C v D [2011] EWCA Civ 646

The Respondent had made the Appellant an offer, specified to be an “offer to settle under CPR Part 36”. The offer was stated to be open for 21 days from the date of the letter, which set out the costs effects of failure to accept the offer within the relevant period. The Appellant purported to accept the offer nearly a year later, only three weeks before trial.

At first instance, the judge found that Part 36 did not allow for time-limited offers, as a Part 36 offer can only lapse when a written notice of withdrawal is served. He also found that the phrase “open for 21 days” meant that the offer lapsed without express withdrawal, and so was time-limited.

On appeal, the court was required to determine firstly whether a Part 36 offer could be made in terms which limited the acceptance of the offer to a stipulated period, and secondly the true construction of the offer being “open for 21 days” in the context of what was intended to be a Part 36 offer. Thirdly, the court had to decide whether the Respondent’s offer was withdrawn either by the time-limited terms of the offer or by subsequent emails.

The Court found that Part 36 does not expressly exclude time-limited offers. However, in order for a Part 36 offer to have effect in terms of costs consequences after trial, it must have remained on the table rather than being withdrawn. There was no room within Part 36 for an offer which was neither withdrawn before or after the expiry of the relevant period, but which lapsed as a matter of its own terms. Further, a time limit is not part of the subject matter of an offer over which an offeror within Part 36 has autonomy. As such, the Part 36 regime cannot accommodate a time-limited offer.

The Court went on to find that while a time-limited offer is inconsistent with Part 36, the letter in this case could be reasonably construed in a manner which avoided it being construed as a time-limited offer. The words “open for 21 days” could be read to mean that the offer would not be withdrawn within those 21 days, but that after those 21 days withdrawal was a possibility. Such a construction would save the offer as a Part 36 offer and would also provide clarity and certainty. Accordingly, on an objective interpretation, the offer was not time-limited, but was an offer which complied with Part 36. The Court also noted that the express time limit was not the equivalent of a Part 36 withdrawal.

It was noted that in order for the Part 36 regime to remain secure, parties must understand that if a claimant wishes to make a time-limited offer, in that the offer will lapse of its own accord at the end of the stipulated period, then such an offer cannot be made under Part 36. However an offer presented as a Part 36 offer, and otherwise complying with that Part, will not be readily interpreted in a way which will prevent it from being a Part 36 offer.