Norman Lee Thewlis v Groupama Insurance Company Limietd

Approved Judgment

Hearing date: 20 December 2011

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

This is an application by the Defendant for a declaration that the proceedings have been stayed pursuant to Part 36.11 of the CPR on the grounds that the Defendant has accepted the Claimant's offer made pursuant to Part 36 of the CPR.

There is no dispute as to the facts relevant to the application. It is common ground between the parties that on 24 ^th September 2008 (before the issue of proceedings) Lawsons on behalf of the Claimant made an offer to settle the proceedings and that the offer was rejected on 1 ^st October 2008. Proceedings were subsequently issued on 25 ^th May 2011 and have now reached the stage where the claim has been set down for trial in February 2012. On 17 ^th October 2011 Ford & Warren on behalf of the Defendant purported to accept the offer in settlement of the whole claim.

There is considerable recent jurisprudence on Part 36 which has spawned significant satellite litigation. During the course of the hearing I was referred to four decisions of the Court of Appeal 1, two decisions of the High Court 2 and one decision of the Romford County Court 3.

There is no dispute between the parties that under ordinary common law principles the offer had terminated long before October 2011. There is equally no dispute that if the letter of 24 ^th September 2008 was a valid Part 36 Offer it was validly accepted in the letter of 17 ^th October 2011.

The issue between the parties was whether the letter took effect as a valid Part 36 Offer. Mr Smith on behalf of the Defendant contends that it was and has referred me to the references to Part 36 in the letter and other parts of the letter which, he submits, make it clear that it should be interpreted as a Part 36 Offer. Mr Buck on behalf of the Claimant submits that it was not. It did not contain the formalities required by Part 36 and contained clauses inconsistent with Part 36.

The underlying dispute

The underlying dispute is largely irrelevant to the present debate and thus may be summarised very shortly. The Claimant is the owner of residential property at Woodside Farm, Middlestown West Yorkshire. The property was insured by the Defendant. In 2007the Claimant made a claim under the policy of insurance in respect of subsidence damage. The Defendant disputed the claim. There are issues as to whether any damage (none being admitted) is covered by the terms of the policy and as to the extent and costs of any necessary remedial works.

The offer letter.

As the letter is central to the current debate it is convenient to set it out substantially in full:

OFFER MADE PURSUANT TO PART 36 OF THE CPR

…

Dear Sirs

Re Our client: Mr Norman Lee Thewlis – Damage to Woodside Farm, Sandy Lane, Middlestown – Your Principal Insured – Groupama

We write further to the above and in one last attempt to settle this matter, we are instructed to put forward the following offer, this offer is made pursuant to Part 36 of the CPR and remains open for acceptance for a period of 21 days, from your receipt of this offer letter, thereafter it can only be accepted if we agree the liability for costs or the Court gives permission:-

1. Your client to pay our client damages in the sum of £20,000 within 21 days of the date of the letter.

2. Your client to pay our reasonable costs and our clients experts costs (Peter Wade Consultancy) such costs to be subject to detailed assessment if not agreed.

The above mentioned offer relates to the whole of our client's claim against your client and takes into account any counterclaim they may have and is inclusive of interest.

Please take your client's instructions on the above and revert to us in due course.

Yours faithfully

Lawsons

It is perhaps worth noting that Part 36 was substantially amended with effect from 6 ^th April 2007. Mr Smith invited me to infer and Mr Buck accepted that the author of the letter had in mind the provisions of Part 36 prior to the amendments.

Part 36

CPR 36.1 provides under the broad heading scope of this part as follows:

"36.1 (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.

"(2) Nothing in this part prevents a party making an offer to settle in whatever way he chooses but if the offer is not made in accordance with rule 36.2 it will not have the consequences specified in rules 36.10, 36.11 and 36.14."

36.2 provides as follows:

"(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 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 counter claim."

36.3, under the heading "Offers – general provisions" provides

(2) A Part 36 may be made at any time, including before the commencement of proceedings

(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.

…

(5) Before expiry of the relevant period a Part 36 offer may be withdrawn or its terms changed to be less advantageous to the offeree, only if the court gives permission.

(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.

36.9, under the heading "Acceptance of a Part 36 offer"

(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.

36.10, under the heading "Costs, consequences of acceptance of a Part 36 offer", provides:

(1) Subject to paragraph 2 and paragraph 4(a) where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings up to the date on which notice of acceptance was served on the offeror

…

(3) costs under paragraphs 1 and 2 of this rule will be assessed on the standard basis if the amount of costs is not agreed."

Under the heading "the effects of acceptance of a Part 36 offer" 36.11 provides:

(1) If a Part 36 offer is accepted the claim will be stayed

(2) In the case of acceptance of a Part 36 offer which relates to the whole claim the stay will be upon the terms of the offer

The Authorities

As already noted I was referred to seven authorities. In Gibbon Moore-Bick LJ made some general observations in paragraphs 4 – 6 of his judgment:

4. 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.

5. 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...