The Court of Appeal has today confirmed that Part 36 offers will be construed and applied strictly in accordance with the terms of CPR Part 36. This will bring great relief to litigants and lawyers alike. This clarity and certainty as to how Part 36 will be applied may be summarised by the expression that Part 36 “does exactly what it says on the tin”. Rawlison Butler LLP acted for the successful Appellant/Defendant.
This keenly anticipated Court of Appeal decision in C v D [2011] EWCA Civ 646 (27 May 2011) has important implications for how settlement offers are drafted and reviewing whether and when a Part 36 offer should be withdrawn. The parties have been anonymised in the Judgment as it concerns privileged communications.
The Court unanimously overturned the High Court decision of Mr Justice Warren (16 November 2010). The case is an important extension of the principles enunciated in Gibbon v Manchester City Council [2010] EWCA Civ 726.
Key points
- The Court of Appeal confirmed that:
- a time limited offer cannot be made under Part 36, and
- a Part 36 offer can be accepted at any time until it is withdrawn by written notice.
- As the Claimant’s/Respondent’s offer (dated 10 December 2009) clearly purported to be a Part 36 offer, the term “open for 21 days” should be construed purposively so as to comply with Part 36, under which a time limited offer cannot be made.
- The Court accordingly preferred the Defendant/Appellant’s position that the term should be construed to mean that the offer would not be withdrawn within 21 days from the date of the offer rather than it would expire after 21 days (the Respondent’s position).
- The offer remained open for acceptance at any time until formally withdrawn.
- The offer was not withdrawn impliedly by any of the emails that passed between the parties’ solicitors after the offer was made, which dealt with when and whether the Defendant would be in a position to respond to the offer (after expiration of the 21 day period).
- The Defendant’s acceptance of the offer on 5 November 2010, three and a half weeks before trial, was effective because the Claimant had made a Part 36 offer which it had never withdrawn.
Lord Justice Rix who gave the main Judgment said:
“Ultimately, it is important for the security of the Part 36 scheme, in countless cases, that it should be clearly understood that if a claimant wishes to make a time-limited offer, in the sense that the offer is to lapse of its own accord at the end of a stipulated period, then such an offer cannot be made as a Part 36 offer; that an offer presented as a Part 36 offer and otherwise complying with its form will not readily be interpreted in a way which would prevent it from being a Part 36 offer; and that if an offeror wishes to bring his Part 36 offer to an end, so that it cannot be accepted, then he must serve a formal notice of withdrawal. It seems to me that, although the precise point raised in this appeal is new, all the jurisprudence on Part 36 cited above contributes to these conclusions.”
Practical considerations
- If a party wants to make a time limited settlement offer it should do so as a “Without Prejudice Save as to Costs” offer outside of Part 36.
- Any Part 36 offers which purports to be time limited should be reviewed in light of this decision.
- A party should throughout proceedings continuously review whether it still wishes to settle upon terms set out within an existing Part 36 offer and whether the costs protection available at Trial outweighs the benefit of withdrawal.
- Parties should carefully review any existing Part 36 offers in advance of and following disclosure of evidence and immediately prior to Trial (after which the Court’s permission for acceptance of an offer is required).
- Any Notice of Withdrawal must be made in writing and clearly and unambiguously.
- A Part 36 offer will not be impliedly withdrawn or undermined by collateral communications.
Comment:
This case will no doubt be a great relief to litigants and litigation practitioners generally as it gives clarity and certainty as to how Part 36 will be applied and which might be summarised by the expression Part 36 “does exactly what it says on the tin”!
Note issued by Clive Lee, Partner in the Commercial Disputes Department, Rawlison Butler LLP, Solicitors for the Appellant/Defendant. Email: clee@rawlisonbutler.com
This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this document.
© Rawlison Butler LLP 27.5.2011