PRACTICE — Settlement of action — Offer of settlement — Claimant making Part 36 offer to settle claim for damages for breach of contract — Claimant stating offer no longer open and not accepted — Defendant contending offer validly accepted — Whether time-limited offer falling within meaning of Part 36 — CPR rr 36.2(2)(c), 36.9(2), 36.14(3)
A time-limited offer was not capable of being an offer within the meaning of CPR Pt 36, which established that an offer must be capable of acceptance unless and until withdrawn by service of a notice within CPR r 36.9(2).
Warren J, sitting in the Chancery Division, so held when allowing an application by the claimant, C, for a declaration that their offer to settle an action with the defendants, D1 and D2, in a letter dated 10 December 2009 and expressed to be made for the purposes of CPR Pt 36 was no longer open for acceptance and had not been accepted.
WARREN J said that the proper approach to CPR Pt 36 had been dealt with by the Court of Appeal in Gibbon v Manchester City Council  1 WLR 2081 (Moore-Bick LJ giving the leading judgment). The offer letter stated that the offer would remain open for 21 days from the date of the offer letter. It was clear that, viewed apart from the CPR Pt 36, the offer would be a time-limited offer. It was also clear that the reference to “the relevant period” within the offer letter was a reference to “the relevant period” within CPR rr 36.2(2)(c) and 36.10. CPR r 36.2(2)(c) made it a requirement of a Part 36 offer that a “relevant period” is specified. It was not necessary for the offer to use words such as “the period of so many days is hereby specified as the relevant period” for the purposes of CPR r 36.2(2)(c), but it must be possible to identify with clarity and certainty the relevant period for that purposes. One could see that at least one of the purposes of the offer paragraph was to ensure compliance with CPR r 36.2(2)(c).
The defendant had two powerful arguments for saying that a time-limited offer could not be a Part 36 offer. First, CPR r 36.9(2) appeared to envisage that any Part 36 offer was capable of being accepted at any time unless and until it was withdrawn. A time-limited offer ceased to be an offer once the period for acceptance had expired. It could not be either accepted or withdrawn. It could not therefore be a Part 36 offer.
There was an important difference between the sort of case described by Moore Bick LJ in Gibbon’s case and the case of a time-limited offer. In the former case, it was possible to identify an offer and to say that it was without doubt a Part 36 offer. Once identified as such, the provisions of Part 36 applied to it and, if the results which flowed were different from the results which would flow from the application of general common law rules, Part 36 prevailed. But in the case of a time-limited offer, the prior question was whether it was capable of being a Part 36 offer in the first place. It would not be right to cherry pick terms on which an offer was made and to identify only some of those terms as comprising the Part 36 offer. Accordingly, it would not be right to ignore the terms relating to the mode and time of acceptance, treating the other terms of the offer as the Part 36 offer, and then to apply rule 36.9(2) to those terms alone. Nonetheless, CPR r 36.9(2) provided a strong indicator of the sort of offer with which Part 36 was concerned. The indicator was that it was an offer which was at least capable of being withdrawn and was not one which came to an end according to its own terms.
Secondly, the defendant highlighted the costs sanction placed on a defendant from CPR r 36.14(3) who did not accept a Part 36 offer where there was a judgment against the defendant which was at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer. But the sanction did not apply where the Part 36 offer had been withdrawn or where the terms were changed so as to be less advantageous to the offeree and the offeree had beaten the less advantageous offer. The policy of Part 36 could thus be identified, under this argument, as being to encourage a defendant to accept a reasonable Part 36 offer from the claimant but so that, if the offer was not kept open, by being withdrawn or changed detrimentally, the sanction ceased to apply. The successful offeror could take the benefit of the provisions only, as the quid pro quo, if he had left it open to the offeree to accept the offer is kept open. It would not be consistent with that policy for there to be a time-limited offer making the defendant subject to the risk of the rule 39.14(3) sanction whilst not obliging the claimant to leave his offer open.
As a matter of the language of rule 36.2, and of rule 36.2(2)(c) in particular, the offer was surely that which was open for acceptance and became a term of the contract which came into being as a result of the acceptance. It was the offer which, if accepted within 21 days, had the costs consequences set out in rule 36.10. It seemed odd, in the context of rule 36.2 to regard, for instance, a letter accepting an offer as being an acceptance of a term of the offer. Rather, in the context of rule 36.2, it was more naturally to be seen as the implantation of a process which resulted in acceptance of the offer rather than acceptance of the term itself. A time-limited offer, as described by His Lordship, was not capable of being a Part 36 offer. An offer could be changed but the costs sanctions under rule 36.14(6) would not apply if its terms were less advantageous.
C v D and another  EWHC 2940 (Ch);  WLR (D) 292
Ch D: Warren J: 16 Nov 2010
Appearances: Michael Barnes QC (instructed by SJ Berwin LLP) for the claimant; Jonathan Seitler QC (instructed by Rawlinson Butler LLP) for the defendants.
Reported by: Scott McGlinchey, barrister