CPR Part 36 and Periodical Payments

Transcription

1 CPR Part 36 and Periodical Payments a presentation by MICHAEL TILLETT QC Tuesday 26 th April 2005

2 Amendments to Existing Rule (CPR 36) 1. The source is the Civil Procedure (Amendment No 3) Rules 2004 which came into force on 1 April The Rules apply to existing proceedings where no settlement or order has been made before 1 April 2005 and to proceedings issued after that date in the case of the power to order variable periodical payments. 2. Principal changes to the Rule appear in 36.2 (the general provisions with the allimportant and new 36.2A), 36.4 (D s offer to settle whole claim including non-money claim), (Court s approach to offer made before proceedings commenced), (costs consequences when C fails to better Pt 36 offer or payment) and 36.23(D s offer to settle prior to receipt of valid CRU certificate). CPR 36.2A(2) Where offer made to settle claim for future loss, wholly or partly by way of lump sum, that sum must be paid into Court if the offer is to have consequences set out in the Rule. This echoes existing Rule 36.3 which requires D actually to make the Pt 36 payment if it is to have the effect provided for in the Rule. CPR 36.2A(3) Where both an offer and payment are made under Pt 36 the offer must include details of the payment and CPR (time for acceptance of D s offer/payment) and CPR (consequences of acceptance) apply as if there was an offer only. Both of those sub-rules 11 and 13 make reference to Pt 36 offers and payments. The new provision makes it clear that C cannot accept the lump sum part of an offer to settle a claim comprising a claim for periodical payments claim unless 2

3 prepared to accept the global offer made. Note also that the time for acceptance is calculated from the date of the offer and not the payment. CPR 36.2A(4) A Pt 36 offer under this Rule may contain an offer to pay or offer to accept: (a) the whole or part of the damages for future pecuniary loss as EITHER a lump sum or periodical payments OR both a lump sum and periodical payments; (b) the whole of any other claim to damages as a lump sum. A fair degree of flexibility is available. An offer and/or payment to settle a claim for future pecuniary loss can be made in the conventional way as a lump sum or a combination of lump sum and periodical payment. The lump sum referred to under (b) is likely to comprise special damage e.g. for past loss such as care and/or loss of earnings and even for future loss in respect of which periodical payments are not, appropriate e.g. for medical costs and/or the cost of aids/equipment which can be capitalised in the ordinary way. CPR 36.2A(5) A Pt 36 offer to which this Rule applies: (a) MUST (my capitals) state the amount of any offer to pay the whole or any part of the damages as a lump sum; (b) MAY state what part of the offer relates to damages for future pecuniary loss to be accepted in the form of a lump sum; 3

4 (c) MAY state, where part of the offer relates to other damages to be accepted in the form of a lump sum, what amounts are attributable to those other damages; (d) MUST state what part of the offer relates to future pecuniary loss to be paid or accepted in the form of periodical payments and MUST specify: (i) the amount and duration of such payments; and (ii) the amount of any payments for substantial capital purchases and when they are to be made, and (iii) that each amount is to vary by reference to the RPI (or to some other named index) or that it is not to vary by reference to any index. (e) MUST state either that any damages in the form of periodical payments will be funded in a way which ensures continuity is secure (see section 2(4) of the Damages Act 1996) or how such damages are to be paid and how continuity is to be secured. CPR 36.2A(6) Where a Pt 36 payment includes a lump sum for damages for future pecuniary loss the (Pt 36) payment notice MAY state the amount of the lump sum. This sub-rule makes it clear that where a Pt 36 payment is made and it includes a sum in respect of future pecuniary loss, the Pt 36 notice MAY state the amount of 4

5 the lump sum which relates to future pecuniary loss. At first blush looks to be in conflict with 36.2(5)(b) but that rule refers to a Pt 36 offer and this to a Pt 36 payment. CPR 36.2A(7) Where D makes an offer to pay both lump sum and periodical payments P may only give notice of acceptance of the offer as a whole. CPR 36.10(3A) deals with offers made before proceedings commenced. This subrule is now inserted to provide that in a claim to which Pt 36.2A applies i.e claim including claim for future pecuniary loss, if the offeror is D who wishes to offer to pay the whole or part of any damages in the form of a lump sum (a) he MUST make a Pt 36 payment within 14 days of service of the claim form and (b) the amount of the payment must be not less than the sum offered before proceedings began. CPR 36.20(1) A new sub-paragraph (c) is added. This simply applies the usual costs consequences for failing to better a Pt 36 offer or payment (see Pt 36.20)] to any claim to which Pt 36.2A applies. The same language is used as in subparagraph (b). The Court is obliged to decide whether or not P has obtained a judgment which is more advantageous than the Pt 36.2A offer made. CPR 36.23(4A) This provides that in deciding whether any offer was more advantageous, the amount of any lump sum paid into Court which it takes into account is to be the amount of the gross sum, inclusive of statutory benefits deducted, specified in the Pt 36 notice. Amendments to Existing Practice Direction (PD 36) 5

6 3. The Practice Direction makes it clear that a Pt 36 offer includes an offer made under CPR 36.2A (see para. 1.1(2)). 4. PD 5.3A stipulates that the contents of any Pt 36 offer to which CPR 36.2A applies must comply with the requirements of Rule 36.2A(5) - see above. 5. PD 7.2A is important because it regulates acceptance of a Pt 36 offer made under CPR 36.2A. It provides that time for acceptance runs from the date of the offer, and not the date of the payment, where a Pt 36 offer includes a Pt 36 payment. 6. PD 12.1 to 12.3 have been added is effectively repetition of Pt 36.2A(5) which specifies the detail required in any Pt 36 offer under CPR Pt 36.2A reiterates that the circumstances in which the continuity of periodical payments will be taken to be secure are set out in section 2(4) of the Damages Act 1996 and reminds the practitioner that section 2(8) and 2(9) deal with the indexlinking of periodical payments stipulates that the existing rules in Pt 36 apply to offers to settle made under CPR 36.2(A) as they apply to other Pt 36 payments and to Pt 36 offers. What is likely to determine whether the judgment obtained is more advantageous than the Pt 36 offer? 6

7 7. What criteria will the Court adopt in deciding whether the Claimant has beaten the offer made? Offers under Pt 36.2A will inevitably be more complicated and a number of factors will require consideration: the quantum of the lump sum whether on its own or as part of an offer including periodical payments. amount/frequency of periodical payments. whether C has succeeded in proving all of the heads of loss claimed. whether, in a case where periodical payments variable in accordance with, for example, the RPI are claimed, C has succeeded in persuading the Court that the RPI should be applied when D s offer included no such proposal. 8. Under 36.2A(4) an offer may comprise an offer to settle on the basis of a conventional lump sum alone OR an offer to settle on the basis of a lump sum and periodical payments (where future pecuniary loss is claimed). If C has always maintained a claim for all or part of his future loss by way of periodical payments and the Court decides that only a lump sum is appropriate then there will be little difficulty in deciding which way costs should go. Likewise the reverse situation will present little problem. 9. But suppose, in a case where the parties agreed that the correct lifetime multiplier for the calculation of future loss should be 20, the Pt 36 offer made comprised periodical payments of 30,000 per annum and a lump sum of 400,000 and the Court awarded 20,000 p.a. for periodical payments and a lump sum of 600,000. Has C achieved a more advantageous result than he was offered? Globally the result is the same because C has effectively recovered 1 million in each example. 7

8 10. One answer may be found in the guidance given in Factortame v Secretary of State [2002] EWCA Civ 22 where Walker LJ said at p.848:... It seems to me that so far as possible the judge should be trying to assess who in reality is the unsuccessful party and who has been responsible for the fact that costs have been incurred hat should not have been... In other words the Court should look to determine which aspect or aspects of the case took the most time to resolve, who was responsible for that time being spent and whether it was reasonable that it should have been spent in that way. If, in the example in para. 9 above, C had always made it clear that he wanted periodical payments at the higher annual rate, and that no lesser annual sum would do, then he is likely to end up being penalised in costs. 11. Perhaps a good example of this working in practice is to be found in the case of Painting v University of Oxford CA Civ Div 3/2/05. At first instance the judge determined that C had made an inflated claim. In fact she had exaggerated it by a factor of 16 at a disposal hearing for the assessment of damages, claiming 400k but recovering 25k. The judge ordered D to pay all the costs principally because, having originally paid in 184k, D successfully applied to withdraw all but 10,000. In light of the apparent exaggeration, it had failed to pay in enough. The judge was of the view that C s claim had always been worth more than 10k. On appeal the CA (LJJ s Kay and Longmore) decided that the judge had failed to take into account that D had in effect won the main point at issue (and on which most court time had been spent) namely, whether C had exaggerated her claim. The CA made C bear her own and D s costs from a date 21 days after the first, substantial, payment-in. 8

9 Conclusion 12. How successful is the revised Pt 36 machinery likely to be in bringing about early compromise in cases where future pecuniary loss is claimed and the claimant wants an order for periodical payments? Certainly it will be more difficult than it is at present to second-guess what the Court will ultimately do in precise enough terms. The fact that the Court may indicate to the parties at an early stage (see CPR 41.6) whether it considers that all or part of the damages ought to be awarded by way of periodical payment may help. 13. In many catastrophic injury cases life-expectancy is in issue between the parties. Sometimes the difference between the experts on such an issue is very great and much Court time is spent endeavouring to resolve this for the purpose of deciding the correct multipliers to apply. In this type of case a defendant is likely to do well by making an early Pt 36 offer incorporating a proposal for periodical payments for the duration of C s life however long or short a period that may be, thereby avoiding the necessity for resolution of the issue. 14. At the moment the amended CPR 36 is silent on the procedure to be adopted by a defendant faced with a claim for periodical payments variable on the happening of a particular event. The Court s power to do this, given by paragraph 5 of the Damages (Variation of Periodical Payments) Order 2005, has similarities to the circumstances in which an order for provisional damages, with permission given for an application for further damages on the happening of a particular event, may be made. The old Supreme Court Rule (Order 37) contained a procedure whereby a defendant could make an offer to submit to an award of provisional damages (see Order 37 rule 9 and the tender offer ). No such procedure under the new CP Rules seems yet to have been specifically devised. 9

10 20 April 2005 MICHAEL TILLETT QC 10