High Court holds formal settlement offers under s.17 Civil Liability Act 2004 cannot be accepted unilaterally after lodgement in court.

NEUTRAL CITATION NUMBER [2012] IEHC 276

THE HIGH COURT

[2010 No. 9115P]

BETWEEN

AMY LACKEY

PLAINTIFF

AND

PATRICK KAVANAGH

DEFENDANTS

JUDGMENT of Mr. Justice Gilligan delivered the 3rd day of May, 2012

Introduction

1. A question has arisen regarding the proper interpretation of s. 17 of the Civil Liability and Courts Act 2004 (the Act).

The Act

2. Section 17 of the Act, entitled "Formal Offers", provides that:

"(1) The plaintiff in a personal injuries action shall, after the prescribed date, serve a notice in writing of an offer of terms

of settlement on the defendant.

(2) The defendant in a personal injuries action shall, after the prescribed date, serve a notice in writing on the plaintiff-

(a) of an offer of terms of settlement, or

(b) stating that he or she is not prepared to pay any sum of money to the plaintiff in settlement of the action.

(3) A copy of a formal offer shall, after the expiration of the prescribed period be lodged in court by, or on behalf of, the

plaintiff or defendant, as the case may be.

(4) The terms of a formal offer shall not be communicated to the judge in the trial of a personal injuries action until after

he or she has delivered judgment in the action.

(5) The court shall, when considering the making of an order as to the payment of the costs in a personal injuries action

have regard to-

(a) the terms of a formal offer, and

(b) the reasonableness of the conduct of the parties in making their formal offers.

(6) This section is in addition to and not in substitution for any rule of court providing for the payment into court of a sum

of money in satisfaction of a cause of action or the making of an offer of tender of payment to the other party or parties

to an action.

(7) In this section-

"formal offer" means an offer under subsection (1) or (2)(a), or a statement under subsection (2)(b);

"prescribed date" means such date before the date of the commencement of the trial of the personal injuries action

concerned as is prescribed by order of the Minister;

"prescribed period" means such period commencing on the prescribed date as is prescribed by order of the Minister."

3. The "prescribed date" and "prescribed period" are defined by S.I. No. 169/2005 - Civil Liability and Courts Act 2004 (Section 17)

Order 2005. Regulations 3 and 4(1) provide that:

"3. For the purposes of section 17 of the Act of 2004, the prescribed date is the date upon which the personal injuries

summons is served on the defendant.

4. (1) For the purposes of section 17 of the Act of 2004, the prescribed period shall, in the case of proceedings in the

Circuit Court or the High Court, be the period commencing on the prescribed date and ending on the expiration of 14 days

after the service of the notice of trial in those proceedings." (emphasis added)

Proper approach to interpretation

4. Section 5(1) of the Interpretation Act 2005 (the "2005 Act"), entitled "Construing ambiguous or obscure provisions, etc." provides:

"(1) In construing a provision of any Act (other than a provision that relates to the imposition of a penal or other

sanction)-

(a) that is obscure or ambiguous, or

(b) that on a literal interpretation would be absurd or would fail to reflect the plain intention of-

(i) in the case of an Act to which paragraph (a) of the definition of 'Act' in section 2(1) relates, the

Oireachtas, or

(ii) in the case of an Act to which paragraph (b) of that definition relates, the parliament concerned,

the provision shall be given a construction that reflects the plain intention of the Oireachtas or parliament

concerned, as the case may be, where that intention can be ascertained from the Act as a whole."

5. In order to rely on s. 5(1), four conditions must be met. A provision must: (1) not relate to the imposition of a penal or other

sanction; (2) be obscure or ambiguous; (3) be one which, on a literal interpretation, is absurd or fails to reflect the plain intention of

the Oireachtas; and (4) be contained in an act where the plain intention of the Oireachtas can be ascertained from the act as a

whole.

6. This begs the question as to what material the court may have regard to in seeking to determine the plain intention of the

Oireachtas. Section 7(1) of the 2005 Act answers that question and provides that the court may make use of all matters that are set

out in an act as enrolled in the Supreme Court. This allows the court, in certain circumstances, to have regard for marginal notes and

headings. It nevertheless restricts the courts' regard to the four comers of an act.

7. In their book, The Irish Statute Book- A Guide to Irish Legislation (2007 First Law Dublin), Hunt & Bennion, at p. 395, deal with the

question of whether parliamentary debates should form part of the material from which the court ought to be in a position to seek to

glean the intention of the Oireachtas. At Committee Stage in the Dáil and again in the Seanad, the question was raised as to why the

Bill was not permitting reliance on parliamentary debates for the purpose of aiding interpretation. The response was that reliance on

debates would have the effect of making the law less rather than more clear. There is a curious irony here in that parliamentary

debates reveal why parliamentary debates should not form part of the consideration of the court.

8. Nevertheless, it was also commented that such reliance would change the nature of parliamentary debates which have the purpose

of openly scrutinising each provision of proposed legislation. Were the debates to form part of the material on which reliance could be

placed, then the purpose of a debate would move from a scrutineering one, to one which focused on the elucidation and clarification

of the various provisions.

How then to interpret s. 17?

9. The natural starting point is the long title of the Act which provides, inter alia, that it is:

"an act to provide for certain procedural and other changes in actions to recover damages for personal injuries; [...] to

make provision in relation to the assessment of damages in a personal injuries action; to make provision in relation to the

jurisdiction of the circuit court in proceedings relating to land; [...] and to provide for related matters. (emphasis added)

10. Thus, it appears clear that s. 17 has as a purpose the introduction of the requirement that plaintiffs must serve a notice in writing

of an offer of terms of settlement on defendants. Defendants must serve a notice in writing of an offer of terms of settlement on the

plaintiff or in the alternative that no sum of money will be offered. The offers must be made after the prescribed date. After the

expiration of 14 days following the service of the notice of trial, the offers must be lodged in court. The offers will then only be

communicated to a judge when the issue as to costs is raised. Along with the terms of the offer, the court must have regard to the

conduct of the parties in making their formal offers. That much is clear.

11. In O'Donnell v. McEntee & Anor [2009] IEHC 563, Kearns J. was concerned with a question of the timing of s. 17 offers and in

particular whether simultaneous offers were envisaged or permitted under the Act. While the court in that case addressed a point

which is not relevant for present purposes, Kearns J. did nevertheless make a number of apposite remarks regarding the overall

scheme and purpose of the Act. Following the section entitled "Decision", Kearns J. remarked that:

"It is instructive to look at the overall scheme and purpose of the Civil Liability and Courts Act, 2004, given that an

individual section of the Act should be construed by reference to the statute as a whole.

It is difficult to conclude other than that the legislation was intended to circumscribe and attach limitations to the manner

in which personal injuries litigation is to be pursued by claimants.

[...]

It is difficult not to conclude, as indeed certain commentators have concluded, that the Act represents an outright attack

on what has been characterised as a 'compensation culture'.

[...]

However, it is difficult to approach any question of the interpretation of the Act on the basis that an interpretation

favourable to a plaintiff is either intended or provided for by the Act."

12. In his conclusion, Kearns J., lamented the poor drafting of the Act and s. 17 in particular.

13. There are therefore two questions that must now be addressed, in light of that interpretative context. The first is whether s. 17

offers may be withdrawn, and if so, when. The second question is whether s. 17 offers are conferred with any statutory timespan or

whether they should be understood as "enduring offers".

Withdrawing s. 17 offers

14. On its face, s. 17 does not prescribe the terms of formal offers. As such, and in principle, it does not limit the period during which

an offer can remain open for acceptance. It appears to follow that the ordinary rules of contract law in respect to the formation of a

valid compromise remain applicable. Indeed this is a view shared by David Foskett QC in his book The Law and Practice of

Compromise (6th Ed., London, Sweet & Maxwell 2005) at para. 15-05 where he notes that:

"As with any contractual offer, a pre-action offer may be withdrawn (or revoked) at any time before its acceptance."

15. In particular, in the absence of a statutory preclusion, there appears nothing on the face of the legislation to suggest that as. 17

offer cannot be withdrawn unilaterally at any time.

16. I do not consider that a formal s. 17 offer has to be withdrawn in writing or with leave of the court. I am of the view that once it

is permissible to withdraw an offer such a fact may in the normal course of conduct of practice, be communicated by counsel to

counsel as retained for the other party or parties to the proceedings. The Act implicitly provides that such withdrawal may have

implications in that it may be viewed as unreasonable by a court when assessing the question of costs, particularly having regard,

inter alia, to the reasons involved and the circumstances of the withdrawal.

A statutory lifespan?

17. Turning now to the second question which arises as to whether s. 17 creates "enduring offers" that remain open to acceptance at

any time by an opposing party until either the offer is withdrawn or the case is concluded.

18. It is useful to remember that the terms of s. 17(6) delimit the effect of the provision by stating that it is "in addition to and not in

substitution for" other rules of court dealing with lodgements or tender offers. Lodgements (under Order 22) and tender offers are

mechanisms through which a defendant can seek protection in relation to costs. This was a view shared by Kearns J. in O'Donnell,

when he remarked that:

"It is not as though s. 17 of the Act was specifically designed to reverse or abolish practices which have characterised

the settlement of personal injuries litigation for generations."

19. Therefore, on one reading the Act does not set out a lifespan for as. 17 offer, although it does refer to a "prescribed period",

which I will address hereunder. However, a s. 17 offer is clearly not meant as a substitute for other settlement practices. On this

basis, it could be said that by allowing s. 17 offers to remain live throughout the course of a trial, they would, in practice, do away

with the utility of tender offers or lodgements. This result would be clearly perverse to the plain intention of the Oireachtas given the

clear wording of s. 17(6), at least in this instance.

20. This leads to a consideration of the "prescribed period". Why would the Oireachtas require that (unaccepted) s. 17 offers be

lodged in court 14 days following the service of a notice of trial? Given that the overriding purpose of the Act is to encourage

settlement and in circumstances where it would be perverse to interpret the Act in a way that benefits claimants, the prescribed

period may be inferred as serving a dual purpose. On the one hand it creates statutory regime in which settlement is promoted by the

exchange of offers in a timely manner before the commencement of a trial. But it may also serve as a window during which such

offers must be accepted or rejected. If an offer is not accepted it will then pass over to the court where its sole function is in

relation to costs. It therefore encourages parties to be reasonable in their approach to settlement during the early stages of personal

injury litigation for fear of costs consequences at a later stage. The conclusion that it was the intention of the Oireachtas that the

lifespan of a s. 17 offer must be limited is supported by s. 17(6).

21. A further, final, factor bolsters this conclusion. An invidious situation would arise if the party making the offer which was sought

to be accepted during the course of a trial could then be faced with costs which the s. 17 regime must clearly have been designed to

avoid.

22. Accordingly, in my view pursuant to s. 17 of the Civil Liability and Courts Act 2004, a party may withdraw its formal offer at any

time but subject always pursuant to s. 17(5)(b) to the view of the court as to the reasonableness of the conduct of the parties in

making and, by implication, withdrawing the offer and further a formal s. 17 offer cannot be accepted unilaterally after lodgement in

court at any time such as on the morning of the hearing at a time after the case has been called on for hearing and before being

assigned to a court for hearing.