Pankhurst v Lee White [2010] EWHC 311 (QB)

The claimant in a personal injury case made a Part 36 offer which was almost immediately rejected by the defendant. Following success in respect of liability in the course of a split trial, the claimant wrote to the defendant stating that he would no longer be prepared to accept the Part 36 offer he had previously made but would continue to rely on it on the question of costs.

The questions for consideration were (1) the effect of the rejection on the continuation of the offer; and (2) the effect of the subsequent withdrawal of the offer. MacDuff J, in the course of his reasoning, appears to have implicitly accepted that (and headnotes of the case record that) the usual principles of contract apply such that the rejection of the offer resulted in its termination; there was therefore nothing to be subsequently withdrawn. As to the question of costs, MacDuff J held that the offer continued to be relevant as a historical fact for the purposes of costs assessment. It had not been ‘withdrawn’ within the meaning of Part 36, because no court would have ordered that it could be accepted (the only method available for accepting a Part 36 offer outside of the 21 day period after which it has been made) following the judgment on liability. The impact was that the effect of the offer for the purposes of costs applied from the date 21 days after it was made, up until the making of a Part 36 offer by the defendant nearly two years after the judgment on liability.

Comment

Insofar as MacDuff J agreed with and applied the contract analysis to Part 36 offers (which as noted is only implied in the judgment), the decision is in direct contradiction to Sampla v Rushmoor Borough Council and Crowley [2008] EWHC 2616. That case was not considered in this judgment.

The case also indicates that an attempted withdrawal will not have the effect of a withdrawal for the purposes of Part 36 if, for practical purposes, it would not in any event have been capable of acceptance. MacDuff J reasoned that because of the judgment on liability, there had been ‘a signifi cant shift in the landscape’ such that the defendant would have failed in an application to the court for permission to accept the offer. The offer was therefore no longer ‘available for acceptance’ at the time of the purported withdrawal in any event.

This is undoubtedly correct as a matter of fact, but what is not clear is whether, as a matter of principle, it was the judgment on liability itself, or the fact that a court would not give permission to accept the offer due to the change in circumstances, which was the key consideration. If the latter, the judgment appears to lead to the conclusion that an offer will only have been withdrawn for the purposes of Part 36 if a court would otherwise have given permission for it to be accepted - in other words, it was (in the absence of the withdrawal) still ‘available for acceptance’. If this is correct, it adds a signifi cant complexity to the question of whether a purportedly withdrawn offer has the costs consequences as set out in Part 36 or not, and appears to require consideration of what a hypothetical court might have done at the time of the purported withdrawal had an application been made to the court to accept the offer outside the 21-day period.