24 October 2023

Caitlin Sykes a trainee Solicitor in the Clinical Negligence Department reviews the case of CCC v Sheffield Teaching Hospitals NHS Foundation 

Case Summary

The Claimant was an eight-year-old girl. The Defendant in this case, Sheffield Teaching Hospitals NHS Foundation Trust (FT), admitted responsibility for failing to prevent the Claimant from suffering severe chronic partial hypoxic ischemia before and during her birth, which resulted in the Claimant’s diagnosis of cerebral palsy.

What happened?

The Claimant, during proceedings, made a Part 36 offer of £7 million and periodical payments order of £360,000 per annum for life. A Part 36 offer is a provision under the Civil Procedure Rules (CPR) to encourage parties to settle a claim and is open for acceptance within 21 days but can be accepted after that time if the offer is not withdrawn.

The periodical payments order of £360,000 per annum equated to a regular form of income for the Claimant so their needs would be met throughout their lifetime. The Defendant did not accept the Part 36 offer and the matter proceeded to trial.

The Trial

The Claimant was awarded a gross lump sum of £6.8 million and periodical payments for life of £395,000 per annum. At first appearance, this would appear to be less than the Claimant’s Part 36 offer, and it would be easy to assume that the Claimant would then be responsible for some of the Defendant’s legal fees.

However, the Claimant argued that technically she had beaten her Part 36 offer. The rationale being that if the periodical payments were capitalized into a lump sum by using the multiplier to assess life expectancy, the capital value of the periodical payments would be £7.6 million. When added to the gross lump sum, this equated to £14.6 million (and therefore higher than the Claimant’s initial Part 36 offer).

The Judgement

The complexity here was unpicking the term ‘better in money terms’ in CPR r.36.17(2).

In an award like this, when there is a lump sum and periodical payments, it needs to be considered whether both parts of the offer are be beaten; or if one was beaten, and the other part not, should the total award be combined and then compared to the Part 36 offer. The Claimant’s proposed method was rejected for three reasons: -

• In most cases, the parties would disagree on any multiplier used.
• The whole purpose of periodical payments was to order a multiplicand (annual loss the Claimant is expected to suffer) only.
• Combined offers should not be treated differently from single offers when it comes to monetary value. The value of a single offer of periodical payment was the figure stated as the multiplicand, and the same should apply to combined offer values.

It was determined that the value of the combined offer should be simple: the figure of the lump sum and the figure of the periodical payment. The Court found that the periodical payment for the financial value of the award should not be capitalized.

In order to beat a combined Part 36 offer, the Claimant would have to beat both parts of the offer (the lump sum, and the periodical payment). If the offeror wanted to protect each part of the offer, then separate offers should be made for each part.

Therefore, the Claimant beat the periodical payment part of the Part 36 offer but failed to beat the lump sum. This ultimately meant the Claimant failed to beat her own Part 36 offer, and she was offered her costs only on the standard basis and not on an enhanced basis as claimed.