UK: A Summary of Recent Developments in Insurance, Reinsurance and Litigation Law

Last Updated: 25 November 2010
Article by Nigel Brook

This Week's Caselaw

C v D & D2 Time-limited offer cannot be a valid Part 36 offer

http://www.bailii.org/ew/cases/EWHC/Ch/2010/2940.html

The claimant made an offer to the defendants in which it was stated that "the offer will be open for 21 days from the date of this letter". The letter was headed "Offer to Settle under CPR Part 36" and made various other references to Part 36. After the expiry of 21 days, the claimant agreed a short extension of time for acceptance of the offer but the defendants failed to respond. Almost a year later the defendants purported to accept the offer, which had never formally been withdrawn. The claimant argued that the offer was not capable of acceptance at that time and so had not been accepted. CPR r36 provides that, after expiry of the relevant period, a Part 36 offer may be withdrawn or changed only be serving written notice on the offeree (assuming it has not already been accepted). Warren J held as follows:

  • A time-limited offer (i.e. one which ceases to be an offer once the period for acceptance has expired) is not capable of constituting a Part 36 offer. A Part 36 offer must be an offer "which is at least capable of being withdrawn and is not one which comes to an end according to its own terms". Accordingly, an offer which states that it "will remain open for [x] days from the date of this letter" is not, and cannot be, a Part 36 offer.
  • Since the offer made by the claimant was not a Part 36 offer at all, it was a perfectly valid time-limited offer instead. Accordingly, the offer had ceased to be open for acceptance as at the date of the purported acceptance by the defendants.
  • Although not required to do so, the judge expressed the view that, had this been a Part 36 offer, the subsequent correspondence between the parties did not amount to a withdrawal of the offer (for the purposes of CPR r36.9(2)). A lengthening of the period which must be set out in the letter under CPR r36.2(2)(c) (ie the period of not less than 21 days within which the defendant will be liable for the claimant's costs in accordance with rule 36.10 if the offer is accepted) does not amount to a withdrawal of the offer. At most, it changes the terms of the offer, which remains open for acceptance.

COMMENT: It was a requirement prior to the changes to CPR r36 (in April 2007) that a Part 36 offer must state that it is open for a minimum of 21 days from the date it is made. After that date, the court's permission or the parties' agreement was needed for acceptance of the offer. That requirement changed under the new rules - now the offer must state a period of 21 days or more within which the defendant will be liable for the claimants costs if the offer is accepted (unless the offer is made less than 21 days before the start of the trial). However, the offer will remain open for acceptance until it is withdrawn by service of a written notice on the offeree. This case therefore highlights the dangers of using the old wording in Part 36 offers. Although, in this case, the offeror obtained the result which it wanted (ie that the offer was not open for acceptance), it is worth noting that the enhanced costs protection under Part 36 will not be available if an offer is not Part 36-compliant.

Noble Denton Middle East v Noble Denton International Ltd Appointment of arbitrator by the court where one party argues that there is no arbitration clause

http://www.bailii.org/cgibin/ markup.cgi?doc=/ew/cases/EWHC/Comm/2010/2574.html&query=title+(+noble+and+d enton+and+middle+and+east+)&method=boolean

Section 18 of the Arbitration Act 1996 provides that any party to an arbitration agreement can apply to the court to appoint an arbitrator where the parties have not agreed what is to happen if the appointment procedure fails. The defendant in this case argued that there was no arbitration agreement between the parties. Burton J was therefore required to resolve the issue of whether (in an application under section 18) the issue to be resolved is whether there is an arbitration agreement or simply whether there is a good arguable case for an arbitration agreement.

Having reviewed the relevant caselaw and textbooks, he concluded that the proper approach was for the arbitrators, and not the court, to decide questions about their jurisdiction. Accordingly, the correct test on section 18 is only one of whether there is an arguable case (which there was in this case).

Tim Martin Interiors v Akin Gump LLP Assessment of solicitors' costs which are to be paid by a third party

http://www.bailii.org/ew/cases/EWHC/Ch/2010/2951.html

A solicitor charges fees under a retainer between himself and his client. However, in certain circumstances, the client's liability to pay his solicitor is passed to a third party. This may be because of a court order or because of the terms of a settlement agreement or (as in this case) because of the terms of a mortgage. In this case, the third party mortgagor was required to pay the fees of the bank's solicitors who were instructed to take steps to enforce the mortgage and recover possession. The issue in this case was what was the correct approach which a costs judge should adopt when assessing a solicitor's bill at the request of a third party who is liable to pay that bill.

Lewison J held that the costs judge in this case had erred in his approach. The correct approach is that the court must assess the bill as if the client himself had required the assessment. The third party is entitled to only raise such objections as the client himself could have raised. Although the court is entitled to interfere with the hourly rate agreed between the solicitor and the client, it will only do so in extremely limited circumstances. Thus the costs judge had been wrong to hold that it was not objectively reasonable in this case for the the rates charged by City firms to be recoverable from the third party.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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