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Capital Bank v Stickland, Court of Appeal, 10 December 2004

4 December 2004
The issues

Part 36 Offers – Whether And On What Terms Part 36 Offers May Be Accepted Out Of Time

The facts

The Claimant bank alleged that Mr Stickland was liable for interfering with the bank’s right to possession of a British registered vessel. The action was listed for Trial in the Manchester Mercantile Court on 27th February 2004. The Claimant had offered under cover of a Part 36 Offer to take £85,000.00 in final settlement of their claim on 10th June 2003. No response was made. On 27th November 2003 the offer was repeated. On 11th December 2003 a further letter was sent offering to settle the dispute and stating that the Claimant would settle on the terms of the Part 36 Offer put forward on 10th June 2003 provided it was accepted no later than 31st December 2003 but in those circumstances noting that the parties would need to apply for the offer to be accepted out of time.

Two days before Trial the Defendant’s solicitors faxed the Claimant’s solicitors purporting to accept the offer. The following day the Claimant’s solicitors responded that the offer had lapsed and that the Court’s permission would be required to accept the offer. They also indicated that any application for permission to accept the offer would be opposed.

On the morning of the Trial the Defendant’s Counsel applied to the Judge for permission to accept a Part 36 Offer out of time. The application was refused. The Trial continued and Judgment was given in the sum of £97,088.80. The Defendant was ordered to pay costs on a standard basis up to 1st July 2003 and thereafter on the indemnity basis together with interest on costs incurred after that date at 10% over base.

The Defendant appealed to the Court of Appeal against the Judge’s Order refusing permission to accept the offer out of time. Judgement exceeded the Claimant’s offer. The offer was £85,000.00. The offer was made on 10th June 2003. No response was made to it. On 27th November 2003 the offer was repeated. The Claim Form was issued in early 2003. On 11th December 2003 a further letter was sent offering to settle the dispute and stating that the Claimant would settle upon the terms of the Part 36 Offer put forward on 10th June 2003 provided it was accepted no later than 31st December 2003 but in those circumstances noting that the parties would need to apply for the offer to be accepted out of time.

Two days before Trial the Defendant’s solicitors faxed the Claimant’s solicitors purporting to accept the offer. The following day the Claimant’s solicitors responded that the offer had lapsed and that the Court’s permission would be required to accept the offer. They also indicated that any application for permission to accept the offer would be opposed.

The Defendant appealed to the Court of Appeal against the Judge’s order refusing permission to accept the offer out of time

The decision

There was no reason why the Judge below should not have taken into account the fact that the application was made on the morning of the Trial and thus so late in the day that the Court’s normal wish to encourage settlements had been effectively discounted.

The extent of the discretion of the Judge who had to consider whether a Part 36 Offer or a Payment into Court could be accepted late should not be limited. Relevant considerations might include the ready availability of the Defendant’s money and the timing of the application. A change of circumstance would also be a relevant consideration. Indeed that might be the most important factor to be taken into account.

A Judge would also be entitled to take into account pre trial conduct of the parties.

The question arose as to whether it was appropriate to have to bear indemnity costs for the entire period after the Part 36 Offer could have been accepted given that application had been made to accept it and that that application had been opposed by the Claimant. There was an analogy with the case of Garner v Cleggs, a pre CPR case. In that case a Defendant had made a Payment into Court in August 1981 which was not accepted. In October 1981 the Defendant found a new witness who assisted his case substantially. In January 1982 the Defendant applied to take the money out. On 25th February the Defendant succeeded and obtained an Order to that affect. In March the Plaintiff obtained Judgment but for less than the Payment into Court that had been made. The Court indicated that the proper approach was for the Defendant to be awarded his costs between the date of Payment into Court and the date when he could have resisted an application by the Plaintiff to take the money out of Court, namely between September and October.

By analogy had the point been raised before the Judge, the Judge might have considered it unjust for the Defendant to have to pay indemnity costs in respect of all or some part of the period after the Claimant, on about 11th February 2004, received an expert report which was in the Judge’s view sufficient to enable them to resist the Defendant’s late attempt to accept their offer on 27th February 2004. However, the point had not been taken.

Appeal dismissed.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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