Gibbon v Manchester City Council
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Carnwath,President of the Queen's Bench Division |
| Judgment Date | 25 June 2010 |
| Neutral Citation | [2010] EWCA Civ 726 |
| Docket Number | Case No: B3/2009/2185 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 June 2010 |
[2010] EWCA Civ 726
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANCHESTER COUNTY COURT
(His Honour Judge Holman)
Before: President of the Queen's Bench Division
Lord Justice Carnwath
and
Lord Justice Moore-bick
Case No: B3/2009/2185
(9MA06104)
Dr. Mark Friston (instructed by Thompsons) for the appellant
Mr. T.P. Hodgson (instructed by Manchester City Council Legal Department) for the respondent
Lord Justice Moore-Bick:
The issues
These appeals have been heard together because they raise similar issues concerning the interpretation and effect of Part 36 of the Civil Procedure Rules. Part 36 contains provisions which enable either party to the proceedings to make an offer to settle the dispute which has far-reaching consequences if the case goes to trial and the other party fails to obtain a judgment which is more advantageous to him than the offer. The central question raised on this appeal is whether Part 36 embodies a self-contained code or is subject to the general law of offer and acceptance insofar as it fails expressly to provide otherwise.
Part 36
Part 36 replaced the provisions of the Rules of the Supreme Court relating to payment into court by way of a formal offer of satisfaction of the claim. It also provided for the first time a means by which a claimant could offer to accept a sum of money less than the amount of his claim with protection in relation to costs comparable to that which had previously been available only to defendants. Its purpose is to encourage settlement and to enable those who make sensible offers to protect themselves against liability for the costs incurred in the continuation of proceedings to no ultimate advantage.
The following are the most important provisions of Part 36 as far as these appeals are concerned:
“ Scope of this Part
(1) This Part contains rules about
(a) offers to settle; and
(b) the consequences where an offer to settle is made in accordance with this Part;
…
Form and content of a Part 36 offer
…
36.2
(1) An offer to settle which is made in accordance with this rule is called a Part 36 offer.
(2) A Part 36 offer must –
(a) be in writing;
(b) state on its face that it is intended to have the consequences of Section I of Part 36;
(c) specify a period of not less than 21 days within which the defendant will be liable for the claimant's costs in accordance with rule 36.10 if the offer is accepted;
(d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and
(e) state whether it takes into account any counterclaim.
Part 36 offers – general provisions
…
36.3
…
(3) A Part 36 offer which offers to pay or offers to accept a sum of money will be treated as inclusive of all interest until—
(a) the date on which the period stated under rule 36.2(2)(c) expires; or
(b) if rule 36.2(3) applies, a date 21 days after the date the offer was made.
…
(6) After expiry of the relevant period and provided that the offeree has not previously served notice of acceptance, the offeror may withdraw the offer or change its terms to be less advantageous to the offeree without the permission of the court.
(7) The offeror does so by serving written notice of the withdrawal or change of terms on the offeree.
Time when a Part 36 offer is made
36.7
(1) A Part 36 offer is made when it is served on the offeree.
(2) A change in the terms of a Part 36 offer will be effective when notice of the change is served on the offeree.
Acceptance of a Part 36 offer
36.9
(1) A Part 36 offer is accepted by serving written notice of the acceptance on the offeror.
(2) … a Part 36 offer may be accepted at any time (whether or not the offeree has subsequently made a different offer) unless the offeror serves notice of withdrawal on the offeree.
…
Costs consequences following judgment
36.14
(1) This rule applies where upon judgment being entered –
(a) a claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer; or
(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant's Part 36 offer.
(2) … where rule 36.14(1)(a) applies, the court will, unless it considers it unjust to do so, order that the defendant is entitled to—
(a) his costs from the date on which the relevant period expired; and
(b) interest on those costs.
(3) … where rule 36.14(1)(b) applies, the court will, unless it considers it unjust to do so, order that the claimant is entitled to –
(a) interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) his costs on the indemnity basis from the date on which the relevant period expired; and
(c) interest on those costs at a rate not exceeding 10% above base rate.”
It can be seen from Part 36 as a whole, as well as from the extracts cited above, that it contains a carefully structured and highly prescriptive set of rules dealing with formal offers to settle proceedings which have specific consequences in relation to costs in those cases where the offer is not accepted and the offeree fails to do better after a trial. In cases where there has been no Part 36 offer or a Part 36 offer has been bettered the judge has a broad discretion in dealing with costs within the framework provided by Part 44. Rule 44.3(4) provides that when exercising its discretion as to costs the court will have regard to the general rule that the unsuccessful party should pay the costs of the successful party, but will also have regard to the conduct of the parties and any payment into court or admissible offer to settle made by one or other party which falls outside the terms of Part 36. In seeking to settle the proceedings, therefore, parties are not bound to make use of the mechanism provided by Part 36, but if they wish to take advantage of the particular consequences for costs and other matters that flow from making a Part 36 offer, in relation to which the court's discretion is much more confined, they must follow its requirements.
Part 36 is drafted as a self-contained code. It prescribes in some detail the manner in which an offer may be made and the consequences that flow from accepting or failing to accept it. In some respects those consequences reflect broadly the approach the court might be expected to take in relation to costs; in others they do not; for example, rule 36.14(3) allows the court to award a claimant who has obtained a judgment at least as advantageous as his offer interest on the sum for which he has 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 as well.
Basic concepts of offer and acceptance clearly underpin Part 36, but that is inevitable given that it contains a voluntary procedure under which either party may take the initiative to bring about a consensual resolution of the dispute. Such concepts are part of the landscape in which everyone conducts their daily life. It does not follow, however, that Part 36 should be understood as incorporating all the rules of law governing the formation of contracts, some of which are quite technical in nature. Indeed, it is not desirable that it should do so. Certainty is as much to be commended in procedural as in substantive law, especially, perhaps, in a procedural code which must be understood and followed by ordinary citizens who wish to conduct their own litigation. In my view, Part 36 was drafted with these considerations in mind and is to be read and understood according to its terms without importing other rules derived from the general law, save where that was clearly intended.
With these general observations in mind I turn to consider the two appeals before us.
Gibbon v Manchester City Council
In December 2007 Mrs. Gibbon was injured when she tripped and fell in a playground for which Manchester City Council was responsible. She brought proceedings against the Council, which admitted liability.
On 10 th November 2008 the Council made a Part 36 offer to Mrs. Gibbon of £1,150 in settlement of her claim. She rejected that offer and on 18 th November made a Part 36 offer in response, offering to accept £2,500 plus repayment of any sums recoverable by the Compensation Recovery Unit and costs.
On 24 th November the Council increased its offer to £1,500. The solicitors acting for Mrs. Gibbon rejected that offer, indicating that they expected something more generous. However, they did not withdraw the Part 36 offer made on her behalf on 18 th November.
On 7 th January 2009 the Council increased its offer to £2,500, but on 18 th February Mrs. Gibbon's solicitors again rejected it. Once again, however, they took no steps to withdraw the offer made on 18 th November.
On 26 th February the Council, mindful of the fact that the offer made on 18 th November had not been withdrawn, wrote to Mrs. Gibbon's solicitors formally accepting that offer. On receipt of that letter the solicitors promptly purported to withdraw the offer and again rejected the Council's offer of £2,500, but the Council was determined to stick to its position. It made an application for a declaration that it was entitled to accept the offer made on 18 th November and an order for judgment to be entered to reflect that fact that it had done so.
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