Offers to settle: when will a new offer reject an earlier offer?
Details
DB UK Bank Ltd (trading as DB Mortgages) -v- Jacobs Solicitors [2016 [EWHC] 1614 (Ch)
CPR part 36 is often considered to be a ‘law unto itself’, and it runs independently of the common law rules of offer and acceptance that apply to non-part 36 offers. Stephen Sarbutts takes a look at a recent High Court decision which deals with implied rejection between part 36 and non-part 36 offers.
Background
The claimant brought a claim for professional negligence against the defendant firm of solicitors. The claimant alleged that the bank would not have made its loan had the solicitors made it aware that the borrower was purchasing a new-build property. There was a partial admission of liability by the defendant for not disclosing this information, but it was then argued that the bank would have made the loan in any event.
The offers
A week before the trial the claimant’s solicitors sent a letter to the defendant’s solicitors stating that they were accepting the defendant’s earlier non-part 36 offer to settle dated 28 August 2015.
Importantly, a counter-offer had been made by the claimant on 19 May 2016 in accordance with part 36. The defendant argued that the claimant’s part 36 counter-offer had the effect of rejecting the non-part 36 offer, meaning that it was no longer open for acceptance.
Implied rejection?
It was held that the principle of implied rejection would apply in this case. The claimant’s part 36 offer was a counter-offer and had the effect of rejecting the offer of 28 August 2015. Whilst it was accepted that when a part 36 offer is made in response to an existing part 36 offer, the common law principle of implied rejection does not apply, the defendant’s offer was a common law (non-part 36) offer and the impact of the later part 36 offer had to be addressed by reference to common law principles. The defendant’s offer was therefore rejected and no longer available for acceptance. There had been no settlement reached and the case would proceed to trial.
This case is a reminder of the different rules governing part 36 and non-part 36 offers. Both types of offer have their place in litigation but parties should take care to consider which type of offer best suits their litigation strategy, bearing in mind what offers are already on the table. As this case makes clear, a common law offer will be governed by common law rules.
