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Offer letters and Part 36

CitationNorman Lee Thewlis v Groupama Insurance Company Limited [2012] EWHC 3 (TCC) (05 January 2012)

Keywords: CPR Part 36, Offers to settle, Failure to comply with Formal Requirements of Part 36, Whether offer engaged provisions of Part 36, Whether Offer Terms Inconsistent with Part 36 Offer

The Facts

The Defendant (“Groupama”) applied for a declaration that the proceedings between the parties (which concerned coverage for subsidence damage) had been stayed pursuant to CPR 36.11, on the basis that Groupama had validly accepted an offer by the Claimant (“Thewlis”) to settle the claim, made under Part 36. Thewlis, who had made the offer through his solicitors William Buck, sought to escape the acceptance of the offer by making two key points:

First, that in breach of CPR 36.2 (2) (b), the offer letter did not say on its face that it was intended to have the consequences of Part 36, and second that the letter was inconsistent with Part 36 because after 21 days it could only be accepted “if we agree the liability for costs or the court gives permission”. Groupama argued that the letter was binding; it referred to Part 36 in two places, once in bold text, and the last few ambiguous words concerning agreement if accepted after 21 days should be ignored, following guidance given by Stanley Burnton LJ in C v D [2011] EWCA Civ 646, to resolve ambiguity so far as possible as complying with Part 36.

Held (HHJ Behrens) 

That the letter had failed to invoke the provisions of Part 36 because it had failed to comply with the requirements of that rule. Rule 36.2 must mean what it said. The Court had previously held that technical failures to comply with the provisions of Rule 36.2 or 36.5 had been fatal: see Huntley v Simmonds [2009] EWHC 406 (QB) and Carillon v PHI Group [2011] EWHC 1581 (TCC). Furthermore and in any event, the clause “thereafter it can only be accepted if we agree the liability for costs or the Court gives permission” which appeared in the offer letter, meant that the offer did not remain open after 21 days for Groupama to accept, and this was therefore inconsistent with a Part 36 offer.

Comment

This is a further confirmation that in order to engage the highly prescriptive consequences of Part 36, any offer to settle made in purported compliance with that rule must comply with all the technical requirements of the Part 36 provisions. This is not an area of the rules where the Court will overlook sloppiness and offer letters must be drafted carefully and within the four walls of Part 36.