Time-limited offers cannot be made under part 36, appeal judges say
(Source: Solicitors Journal - http://www.solicitorsjournal.com/story.asp?sectioncode=2&storycode=18475&c=1)
Time-limited offers cannot be made under part 36 of the CPR, the Court of Appeal has unanimously ruled.
The case involved a commercial dispute over the sale of development land for £12m, which led to the defendant failing to complete the transaction. The parties were anonymised as C (claimant) and D (defendant) because of the possibility that a trial may take place.
Giving the leading judgment in C v D [2011] EWCA Civ 646, Lord Justice Rix said the “critical issue” raised by the appeal was what it meant in a “purported” CPR part 36 offer to say it was “open for 21 days”.
He went on: “On one view it means that the offer is not open after 21 days. On another view it means, in its context, that the offer will not be withdrawn for 21 days.”
Rix LJ said the High Court held that the part 36 offer lapsed without express withdrawal “with the consequence that what was made as a part 36 offer failed to be one”.
However, Rix LJ said there was an “entirely feasible and reasonable construction of the offer letter which avoided it being construed as a time-limited offer”.
He said that, in the context of part 36, it was “entirely feasible and reasonable” to read the words ‘open for 21 days’ as meaning that it would not be withdrawn within those 21 days.
“Part 36 permits withdrawal within the 21-day relevant period, but only with the permission of the court,” Rix LJ said. “It seems to me that ‘open for 21 days’ is an obvious way of saying that there will be no attempt to withdraw within those 21 days.
“It is also a warning that, after the expiry of those 21 days, a withdrawal of the offer is on the cards. Such a construction would save the part 36 offer as a part 36 offer and would also give to both parties the clarity and certainty which both part 36 itself, and the offer letter with its reference to ‘open for 21 days’, aspire to.”
Lord Justice Rix said it was “important for the security of the part 36 scheme, in countless cases” that it should be clearly understood that if a claimant wishes to make a time-limited offer, then such an offer cannot be made under part 36.
He said an offer “presented as a part 36 offer and otherwise complying with its form will not readily be interpreted in a way which would prevent it from being a part 36 offer”.
Rix LJ allowed the appeal by D. This meant that the defendant’s acceptance of the offer was effective because the claimant had made it under part 36 and it was never withdrawn. Lord Justices Rimer and Stanley Burnton agreed.
Clive Lee, partner at Rawlison Butler in London, acted for D.
He said, relying on the usual rules of construction, the court would look at “what the words meant in the context and not what the parties in the case were trying to achieve”.
Lee said “any reasonable solicitor” would think the phrase ‘open for 21 days’ was referring to the period during which the offer remained open for acceptance and could only be withdrawn with permission of the court.
