Withdrawal Of Part 36 Offer

Allen & Overy LLP
Contact

In Super Group plc v Just Enough [2014] EWHC 3260 (Comm), 27 May 2014 it was held that a defendant’s Part 36 offer in respect of a claim and counterclaim could not be accepted once the defendant had withdrawn its offer. Despite alleged ambiguity, the withdrawal was valid as it was an express notice in writing in terms which made it clear to the offeree that the offer had been withdrawn. Further, the claimant could not accept a Part 36 offer in respect of a claim and counterclaim once it had discontinued its claim.

The claimant claimed for breach of contract and the defendant counterclaimed for repudiatory breach. On 26 November 2013 the defendant served a Part 36 offer in respect of settling both the claim and counterclaim. It was the only offer in discussion at the time.

On 25 April 2014 the defendant wrote to the claimant withdrawing the Part 36 offer (the Withdrawal):

“Needless to say, on the issue of costs we will further refer the court to the fact that our client made every effort to settle this matter, which was simply ignored by yourselves and your client which offers are, needless to say, withdrawn. The only basis upon which our client will settle the dispute is in terms if you meet our client’s cost in full, both in respect of the High Court proceedings and American proceedings”.
The letter also set out the terms on which the defendant was prepared to settle which were, in summary, for the defendant to be reimbursed for all of its costs and paid the full amount for the counterclaim.
On 8 May 2014 the claimant served a notice of discontinuance of its claim. Then, on 15 May 2014, the claimant attempted to accept the Part 36 offer.

The claimant argued that the withdrawal letter of 25 April 2014 was ambiguous because it was not a “formal notice of withdrawal” as referred to as a requirement of a Part 36 offer withdrawal in Rix LJ’s judgment in C v D [2011] EWCA Civ 656. The claimant also argued there was ambiguity because later in the letter it made reference to the Part 36 offer, and subsequent correspondence also made reference to the Part 36 offer, both suggesting the offer was still on the table. The defendant argued that, properly construed, the letter of 25 April 2014 was not ambiguous and was a clear withdrawal of the Part 36 offer. 

Requirements for withdrawal

Flaux J stated that an offeror may withdraw an offer after expiry of the offer’s notice period if the offeree had not accepted by that point, by the offeror serving written notice on the offeree. Withdrawal of a Part 36 offer home to the offeree that the offer has been withdrawn” (as per Moore-Bick LJ in Gibbon v Manchester City Council [2010] EWCA Civ 726). An implied withdrawal is insufficient.

Flaux J confirmed there is no prescribed form of wording to be used for a withdrawal of a Part 36 offer. Whilst Moore-Bick LJ in Gibbon said [at 17] that “in order to avoid uncertainty [a withdrawal] should include an express reference to the date of the offer and its terms, together with some words making it clear that it is withdrawn”, Flaux J understood this to mean that it was preferable, but not mandatory, to include reference to the date of the Part 36 offer which is being withdrawn. 

Had the defendant’s Part 36 offer been withdrawn?

Flaux J held that the letter dated 25 April 2014 clearly withdrew the Part 36 offer. It was obvious that the wording referred to the defendant’s Part 36 offer as this was the only offer to settle that was in discussion at that time.

Further, the terms on which the defendant sought the costs to be calculated were wholly inconsistent with any suggestion that the Part 36 offer remained on the table. Referring to the letter dated 25 April 2014, Flaux J stated that “… any reasonable solicitor would have understood that letter as withdrawing the Part 36 offer”.
Flaux J also dismissed suggestions of ambiguity caused by the subsequent correspondence, stating that it is not possible to revive an offer or bring a Part 36 offer back into existence by subsequent correspondence. 

Obiter – Part 36 offer cannot be accepted once a claim no longer exists 

Although Flaux J had found that the withdrawal letter dated 25 April 2014 had successfully prevented the claimant from accepting the defendant’s now withdrawn Part 36 offer, he considered obiter the effect of the claimant’s notice of discontinuance of their claim.

Flaux J said that a Part 36 offer can only be accepted where it is in respect of a claim which is in existence. This meant that once the claimant had served notice of discontinuance of its claim, there was no claim which the Part 36 offer could be in respect of. This also meant that the claimant could not accept the Part 36 offer in respect of the counterclaim only. Otherwise, claimants would be in a position where they could accept an offer effectively on different terms from the terms on which it was being offered.

Comment

A Part 36 offer is a useful tactic to help focus another party on settlement because if the offeree fails to obtain a judgment more advantageous than the offer at trial there can be serious cost consequences for the offeree.

The use of Part 36 offers can be very specific to each case. For example, more than one Part 36 offer can remain open at a time, and a Part 36 offer can be in respect of a whole claim or part of a claim and a counterclaim. Part 36 offers must specify a period of not less than 21 days within which the offeror will be liable for the offeree’s costs and can only come to an end if validly withdrawn. The Part 36 offer can be accepted until the end of trial unless it has been validly withdrawn. It is important that each Part 36 offer and withdrawal made or received is recorded and that each withdrawal is drafted clearly.

Flaux J made useful comments on the requirements for an effective withdrawal of a Part 36 offer. A withdrawal of a Part 36 offer needs to make it absolutely clear that a particular Part 36 offer is being.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen & Overy LLP | Attorney Advertising

Written by:

Allen & Overy LLP
Contact
more
less

Allen & Overy LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide