ON APPEAL FROM THE HIGH COURT, QUEEN'S BENCH DIVISION
HIS HONOUR JUDGE SEYMOUR QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LLOYD
LORD JUSTICE TOULSON
||Claimant / Appellant
|- and -
|GROUPAMA INSURANCE COMPANY LTD
||Defendant / Respondent
Mr Geoffrey Brown (instructed by Messrs Ford & Warren Solicitors) for the Respondent
Hearing dates : Monday 27th June 2011
Crown Copyright ©
Lord Justice Rix :
"25…The effect of the decision of the Court of Appeal in Trustees of Stokes Pension Fund v Western Power Distribution (South West) plc in my judgment is that in a case such as the present the offer is to be treated as having the same effect as an offer under Part 36 would have had.
26. The letter of 22 December 2006 did not satisfy the requirements identified by Dyson LJ in paragraph 24 of his judgment, in particular because it did not specify that the offer was open for acceptance for at least twenty-one days. However, the offer of 15 February 2007 stated in terms that it was available for acceptance for a period of twenty-one days only. Mr Brown [for Groupama] submitted that, on proper construction of each of the two letters with which I am concerned, the offer which was being made was an offer to settle all of the claims of Miss French, including in respect of interest or costs, by payment of the sum of £115,000 and I am satisfied that on a proper construction of each of those letters that was indeed the offer which was being made.
27. Consequently, I am satisfied, for the reasons which I have explained, that Miss French has achieved nothing of value by rejecting the offer contained in the letter of 15 February 2007 but pursuing her claim to trial. In financial terms she is, as it seems to me, worse off than she would have been if she had accepted the offer. That means that, adopting the approach set out by Dyson LJ, the consequence has to be that Miss French is not entitled to her costs against Groupama, rather she must pay the costs of Groupama of the action and that is an order which I make."
"I am inviting you, Sir, to make my Christmas different from the last ten, to change the course of events because you have the power to end this entirely unnecessary ordeal, and settle this matter once and for all. You are in breach of your contractual duty, you have treated me neither fairly nor reasonably and as a result you have caused me untold grief, suffering, and cost me my home, my health and my career – and for that I am entitled to recompense…"
"You will be aware that we have already paid £65,675.44 for your alternative accommodation and storage as well as other payments and have made an additional offer of £115,000 which I am happy to stand by."
"When, mid-way through last year, the offer of mediation was put forward by Groupama, following intervention by the BBC, I spent some considerable time looking at the losses I sustained and had been made to bear. I can assure you that the offer you have recently come up with bears no resemblance to the truth. It bears hardly 10% of damage that can be calculated, and so I am having difficulty fathoming any kind of integrity to your offer, seeing it (a) cannot even finance the replacement of my home which you refused to fix, and it (b) does not reimburse me for years of lost rent. It certainly does not (c) recognise the costs and expenses (legal et al) of dealing with this entirely unnecessary ordeal for more than a decade, nor does it (d) compensate me for the pain, the suffering and the illness brought about by an inability, nay, refusal to reinstate the property when, as professionals, you should have done so no later than end of 1997; and, it does not (e) compensate me for even the most conservative estimates in lost income, let alone (f) the lost opportunity of my international singing career, both past and future."
"Notwithstanding the above and in the hope that it may draw this matter to a conclusion I am prepared, without prejudice to the company's legal position or its rights, to confirm again a final offer of a payment of £115,000. By way of clarification, this payment will be in addition to payments of £55,700 received by you to date and is also in addition to the costs of works and fees already expended by Groupama…
This offer is made in full and final settlement of all claims of any kind whatsoever between you and Groupama Insurance Company Ltd. and its associated companies. The offer is available for acceptance for a period of 21 days only and will expire at 4.00 p.m. on 8 March 2007, if it has not by that time been accepted in writing on the terms upon which it has been made."
The solicitors' agreement at trial
"We have previously advised your client that it is the Defendant's view that references to the settlement proposals and mediation in 2006/2007 should be redacted from the bundle of documents for the trial on the basis that they are privileged. This includes the letter dated 22.12.06 appended to your letter which your client wishes to be included in the trial bundle. This was excluded from the trial bundle along with the letter dated 15.2.07 on the basis they are privileged."
"We fail to see why the letter of 22 December 2006 should be excluded from the bundle. There does not appear to be any legal professional privilege attaching thereto and it is not by its form or substance written on a without prejudice basis. However, the content does appear relevant to the facts in issue in this trial. Please would you explain [if] you think otherwise."
That did not embrace the February 2007 letter. Within half an hour however Miss French's solicitors emailed again with a different message:
"However as the dispute centres around the insurance policy and alleged agreements/breaches of 2002/2003, we do not wish to dwell on this matter further and are content to draw the Court's attention to such discussions and proposals only once the subject of costs arises at the conclusion."
"The letters dated 22.12.06 and 15.02.07 are privileged as the contents of those letters clearly relate to without prejudice offers. As you will be aware documents do not have to be marked "without prejudice" to be privileged.
I consider the best way forward would be for both parties to agree that the following are privileged; will not be included in the Trial Bundle and may only be drawn to the attention of the trial judge following judgment in relation to costs…
Groupama's letters to your client 22.12.06 and 15.02.07…
If this cannot be agreed I suggest the parties ask the trial judge to determine this issue at the commencement of the trial on Thursday."
"Apologies if I am being pedantic but can you confirm that you agree that the letters dated 22.12.06 and 15.02.07 are privileged, that they should not be included in the trial bundle and that they should not be drawn to the attention of the trial judge until after judgment."
Miss French's solicitors replied, all of this happening on 18 October 2010:
"You are not being pedantic. That is precisely what I intended to say. We are in agreement."
Were Groupama's offers open when made?
CPR Part 36 in its original form
The Stokes case
"23. How should the discretion accorded by CPR rr 36.1(2) and 44.3(4)(c) be exercised in relation to an offer made to settle a money claim where the claimant recovers less than the amount of the offer? In the absence of any guidance in the rules, it falls to the courts to provide it. I emphasise that it is a matter for the discretion of the court. It is clear from CPR r 36.3(1) that the offer cannot automatically have the costs consequences specified in Part 36. The question, therefore, is what weight should be given to an offer made to settle a money claim.
24. In my judgment, an offer should usually be treated as having the same effect as a payment into court if the following conditions are satisfied (I consider the effect of a withdrawal at paras 32-42 below). First, the offer must be expressed in clear terms so that there is no doubt as to what is being offered…This condition does no more than reflect the requirements specified in CPR 36.5(2) in relation to payments into court. Secondly, the offer should be open for acceptance for at least 21 days and otherwise accord with the substance of a Calderbank offer. Thirdly, the offer should be genuine and not, to use the words of Waller LJ, at para 41, a "sham or non-serious in some way". Fourthly, the defendant should clearly have been good for the money when the offer was made.
25. To the extent that any of these conditions is not satisfied, the offer should be given less weight than a payment into court for the purposes of a decision as to the incidence of costs. Where none of the conditions is satisfied, it is likely that the court will hold that offer affords the defendant no costs protection at all.
26. But if all of the conditions to which I have referred are met, then I can see no reason in principle why the effect of an offer should differ from that of a payment into court. Simon Brown LJ [in Crouch v. King's Healthcare NHS Trust  1 WLR 2015] mentioned the need to promote clarity and certainty. I agree. That is why an offer which satisfies the four conditions should by definition be no less clear or certain than a payment into court. It is important to emphasise that the purpose of a payment into court is not to provide the claimant with security for his judgment if he succeeds at trial. It is to encourage settlement…"
The amended Part 36 and the transitional provisions
"Nothing in this Part prevents a party making an offer to settle in whatever way it chooses, but if the offer is not made in accordance with rule 36.2, it will not have the consequences specified in rules 36.10, 36.11 and 36.14.
(Rule 44.3 requires the court to consider an offer to settle that does not have the costs consequences set out in this Part in deciding what order to make about costs)"
Thus the rule 44.3 discretion to take account of all the circumstances, including the conduct of the parties and any "admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which the costs consequences under Part 36 apply" (amended rule 44.3(4)(c)) lies in the background. It will be recalled that at the time of Stokes that rule had simply concluded – "(whether or not made in accordance with Part 36)".
"In light of the guidance given by this court in, most recently, The Trustees of Stokes Pension Fund v Western Power Distribution (South West) Plc  EWCA Civ 854 at paragraphs 24 and 25, it seems to me that this letter cannot be validly treated as a Part 36 offer. Quite apart from anything else, if it is to be read as making an offer in money terms, there was no money paid into court. It simply fails too many of the requirements of Part 36, which is particularly significant if it is written to a litigant in person."
The Part 44 discretion
Lord Justice Lloyd :
Lord Justice Toulson :