The New Discount Rate and Part 36

This was a case concerning a Claimant with serious lower leg injuries and a chance of future below knee amputation (2-15% chance) and therefore suitable for provisional damages.

Liability was admitted and the Schedule (dated December 2016) totalled around £320,000 of which over 80% was future losses. There was a JSM in January 2017 and following that a Part 36 Offer was made by the Claimant on 06-02-17 to settle for £315,000. The offer was open for acceptance until 4pm on 27-02-17 (the date of the announcement of discount rate revision).

On 27-02-17 at 10am the Claimant sought to withdraw the Part 36. At 11 am the Defendant accepted the offer and had an unfettered right to do so. The Claimant applied under CPR 36.10 (2) (b) and (3) to withdraw the offer citing the discount rate change and fact that it added circa £190,000 to the previously pleaded schedule.

The Defendant contested the application on the basis the Court must give greater weight to the fact that the Defendant had an unfettered right to accept the offer. It ought to have been known to the Claimant, at the time the offer was made, that the discount rate change was imminent. In light of that the Claimant's application failed to show what advice had been given to the Claimant before making the offer at the time at which it was made. If the Claimant was allowed to withdraw, the Defendant would have no recourse, but the Claimant did have one in that he could sue his lawyers if they had failed to advise him of the imminent rate change and its likely impact on the value of his pleaded claim.

The Court found that the Defendant did have an unfettered right to accept the offer and this had to be weighed against the Claimant’s application. It was found that the rate change did constitute a change in circumstances (CPR 36.10 (3)) since the offer was made. it was noted liability was admitted and the change had a significant impact on the value of the future losses in a claim where there was a risk of future amputation. It was acknowledged that the Claimant could sue in negligence but that would mean further litigation, costs and no guarantee of success for the Claimant. In the circumstances it was in the interests of justice to allow the Claimant to withdraw the offer and the application was allowed. It was also noted that it was never certain the government would have made the rate change decision when it did given that it had delayed doing so since at least 2012.