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England and Wales High Court (Queen's Bench Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> O'Grady v B15 Group Ltd [2022] EWHC 67 (QB) (17 January 2022) URL: http://www.bailii.org/ew/cases/EWHC/QB/2022/67.html Cite as: [2023] 1 All ER (Comm) 309, [2022] EWHC 67 (QB) |
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QUEEN'S BENCH DIVISION
B e f o r e :
____________________
LORRAINE HEATHER O'GRADY (widow and executrix of the Estate of MARTIN JAMES O'BRIEN |
Claimant |
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- and - |
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B15 GROUP LIMITED (formerly BRIGHTHOUSE GROUP LIMITED) |
Defendant |
____________________
Mr David Brounger (instructed by Kennedys Law LLP) for the Defendant
Hearing date: 9 December 2021
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Crown Copyright ©
"The Claimant offers to resolve the issue of liability of on 80/20 basis. For the avoidance of doubt if the Defendant accepts this offer it will only be required to pay 20& of the Claimant's damages."
Pausing there, however, I am asked by the Claimant to note that the Defendant's concession was hardly surprising. The Claimant says it was surely always obvious that the 23 February 2021 communication was not that intended. Read literally, the assertion in the "clarification clause" of the offer that the Defendant would only be required to pay "20&" of the Claimant's damages made no sense and plainly invited clarification. Further, any mention of an 80:20 ratio in an offer from a claimant would ordinarily indicate an expectation for an 80% apportionment in their favour, yet this phrase, insofar as it meant anything, oddly suggested the opposite. The implausibility of the Claimant truly intending to compromise her claim for only 20% of its value becomes even more striking given the Defendant had made an offer many months previously of 60:40 in her favour as well as subsequently admitting primary liability.
These observations, whilst no longer relevant to a former factual question whether the offer had been made in mistake, remain pertinent to the particular circumstances by which the Claimant seeks the relief she does. Mr Wilkinson emphasised that the circumstances whereby an offer of settlement are known by the receiving party to be mistaken must be rare and extreme. Whilst submitting that these particular circumstances justify her Application, the Claimant by no means seeks to suggest that any mistake by a party putting forward a Part 36 should result in an agreement being rendered void. Mr Wilkinson contrasted this case for one where, say, a claimant had offered to accept 80:20 in their favour rather than 90:10 and so where the margin of error would not, or not obviously, have been apparent to the recipient. He adds that the proposition of an obvious and understood mistake being relevant could as much work to the relief of a defendant who, for example, offers a large sum expressed in sterling rather than, say, dollars.
The Claimant accepts the fundamental principle that Part 36 is intended to be a self-contained code but submits it would be a very peculiar procedural code that can wilfully shut its eyes to a mistake of this kind. Whilst there is every justification for the rules to impose limits on the circumstances in which an offeror can change their mind about the making of an intended offer within the initial "relevant period", there ought to be no such justification when the offer was made, and known to have been made, in error.
By way of similar qualification, and not unconnected to his submission above, Mr Brounger briefly reminded me of the facts as give rise to the Defendant's allegation of contributory negligence against the Deceased. The joint expert accident reconstruction report in the criminal proceedings had concluded that the Deceased was travelling significantly faster than the speed limit, having passed a camera some 100 metres from impact at 46 – 48 mph and then accelerated up to 56mph before the collision. They also concluded that had the Deceased been travelling at the speed limit he would have been able to avoid the collision.
The Defendant's position therefore is that Part 36 is both the starting and end point, being a self-contained code. There is no basis anywhere in Part 36, or otherwise generally in the CPR by way of cross-reference, for example by reference to the Overriding Objective, for importing into Part 36 the feature of an offer having been made by mistake. The application of a strict approach being applied once an offer has been made facilitates certainty and consistency in the operation of a Rule that is deliberately intended to codify and simplify the resolution of disputes. Seen in this way, cases initially focusing upon the interpretation of offers, even if Part 36 offers, have no true bearing on the workings of Part 36 itself and whether it is capable of incorporating the doctrine of mistake.
The Rules Committee, the Defendant submits, could easily have provided an express provision that where there an offer had been accepted under a mutual mistake it could be withdrawn or varied even after acceptance. The absence of such safeguard serves to emphasise the importance of preparation and satisfaction in the initial drafting of an offer before submission. In response to the Claimant's reliance upon general principles of "dealing with cases justly" to resolve the dispute, the Defendant submits that any reasonable citizen reading Part 36 would realise that once an offer is made and accepted then the consequences contained in the code will follow. If they have made a mistake in the formulation of their offer, then it is only "just" that that should be their "look-out". Any perceived harshness of consequence in this approach is by far eclipsed by the need for certainty and consistency of the procedure.
Having regard to such expressed aims as to proportionality and cost-effectiveness, HHJ Parker was satisfied that the normal rules of contract were excluded from the Protocol [Paras 36-39] and so could not be used to assist.
A similar conclusion was reached in 2019 by HHJ Davey QC in the County Court claim in Harris v Browne D00BD701. HHJ Davey QC reviewed similar commentaries, as well as the decision itself, in Fitton v Ageas and likewise concluded the effect of the Protocol was to exclude both common law principles or "external data" as established mistake. He was, however, satisfied that there was a case for the application of the Overriding Objective where, as in Harris, the defendant had purported to accept an offer knowing that it was not an intended offer, being substantially lower than what must have been intended.
"A mistake as to the terms of the contract, if known to the other party, may affect the contract. In this case, the normal rule of objective interpretation is displaced in favour of admitting evidence of subjective intention. In Hartog v Colin and Shields 1 [1939] 3 All E.R. 566 the defendants offered for sale to the plaintiffs some Argentine hare skins, but by mistake offered them at so much per pound instead of so much per piece. The previous negotiations between the parties had proceeded on the basis that the price was to be assessed at so much per piece, as was usual in the trade. But the plaintiffs purported to accept the offer and sued for damages for non-delivery. The court held that the plaintiffs must have known that the offer did not express the true intention of the defendants and that the apparent contract was therefore void".
Mance J (as he then was) in O.T. Africa Line Ltd v Vickers Plc [1996] 1 Lloyds Rep 700 at 703:-
"I further proceed on the basis that Vickers would not be bound [by the agreement] if they could show that OTAL, or those acting for OTAL, either knew or ought reasonably to have known that there had been a mistake by Vickers or those acting for Vickers. ………… The question is what is capable of displacing that apparent agreement. The answer on the authorities is a mistake by one party of which the other knew or ought reasonably to have known. I accept that this is capable of including circumstances in which a person refrains from or simply fails to make enquiries for which the situation reasonably calls and which would have led to the discovery of the mistake. But there would have, at least, to be some real reason to suppose the existence of a mistake before it could be incumbent on one party or solicitor in the course of negotiations to question whether another party or solicitor meant what he or she said."
As stated in the opening of the leading judgment from Moore-Bick LJ, the central question on the appeal was whether Pt 36 embodies a self-contained code or is subject to the general law of offer and acceptance "in so far as it fails expressly to provide otherwise". The significance of this latter phrase becomes clear from Para 6 of the judgment:
"Basic concepts of offer and acceptance clearly underpin Part 36, but that is inevitable given that it contains a voluntary procedure under which either party may take the initiative to bring about a consensual resolution of the dispute. Such concepts are part of the landscape in which everyone conducts their daily life. It does not follow, however, that Part 36 should be understood as incorporating all the rules of law governing the formation of contracts, some of which are quite technical in nature. Indeed, it is not desirable that it should do so. Certainty is as much to be commended in procedural as in substantive law, especially, perhaps, in a procedural code which must be understood and followed by ordinary citizens who wish to conduct their own litigation. In my view, Part 36 was drafted with these considerations in mind and is to be read and understood according to its terms without importing other rules derived from the general law, save where that was clearly intended".
This observation returns one to the real difference between the parties in this case. The Claimant submits that the common law principle of unilateral mistake is both consistent and compatible with the question whether her Part 36 offer should be treated as valid, whereas the Defendant points to the absence of clear intention within the drafting of Part 36 that it should.
"34. The parties agree that the issues are to be determined by applying an objective test to arrive at the meaning of the correspondence. While the provisions of Part 36 are not part of the law of contract, they are made against the background of that law. The need to apply an objective test is one of the rules which apply in both contexts. Under the objective test, a party may be bound if his words or conduct are such as to induce a reasonable person to believe that he intends to be bound, even though he in fact has no such intention. The Editors of Chitty on Contracts 30th edn Volume 1 para 2-003 give the example of a solicitor who had been instructed by his client to settle a claim for US $155,000 but by mistake offered to settle it for the higher sum of £150,000…"
On this analysis, I see no difference in a methodology that analyses the effect of common law mistake on a Part 36 offer when the recipient does accept that the offeror did not intend to be bound owing to mistake. It is simply the application of a different contractual rule and effect but still equally compatible to the context of Part 36.
"26. Issue 1 turns on the correct interpretation of the offer letter of 19 April 2017. That involves assessment of the "objective meaning of the language" (to quote Lord Hodge in Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173 , at para 10) or, in the words of Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912, "ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract".
Newey LJ listed various reasons why the court was entitled to take into account in its interpretation of the offer the inherent improbability that a reasonable recipient of the letter would have believed the offeror intended to offer something that would ordinarily be unexpected and irregular:
"32. Fifthly, it is inherently improbable, as a reasonable recipient of the April 19 letter should have appreciated, that the appellant intended to offer conventional rather than fixed costs. The fixed costs regime could be expected to be considerably more favourable to the appellant than conventional costs and, on the face of it, the appellant would be vulnerable to the latter as regards costs to date only if a court were persuaded that there were "exceptional circumstances" warranting an award of extra costs under CPR 45.29J or that there should be a direction disapplying the fixed costs regime retrospectively under CPR 46.13 following re-allocation to the multi-track pursuant to CPR 26.10 . None of this was obviously inevitable and it is improbable that the appellant would have been willing to concede the higher costs in her offer".
The court acknowledged that the Rules in Part 36 did "not spell out" what should happen when conflicting wishes arose within the 21 days of an offer having been made but was satisfied that the construction and interpretation of Part 36 was accordingly subject to the overriding objective:
"10. The first issue in this appeal turns on the proper construction of CPR Part 36. Part 36 must be looked at in the light of the overriding objective in Part 1 . The rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly: rule 1.1(1). The court must seek to give effect to the overriding objective when it exercises any power given to it by the rules or when it interprets any rule: rule 1.2 . The parties are required to help the court to further the overriding objective: rule 1.3."
Conclusion
On the facts of this case, I agree with the Claimant's submission that the Overriding Objective is entirely consistent with the merits of her Application and it should be granted. Conversely, the Overriding Objective provides little support for the Defendant's position once mistake is accepted as in issue. Indeed, it is difficult to think how the Overriding Objective would support the Defendant's position at all. Plainly, "saving expense" [r.1.1(2)(b)] does not have as its primary aim the substantial reduction of a party's liability for damages owing to the mistake of another "of a kind which in law would render the agreement void".
Ancillary matters
On the basis of my decision that no binding agreement arose, it seems unnecessary to resolve this contention. No settlement arose in respect of any claim(s). However, the Claimant's submissions about the interpretation of the original Letter of Claim (that the claim was being pursued on behalf of the Estate and dependants) and the requirement of the Fatal Accidents Act 1976 that only one action shall lie for and in respect of the same subject matter of complaint would have had considerable force had it been necessary to decide.
I agree with that and, for what it is worth, comment that it seems unlikely a court on approval would be persuaded to uphold an agreement that, first, would only have been brought before the court reluctantly by a Litigation Friend who felt bound by an offer made by mistake and, secondly, an agreement that on its face bore no relation to the merits of the case on liability. Such principles would have preceded by some margin arithmetical comparisons of what financial difference it might have made to Lottie's claim that, it has to be said, is not the largest dependency claim within the action.
If a hearing on costs is required, I ask that dates and time estimates are e-mailed to my clerk.