CONSTRUCTION OF A PART 36 OFFER: DEFENDANT’S ARGUMENT IS A PLOT TOO FAR

In Bentley Design Consultants Ltd v Sansom [2018] EWHC 2238 (TCC) Mrs Justice Jefford DBE considered a novel point on the construction of a Part 36 offer.  She held that a Part 36 offer made by a claimant could not be construed to cover matters that the claimant added to the action later when the particulars were amended.

THE CASE

The claimant was bringing an action for professional negligence in relation to the survey carried out on two properties, “plot 1” and “plot 2”. When proceedings were issued the particular of claim only made a claim in respect of plot 1.

THE CLAIMANT’S OFFER

The claimant made an offer of settlement.  The judge considered the impact of that offer.

  1. That was followed on 23 April 2015 by the letter that is central to the issue on this appeal (“the 23 April offer”). That letter was sent by Foot Anstey to Kennedys. It was stated to be “without prejudice save as to costs” but also to be an offer pursuant to CPR Part 36. It identified the claim by reference to the claim number A48YJ616. The offer was that “Your client will pay to our client the sum of £25,025 in full and final settlement of the whole of this claim”.
  2. There can be no doubt that, at the time this offer was made, it was an offer to settle the claim in respect of Plot 1 only and Bentley does not dispute that. The only claim that had been made was that in respect of Plot 1: the claim in respect of Plot 2 was in contemplation but had not been made. The claim in the claim bearing the number referenced was only in respect of Plot 1. The offer was to settle “the whole of this claim” – if any further clarity were required, that wording made clear that it was an offer to settle the existing claim and not any potential claim. On this appeal, Bentley do not seek to argue differently but they argue that things changed.

SUBSEQUENT DEVELOPMENTS: PLOT 2 ADDED TO THE CLAIM

The offer was not accepted by the defendant. Subsequently the particulars were amended to plead a case in relation to plot 2.

THE DEFENDANT’S ACCEPTANCE

The defendant wrote in November 2016 accepting the Part 36 offer that had been made in April 2015.

The defendant asserted that their acceptance covered both plot 1 and plot 2.

THE FINDING OF THE CIRCUIT JUDGE

The Circuit Judge rejected the defendant’s argument.   HH Judge Cotter QC held

“The effect of the defendant’s letter dated 8th November 2016 was to compromise only the claimant’s claim for damages and breach of duty in relation to Plot 1 as set out in paras. 10 and 16 to 18 of the amended particulars of claim dated 28th June 2016. The claimant’s claim so identified is stayed on terms that the defendant is to pay the claimant the sum of £25,025 within 14 days of 8th November 2016. The claimant’s claim for damages for breach of duty in relation to Plot 2 as set out in the remainder of the amended particulars of claim has not been compromised and is not stayed.”

THE FINDING ON APPEAL: DEFENDANT FAILS AGAIN

The defendant appealed.  That appeal failed.
    1. So far as I can see, none of the authorities cited to me deals expressly with the examples I have given at paragraph 41 above or the present situation.
    2. Both parties placed some reliance on the decision of Cox J in the Mahmood case. On the one hand, Mr Coulson submitted on behalf of Mr Sansom that it supported his proposition that the meaning of an offer did not change over time, whilst Ms Piercy relied on the fact that the context of Part 36 led to an outcome that was almost certainly unintended by either party. The decision, as so often, is one on its own facts. So far as the argument as to the meaning of the offer was concerned, the judge below and on appeal construed the words used as an offer to settle the whole of the claim and the argument that the meaning was different depended on what the parties had appeared to think the offer meant after it was made. That is not what happened in this case and the decision does not assist me in construing the April offer. The argument that the offer had not been withdrawn drew on the same arguments as in the Gibbon case. The offer was made in respect of a claim where proceedings had not yet been commenced so that any claim was a potential claim (in the sense of one made in proceedings) and to that extent it might support Bentley’s argument that an offer can relate to a claim not yet made. But in the present case, there was a claim made (in proceedings) to which the offer related.
    3. In Clark v Meerson, the offer was similarly a pre-action offer and it was necessary to determine as a matter of construction to what “claim” the offer related. The context of the offer – as a Part 36 offer – did not render an offer to settle “the whole of the claim” an offer to settle any potential claim that might be made in future. The issue was simply one of construction of the meaning of the offer and beyond that does not provide any authority for any particular proposition as to the meaning of an offer.
    4. In this case, as a matter of construction, what the offer was was very clear and that was an offer to settle the claim in respect of Plot 1. His Honour Judge Cotter QC put it this way:
“The phrase the whole of this claim used at that time was in my view the only sensible combination of words that could be used to refer to the entirety of the claim in respect of Plot 1 because no claim had been advanced in relation to Plot 2. It meant the whole of the claim in relation to Plot 1 and nothing more. Neither party knew whether any further claims would be made or the nature and extent of them.”
    1. I agree. There simply was no unitary claim in respect of the property or the site or the project, or however it might have been expressed, encompassing both plots. As persuasive as Ms Piercy arguments were, I cannot see that the effect of Part 36 is that an offer that was made to accept a sum in settlement of “the whole of this claim” (which was, and is recognised by Bentley to have been, a reference to the extant claim in respect of Plot 1) became, on amendment of the Particulars of Claim, an offer to settle the claim subsequently made in respect of Plot 2 under a separate contract for works to a separate property. Nor do I consider that Part 36 requires me to construe the offer in that way or that any of the authorities cited to me drive such a conclusion.
  1. On the contrary, following the amendment, the offer to settle “the whole of this claim” in respect of Plot 1 became an offer to settle what was now part of the whole of the claim in the proceedings. The offer did not change.
    1. The objective context of the offer (as Rix LJ put it in C v D) was that this was an offer to settle the claim in respect of Plot 1 and that did not change when the Plot 2 claim was added into the extant proceedings. I do not consider that the fact that the offer was a Part 36 offer in respect of what was at the time “the whole of this claim” leads to the conclusion that the solicitors making and receiving the offer would objectively have construed it as an offer in respect of a distinct claim to be made in the future. My view is supported and reinforced by the facts that the parties had always regarded the Plot 2 claim as a distinct claim and the joinder of the Plot 2 claim into the existing action was a matter of practicality to the parties. Had that consensual approach not been taken, Mr Sansom would have issued fresh proceedings in respect of Plot 2 and might then have applied to have the two matters joined and tried together. That puts this case into a very different picture from the one in which a further cause of action in respect of the same subject matter is added to the claim or a fresh allegation or further head of damage is added in relation to an already pleaded claim.
    2. In support of her argument, Ms Piercy identified a number of instance in which the position might be less obvious than the examples I have given or this particular case. It does not, however, seem to me that the identification of potential difficulties in other scenarios is a reason to construe a clear offer as meaning something that it plainly did not. To do so does not promote certainty but confusion.
“Relation back”
    1. One further matter was canvassed in skeleton arguments although only touched upon in oral submissions. That was the argument that the “relation back” of the claim in respect of Plot 2 had the effect that the reference to the “claim” in the 23 April offer was to the whole of the claim as made after amendment. The argument turns on s. 35(1)(b) of the Limitation Act 1980:
“(1) For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced –
(a) in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and
(b) in the case of any other new claim, on the same date as the original action.”
    1. As Mr Coulson submitted, the “relation back” that is provided for in s.35(1)(b) is for the purposes of the Limitation Act and not for all procedural purposes and he is, in my judgment, right to say that this provision does not take matters any further in this case.
Decision
  1. For all these reasons, the appeal is dismissed.