The general law is not always applicable in civil procedure

Part 36 and settlement

Given that part 36 has as its aim the settlement of litigation, it might be assumed that behind it lies the ordinary law of contract, or indeed that was seemingly the position until recently.

For example, in Scammell v Dicker [2001] 1 WLR 631 it was held that a part 36 offer (as opposed to a payment into court) did not exclude the ordinary law of contract and it followed that if an offer had not been accepted it could be withdrawn. This decision of the Court of Appeal was one of the first decisions to consider the new Civil Procedures Rules and its context was the question of the need for leave of the court in respect of withdrawal.

The Court of Appeal held that leave was not required. Part 36 at that time included the mechanism of payment into court and there the provisions were clear that withdrawal did require leave - a constraint therefore on the general law of contract.

However, in respect of offers, the court reasoned that these were contractual in nature and therefore governed by the ordinary rules of offer and acceptance. Two consequences flowed from that reasoning: first, that an offer could be withdrawn at any time unless it had been accepted; and second, that the relevant period required by part 36 (a minimum of 21 days during which the offer must be expressed to remain open for acceptance) did not prevent an offer being withdrawn during that period.

Altered wording

The wording of part 36 has altered since the Scammell decision, most notably by introducing provisions concerning withdrawal.

CPR 36.3 (5) provides that before expiry of the relevant period a part 36 offer may be withdrawn or its terms changed to be less advantageous to the offeree, but only if the court gives permission.

CPR 36.3 (6) provides that after expiry of the relevant period and provided that the offeree has not previously served notice of acceptance, the offeror may withdraw the offer or change its terms to be less advantageous to the offeree without the permission of the court.

As to withdrawal generally, CPR 36.3 (7) provides that the offeror does so by serving written notice of the withdrawal or change of terms on the offeree.

These provisions were fully considered in Gibbon v Manchester City Council [2010] EWCA Civ 726 where the Court of Appeal held that part 36 was a self-contained code and was not dependent upon the general principles of the law of contract. Scammell was not considered.

This time the court held that a part 36 offer does not lapse on rejection (contrary to general contractual principles), but lives on until the offeror has served a notice of withdrawal and can therefore be accepted unless such notice has been given.

It is salutary to note that the acceptance here was made after the offeror had made it clear that the offer was no longer a basis for settlement but had failed to give notice in writing as required by 36.3 (7).

It meant that there was a concluded agreement even though the intention of the offeror to no longer be bound was fully known to the offeree - much more of a contradiction to the ordinary law of contract is hard to imagine. The court in Gibbon also approved Sampla v Rushmoor Borough Council [2008] EWHC 2616 (TCC) where Mr Justice Coulson held that the rejection of a part 36 offer does not render it incapable of later acceptance.

Consent orders

The same litigating parties provide a further Court of Appeal decision relating to consent orders and the operation of the law of contract in Scammell and others v Dicker [2005] EWCA Civ 405.

Here, although the court dismissed the appeal, holding that the consent order was not void for uncertainty, it did recognise the general application to consent orders of such areas of the law of contract as misrepresentation, fraud or mistake. It would seem to follow that such general rules apply also to part 36 offers.

Interestingly, in dismissing the appeal based on uncertainty of the consent order, the court again relied upon the ordinary law of contract: '…it is only in the absence of agreement as to essential terms that a contract is in danger of failing for uncertainty because further agreement is required. The world is otherwise full of perfectly sound contracts which require further agreement for the purpose of their implementation.'

David Chalk is a consultant for DAS LawAssist

www.daslawassist.co.uk

He is a senior fellow in business law and sport at Winchester University.

Chalk was the university's founding head of law from 2006 to 2009 having joined from Anglia Ruskin University where he was Principal Lecturer in Law. He has taught law at undergraduate level for more than 30 years and has also taught at Master's level and at the vocational stage for both barristers (BBPTCC) and solicitors (LPC)