From time to time, in the aftermath of a road traffic accident, parts of the claim will often be pursued simultaneously by a number of agents acting on a claimant’s behalf.
The usual division is between a personal injury claim including general damages for pain suffering and loss of amenity and consequential loss claimed as special damages and a vehicle damage claim which will principally consist of the pre-accident value or costs of repairs and credit hire charges.
The claimant will instruct solicitors to pursue the personal injury claim: the credit hire company may deal directly with the credit hire claim or instruct solicitors to do so. Another potential division can be between uninsured losses and insured losses.
The perennial problem that arises from this arrangement, is that sight can be lost of the fact that all these losses accrue to the claimant and a defendant insurance company can quite legitimately refuse to deal with matters on a piecemeal basis, and instead make global offers to one set of agents, which if accepted will form a full and final settlement of all potential heads of loss. In effect each set of agents, sits in their own silo, and does not appreciate that their actions may prejudice the efforts of the other set of agents.
It follows that if a defendant insurance company make a part 36 offer it should be carefully scrutinised as to what it is actually proposing by way of settlement, and cannot be assumed that it simply relates only to the losses that the agent is tasked with pursuing.
Rule 36.5 provides:
(1) A Part 36 offer must—
(a) be in writing;
(b) make clear that it is made pursuant to Part 36;
(c) specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.13 or 36.20 if the offer is accepted;
(d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and
(e) state whether it takes into account any counterclaim.
It should be noted that it is a requirement that a part 36 offer must state whether it relates to the whole of the claim or part of it: if an offer is made in respect of the “whole” of the claim, and it is not clear to the recipient what this is intended to mean, then there exists a mechanism within the rules by which clarity can be sought.
Rule 36.8 provides:
(1) The offeree may, within 7 days of a Part 36 offer being made, request the offeror to clarify the offer.
(2) If the offeror does not give the clarification requested under paragraph (1) within 7 days of receiving the request, the offeree may, unless the trial has started, apply for an order that the offeror do so.
(3) If the court makes an order under paragraph (2), it must specify the date when the Part 36 offer is to be treated as having been made.
But if this procedure is not used, and an offer is accepted but there arises a dispute about what has been settled by the acceptance of the part 36 offer, how will the court decide whether an offer in respect of the “whole” of the claim means precisely that? What principles will be applied?
The starting point is to note that per C.v.D  1 WLR 1962 when interpreting part 36 at paragraphs 15 and 45, it is legitimate to borrow from the canons of contractual construction to construe a part 36 compromise to ascertain what the terms of that compromise were.
The classical authority on the construction of a contract is ICS Ltd.v.West Bromwich Building Society  1 WLR 896 that Lord Hoffmann’s principles have been expanded, and explained in a series of further cases, before the House of Lords and Supreme Court including notably Chartbrook Ltd v Persimmon Homes Ltd 1 AC 1101 and Wood v Capita Insurance Services Ltd  AC 1173.
The key passage in ICS Ltd drawn from Lord Hoffman’s speech notes:
(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the “matrix of fact,” but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the *913 exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd.  A.C. 749 .
(5) The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B.  A.C. 191 , 201:
“if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense”
A defendant will argue that the meaning of a part 36 offer to settle the “whole” of the claim is plain and obvious: the “whole” of the claim means precisely that. The effect of the acceptance of such an offer is to make a compromise in full and final settlement of the “whole” of the claim.
The court must then consider in it’s evaluation of this case whether there is anything in the background matrix of fact, which might displace the natural and ordinary meaning of the word “whole”.
The principle recognised in paragraph (3) of Lord Hoffman’s restatement of principle in ICS Ltd that previous negotiations must be excluded from construction of a written contract, was reformulated at length in the case of Chartbook Ltd in paragraphs 28 to 42.
See also, the later commentary deprecating the “Private Dictionary” approach to construction. Such matters are only admissible for the purposes of estoppel or rectification. This means that the chain of correspondence leading up to the offer is likely to prove inadmissible.
There are a number of facts which are admissible as part of the background. Leaving aside particular factual matters peculiar to the claim, they may include the fact that the offer was formulated by an insurance company, a professional litigant who can be taken to know what “whole” means, the fact that the claimant was advised throughout by solicitors, who are presumed to be competent and familiar with the use of part 36 CPR and the wording of offers and failure either to raise a query about the Defendant’s part 36 offer or to reserve the position in relation to other heads of loss in the acceptance letter.
If it proves to be the case, that the “whole” of the claim has been compromised, that will lead to any further proceedings to eg pursue a credit hire claim as being liable to be struck out as an abuse of process.