UK: BLG Local Authority Newsletter - Making An Offer To Settle A Multi-Defendant Action: A Word Of Warning...

Last Updated: 10 July 2008
Article by Catherine Kearney

A recent first instance decision illustrates the caution to be exercised when a defendant, as one of a number, makes a Part 36 offer to settle a claimant's claim. Clearly, if there is overlap in terms of damages, the claimant cannot make a double recovery, but what of the case where some of the damages remain outstanding? Is the claimant entitled to accept the offer and continue against the other defendants for any shortfall in the damages?

The case of Gedye v Land Rover UK in January 2008, dealt with this issue. The claimant alleged that she was injured by her defective runaway vehicle. She sued both the dealership, for breach of contract, and the manufacturer, for breach of the Consumer Protection Act and negligence. Liability was denied on the basis that the accident was the claimant's fault.

Although the dealership was entitled to seek an indemnity from the manufacturer in the event of a successful claim, it appears that no effort was made to adopt a pragmatic and cost-saving approach to defending the claim (say by the manufacturer taking over the defence).

The manufacturer made a Part 36 offer to settle the claim for only a third of its probable value. The claimant sought and obtained clarification that the offer was made in respect of the claim against the manufacturer only, and that the manufacturer was offering to pay the claimant's costs of the claim against it and not against the dealership. The claimant accepted the offer and simultaneously wrote to the dealership, indicating her intention to continue against it.

The manufacturer refused to pay, stating that there was no valid acceptance of the offer as the claimant had neither discontinued against the dealership nor obtained the dealership's consent to its acceptance of the offer. Clearly it was not lost on the manufacturer that if the claimant was entitled to continue the claim against the dealership alone and was successful, it would be liable for the damages and costs of both settlements.

The matter at issue therefore was whether or not the defendants were sued severally, in which case the claimant could accept the offer and continue her claim, or jointly or in the alternative, in which case she could only accept it after discontinuing against the other defendants and with their written permission.

The CPR

CPR 36.12 provides that, where a claimant wishes to accept a Part 36 offer made by one or more, but not all, of a number of defendants, two different scenarios apply depending on whether the defendants are sued: 1) jointly or in the alternative; or 2) severally. A claimant can only accept such an offer and continue with her claim if the defendants have a several liability.

How to spot joint, alternative or several liability

It's not always easy, but a few examples assist. The most obvious example of joint liability is in the case of master and servant, so the servant who commits a tort is liable, but the employer is also vicariously liable and may be sued as well. Alternative liability is best illustrated by the type of motor liability case where one of two parties is solely liable but the claimant cannot point with certainty to that person and sues both in the alternative. Several liability refers to one cause of action being alleged against one person only.

The result

In Mrs Gedye's case, she had not sued the dealership and the manufacturer jointly. Rather, there were two entirely separate causes of action. Neither had she sued them in the alternative. Accordingly, she had sued them severally and thus there had been valid acceptance of the offer. She was free to continue against the dealership for the remainder of the damages she was seeking, and therefore the dealership would be free to seek recovery against Land Rover.

Conclusions

Local authorities often find themselves embroiled in multi-party actions, for example where contractors have undertaken duties on the highway and an accident to the member of the public results. Even when dealing pre-action, the safest route is to ensure that all parties agree when a settlement is achieved in such a case and, if not, make absolutely sure on which basis the defendants are sued by the claimant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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