Contract – Offer and acceptance – Civil Procedure Rules – Party to contract purporting to withdraw settlement offer – Whether CPR 36 constituting self-contained code or subject to general law of offer and acceptance in absence of express provision to contrary – Appeals dismissed
In the first appeal, the respondents admitted liability in the appellant’s claim for damages and made an offer under CPR 36 to settle. The appellant rejected that offer but indicated that she was willing to accept £2,500 in final settlement; she also rejected an increased offer but did not withdraw her own. The respondents then offered the sum that the appellant had suggested she would accept, but that was also rejected. When they realised that the appellant had not withdrawn her offer, they formally accepted it whereupon the appellant purported to withdraw it. The county court held that the appellant’s offer had not been formally withdrawn and the respondents had therefore been entitled to accept it because, under CPR 36, the onus was on the appellant positively to withdraw an offer that was no longer available. The appellant appealed against a costs award.
In the second appeal, the respondents had entered into a contract with the appellant building contractor to carry out improvements to their home. A dispute arose and the respondents sought to set off against the appellant’s final invoice various amounts that they said represented the loss they had suffered. They admitted that part of the money claimed was due and offered to pay the balance. However, the appellant was unwilling to accept less than the full amount claimed and sought damages for breach of contract. The respondents made a series of CPR 36 offers, one in May 2007 and another in August 2007, which was repeated in February 2008. The appellant obtained judgment in its favour but an issue arose as to whether the sum awarded was higher than the respondents’ May offer. The county court held that the February offer, which was not as advantageous to the appellant as the sum awarded, superseded all previous offers. The respondents appealed against the costs award.
The appeals were heard together because they raised similar issues as to the interpretation and effect of CPR 36. The central question was whether CPR 36 embodied a self-contained code or was subject to the general law of offer and acceptance in so far as it did not expressly provide otherwise.
Held: The appeals were dismissed.
In seeking to settle the proceedings, parties were not bound to use the mechanism provided by CPR 36. However, if they wanted to take advantage of the particular consequences for costs and other matters that flowed from a CPR 36 offer, in respect of which the court’s discretion was more confined, they had to follow its requirements.
CPR 36 was drafted as a self-contained code. It prescribed the manner in which an offer might be made and the consequences that flowed from accepting or rejecting it. In some respects, those consequences broadly reflected the approach that the court might be expected to take on costs; in others, they did not: for example, CPR 36.14(3) allowed the court to award a claimant, which had obtained a judgment at least as advantageous as its offer, interest on the sum for which it had obtained judgment at an enhanced rate of up to 10% over base rate, costs on the indemnity basis and interest on those costs at an enhanced rate.
Basic concepts of offer and acceptance underpinned CPR 36, but that was inevitable given that it contained a voluntary procedure under which either party might take the initiative to resolve the dispute consensually. Such concepts were part of everyday life. However, it did not follow that CPR 36 should be understood as incorporating all the rules of law governing the formation of contracts, some of which were quite technical in nature. It was undesirable that it should do so. Certainty was as much to be commended in procedural as in substantive law, especially, perhaps, in a procedural code that had to be understood and followed by ordinary citizens who wanted to conduct their own litigation. CPR 36 was drafted with those considerations in mind and was to be read and understood according to its terms without importing other rules derived from the general law, save where that was clearly intended.
Dr Mark Friston (instructed by Thompsons Solicitors, of Manchester) appeared for the appellant in the first appeal; Dr Timothy Hodgson (instructed by the legal department of Manchester City Council) appeared for the respondents in the first appeal; Thomas Plewman (instructed by Aaron & Partners LLP, of Manchester) appeared for the appellant in the second appeal; Frances Pigott (instructed by Andrews Law, of Bridgnorth) appeared for the respondents in the second appeal.
Eileen O’Grady, barrister
