Crouch v King's Healthcare NHS Trust

A defendant’s written offer to settle a money claim does not automatically attract the consequences of a payment into court under Part 36 of the Civil Procedure Rules 1998. It is nevertheless admissible on costs and may be given the same practical effect under Part 36.1(2) or Part 44.3.

The court must consider all the circumstances. The Part 36.20 presumption does not apply automatically. Where an NHS trust makes a genuine offer and is plainly able to pay, the offer should ordinarily be treated like a payment into court unless a special circumstance makes that result unjust.

Permission to withdraw a Part 36 payment ordinarily requires a sufficient change of circumstances affecting the evaluation of the claim.

Two NHS trusts appealed in cases concerning written offers to settle money claims which had not been supported by payments into court.

In Crouch, the claimant recovered damages below the trust’s £35,000 offer. His Honour Judge Latham nevertheless ordered the trust to pay all his costs because it had not made a Part 36 payment. The trust appealed against that costs order.

In the related Murry proceedings, Wright J held that the trust had implicitly agreed to treat its £150,000 offer as if it were a Part 36 payment. He refused permission to withdraw the offer and approved its later acceptance, subject to costs orders. The trust appealed only against that exercise of discretion, while the claimant challenged the costs orders.

The central questions concerned the status and costs consequences of written settlement offers in money claims, and the circumstances permitting withdrawal of an offer treated as a Part 36 payment.

1. Crouch appeal allowed; Murry appeal dismissed. A defendant to a money claim cannot unilaterally declare that a written offer is equivalent to a Part 36 payment. Part 36.3 requires payment into court before the automatic Part 36 consequences, including the presumption in Part 36.20, arise.

2. Parties may in principle agree to treat a written offer as a payment into court. Such an agreement should be found only where the claimant clearly accepts that arrangement and the defendant relies upon it. Its terms must be sufficiently clear, including as to whether withdrawal requires the court’s permission. A defendant may also seek a direction under Part 36.1(2) during the proceedings that its offer be treated as a Part 36 payment.

3. A settlement offer made without prejudice save as to costs remains admissible in a money claim. Under Part 36.1(2) and Part 44.3 of the Civil Procedure Rules 1998, the court may give it the costs consequences specified by Part 36. The court must consider all the circumstances and decide whether applying the Part 36.20 presumption would produce a just order. The absence of a payment into court means that the presumption does not arise automatically.

4. The Crouch judge had wrongly treated the absence of payment into court as effectively decisive. An NHS trust was plainly able to honour its offer. Its offer was therefore as sound as a payment into court and, absent a special circumstance, should receive the same treatment. The claimant was ordered to pay the trust’s costs from 21 days after the offer and the costs of the appeal.

5. In Murry, the unappealed finding that Part 36 applied meant that withdrawal required permission. The established inquiry was whether a sufficient change of circumstances since the payment made withdrawal just. Witness distress was not such a change, and the judge’s costs order addressed expenditure incurred after rejection. Grounds not squarely advanced below could not properly be introduced on appeal.

Mance LJ agreed, but expressed no view on whether loss or alteration of public funding could justify withdrawal. Sir Christopher Staughton likewise left that question open.

• Court of Appeal (Civil Division): In Crouch, allowed the NHS trust’s appeal from His Honour Judge Latham’s costs order and substituted an order requiring the claimant to pay the trust’s costs from 21 days after its offer. In Murry, dismissed the trust’s appeal from Wright J’s refusal to permit withdrawal of the offer and declined to disturb the associated costs orders.
• County Court: His Honour Judge Latham awarded Mr Crouch damages below the trust’s offer but ordered the trust to pay all his costs because no payment into court had been made.
• High Court: Wright J held in the Murry proceedings that the trust had implicitly agreed that Part 36 would govern its offer. He refused permission to withdraw it and approved its acceptance, subject to costs orders.