University Hospitals of Derby & Burton NHS Foundation Trust v Harrison

Factual and Procedural Background

The claimant brought a clinical negligence claim against the appellant following surgical injuries sustained in 2016. The appellant made a Part 36 offer in December 2019, which included deductible benefits paid by a government department. Liability was admitted in January 2020, and judgment was entered with damages to be assessed. After evidence disputes and an unsuccessful mediation, the claimant sought to accept the Part 36 offer late in November 2021. The parties disagreed on liability for costs, leading to a hearing in March 2022 where the judge granted permission for the claimant to accept the offer and directed deductions for deductible benefits and interim payments, resulting in a net sum payable. The judge ordered costs payable by the appellant up to the offer expiry date and costs payable by the claimant thereafter, but importantly, prevented the appellant from setting off or enforcing costs against the claimant under the relevant procedural rule, thereby preserving the claimant's Qualified One-Way Costs Shifting (QOCS) protection. The appellant's application for permission to appeal was refused.

Legal Issues Presented

1. Whether the court order made following the respondent's late acceptance of the appellant's Part 36 offer constituted "an order for damages and interest made in favour of the claimant" within the meaning of rule 44.14(1) of the Civil Procedure Rules (CPR).
2. If the order qualifies as such, whether the appellant was entitled to set off its own costs against the amount due to the claimant.

Arguments of the Parties

Appellant's Arguments

• The order made by the judge was an order awarding damages and therefore fell within rule 44.14(1).
• Because the judge identified the amount to be deducted for deductible benefits, it was more than mere permission to accept the offer and thus constituted an order for damages.
• Distinguished the Cartwright case as it concerned Tomlin Orders, which were not at issue here.
• Argued that the Adelekun v Ho case was also a Tomlin Order case and did not involve the deduction exercise required here.
• Maintained that this was a court order awarding a sum of money and therefore within the scope of rule 44.14(1).

Respondent's Arguments

• The order was simply permission to accept the Part 36 offer late and did not amount to an order for damages and interest.
• The direction concerning deductible amounts did not change the nature of the order.
• The appellant's obligation to pay arose from the operation of Part 36 and not from the court order itself.
• Paragraph 2 of the order, which identified the net sum payable after deductions, was not independently enforceable.

Intervener's Arguments

• Supported the judge's decision, emphasizing the distinction between court orders and settlements.
• Argued that interpreting any court order as triggering loss of QOCS protection would lead to absurd results, especially for vulnerable claimants requiring court approval for settlements.
• Such an interpretation would penalize those most in need of QOCS protection and was contrary to the CPR.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the nature of the order made under rule 36.22(9) of the CPR, which permits the court to give permission for late acceptance of a Part 36 offer and to direct deductions for deductible benefits accrued since the offer date. The critical question was whether this order constituted "an order for damages and interest made in favour of the claimant" under rule 44.14(1), which would impact the applicability of QOCS protections.

The court held that the judge was not making an order for damages but rather granting permission and directing a procedural adjustment to the settlement amount as required by Part 36. The court emphasized that the order did not independently create an enforceable obligation to pay the net sum; rather, the obligation arose from the Part 36 offer and acceptance themselves. The direction concerning deductible benefits was ancillary to the settlement and did not transform the order into one for damages and interest.

The court rejected the appellant's argument that the identification of deductible benefits elevated the order to a damages order, noting that such an interpretation would elevate form over substance and lead to arbitrary and potentially unfair consequences, particularly for vulnerable claimants who require court involvement in settlements.

Policy considerations were also relevant; the court recognized that the appellant's interpretation risked penalizing claimants entitled to QOCS protection, contrary to the purpose of the regime. The court relied heavily on the distinction drawn by the Supreme Court in Adelekun v Ho between court orders and settlements, affirming that settlements, including those under Part 36, do not constitute orders for damages under rule 44.14(1).

The court further noted that the current wording of rule 44.14(1) does not encompass settlements and that proposed amendments by the Civil Procedure Rules Committee aim to address this gap, indicating that the appellant's interpretation is inconsistent with the present rule.

Holding and Implications

The appeal was dismissed.

The court held that the order made under rule 36.22(9) was not an "order for damages and interest made in favour of the claimant" within the meaning of rule 44.14(1) of the CPR. Consequently, the appellant was not entitled to set off its costs against the amount due to the claimant, and the claimant's QOCS protection remained intact. This decision means that, under the current rules, settlements reached by acceptance of Part 36 offers—even with court permission and directions regarding deductible benefits—do not trigger loss of QOCS protection.

No new precedent altering the existing legal framework was established; rather, the judgment reaffirmed the distinction between court orders and settlements as critical to the operation of QOCS. The court acknowledged ongoing proposed amendments to the rules that may alter this position in the future.