Part 36: Offer to settle did not cover claims in draft amended pleadings

In Warburton v The Chief Constable of Avon and Somerset [2023] EWCA Civ 209, the Court of Appeal considered the scope of a Part 36 settlement offer to settle “the whole of the claim” where there were additional claims set out in the claimant’s draft amended particulars of claim. The Court also considered and applied the principles of abuse of process in relation to an attempt to bring new proceedings after the settlement. The Court held that the settlement did not include the additional claims but the claimant was prevented from bringing new proceedings to raise the additional claims. The case is a further reminder of the need for certainty in Part 36 offers.

Background

In April 2018, the claimant brought defamation proceedings against the defendant police force (2018 Proceedings), in relation to information supplied to a prospective employer (another police force).  In May 2019, the claimant filed and served draft amended pleadings as part of the 2018 Proceedings, which advanced a proposed data protection claim. In July 2019, before these amendments were granted, the claimant accepted a Part 36 offer from the defendant to settle “the whole of the claim”, which ended the 2018 Proceedings.

In August 2020, the claimant issued new proceedings (2020 Proceedings) in relation to data protection claims. These were substantially the same claims set out in the draft amended pleadings in the 2018 Proceedings. The defendant applied to strike out the 2020 Proceedings and for summary judgment.

The High Court struck out the claimant’s pre July 2019 data protection claims (i.e. claims arising out of matters prior to the July 2019 settlement) in the 2020 Proceedings as an abuse of process under the Henderson v Henderson principle, i.e. the principle that a party is prevented from raising a matter in subsequent proceedings that it ought to have raised in earlier proceedings. It also summarily dismissed most of the claimant’s post July 2019 claims.

The claimant appealed to the Court of Appeal in relation to the pre July 2019 data protection claims. The claimant argued that Henderson v Henderson did not apply because the pre July 2019 data protection claims had been raised in the 2018 Proceedings (i.e. through the draft amended pleadings) and the Part 36 offer accepted in July 2019 did not cover these claims.

Decision

The Court of Appeal dismissed the claimant’s appeal. It considered two principal issues: the scope of the accepted Part 36 offer and whether the pre July 2019 claims were an abuse of process under Henderson v Henderson.

Phillips LJ held that the defendant’s 2019 Part 36 offer for “the whole of the claim” accepted in July 2019 only covered the pleaded claims in the 2018 Proceedings. It did not also cover the pre July 2019 data protection claims because they were unpleaded (i.e. were raised in draft amended pleadings only). Phillips LJ applied Hertel v Saunders [2018] EWCA Civ 1831, a decision which held that “claim” for the purposes of Part 36 could only relate to pleaded claims. It does not appear that the Court was referred to Calonne Construction Ltd v Dawnus Southern Ltd [2019] EWCA Civ 754, where the Court of Appeal found a Part 36 offer validly settled both a pleaded claim and unpleaded counterclaim.

However, the Court of Appeal upheld the High Court’s decision that permitting the pre July 2019 data protection claims to be pursued in the 2020 Proceedings would be an abuse of process. The Court of Appeal confirmed that claims raised in draft amended pleadings were not an exception to the Henderson v Henderson principle. The Courts are entitled to take a broad merits based approach to whether a matter should have been raised in earlier proceedings.

The Court of Appeal also rejected the claimant’s contention that the Court should not have considered the parties’ without prejudice correspondence when considering the scope of the settlement. The without prejudice correspondence indicated that the claimant knew that the defendant mistakenly believed that its Part 36 offer would settle all claims (including the pre July 2019 data protection claims). It would be abusive to allow the claimant to take advantage of this mistake.

Key takeaways

Under CPR 36.5(1)(d), a Part 36 offer must “state whether it related to the whole of the claim or to part of it or to an issue that arises in it…”. In light of this decision, parties making a Part 36 offer should ensure that the terms of the offer deal with any claims that have been referred to but not yet pleaded (and parties to whom an offer is made should obtain clarity as required about what is covered by the offer). Although in this case, the Court did not unwind the settlement, the uncertainty around this point resulted in satellite litigation which could have been avoided.

The decision also confirms that the Courts will take a broad merits approach to the application of the Henderson v Henderson principle in deciding whether new claims are an abuse of process which will not be allowed to proceed.

With thanks to Mike Gledhill for his assistance with this post.