Flynn v Scougall

A Part 36 payment is a procedural offer whose withdrawal or reduction requires the court’s permission. Within the initial 21-day period, a claimant may accept a subsisting payment without permission, notwithstanding the defendant’s pending application to withdraw or reduce it.

Acceptance neither automatically defeats the defendant’s application nor causes the application to suspend the right of acceptance. The court must decide whether a sufficient change of circumstances makes withdrawal or reduction just. Acceptance is an important consideration because permission would deprive the claimant of an otherwise unfettered right. A fresh expert’s differing assessment of existing information will not ordinarily suffice where the defendant knowingly made the payment before receiving that assessment.

The claimant sought damages for injuries sustained when the fire engine in which he was travelling was struck by the defendant’s vehicle. Liability was admitted. Before receiving her medical expert’s report, the defendant made a Part 36 payment of £24,500, net of recoverable benefits. After receiving a more favourable report, she applied to reduce the payment to £10,000. The claimant then accepted the original payment within 21 days.

District Judge Large held that the claimant’s acceptance was effective because the court had not permitted a reduction. HH Judge Bowers allowed the defendant’s appeal. He considered that the application automatically suspended the claimant’s right to accept and permitted the reduction. On this second appeal, the issues were whether the application suspended acceptance, whether acceptance defeated the application, and whether the reported change in expert opinion justified reducing the payment.

1. Appeal allowed unanimously. A Part 36 payment is an offer made through a procedural mechanism and subject to the attributes prescribed by Part 36. Rule 36.6(5) applies to the offer comprised in the payment, not merely to the physical money in court. The offer therefore cannot be withdrawn or reduced without the court’s permission. Part 36 payments remain procedural and are not governed simply by the contractual rule permitting withdrawal of an unaccepted offer.

2. Rules 36.6(5) and 36.11(1) confer concurrent rights during the initial 21-day period. A defendant may apply for permission to withdraw or reduce the payment. A claimant may meanwhile accept a subsisting payment without permission, even with knowledge of that application. Neither provision could be modified by implication to remove the resulting procedural conflict.

3. The defendant’s application does not create an automatic stay or suspension of the claimant’s right of acceptance. Part 36 contains no warrant for such a stay, which could also facilitate abuse. Equally, the claimant’s acceptance does not defeat the court’s power to determine an application made before or after acceptance. The court may make the orders needed to give effect to its decision.

4. The approach in Manku v Seehra (1987) 7 Con LR 90 was applied. Once acceptance has occurred, it is an important consideration because allowing withdrawal would deprive the claimant of an otherwise unfettered right. Permission remains exceptional. The governing question is whether there has been a sufficient change of circumstances since payment to make withdrawal or reduction just. This standard is applied flexibly in accordance with the overriding objective.

5. The defendant knowingly paid before receiving her expert’s report and obtained the advantage of an earlier Part 36 payment while assuming the corresponding evidential risk. The later report merely provided a fresh expert’s different assessment of available information. It was neither newly discovered evidence nor a change in legal outlook and came nowhere close to a sufficient change of circumstances. Permission to reduce the payment was refused. Consequential payment and costs orders were made in the claimant’s favour.

1. Court of Appeal (Civil Division): The claimant’s second appeal was allowed unanimously. HH Judge Bowers’ discretionary decision permitting reduction of the Part 36 payment was displaced.
2. Newcastle upon Tyne County Court, HH Judge Bowers: The defendant’s appeal was allowed. The judge set aside District Judge Large’s order, treated the application to reduce the payment as automatically suspending acceptance, and permitted the claimant to accept the reduced sum.
3. Newcastle upon Tyne County Court, District Judge Large: The deputy district judge’s reduction order was set aside. The defendant was ordered to provide the claimant with the full amount of the original Part 36 payment because it had been accepted before the court permitted any reduction.
4. Newcastle upon Tyne County Court, Deputy District Judge Mather: The defendant’s application was allowed and the Part 36 payment was reduced from £24,500 to £10,000.