Civil practice and procedure – CPR Part 36 – Offer and acceptance – Defendant making offer to settle dispute without prejudice save as to costs not compliant with Part 36 – Claimant making counter offer compliant with Part 36 – Claimant subsequently purporting to accept defendant’s offer – Whether defendant’s letter capable of acceptance – Whether counter offer amounting to rejection of earlier offer – Whether parties making binding agreement – Ruling in favour of defendants
The claimant bank brought proceedings for professional negligence against the defendant solicitors alleging that the defendant had failed adequately to report on the fact that the claimant’s borrower was purchasing a new-build property at flat 43, Crick Court, Spring Place, Barking. The claimant was seeking damages for all its losses suffered as a result of making the loan, a sum of £162,410.408 together with interest and costs.
On 28 August 2015, the defendant wrote a Without Prejudice Save As to Costs letter to the claimant offering to settle the matter. It was accepted that the offer did not comply with CPR Part 36. Thereafter there was a series of without prejudice letters and telephone conversations between the parties and, on 19 May 2016, the claimant sent a letter to the defendant containing a counter-offer that was complaint with Part 36. On 22 June 2016, the claimant sent a letter to the defendant accepting the offer made in the letter of 28 August 2015.
A dispute arose concerning the effect of the claimant’s letter of 19 May. The defendant argued that the claimant’s Part 36 offer was a counter-offer and in law had the effect of rejecting the defendant’s offer which thereafter was no longer open for acceptance. The claimant contended that because it had made a valid Part 36 offer, it did not have that effect.
Held: A ruling was made in favour of the defendants.
(1) Since the defendant’s offer was not compliant with Part 36, it would not attract the benefit of Part 36 costs protection: Phi Group Ltd v Robert West Consulting Ltd [2012] EWCA Civ 588 applied.
(2) The defendant’s letter of 28 August was clearly an offer capable of acceptance. It was made clear that 90% of the settlement sum would be made by the Financial Services Compensation Scheme and the claimant would have to be prepared to wait for payment until it was processed by them. There was no reason why an offer on those terms was not capable of acceptance. It was trite law that the court should be slow to set aside bargains on the grounds of uncertainty and there was no reason to do so here.
(3) At common law, a counter-offer would amount to a rejection of the earlier offer. The fact that the counter-offer was in the form of a Part 36 offer did not displace the common law rule. When looking at the effect on a common law, non-Part 36 offer of a counter-offer, the common law rule had to be applied. It made no difference whether the counter-offer was one which was compliant with Part 36 or not. Because one was dealing with an initial common law offer, the impact on it of any counter-offer had to be addressed by reference to common law principles. A Part 36 counter-offer was still a counter-offer. Therefore, once the claimant’s offer was made on 19 May 2016, the defendant’s letter was rejected as a result and was no longer available to be accepted. Accordingly, there had not been a settlement of the claim which now had to proceed to trial: Gibbon v Manchester City Council [2010] EWCA Civ 726; 3 EGLR 85 considered.
(4) If that was wrong and the defendant’s letter remained open for acceptance, the claimant’s letter of acceptance on 22 June was a true acceptance of that offer: Arnold v Britton [2015] UKSC 36; [2015] EGLR 53 and Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd [2015] UKSC 72; [2016] EGLR 8 considered.
Imran Benson (instructed by Rosling King LLP) appeared for the claimant; Simon Wilton (instructed by Caytons Law) appeared for the defendant.
Eileen O’Grady, barrister
Click here to read transcript: DB UK Bank Ltd (t/a DB Mortgages) v Jacobs Solicitors
