*but it remains open.

Not a housing post per se, but this case concerns Part 36 offers which are a vital tool in any disrepair or nuisance claim or counterclaim, so worth a brief note for practitioners.

Gibbon v Manchester City Council [2010] EWCA Civ 726

Two joined appeals on the issue of the construction of CPR Part 36:

In Gibbon, Machester had made an offer of £1,150 in settlement. G rejected that and offered £2,500. Manchester thereafter offered £1,500, the £2,500. G rejected both offers. Manchester then formally accepted G’s initial offer of £2,500 which had not been formally withdrawn in the interim. G then purported to withdraw the offer and Manchester applied to the Court, which held they were able to accept the offer. On appeal, G argued that i) Manchester had rejected the offer initially, making it incapable of acceptance and ii) G’s refusal of Manchester’s offer of £2,500 was an implicit withdrawal of her offer.

Held: Part 36 is quite clear: “a Part 36 offer may be accepted at any time unless the offeror has withdrawn the offer by serving notice of withdrawal on the offeree”. There was no need to import common law contract ideads into Part 36, which was a freestanding set of rules. Appeal dismissed.

In L G Blower Ltd v Reeves, R had made various offers at various times in varying amounts At one point all previous offers save for a ‘May 2007’ offer were expressly revoked. There was then a further offer in February 2008, which was not in the form of a Part 36 offer, but did re-state the amount of one of the earlier, revoked offers. At trial the award to B was not significantly greater than the Feb 08 offer and the Judge awarded B half its costs from R from the date of the offer. R contended that B should have paid their costs from the date of the offer.

On appeal, R argued that the Feb 08 offer was not a Part 36 offer and that the May 07 offer was therefore the only part 36 offer valid at the time of trial. The court agreed, but found that the award at trial was still higher than R’s offer once interest and costs were taken into account.

The court went on to express views on whether a Part 36 offer automatically revokes a previous one or whether there can be concurrent offers, each open to acceptance.

Although at first sight it may seem anomalous that a party should be able to make several offers in different terms, all of which may at any one time be capable of acceptance, that does in my view reflect both the language and the purpose of Part 36. As to the language, Part 36 is quite clear as to the manner in which offers may be made, varied and withdrawn. It does not provide that only one offer may be available for acceptance at any one time; nor does it provide that a later offer is to be treated as a varying or revoking a previous offer and it would be inconsistent with the recognition of Part 36 as a self-contained code to read provisions of that kind into it. The purpose of Part 36 is to promote settlement by encouraging sensible offers. As Mr. Plewman pointed out, every Part 36 offer carries with it certain consequences for costs linked to the date on which it is made and the financial implications vary as the proceedings progress. For example, an offer of £10,000 made at an early stage may be more valuable than an offer of £12,000 made at a later stage, depending on the amount of costs that have been incurred in the meantime and prevailing rates of interest. There is no reason why a party should not make more than one offer and leave it to the other to decide which, if any, to accept. Or, if he wishes, he may change the terms of the original offer which then continues to stand in its varied form as from the date it was originally made. I accept that in some cases there could be argument about whether a later offer was intended to vary an earlier offer or to stand alongside it. The solution, however, is for parties and their legal advisers to follow the requirements of the Rules carefully and make their intentions clear. If they do so, problems of that kind should not arise.

This may make it difficult to calculate the value of offers when assessing whether a party has beaten its offer at trial.

In any consideration of the effect on costs of an offer to settle it is necessary to compare the amount of the offer with the amount for which judgment has ultimately been obtained. Offers under Part 36 are treated as inclusive of interest (rule 36.3(3)). However, since interest is normally awarded in respect of most or all of the period for which the successful claimant has been kept out of his money, it is usually simpler to concentrate on the principal amount in dispute when deciding whether the claimant has recovered more than was available to him under the offer. Clearly, the longer the proceedings go on, the more the successful claimant can expect to recover by way of interest, but the additional amount reflects nothing more than the additional time spent waiting to obtain judgment and any change in interest rates in the meantime. Accordingly, in cases where a sum is offered under Part 36 or an offer is expressed to be inclusive of interest, in order to evaluate the offer it is necessary to take into account how long the principal sum has been outstanding and the rates of interest likely to be awarded by the court.

The upshot is:

1. A Part 36 offer is open until expressly and formally withdrawn, even if the other party has rejected it.
2. It is possible for there to be concurrent offers, each in different amounts at different times, unless previous offers are formally withdrawn. Costs and interest at the date of offer should be considered in assessing its value.

Be careful out there…