Respondents commencing action over boundary dispute – Respondents’ solicitors attempting to settle action by way of offer under Part 36 of Civil Procedure Rules 1998 – Appellant making alternative offer under Part 36 stated to be open for 21 days – Appellant purporting to withdraw offer unilaterally – Respondents purporting to accept offer – Whether appellant entitled to withdraw offer – Judge holding action compromised – Appeal allowed
The appellant and the respondents were neighbouring landowners in Dorset. In 1989 the appellant commenced an action seeking: (i) declarations as to the location of the boundary between her land and that of the respondents; (ii) a mandatory injunction prohibiting further acts of trespass; (iii) mesne profits; and (iv) damages. The parties compromised that action and an order was made by consent in February 1994.
In September 1994 the respondents commenced the instant action, in which they alleged that the compromise and consent order had been the result of a mutual mistake. They sought to set aside the consent order and to relitigate the issues in the first action.
Subsequently, the respondents tried to settle the action by way of a letter of February 2000 from their solicitors to the appellant, containing an offer under Part 36 of the Civil Procedure Rules 1998. By a letter of March 2000, the appellant’s solicitors put forward a different Part 36 offer, which was stated to be open for a period of 21 days, and correspondence ensued between the parties.
Later that month, the appellant’s solicitors wrote to the respondents stating that the Part 36 offer had been withdrawn. The respondents wrote back stating that the appellant’s Part 36 offer remained open for acceptance for 21 days after it was made, even if it had been purportedly withdrawn. They stated that they were willing to settle on the terms of the appellant’s Part 36 offer, subject only to the appellant’s legal aid costs being agreed at £14,781. They then applied for the determination of the issue of whether the action had been compromised by their acceptance of the appellant’s Part 36 offer.
The judge held that the appellant had not been entitled to unilaterally withdraw, the Part 36 offer within 21 days of it being made, and that, accordingly, the litigation had been compromised by the respondents’ acceptance. The appellant appealed, contending that: (i) a Part 36 offer was subject to the same legal principles of offer, acceptance, rejection and withdrawal as applied to the formation of contracts; and therefore (ii) a Part 36 offer could be withdrawn at any time prior to acceptance, even if the offer were expressed to remain open for a specified period.
Held: The appeal was allowed.
The Civil Procedure Rules did not prevent a Part 36 offer from being withdrawn at any time prior to acceptance, for six reasons:
1.There was nothing in Part 36 that stated that a Part 36 offer could not be withdrawn.
2. Rule 36.5(6) only required the offer to “be expressed to remain open for acceptance for 21 days…”. If the intention had been that the offer had to remain open for 21 days, then the word “expressed” would not have been used.
3. There was no mention of a particular period for offers made close to trial. To read into the rules that such offers could not be withdrawn for a reasonable period from the date of the offer would provide an uncertainty, which could not have been contemplated.
4. Rule 36.5(8) expressly provided that a Part 36 offer could be withdrawn, and there was no limitation, as to when that withdrawal could take place.
5. A requirement that a Part 36 offer could not be withdrawn could impose hardship in certain circumstances, and, therefore, it would be expected that provision would have been made for withdrawal in certain circumstances.
6. A Part 36 offer was an offer to enter into a contract with the offeree. To impose a term that the offer could not be withdrawn would result in an addition to the contractual terms offered by the offeror. That was possible, but was not to be done by implication. Accordingly, the Part 36 offer made by the appellant had been effectively withdrawn, and the respondents had not been entitled to accept it, thereby compromising their action.
Sara Hargreaves and David Fisher (instructed by Simpson & Co, of Rugby) appeared for the appellant; George Laurence and Louise Davies (instructed by Jacksons, of Fordingbridge) appeared for the respondents.
Thomas Elliott, barrister
