Claimant could accept offer with no express time limit after Detailed Assessment Hearing had started – A lesson in regularly reviewing offers
In MEF v St George’s Healthcare NHS Trust  EWHC 1300 (QB) the Defendant’s Calderbank offer was accepted by the Claimant whilst Detailed Assessment proceedings were in progress.
This was a birth injury case with liability costs to be assessed forthwith. After preparation of a Bill of Costs and following a series of offers and counter-offers over the previous 16 months, on 19.08.19, the Defendant made a Calderbank offer to settle the Claimant’s claim for costs at a figure of £440,000.00 (the August 2019 offer). The hearing of the Detailed Assessment, due to last 3 days, commenced on 17.09.19. Just before the end of the second day, the Claimant’s solicitors, Stewarts Law, sent an email accepting the August 2019 offer. By that stage of the Assessment hearing, it was the case that, if the Assessment had continued, the Claimant would have recovered less than £440,000.00. An order was made on 19.09.19 in favour of the Claimant; the Judge declared that the Claimant’s letter dated 18.09.19 was a valid acceptance of the Defendant’s August 2019 offer, thereby compromising the Detailed Assessment of the Claimant’s costs of the action. At the same time, the Judge granted permission to appeal.
The Defendant argued that the court should have found that the Calderbank offer made came to an end ‘after the lapse of a reasonable time’. The Claimant argued that it was inherent in the offer that it remained open unless and until withdrawn.
The Defendant appealed from the order of Costs Judge Master Rowley. The question at the heart of this appeal was whether a Calderbank offer to settle (without express time limit) could be accepted following the commencement of the substantive hearing or whether it lapsed upon its commencement.
The correct approach to Calderbank letters was to consider the common law principles of offer and acceptance. The question was whether in the absence of express provision as to time, the offer had lapsed.
The Defendant chose to use a Calderbank offer approach rather than the Part 36 procedure. Part 36 is a self-contained procedural code about offers to settlement made pursuant to the procedure set out therein. Where a trial is in progress the court’s permission is required to accept a Part 36 offer (CPR 36.11 (3d)). Part 36 does not provide that the offer lapses at the door of the court nor stop you from accepting a Part 36 offer after commencement of a hearing.
The course and content of the Defendant’s prior offers since April 2018 was highly relevant context. None of the earlier offers had an absolute time limit. The Defendant was working on the assumption (and was indicating to the Claimant) that the September 2018 offer remained open throughout and did so all the way until August 2019. Also, the £440,000.00 offer remained open and at the same level, despite the continuing weakening of the Claimant’s claim following service of the Replies to the Points of Dispute. The Defendant was aware throughout that it could withdraw the offer made, but consciously decided not to do so.
It was also noted that it has always been common practice for parties to recalculate Bills of Costs during a Detailed Assessment hearing, particularly when a costs judge makes ‘mini-decisions’ on individual issues (with the new electronic Bill making this easier moving forward). Compromises have always been made part-way through Detailed Assessment hearings depending on the outcome of those ‘mini-decisions’.
On appeal, Mr Justice Morris held that the offer did not lapse when the Detailed Assessment hearing commenced and remained open for acceptance and as such the Claimant’s acceptance gave rise to a contractually binding settlement of the Detailed Assessment proceedings.
“It was always open to the Defendant to put a time limit on the offer. Equally it was open to it to withdraw the offer at any time”.
This case serves as a reminder to check any offers made prior to the commencement of Assessment and to undertake any steps to clarify the position with any offers. It is useful for the receiving party to be fully aware of all the offers made in case, as in this case, it becomes apparent that accepting a previous offer is more favourable than proceeding with Assessment. This case is also useful to paying parties because if receiving parties don’t review their own offers then this situation could easily be reversed.