Brennan v Eco Composting Ltd. & Anor

The background to this application is that on 11 December 1998, John Brennan (“the claimant”) was injured in an accident and as a consequence of his injuries, sadly he became a patient. On 27 January 2004, proceedings were commenced on his behalf against ECO Composting Limited and J. Bascombe Contractors Limited (“the defendants”). On 19 September 2005, the defendants made a Part 36 payment and so the prescribed 21 day period for acceptance expired on 10 October 2005.

On 29 March 2006, the claimant’s solicitors notified the defendants’ solicitors that the claimant wished to accept the payment into court for which they required the approval of the court as the claimant was a patient. On 3 October 2006, the matter came in front of me in Winchester on an application by the claimant for the court’s approval of the decision to accept the money paid into court but the defendants also sought leave to take the money out of court because of what they contended had been a change in the claimant’s life expectancy.

On that occasion, an order was made for further evidence to be served so that the two applications could be decided by me at an adjourned hearing in Winchester on 10 November 2006 when it would have to be determined first if there had been a relevant change in the claimant’s life expectancy, second if the defendant should be given leave to take the money out of court and third whether the court should approve the acceptance of the money paid into court.. Shortly before the date of this adjourned hearing, the solicitors for the defendants indicated that they would not pursue their application to withdraw the money in court and so the claimant’s solicitors restored their application to obtain the court’s approval to take out of court the sum which had been paid in.

On 10 November 2006, I approved the settlement but at that hearing, there was then a dispute as to which party should be entitled to receive the interest on the money which had been paid into court in respect of the period until 3 October 2006, which was when the matter came before the court and when the payment would have been approved if the defendants had not made an application to withdraw the payment into court which was an application which they later withdrew.

Both Mr Timothy Lamb QC counsel for the claimant and Mr Alan Jeffreys QC counsel for the defendants submitted that their respective clients were entitled to all the interest, which had accrued prior to 3 October 2006 on the money paid into court.

During the course of their oral submissions, it became clear that counsel had carried out some research to discover if there was any authority on the issue in dispute but that at that time, their researches were not complete. It was then agreed that counsel would carry out further research and that after that was completed, they would make further written submissions which they have now done. Those submissions have been helpful and Mr. Jeffreys has made detailed submissions to which I will refer in due course. I gave Mr. Lamb the opportunity to comment on the authorities relied upon by Mr. Jeffreys in his latest submissions and he availed himself of that opportunity.

8.It is common ground that the appropriate starting point is the Part 36 Practice Direction (“ the Practice Direction”) which provides so far as is relevant that:

“7.10

(1) Unless the parties have agreed otherwise:

(1)

interest accruing up to the date of acceptance until payment out will be paid to the offeror, and

(2)

interest accruing as from the date of acceptance until payment out will be paid to the offeree”.

It is also relevant that CPR Part 36 contains provisions on how a party can accept a payment and they state that:

There are special provisions explaining how patients and others under a disability can accept money paid into court and CPR 21.10 provides that:

“(1)

Where a claim is made-

(a)

by or on behalf of a child or patient; …

no settlement, compromise or payment and no acceptance of money paid into court shall be valid, so far as it relates to the claim by, on behalf of or against the child or patient, without the approval of the court….”

The submission of Mr. Lamb is that the claimant is entitled to all the interest for the whole period and he relies on Rule 31 of the Court Fund Rules 1987 which has a headnote stating “Money to be paid in satisfaction, etc.”and which provides that

“ (1) Where money has been-

(a)

paid into court in accordance with CPR Part 36; or

(b)

appropriated in accordance with CPR rule 37

in satisfaction of a claim, it shall only be placed to a basic account 21 days after the effective date of lodgement or appropriation and not before.

(2)

[Omitted]

(2A) Paragraph (1) shall not apply where a request for payment from the claimant is received within the 21 days specified in that paragraph.

(3)

[Omitted]

(4)

Where money is required under rules 16(7) or 19(3) the remittance shall be accompanied by a notice stating the date and the reason why the money was paid into court.

(5)

Where the claimant is under a disability money lodged or paid into court under paragraphs (1) or (2) shall be placed to a basic account in any event, whether or not he has accepted it, until the claim is determined or settlement is reached, unless the court otherwise directs”

I am unable to agree with Mr. Lamb that this provision means or indicates in any way that claimants under a disability are entitled to interest from the date of payment for four reasons. First, the mere fact that money paid into court on behalf of claimant under a disability earns interest earlier than a payment in for an ordinary claimant does not show or imply in any way that there should be any difference in the treatment in any other respects between these two different groups in the absence of any specific provisions to that effect. Second, there is nothing anywhere in the CPR, which suggests that there should be different treatment between these two groups on the allocation of the interest.

Third, if the draftsman of the CPR had wanted to ensure that the only difference between the treatment of payments in for claimants under a disability and other claimants was that interest would be payable earlier on the monies actually paid into court for claimants under a disability than for other claimants, then the provisions in the CPR and the Court Fund Rules would have been drafted exactly as they have been. Finally, the Practice Direction, which I quoted in paragraph 8 above, applies across the board to all payments into court for all claimants irrespective of whether or not they are under a disability and it certainly does not support any suggestion that the two groups should be treated differently on the allocation of the interest payable on monies paid into court. I conclude that in accordance, the claimant is only entitled to receive the interest from, in the words of the Practice Direction “the date of the acceptance” but the meaning of those words have been the subject of submissions,

It is of paramount importance to ascertain when acceptance of a payment in by a claimant patient actually occurs and Mr. Lamb contends that it occurs when it is intimated on behalf of the claimant that the payment is accepted.

Mr. Jeffreys submits first that the words “up to the date of acceptance” in the Practice Direction mean up to the date of a valid acceptance by the claimant and second that there can only be a valid acceptance in the light of CPR 21.10(which I have set out in paragraph 10 above) and that only occurs when the acceptance of the payment on behalf of the claimant patient has been approved by the court.

Thus it is said on behalf of the defendants that they are entitled to the interest for the entire period until the Court approved the settlement, although the defendants accept correctly that the claimant should receive interest from 3 October 2006 because, as I have explained, that was when the court would have approved the payment if the defendants had not made an application to withdraw the money in court which was an application which they later abandoned.

In support of his submission that the payment into court could not be accepted and was not accepted until the court’s approval was obtained, Mr. Jeffreys submits that the purpose of the rule in CPR 21. 10 (which I have set out in paragraph 10 above) is to protect the interests of a child or patient, who is a party to a claim because it provides that an acceptance of the defendant’s payment in could not be a valid acceptance until the approval of the court was obtained.

In support of his submission, Mr. Jeffreys relies on the reasoning of the Court of Appeal in Whitwood v Drinkall [2003] EWCA Civ 1547 which concerned a minor, who had been struck by a car when travelling on her bicycle and in consequence of which she sustained severe head injuries. Before proceedings were started, the claimant’s solicitors made a Part 36 offer to settle the issue of liability on a 80:20 basis in her favour. This offer was accepted by the defendant’s insurers but it was then withdrawn some 18 months later on the basis that the defendant wished to obtain a higher degree of contributory negligence because the claimant had not been wearing a helmet.

In response, the claimant issued Particulars of Claim in which she relied on the earlier exchange of letters which, she pleaded, constituted a binding agreement on the issue of liability. The defendant resisted the claim on the basis that the agreement could not have been binding without the approval of the court.

Thus the validity of the compromise agreement had to be determined as a preliminary issue. The judge at first instance found for the claimant that there had been a binding agreement on the issue of liability, which was a decision upheld on appeal. However, on a second appeal, the Court of Appeal (Simon Brown, Jonathan Parker and Thomas LJJ) reversed the decision.

The question of whether or not the settlement agreement was binding on the parties was before the Appellate Committee and it was decided against the child because that was held to be the true effect of RSC Order 80, r11, which was the provision equivalent to the present provision in CPR Part .21.10(1)).

23.Simon Brown LJ giving the only reasoned judgment in Whitwood sets out at paragraphs 14 and 15 of his judgment the material parts of the speeches in the House of Lords. Lord Morris of Borth-y-Gest explained at page 183 that:

“…If in the present case a writ had first been issued and if thereafter there had been discussions leading to agreement, such agreement would have lacked validity unless and until the approval of the court was given…”

Lord Pearson stated at page 190 that:

“The settlement … in which the infant was interested, was only a proposed settlement until the court approved it. Either party could lawfully have repudiated it at any time before the court approved it”

In Whitwood, it was held that Dietz’s case was decisive upon the issue before them as in the words of Simon Brown LJ:

“…the fact that agreement here was reached pursuant to the express provisions of Part 36 can make no possible difference” (paragraph 16) and

“… 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 … and must therefore succeed…” (paragraph 19)

So Mr. Jeffreys submits that the position should be the same in the present case concerning as it does a payment into court rather than an offer, thereby requiring the court’s permission to withdraw or reduce it. He contends first that “acceptance” is a word used in various parts of the CPR, but particularly in Part 36 and second that its meaning should be consistent throughout the Rules. So Mr. Jeffreys submits that it is clear from CPR 21.10 (1) that in the present case an acceptance is not valid until the court approves it.

On that interpretation, it is contended that under the Practice Direction, a claimant had not “accepted” and could not have accepted a Part 36 payment until his intended acceptance has been approved by the Court. Mr. Lamb disagrees and he point out that the Practice Direction is not a rule of court and that in accordance with CPR1.1 and 1.2 it should be interpreted so as to allow some discretion in the Court. It is true that all powers of the courts must be exercised in accordance with the overriding objectives (CPR 1.2), which means that they must be exercised with the objective “of enabling the court to deal with cases justly” (CPR 1.1)

I am unable to accept Mr. Lamb’s submission as there is in my opinion nothing unjust about a state of affairs in which the claimant can only receive the interest on money paid into court after the court’s approval is obtained. After all, a claimant can take that factor into account in deciding whether to accept a payment in. Solicitors for claimants should be able to ensure that a judge is available to approve the acceptance of the money paid into court very speedily after a claimant has decided to accept the money. Furthermore, a claimant is not bound by an intimation of acceptance until the court approves the acceptance.

So the provisions in CPR Part 1.1 and 1.2 do not preclude me concluding that a payment into court cannot be accepted validly on behalf of a person under a disability until the court has approved the acceptance of the payment into court because as is stated in CPR 21.10 quoted in paragraph 10 above “… no acceptance of money paid into court shall be valid, so far as it relates to the claim by, on behalf of or against the child or patient, without the approval of the court”. If an “acceptance” of a payment into court could be validly made on behalf of a claimant patient before the court had approved of it, this would be contrary to CPR21.10 as well as the reasoning behind the Dietz and the Whitwood decisions.

I conclude that Mr. Jeffreys is correct in submitting that:

After I circulated a draft of this judgment, the parties agreed that in the light of my judgment, I should order that all interest that had accrued on the sum of £600,000 between the date of payment into Court and 3 October 2006 should forthwith be paid out to the Defendant.