Drinkall (a minor) v Whitwood

Kerry Drinkall (the claimant) was born on 18 October 1983. On 19 January 1998, aged 14, bicycling home from school, she was in collision with a motor car driven by the defendant. She was, alas, seriously injured, sustaining in particular a severe closed head injury which has left her with some permanent brain damage.

On 5 April 2000, before proceedings were issued, the claimant through solicitors made a Part 36 offer (see CPR 36.10) to settle the issue of liability on a 80:20 basis in her favour, an offer accepted on 7 April 2000 by the defendant’s insurer’s loss assessors.

Some eighteen months later, on 26 September 2001 (22 days short of the claimant attaining her majority on her eighteenth birthday), the defendant withdrew from that settlement agreement (as later explained, with a view to contending for a higher degree of contributory negligence because the claimant had not been wearing a cyclist’s helmet).

On 11 January 2002 the claimant issued Particulars of Claim in the Kingston-upon-Hull County Court relying on the April 2000 exchange of letters which, she pleaded, constituted a binding agreement on the issue of liability. The defendant disputed that, pleading that the claimant was a minor in April 2000 and that:

The issue whether there was a valid compromise agreement was ordered to be tried as a preliminary issue.

District Judge Glentworth on 4 October 2002 decided that the agreement was valid and binding. His Honour Judge Hepple QC on 6 February 2003 upheld that decision on the defendant’s appeal before him. This second appeal comes before the court with the permission of Hale LJ. (The defendant now recognises, as Hale LJ pointed out, that his appeal from District Judge Glentworth should itself properly have been brought in the first place to this court rather than to Judge Hepple).

The appeal turns on the true construction and application of CPR 21.10 which, so far as material, is in these terms:

The District Judge observed, in her short judgment:

The determinative paragraphs in Judge Hepple QC’s judgment upholding that decision are these:

The “substantive law of contract involving infants”, to which Judge Hepple was there referring, is the rule that, in the ordinary way, minor’s contracts are enforceable by the minor but are not binding upon him unless he expressly ratifies them upon coming of age.

Sympathetic though one may be to the conclusion reached by Judge Hepple, the difficulties in his reasoning are quickly apparent. It is, for example, surely clear that the “claim” referred to at the end of clause (a) in paragraph 2 of Part 21.10 must necessarily pre-date the commencement of proceedings since paragraph 2 expressly envisages issuing Part 8 proceedings to approve “an agreement … reached for the settlement of the claim”.

As it happens, however, it is unnecessary for this court to reach its own conclusion on the correctness or otherwise of the judge’s reasoning below since, as Mr Burns’ researches at last discovered (although not until after permission was given to appeal to this court), the House of Lords decided the very point arising here by reference to materially identical rules in Dietz -v- Lennig Chemicals Limited [1969] 1 AC 170. The rules then in question were as follows:

The short facts of Dietz were that, before proceedings were issued, the plaintiff widow accepted the defendants’ offer of £10,000 to settle her and her infant son’s Fatal Accidents Acts (and 1934 Act) claim “subject to the approval of the court”. An originating summons was then issued for the court to approve that settlement. Between then and the hearing of the application, however, the plaintiff, unknown to the solicitors on either side, remarried. The master duly approved the settlement but, before the consent order had been drawn up, the defendant’s solicitors learned of the plaintiff’s remarriage and applied to set the order aside. The master acceded to that application, rightly, as was thereafter successively held by the judge, the Court of Appeal and the House of Lords. There were essentially two issues in the case. First, was the settlement agreement prior to its approval binding on the parties (or at least on the defendants) or could either side repudiate? Second, even if it was not binding, was the master right, once he had approved it, to set aside his consent order rather than draw it up? Both points were decided against the plaintiff, the first because that was held to be the true effect of Order 80, r11 (equivalent to CPR 21.10(1)); the second because the defendants’ consent to the court’s approval of the settlement had been induced by an innocent misrepresentation. It is, of course, the first point alone which is critical for the purposes of the present appeal.

The two reasoned speeches were given by Lord Morris of Borth-y-Gest and Lord Pearson. On the point now at issue, Lord Morris said:

Lord Pearson said:

That authority is in my judgment decisive upon the present appeal, certainly with regard to the basis on which the matter was decided below. The fact that agreement here was reached pursuant to the express provisions of Part 36 can make no possible difference. The judge’s reasoning simply cannot stand in the light of Dietz, to which his attention was not drawn.

In the course of argument we considered whether the impact of Dietz and, more particularly, the effect of paragraph 1 of Part 21.10 could be escaped by reference to the agreement in the present case being for a partial rather than complete settlement of the claim, ie the settlement of an issue (liability) and not the whole claim. Certainly the most obvious reading of paragraph 2 of the rule is that “the settlement of the claim” there referred to is a reference to the final settlement of the whole claim. The claimant would hardly otherwise be issuing proceedings under Part 8; rather he would be seeking approval within an ordinary Part 7 action. Nor to my mind is this point necessarily destroyed by the reference in paragraph 1 of the rule to the unapproved settlement not being valid “so far as it relates to the claim by or on behalf of the child”. The use of that phrase is to distinguish the child’s claim from such other claim as may be joined with it (as the infant’s claim was joined with the mother’s claim in Dietz itself). Paragraph 1 also I have no doubt, was drafted essentially without thought for partial settlements.

The real difficulty with the argument, however, becomes apparent when examining its consequences. If Part 21.10 is really to be construed as having no application to partial settlements, then it would follow that, provided only one aspect of a claim remained in contention (perhaps only a minor head of damage in a high value case) the court’s approval would not be required at all. Take this very case and assume that quantum were to be contested: the 80:20 liability split never needed approval. (I recognise, of course, that the requirement for the court’s approval in any event ceases once, as here, the claimant reaches his or her majority but that cannot affect the argument. We are here discussing the application of the rule during the claimant’s minority and plainly it would be intolerable were the requirement for the court’s approval to be escaped merely because some issue remains to be agreed). The rule need not be and accordingly should not be construed so as to produce this absurd result.

It inescapably follows from all this that, regrettable though it might seem, the defendants here were entitled to renege on their agreement as they did, for good reason or none, and must therefore succeed upon this appeal.

Before parting from the case, however, I would add the following footnotes:

It may well be, as Mr Korn for the respondents suggests, that those acting for child claimants in future will on occasion think it prudent to issue proceedings (presumably under Part 7 rather than Part 8) to obtain the court’s approval for any partial settlement of the claim lest, as here, the defendant otherwise seeks to repudiate it. The need for this appears not hitherto to have been appreciated. Dietz itself, of course, was concerned with a final settlement agreement and the impact of the decision on partial settlements may not have been apparent even to those acquainted with the case.

Mr Korn further submitted that a consequence of applying Dietz is that Part 21.10, a rule designed for the protection of vulnerable people (children and patients), becomes instead a loophole to be exploited against them. Had the liability agreement reached here in April 2000 been between adults it would, of course, have been enforceable. Mr Korn submits that the Rules could and should provide, consistently with the general law concerning minors, that settlement agreements prior to court approval are voidable at the option of the child (not, as was held in Dietz open to repudiation by either party). That said, a Compromise Rule materially the same form as Part 21.10(1) has stood now for many years and opportunities to change it have not been taken. Whether it should now be altered must be for consideration by others. Meantime it is clearly desirable that Dietz (and perhaps also this case which illustrates Dietz’s inescapable application to partial settlements too) be brought more clearly to the profession’s attention. Most suprisingly it is not referred to either in the White Book or the Green Book.

Once a child claimant reaches adulthood, a settlement agreement which until then, on the authority of Dietz, has been invalid, can, it seems to me, unless and until repudiated, be treated as an offer and accepted by either side.

The doctrine of estoppel (in one form or another) may perhaps be available to a party who has acted to his detriment in reliance on a settlement agreement which the other party then seeks to repudiate. No such argument, however, was addressed to us on the present appeal (indeed, the point having surfaced in one of the respondent’s skeleton arguments was later expressly abandoned). This, therefore, is no occasion to explore its possibilities.

Those, I repeat, are just footnotes. They cannot affect the outcome of this appeal. For the reasons previously given I conclude that the settlement agreement reached here was invalid, that the defendants were accordingly entitled to repudiate it as they did, and that their appeal must accordingly be allowed.

I agree.

I also agree.