Wormald v Ahmed (Rev1)

A Part 36 offer accepted on behalf of a child or protected party remains subject to court approval under CPR 21.10. Until approval, the acceptance does not create a binding settlement and either party may resile from it. However, a purported withdrawal does not automatically take effect for Part 36 purposes, particularly as to costs. The court must decide whether to approve the settlement or give effect to the withdrawal.

The approval decision is fact-sensitive. The court must prioritise protection of the protected party and dependants, while also considering the overriding objective and whether it would be unjust to bind a party. A financial windfall is not ordinarily decisive, but a substantial disparity between the parties’ knowledge and a hastily accepted offer following a critical change in prognosis may justify withdrawal.

The claimant, a protected party who had suffered a serious traumatic brain injury in a road traffic accident, accepted the defendant’s 2014 Part 36 offer of £2 million on 18 September 2020. He died later that day. The defendant purported to withdraw the offer after learning of his death.

The claimant’s estate sought a declaration that the offer had been validly accepted, together with approval of the settlement under CPR 21.10. The defendant contended that the settlement was not binding before approval and that withdrawal should be permitted. The central issues were whether a Part 36 offer accepted for a protected party could be withdrawn before approval, and the grounds on which the court should approve or reject the settlement.

1. Applicable framework. Part 36 is a self-contained procedural code, but its operation is expressly subject to CPR 21.10 and the wider overriding objective. The certainty pursued by Part 36 does not displace the court’s supervisory jurisdiction over settlements involving protected parties.
2. Effect of acceptance. Acceptance of a Part 36 offer on behalf of a protected party constitutes a compromise requiring approval under CPR 21.10. The offer and acceptance are not binding until approval, and the proceedings are not stayed until approval under CPR 36.14. Either party may give notice of withdrawal before approval, consistent with Drinkall v Whitwood [2003] EWCA Civ 1547.
3. Limits on withdrawal. Withdrawal does not itself determine the Part 36 consequences. CPR 36.9 must be given effect so far as possible, and the court must determine on the approval application whether the withdrawal should be effective or the settlement approved.
4. Approval test. The primary considerations are protection of the protected party and dependants, proper control of recovered funds, and ensuring the defendant receives a valid discharge. The overriding objective also applies. The court assesses matters as at the approval hearing, and the party seeking to avoid the settlement bears the burden of showing that it would be unjust to be bound. CPR 36.17 provides useful guidance, although the approval discretion is not governed by Part 36.
5. Application. The claimant’s acceptance followed an unexpected critical change in prognosis. The defendant had not been informed of that change before acceptance and had no opportunity to reassess the offer. The offer would substantially exceed the likely value of the crystallised claim and benefit only the estate. In those circumstances, it would be unjust to bind the defendant. The court would give effect to the withdrawal and grant permission for it if necessary, but reserved final determination to allow further evidence complying with the relevant practice direction.

First-instance decision. The judgment records that an earlier liability judgment in favour of the claimant, awarding 60% liability, had been upheld on appeal on 7 June 2016, but gives no citation for that decision.