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Costs: C v D [2011] EWCA Civ 646

C makes an offer to D headed "offer to settle under CPR Part 36". C includes that the offer will be "open for 21 days" from the date of the letter and also the costs' consequences of not accepting the offer within this "relevant period".

It is common ground that this offer is intended to be made pursuant to Part 36. Circumstances change to C's advantage. To C's dismay, almost a year later, and 3 weeks before trial, D purports to accept the offer. Can C wriggle out of this by saying that the offer has lapsed? No, according to C v D.

In C v D Lords Justice Rix, Rimer and Burton addressed the questions of (1) whether a Part 36 Offer can be a time limited offer and (2) the true construction of an offer being "open for 21 days".

Can a Part 36 Offer be a time limited offer? No. There is a necessary inconsistency between an offer being both time limited and a Part 36 Offer. For a Part 36 offer to have effect in terms of costs consequences after trial, it has to be an offer that has not been withdrawn, but has remained on the table. The initial offer has to specify a period of at least 21 days ("the relevant period") during which the offer cannot be withdrawn without the permission of the court (rule 36.3(5)). After that period has expired, the offeror can withdraw the offer only by serving notice of withdrawal on the offeree (rules 36.3(6) and (7)). In the absence of withdrawal, the offeree can accept the offer at any time.

What is the true construction of an offer being "open for 21 days"? It was found that the "21 days" was the "relevant period". According to the maxim of construction, words should be understood in such a way that the matter is effective, rather than ineffective. Where the offeror's expressed intention is to make its offer a part 36 offer, any ambiguities in it raising a question of whether the offer does or does not comply with the requirements of Part 36, will be interpreted by the reasonable man in a way that is so compliant.

Accordingly, in C v D, it was held that the offer was a part 36 offer, it had remained open and that C was bound.

Philippa Seal / 1st Jul 2011


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