Court Of Appeal Overturns Decision To Decline Undertakings Given Following The Acceptance Of A Part 36 Offer (Smith V Backhouse)

• Published date: 01 September 2023
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Gatehouse Chambers
• Author: Mr Phillip Patterson

Dispute Resolution analysis: The Court of Appeal has reversed a decision by Mr Justice Nicklin not to accept various undertakings offered to the Court as part of the settlement reached following a Part 36 offer. The fact that such undertakings were broad in scope was not sufficient reason for the Court not to accept them.

Smith v Backhouse [2023] EWCA Civ 874

What are the practical implications of this case?

This is an interesting judgment in relation to two matters. First, it offers some useful analysis of what undertakings given in lieu of an injunction are and the extent to which a Court is bound to accept them. Whilst the Court is under no obligation to accept undertakings offered, it cannot decline to accept the, simply because their scope is broad and that there may be future disputes (requiring Court time to be allocated) in relation to whether ostensibly lawful conduct has breached them. The Court should instead consider whether the undertakings are illegal, immoral or equivocal. If they are not, the Court should be slow to conclude that those undertakings should not be accepted. Second, it confirms that Courts should be very reluctant to prevent the operation of a binding settlement which disposes of litigation. Whilst the Court may entertain some concerns about the feasibility or fairness of the settlement, in circumstances where both parties are legally represented, the Court should be slow to interfere with or prevent the completion of the terms of settlement.

What was the background?

Dr Smith, a physicist who worked at a facility called Fermilab, issued proceedings against Dr Backhouse, a colleague. The claim alleged that Dr Backhouse had conducted a prolonged campaign against her, including the making of various threats and the transmission of malicious images online. Dr Smith sent a Part 36 offer shortly after the claim was issued in which she indicated that she would accept a monetary sum in compensation plus the provision of signed undertakings to the Court within 14 days. That offer came to be accepted by Dr Backhouse and by way of a proposed consent order, Dr Backhouse gave the undertakings which formed the agreement contained in the Part 36 offer. The consent order accurately reflected the terms of the Part 36 offer. The undertakings were eight in number and the parties were both legally represented at the time of both the Part 36 offer being accepted and the consent order being drafted. The Court accepted the fourth to eighth...