Howell & ors v Lees-Millais & ors [2011] EWCA Civ 786

WTLR Issue: December 2011 #114

The appellant trustees sought permission to appeal from a costs order. An application had been issued in December 2006 pursuant to which the trustees sought sanction to pursue claims for (inter alia) breach of trust. Three related beneficiaries (Lorna, Fiona and Marcus) resisted the application as defendants, save in respect of a negligence claim against solicitors...

Part 36 offer – update

| The Practical Lawyer |

There have been two important CA decisions on Part 36 offers.

Firstly, it has been clear that Part 36 has to be read as a self-contained code, which means you cannot imply general contractual rules into it (eg with general law, if you reject an offer then you lose the right to subsequently accept it; that does not apply to Part 36, where the offer remains until it is specifically withdrawn by the party who made it). What this means in the context of Part 36 offers is:

  • rejection of an offer does not mean that the offer cannot be accepted later;
  • the making of a counter-offer does not mean that the other offer ceases to be available;
  • the making of a further offer does mean that an earlier offer is no longer available. The key point is that any Part 36 offer can be accepted ‘at any time’ unless it has been withdrawn. Accordingly, several different (and indeed inconsistent) offers can remain validly available.

The second important case dealt with time-limited Part 36 offers – typically ‘this offer will remain open for 21 days’. Such a time restriction cannot be imposed within the Part 36 framework (since the self-contained framework of Part 36 contains no provision for time-based offers). The time-limited offer will not be treated as expiring (or withdrawn) when the time period expires; it will simply be interpreted as meaning that the offeror agrees not to withdraw it for that time period, but thereafter is free to withdraw it if he wants to (in which case, specific notice of withdrawal must be given). The correct way of making a time-limited offer is not within the Part 36 regime (which does not permit such offers) but to use a Calderbank letter (the offer is made ‘without prejudice save as to costs’).

The two cases are, respectively Gibbon v Manchester City Council [2010] EWCA Civ 726, and C v D [2011] EWCA Civ 646. Incidentally, there have been strong hints that the CPR will be amended shortly to make the rules on Part 36 offers more clear-cut and self-explanatory.