A summary of recent developments in insurance, reinsurance and litigation law.

Gibbon v Manchester City Council

Part 36 offers: need to withdraw offer and determining whether an offer is "more advantageous"

http://www.bailii.org/ew/cases/EWCA/Civ/2010/726.html

In this case, the Court of Appeal heard two appeals together. They both concerned the scope of CPR r36 (offers to settle). Moore-Bick LJ prefaced his judgment with the comment that Part 36 embodies a self-contained code and it does not incorporate all the rules of law governing the formation of contracts.

In the first appeal, the claimant had offered to accept £2,500. This offer was never withdrawn and a few months later the claimant rejected an offer from the defendant which was for a similar amount. The defendant then formally accepted the claimant's offer. The Court of Appeal held that the defendant was entitled to accept the offer which had never been withdrawn. There is no concept of implied withdrawal of a Part 36 offer. Rejection of a Part 36 offer does not render it incapable of later acceptance and, unlike in common law, an offer cannot lapse.

Moore-Bick added that "although the rule does not prescribe any particular form of notice [of withdrawal], in order to avoid uncertainty it should include an express reference to the date of the offer and its terms, together with some words making it clear that it is withdrawn". The rejection by the claimant of the defendant's counter-offer did not amount to a withdrawal of her offer which had been on similar terms. This part of the Court of Appeal's decision reflects the views of Coulson J in Sampla v Rushmoor Borough Council (see Weekly Update 40/09).

In the second appeal, Moore-Bick LJ also commented (obiter) that a party can make a number of different Part 36 offers, all of which are concurrently open for acceptance: "Part 36.does not provide that only one offer may be available for acceptance at any one time". In this case, the claimant had recovered £661 more than the defendants' offer. That raised the question whether the claimant had failed to obtain a judgment which was "more advantageous" than the defendants' offer (within the meaning of CPR r36.14(1)(a)).

In the Court of Appeal decision of Carver v BAA [2008], it was concluded that account should be taken of all aspects of a case, including emotional stress and financial factors. Both Moore-Bick LJ and Carnwath LJ expressed criticism of that decision (which has also recently been criticised by Jackson LJ in his Review of Civil Litigation Costs). Although they recognised that they are bound by the decision, they said that it "should not be interpreted as opening the way to a wide-ranging investigation of emotional and other factors in every case, even where the financial advantage is significant". In most cases, obtaining judgment for an amount greater than the offer will outweigh all other factors. Only in rare cases (for example, where the offer is beaten by only a very small amount and the winning party has suffered serious adverse consequences as a result...