CPR Part 36 – Is rejection really rejection?

If a party makes an offer to settle a case under Part 36 of the Civil Procedure Rules (‘CPR’) and the other party does not accept it and fails to obtain an equal or more advantageous outcome at trial, the offeror is likely to be awarded costs. In any litigation, it is imperative to consider making a reasonable offer of settlement at an early stage, as failure to do so can have serious costs consequences. 

Until now, there has not been any guidance as to the effect of subsequent offers upon previous Part 36 offers which have not been expressly withdrawn. The Court of Appeal has now provided welcome clarification. 

In recent cases of Gibbon v Manchester City Council; L G Blower Specialist Bricklayer Ltd; Reeves and another [2010] EWCA Civ 726; [2010] WLR (D) 161, the Court of Appeal emphasised that CPR Part 36 contains carefully structured rules dealing with formal offers to settle proceedings, which have specific consequences in relation to costs.

The Court confirmed however that Part 36 should not be understood as incorporating all the rules of common law
governing the formation of contracts through offer and acceptance.

A Part 36 offer can accordingly be accepted at any time, unless the offeror has withdrawn the offer by serving notice of withdrawal on the offeree. Furthermore, the Court held that an offer may be accepted, whether or not the offeree has subsequently made a different offer or rejected the offer. 

It is key to note therefore that an offer to settle is ‘on the table’ and available for acceptance until the offeror formally withdraws it. Withdrawal of an offer must be in writing. The Court of Appeal stated that in order to avoid uncertainty, the withdrawal should include an express reference to the date of the offer and its terms, together with words making it clear that it is withdrawn.
As part of their commentary, the Lord Justices stated that they could not see why a party should not make more than one offer and leave it to the opponent to decide which, if any, to accept.  It is therefore vital that parties review Part 36 offers that
have not already been withdrawn whenever there is a new development in the case and take particular care to ensure
that offers are properly withdrawn, even if previously rejected by the other party.

Laura Honeybourne
laura.honeybourne@rlb-law.com
© RadcliffesLeBrasseur 


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