A claimant’s 90/10 liability offer went against both the letter and spirit of civil procedure rules on Part 36, a High Court judge has ruled.

In Mundy v TUI, Mrs Justice Collins Rice said Calvin Mundy had tried to cover himself with a ‘unilaterally imposed insurance policy’ which he could use to override Part 36 rules. The claimant’s 90/10 liability offer was in fact not an offer to settle the claim and ‘difficult’ to fit into the Part 36 scheme altogether, the judge found. 

Claimant Mundy had been made a Part 36 offer to settle the holiday sickness claim for £4,000. As his eventual damages came in under that figure, the court ruled he should meet costs incurred after that offer was made.

The court heard that the practice of claimant lawyers making 90/10 liability offers to secure costs advantages had become ‘widespread’. There was also no existing authority on precisely how these offers fitted in to CPR rules on Part 36.

Mundy’s representatives had sought general damages of between £25,000 and £35,000 before Swindon County Court, following his infection through contaminated food on a  TUI holiday in Mexico.The district judge had found that while the illness had been ‘very unpleasant’, it was less severe and long-lasting than Mundy claimed, and he was awarded £3,805 in damages.

The parties then disputed costs: Mundy had made two Part 36 offers, one of which was to settle the issue of liability on the basis of 90/10 in his favour.

Lawyers for Mundy said this offer to reduce damages by 10% was a carrot but also acted as a stick, as any defendant rejecting it would face costs consequences.

It was submitted that the claimant had effectively ‘beaten’ this offer by securing a 100% liability outcome, which was at least as advantageous to him as the proposals in the 90/10 offer.

But the judge was ‘unpersuaded’ that a split liability offer could be applied to Part 36 rules.

‘Trying to do so strains the language of the provision, undermines its careful balance, and introduces a degree of complexity and uncertainty which I am not persuaded is within its contemplation,’ she said. ‘The effect proposed by Mr Mundy in this appeal goes far beyond incentivising the avoidance of a liability trial. It makes a 90/10 liability offer into a means for a claimant, who fails to beat a money offer to settle his claim, to recoup a substantial premium for "winning" the case nevertheless.’

The court upheld the district judge’s decision that Mundy should pay TUI’s costs after the date of the expiration of its Part 36 offer.

 

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