We first referred to the case of C v D in the January Banking update. The Court of Appeal has now confirmed that an offer under Part 36 of the Civil Procedure Rules (CPR) cannot be time-limited.

The claimant's offer was headed "Offer to settle under CPR Part 36" and was said to be "open for 21 days from the date of the letter." It stated that the offer was intended to have the consequences set out in Part 36 and detailed the costs consequences set out in Part 36.14 if the offer was not accepted.

The offer was not accepted with the 21 day time limit referred to. However, shortly before trial the defendant sought to accept it. The claimant said the offer was no longer open for acceptance as the time limit had passed. The defendant argued that as no notice of withdrawal had been served, the offer remained open for acceptance.

At first instance the court held that despite the references to Part 36, the offer was not capable of being a Part 36 offer because it was time limited. To be valid, a Part 36 offer must remain open for acceptance until it is withdrawn in writing. This offer was a valid, time limited offer which, if not accepted within the time stipulated, came to an end and could not be accepted thereafter. It was not a Part 36 offer and did not have the Part 36 costs consequences.

The Court of Appeal confirmed that a time-limited offer which provides that the offer lapses at the end of a stipulated period cannot constitute a valid Part 36 offer. Part 36 does not permit time-limited offers. To have the Part 36 costs consequences following trial, there must be an offer that has not been withdrawn and has remained on the table. An offer can be time-limited or a Part 36 offer: it cannot be both.

It was common ground that the offer was intended to be made under Part 36. The Court of Appeal held that any ambiguity should, therefore, be interpreted to make the offer compliant with Part 36. By construing the relevant words to mean that the offer would not be withdrawn during the period of 21 days, but could be withdrawn only thereafter, effect could be given to the claimant's intention to make a Part 36 offer. Objectively interpreted, the offer was not time limited but complied with Part 36. The first instance decision was reversed on this point.

The offer therefore was a Part 36 offer. It had not been withdrawn but had remained open for acceptance and had been accepted by the defendant. This brought the proceedings to a conclusion without the need for a trial.

Things to consider

The Court of Appeal held that where an offer is clearly intended to be a Part 36 offer and otherwise complies with the form of Part 36, it will not readily be interpreted in a way which would prevent it from being a Part 36 offer. Any ambiguities in any Part 36 offer received should be clarified at an early stage. This will avoid any unexpected penalties for failing to accept an offer that you might not think is compliant but which the court later finds is.