Evans v Royal Wolverhampton Hospitals NHS Foundation Trust

This remarkable case raises the question whether a party who requires the court’s permission to withdraw a Part 36 offer may be granted such permission on the basis of information and for reasons not disclosed to the party to whom the offer was made.

The claim is for damages for personal injury allegedly caused by a delay in treatment of the claimant at the defendant’s hospital.

At 21.45 on 24 August 2009 the claimant was admitted to the A&E Department of Newcross Hospital, Wolverhampton, with a history of a fall in the street while intoxicated. She was discharged later that evening. At 15.30 the next day the claimant was re-admitted to the hospital in an unresponsive state. Despite treatment, the claimant suffered a brain injury and has been left with a permanent disability. It is the claimant’s case that this was caused by the defendant’s negligence in failing to assess and treat her properly. The defendant has admitted negligence in failing to admit the claimant to hospital on 24 August 2009 overnight for observation but has denied that its negligence had any causal effect on the claimant’s clinical outcome.

This action was begun on 21 August 2012. At a case management conference on 4 June 2014 directions were given for the service of expert evidence. On 1 July 2014 a round table settlement meeting took place but no settlement was reached on that day.

Following the settlement meeting, by a letter dated 3 July 2014 the defendant made an offer under CPR Part 36 to settle the claim by paying a gross sum of £325,000. The offer letter included the following statements:

“This is a Part 36 Offer and is intended to have the consequences of Part 36. If it is accepted within 21 days from the date you are served with this letter, which we calculate to be until 4pm on 24 July 2014, the defendant will be responsible for your costs in accordance with Part 36.10 of the Civil Procedure Rules.

…

This offer can only be withdrawn or altered to be less advantageous to the claimant before [that time] with the permission of the Court.”

The latter statement reflected CPR 36.3(5), which states:

“Before expiry of the relevant period a Part 36 offer may be withdrawn or its terms changed to be less advantageous to the offeree, only if the court gives permission.”

Also relevant to what subsequently happened is CPR 36.9(2), which states that (subject to exceptions not material for present purposes):

“a Part 36 offer may be accepted at any time … unless the offeror serves notice of withdrawal on the offeree.”

On 23 July 2014 at 11.25am the defendant’s solicitors served by fax on the claimant’s solicitors a notice of withdrawal of the defendant’s Part 36 offer. At 12.45pm on the same day the claimant’s solicitors served on the defendant’s solicitors by fax a notice of acceptance of the defendant’s Part 36 offer. It is common ground that both these notices were served before the expiry of the 21 day relevant period referred to in CPR 36.3(5).

It seems clear that in these circumstances the effectiveness of the claimant’s notice of acceptance depended on whether the defendant was subsequently given permission by the court for the withdrawal of its offer. In Flynn v Scougall [2004] 1 WLR 3069 the Court of Appeal held that this was the position under an earlier version of CPR Part 36 where the defendant and the claimant had given notice of, respectively, withdrawal and acceptance of a Part 36 payment within the relevant period. May LJ said (at para 33):

“There is no need for an unseemly rush to establish procedural advantage. If, exceptionally, the defendant wishes within the 21 days to withdraw or reduce a Part 36 payment, he should apply for permission to do so and inform the claimant of his application. If the claimant wishes to accept the Part 36 payment within the 21 days without permission, he should give the requisite written notice of acceptance. The stage is then set for the Court to decide the defendant’s application in the light of the claimant’s notice of acceptance.”

It seems to me, although I have not heard argument on the point, that the position must be the same under the current version of CPR Part 36 in relation to a Part 36 offer. At all events I must assume this to be the case, for reasons that I will explain soon.

Pursuant to CPR 36.11(6), unless the parties agree otherwise in writing, where a Part 36 offer by a defendant to pay a single sum of money is accepted, that sum must be paid within 14 days of the date of acceptance. CPR 36.11(7) provides that:

“If the accepted sum is not paid within 14 days or such other period as has been agreed the offeree may enter judgment for the unpaid sum.”

On 28 July 2014 the claimant’s solicitors sent an email seeking confirmation that the sum of £325,000 would be paid by 6 August 2014, being 14 days from the date when the claimant had given notice of acceptance. The defendant’s solicitors replied on 29 July 2014 saying that the matter was under consideration.

On 31 July 2014 the claimant’s solicitors sent a further email giving notice of their intention to apply to the court to enter judgment if the sum was not paid by 6 August 2014. No response was received. On 6 August 2014 the claimant accordingly issued and served an application seeking a declaration that the proceedings had been settled for the sum of £325,000 and an order for judgment to be entered in favour of the claimant against the defendant.

Unknown to the claimant, the defendant had on 24 July 2014 issued an application for permission to withdraw its Part 36 offer. No notice of the application was served on or given to the claimant. The application was heard on 7 August 2014 by HHJ McKenna sitting at the Birmingham District Registry of the High Court. Upon reading a witness statement and skeleton argument in support of the application and hearing counsel for the defendant, the judge made the following order:

“1.

The Defendant shall have permission to make this application, pursuant to CPR rule 23.4(2)(c), without serving a copy of the application on the claimants.

2.

The Defendant shall have permission, pursuant to CPR rule 36.3(5), to withdraw its Part 36 offer made by letter dated 3 July 2014 …

3.

The purported acceptance of the Part 36 offer referred to in paragraph 2 above by the Claimant on 23 July 2014 shall be set aside and no steps shall be taken to seek to enforce payment of the said sum until further order.

4.

All proceedings in this matter be stayed for a period of 3 months from the date of this order.

5.

The requirement in CPR rule 23.9(2) (that the application notice and evidence in support be served on a respondent party after a without notice order shall have been made) shall be dispensed with until such time as the Court orders otherwise.

…

TAKE NOTICE that this order has been made without notice to the claimant and the claimant has the right to make an application to set aside or vary the terms of the order, pursuant to CPR rule 23.10.”

On 13 August 2014 the claimant received a copy of this order (which I will call “the ex parte order”). However, as sanctioned by paragraph 5 of the ex parte order, the claimant was not served with the application notice or the evidence which had been relied on in support of the defendant’s application. Nor was the claimant given any note or other record of what had been said at the hearing. Even now, the claimant and her representatives do not know the basis on which the ex parte order was made. The only information provided to them has been a redacted version of the defendant’s skeleton argument for the hearing on 7 August 2014. This contains a submission that there was a change of circumstances which justified permitting the defendant to withdraw its offer. However, in the copy disclosed to the claimant the parts of the skeleton argument which presumably explained the nature of this alleged change of circumstances have been blanked out.

On 14 August 2014 the claimant issued an application under CPR 23.10 to have the ex parte order set aside and also seeking an order for a copy of the defendant’s application notice dated 24 July 2014 and evidence in support to be served on the claimant. That application and the claimant’s application issued on 6 August 2014 to enter judgment initially came before HHJ Oliver-Jones on 9 September 2014. He adjourned the claimant’s applications until 16 September 2014 when they could be heard by HHJ McKenna. The hearing on 16 September was then adjourned due to lack of court time until 23 September 2014.

On 23 September 2014 HHJ McKenna decided as a preliminary issue the question of whether the court had the jurisdiction to permit the defendant to withdraw its Part 36 offer after the claimant had accepted it within the 21 day relevant period. He held that the court did have such jurisdiction. HHJ McKenna did not, however, decide any other issues. Instead, he made an order that:

“[t]he remaining questions as to whether:

a)

the claimant is entitled to be provided with the notice of application and supporting evidence filed by the defendant in support of its application dated 24 July 2014 to withdraw the Part 36 offer;

b)

the court should permit the defendant to withdraw its offer; and

c)

the action should be stayed until 7 November 2014.

be adjourned for an urgent expedited hearing to a High Court Judge …”

That urgent expedited hearing took place before me in London on 29 September 2014. Although the order of HHJ McKenna dated 23 September 2014 specifically refers only to the three questions which I have set out above, I understand there to be before the court all issues raised by the claimant’s two applications dated 6 and 14 August 2014 save for the question of jurisdiction which HHJ McKenna has decided. (It is because of that decision that I must assume that a notice of withdrawal of a Part 36 offer served within the 21 day relevant period may be validated retrospectively by permission given subsequently by the court.)

I have not seen the defendant’s application notice dated 24 July 2014 nor the evidence relied on in support of its application for permission to withdraw its Part 36 offer; nor have I been told the grounds on which the defendant contends that there had been a change of circumstances which made it just to give such permission. The defendant has asked me to consider this material without it being disclosed to the claimant. The claimant objects to that course.

In these circumstances the questions which I have in the first place to decide and on which I am ruling in this judgment are:

The claimant’s primary argument is that the procedure which the defendant has invited the court to follow in this case is contrary to natural justice and is impermissible as a matter of law. In support of that argument counsel for the claimant, Mr Samuel, cited three recent decisions of the Supreme Court in which the requirements of natural justice in the conduct of civil proceedings have been considered.

In Al Rawi v Security Service [2012] 1 AC 531 the issue was whether it could be lawful and proper for a court to order that a ‘closed material procedure’ be adopted at the trial of a civil claim for damages. A ‘closed material procedure’ was defined for this purpose to mean a procedure in which a party is permitted to rely on evidence without disclosing it to other parties where to do so would be contrary to the public interest, but with disclosure of such closed material being made to special advocates and, where appropriate, the court. The Supreme Court answered the issue in the negative, holding that Parliament alone could introduce such a procedure and that it was not open to the courts to do so.

Lord Dyson, who gave the leading judgment, identified the open justice principle (that proceedings should be conducted and judgments given in public) and the principle of natural justice as essential features of a common law trial (see paras 10-12). He went on to hold (at paras 18-22) that these fundamental principles limit the court’s inherent jurisdiction to regulate its own procedures. Lord Dyson said (at para 22);

“The basic rule is that (subject to certain established and limited exceptions) the court cannot exercise its power to regulate its own procedures in such a way as will deny parties their fundamental common law right to participate in the proceedings in accordance with the common law principles of natural justice and open justice. To put the same point in a different way, the court must exercise the power to regulate its procedure in a way which respects these two important principles which are integral to the common law right to a fair trial.”

Lord Dyson identified two established narrowly defined categories of case where departure from the usual rules of procedure has been held to be justified: namely, cases involving the interests of children and confidentiality cases “where the whole object of the proceedings is to protect a commercial interest” (see paras 63-65).

Agreeing with Lord Dyson, Lord Hope said (at para 72):

“I have always believed that a court of unlimited jurisdiction is the master of its own procedure. But that does not mean that the court can do what it likes. Everything that it does must have regard to the fundamental principles of open justice and of fairness. The principle of legality demands nothing less than that. There is, of course, a very wide area of procedure where these issues of principle are not engaged at all. There comes a point, however, where the line must be drawn between procedural choices which are regulatory only and procedural choices that affect the very substance of the notion of a fair trial. Choices as to how the conduct of the court's business may be simplified, made less expensive or made easier to understand are one thing. Choices that cut across absolutely fundamental principles such as the right to a fair trial, the right to be confronted by one's accusers and the right to know the reasons for the outcome are entirely different. The court has for centuries held the line as the guardian of these fundamental principles.”

Following this decision, Parliament enacted the Justice and Security Act 2013 which has established a closed material procedure in relation to “sensitive material”, defined by section 6(11) of the Act to mean “material the disclosure of which would be damaging to the interests of national security”. It is not suggested that any interest of national security arises in the present case.

In Bank Mellat v HM Treasury (No 2) [2014] AC 700 questions arose as to whether the Supreme Court (i) could and (ii) should adopt a closed material procedure on the appeal in circumstances where the court of first instance had followed a closed material procedure provided for by statute. The Supreme Court gave affirmative answers to these questions (in each case by a majority). However, Lord Neuberger PSC, who wrote the leading judgment, gave further emphatic endorsement to the principles of open justice and natural justice. Having described the principle of open justice as “fundamental to the dispensation of justice in a modern, democratic society” (para 2), Lord Neuberger continued (at para 3):

“Even more fundamental to any justice system in a modern, democratic society is the principle of natural justice, whose most important aspect is that every party has the right to know the full case against him, and the right to test and challenge that case fully. A closed hearing is therefore even more offensive to fundamental principle than a private hearing. At least a private hearing cannot be said, of itself, to give rise to inequality or even unfairness as between the parties. But that cannot be said of an arrangement where the court can look at evidence or hear arguments on behalf of one party without the other party (‘the excluded party’) knowing, or being able to test, the contents of that evidence and those arguments (‘the closed material’), or even being able to see all the reasons why the court reached its conclusions.”

Lord Hope (at para 81) repeated the distinction he had drawn in the Al Rawi case:

“There may come a point where a line must be drawn when procedural choices of one kind or another have to be made. A distinction may be drawn between choices which do not raise issues of principle and choices that affect the very substance of a fair trial. There is no room for compromise where the choices are of the latter kind.”

In R (BSkyB Ltd) v Central Criminal Court [2014] AC 885 the Supreme Court held that on the hearing of an application for a production order under section 9 and Schedule 1 of the Police and Criminal Evidence Act 1984 it was not permissible for the court to consider evidence adduced by the applicant which was not disclosed to the respondent. The Supreme Court reached that conclusion, however, because the Act expressly requires such an application to be made “inter partes”. The Supreme Court rejected the argument that, as a general proposition, the reasoning of the Al Rawi case extends to an application made by a party to litigation to obtain evidence from a third party. As Lord Toulson, with whom all the other justices agreed, explained (at para 28):

“This is because such an application will not ordinarily involve the court deciding any question of substantive legal right as between the applicant and the respondent. Rather it is an ancillary procedure designed to facilitate the attempt of one or other party to see that relevant evidence is made available to the court in determining the substantive dispute. Applications of this kind, such as an application for a witness summons in civil or criminal proceedings, are typically made ex parte.”

In addition to these three decisions of the Supreme Court, Mr Samuel referred to VB, CU, CM and EM v Westminster Magistrates Court [2014] EWHC 889 (Admin), in which a Divisional Court held that it was unlawful for a judge hearing a request for extradition to receive and consider evidence not disclosed to the state requesting extradition. Moses LJ said (at para 29):

“This attempt to create a new category of case to which the basic principles of natural justice do not apply is founded on the Supreme Court's acceptance that there are two classes of case where a departure from the normal rule has been justified for special reasons in the interests of justice ( Al Rawi [63] and [64]). But if, to the two categories of children and protection of commercial interests, there is to be added a third, without Parliamentary intervention, then it is for the Supreme Court to make that addition, not for this court. We are bound by the principles expressed in Al Rawi and BSkyB .”

Two points emerge clearly from these cases. The first is that adherence to the principle of natural justice is not an optional feature of litigation from which a court has power to derogate because it considers that in the particular circumstances the need to follow a fair procedure is outweighed by a conflicting public or private interest. Subject only to certain established and tightly defined exceptions, the right to participate in proceedings in accordance with the principle of natural justice is absolute. The second point is that, although the Al Rawi case concerned the trial of a civil claim for damages, the reasoning which underpins that decision is not confined to trials and is of broader application. The broader principle which I derive from these authorities is that the logic of the Al Rawi case applies whenever a court is deciding a question of substantive legal right as between the parties to the litigation. This is consistent also with Article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms, which establishes the right of everyone to a fair and public hearing in “the determination of his civil rights and obligations” and provides only for balancing the requirement of publicity and not that of fairness against other interests.

Faced with the authorities cited by the claimant, Mr Counsell on behalf of the defendant did not seek to maintain the contention advanced in the defendant’s skeleton argument that the court can refuse the claimant’s application to set aside the ex parte order without permitting the claimant to see the evidence or know the basis on which the order was made. Mr Counsell accepted that this information must be disclosed to the claimant and that the claimant must then have the opportunity to respond to the defendant’s case before a final decision is made as to whether the defendant should be permitted to withdraw its Part 36 offer. But he asked for “breathing space”. He said that this was what the order of 7 August 2014 was seeking to achieve in providing for the proceedings to be stayed for a period of three months. Mr Counsell asserted that there are good reasons why it is not in the interests of justice that the claimant should see the evidence or know the grounds relied on by the defendant at the moment. In effect Mr Counsell was seeking an adjournment of the hearing until a date (which he said he could not yet specify exactly) when the defendant’s evidence can properly be disclosed to the claimant.

Before granting an adjournment, however, the court would need to be satisfied that there is a sufficient reason to do so. Mr Counsell submitted that, for this limited purpose, it is permissible for the court to consider evidence and argument which has not been disclosed to the claimant. In support of this contention he relied on the passages in the judgment of Lord Hope in the Al-Rawi case at para 72 and in the Bank Mellat case at para 81 which I have quoted above and on the similar distinction between ancillary matters and questions of substantive rights drawn in the BSkyB case. He submitted that the adjournment which the defendant is seeking is a procedural matter which does not engage the fundamental principles of open and natural justice. In due course the claimant can see the defendant’s evidence and the substantive questions raised by the applications can then be argued and decided in accordance with an open and fair procedure.

Mr Samuel responded to the effect that justice delayed is justice denied. The claimant is at present being kept out of money which, if her acceptance of the defendant’s Part 36 offer was valid, she should have been paid by 6 August 2014. He submitted that the delay that has already occurred, and any further delay, affects her substantive rights and is causing her, as a severely disabled person, real prejudice. In these circumstances any application to adjourn the hearing can itself only properly be conducted on the basis that the grounds and evidence relied on in seeking an adjournment are disclosed to the claimant.

The question which I found difficult when listening to the oral argument and which led me to reserve judgment is whether I should look at the defendant’s evidence solely for the purpose of deciding whether there is any merit in the application for an adjournment. On the one hand it seemed to me unfair to follow a procedure, for any purpose at all, which involves putting the parties on an unequal footing. But on the other hand I felt a concern that, without knowing the reasons which are said by the defendant to require an adjournment, I cannot say whether they are insufficient. I also felt a concern that it might be unfair to require the defendant to disclose the reasons to the claimant, or for the court to refuse to consider them unless they are disclosed, when it is the defendant’s case that such disclosure would itself defeat the reasons why an adjournment is required.

On consideration, however, I have come to the clear conclusion that these concerns are misplaced and that I can and should reject the application for an adjournment without considering any evidence or argument which the defendant has refused to disclose to the claimant.

I remind myself that the context for this hearing is that the defendant has already been given permission to withdraw its Part 36 offer and that such permission was given on an application made without notice to the claimant.

The practice of making orders which determine questions of substantive legal rights on an application made without notice is itself an exception to the principles of open and natural justice. As such, it is a power which, in principle and as a matter of established practice, can only properly be exercised in certain limited circumstances and subject to vital safeguards.

As a general principle, such an application should not be made without notice unless either giving notice would enable the respondent to take steps to defeat the purpose of the application or there has been literally no time to give notice before the urgent assistance of the court is required: see National Commercial Bank Jamaica v Olint Corpn Ltd [2009] 1 WLR 1405, 1408 at para 13. Paradigm cases falling in the first of these categories are freezing orders and search orders, where there is concern that giving notice of the application might well prompt the respondent to take evasive action which would render the order ineffective before it was made.

It is standard practice when granting a freezing order, search order or other form of interim injunction without notice for the court to require undertakings that the applicant will serve on the respondent at the same time as the order or as soon as practicable copies of all evidence and documents which were relied on in support of the application. There is also an obligation on the applicant to provide the respondent with a note or transcript of the hearing. These requirements reflect the rights of the respondent to know the basis on which an order affecting his legal rights has been made and to apply to set aside or vary the order. It is difficult to see how it could ever be compatible with natural justice to determine a question of substantive legal right against a party to litigation at a hearing held without notice to that party unless he is afforded such protection.

I cannot accept that it was or could have been appropriate in this case for the defendant to apply to the court for permission to withdraw its Part 36 offer and to have the claimant’s purported acceptance of the offer set aside without giving notice of its application to the claimant. There was clearly ample time in which to give such notice between 24 July 2014 when the application was issued and 7 August 2014 when the application was heard. Nor is an application for permission to withdraw a Part 36 offer one whose purpose could be defeated by the offeree if notice of the application is given before an order granting the application is made.

I understand the defendant to have been concerned that, pursuant to CPR 36.11(6) and (7), unless permission to withdraw the offer was given within 14 days of its purported acceptance, the claimant would be entitled to enter judgment for the unpaid sum. In response to the claimant’s application to enter judgment, however, it would have been open to the defendant to argue that the purported acceptance of its Part 36 offer was invalid because the defendant had served notice of withdrawal on the claimant. This would have raised the question of whether the notice of withdrawal was valid, which in turn would depend on whether the court gave permission for the withdrawal of the offer. The logical approach would therefore have been to list the defendant’s application for permission to withdraw its offer and the claimant’s application to enter judgment for hearing at the same time.

Even if it were thought essential for the defendant’s application for permission to withdraw its offer to be heard within the 14 day period referred to in CPR 36.11(7), this would not provide any justification for making the application without notice to the claimant. There is no step which, if given notice of the application, the claimant could have taken to prevent an order giving the defendant permission to withdraw its offer from being effective.

It accordingly seems to me that it was wrong in principle for the defendant to make its application for permission to withdraw its Part 36 offer without notice to the claimant and for the court to entertain that application.

It was all the more wrong in my view, when such permission was given and the claimant’s purported acceptance of the Part 36 offer was set aside at a hearing from which the claimant was excluded, to conceal from the claimant the grounds on which that order had been made. I am not aware of any precedent for such a procedure and none was cited. That is unsurprising as the procedure seems to me to represent a denial of justice. As discussed, making orders which determine questions of substantive right as between the parties to litigation without notice to a party against whom such an order is made can only be justified if that party has the right to apply to the court to set aside or vary the order upon being given notice of it. That right is embodied in CPR 23.9(3) and 23.10. However, the right to apply to have the order set aside is only real and meaningful if the party against whom the order was made (the respondent) is told the grounds on which the order was sought and made and is shown the evidence on which the applicant relied. It is manifest that, unless the respondent knows the case it has to meet, it cannot adduce evidence or advance arguments to persuade the court that it was wrong to make the order.

CPR 23.9(2) states that where the court makes an order whether granting or dismissing an application which it permitted to be made without service of a copy of the application notice, then:

“a copy of the application notice and any evidence in support must, unless the court orders otherwise, be served with the order on any party or other person–

(a)

against whom the order was made; and

(b)

against whom the order was sought.”

It was under this rule that the court in paragraph 5 of the ex parte order quoted earlier “ordered otherwise” by dispensing with the requirement to serve the application notice and evidence in support on the claimant. I cannot accept, however, that it is legitimate to use this dispensing power in a way which is calculated to prevent a party against whom the order was made from exercising effectively its right to make an application to set aside the order under CPR 23.10. Yet that is plainly the effect of the order made in this case.

For these reasons, the ex parte order should not in my view have been made and it follows that the claimant is entitled as of right to have it set aside.

This would not prevent the defendant, now that both parties are before the court, from arguing that it should be given permission to withdraw its Part 36 offer and from opposing the claimant’s application to enter judgment on the basis that such permission should be granted. However, in accordance with the principle of natural justice such arguments would have to be supported by reasons and evidence to which the claimant was given an opportunity to respond. This case does not fall into a category where any form of ‘closed material procedure’ is permissible.

The defendant has not served any evidence or disclosed any reasons to support the contentions that it should be given permission to withdraw its Part 36 offer and that the claimant’s acceptance of the offer is therefore invalid. In the absence of any such evidence or reasons, the claimant’s acceptance of the offer must be treated as effective, from which it follows that the claimant is entitled to judgment pursuant to CPR 36.11(7) for the accepted sum.

The defendant cannot, in my view, avoid that conclusion by requesting an adjournment in circumstances where no evidence has been served and no reasons have been disclosed in support of that request. I accept the claimant’s submission that the application for an adjournment engages her substantive legal rights and is an application which must itself be decided in accordance with the principle of natural justice. The claimant’s application to enter judgment is before the court and there is no insufficiency of time or other purely administrative reason why it cannot be determined now. On the material currently before the court, the claimant is entitled to have judgment entered against the defendant. If the defendant wishes to argue that judgment should not be entered against it now, it must therefore as a starting point indicate reasons which are capable of providing a substantive answer to the claimant’s application. The principle of natural justice requires that the claimant is entitled to know those reasons and to have an opportunity to dispute them.

I conclude that it would be unlawful and improper for the court to receive evidence or argument from the defendant in support of a request for an adjournment without the claimant knowing the contents of that evidence and argument.

It follows that the defendant’s attempt to withhold from the claimant the material that it wishes the court to consider is not a position which it is entitled to adopt. Either the defendant must now serve the evidence and disclose the arguments on which it relies to justify the withdrawal of its Part 36 offer or judgment should now be entered in favour of the claimant.

There is another separate line of reasoning which leads me to the same conclusion. Part 36 provides a statutory procedure designed to facilitate and encourage the settlement of disputes. It is essential to its efficacy that there should be clarity and certainty in its operation. An important element of the scheme is that, when a Part 36 offer is made, the offeree knows that it has a period of 21 days (or longer if the parties agree) in which to decide whether or not to accept the offer – subject only to the reservation that the offer may be withdrawn before the expiry of that period if the court gives permission.

The test to be applied when the court is considering whether to give a party permission to withdraw a Part 36 offer is whether there has been a sufficient change of circumstances to make it just to permit the party to withdraw its offer. That test was set out by the Court of Appeal in relation to payments into court in Cumper v Pothecary [1941] 2 KB 58 at 70. The Court of Appeal gave as examples of such circumstances “the discovery of further evidence which puts a wholly different complexion on the case … or a change in the legal outlook brought about by a new judicial decision…” This test was adopted in relation to Part 36 payments by the Court of Appeal in Flynn v Scougall [2004] 1 WLR 3069, 3079 at para 39. I see no reason why the test should be different in relation to a Part 36 offer and, as mentioned earlier, the defendant’s application to withdraw its Part 36 offer was made on the basis that this is the applicable test.

Although I am dealing with the matter on the footing that the court’s permission for the withdrawal of the offer may be given after the notice of withdrawal was served, the date as at which the court must decide whether there was a sufficient change of circumstances to make it just to permit the party to withdraw its offer must clearly be the date on which the offer was purportedly withdrawn. It cannot be open to a party who did not have good reason to withdraw its offer at the time when it gave notice of withdrawal during the 21 day period and who would have been refused permission by the court on that date to justify the withdrawal by reference to matters discovered subsequently. This being so, I find it difficult to envisage what legitimate reason there possibly be for seeking to conceal from the offeree the way in which circumstances are said to have changed after the offer was made and before the notice of withdrawal was given. But even assuming there is such a legitimate reason, it seems to me that the matter relied on as constituting such a change of circumstances must in principle be one which the offeror is ready to disclose at the time when notice of withdrawal is given and the necessary application for permission is made. Part 36 sets out a structured series of steps, with specified timescales, for the acceptance of an offer made in accordance with its provisions and for payment of the accepted sum. It would be inconsistent with this regime and with the aim of providing a fair, speedy and effective mechanism for the settlement of proceedings, if the offeree could be required to wait in limbo for an indeterminate time, as is proposed in this case, with the whole action stayed meanwhile, before it can be established whether the offer was validly accepted within the 21 day relevant period such that the offeree was entitled to payment or judgment within 14 days thereafter.

I would accordingly hold that the only new circumstances which could make it just to permit the party to withdraw its offer before the expiry of the relevant period are circumstances which the offeror is able and willing to make known to the offeree at the time of serving notice of withdrawal.

For the reasons given, I have concluded that: