Rosario v Nadell Patisserie Ltd

The meaning of settlement correspondence is determined objectively, having regard to its wording and the relevant background. A reference to accepting an offer may concern only the monetary amount, rather than every term of an earlier offer. Correspondence headed without prejudice save as to costs, a draft consent order dealing expressly with costs, and conduct inconsistent with Part 36 acceptance may show that the communication is a contractual counter-offer instead. That counter-offer may be accepted by words and conduct, including reporting settlement to the court and making payment. Where the court finds a concluded settlement on agreed terms, it need not determine whether an earlier offer complied with Part 36.

The claimant brought a personal injury claim against his former employer. Liability had been admitted and default judgment entered, with damages to be assessed. The defendant made a monetary offer headed as a Part 36 offer. After further negotiations, the claimant’s solicitors sent correspondence accepting the defendant’s monetary offer, subject to deductions, and enclosed a draft consent order providing for the defendant to pay the claimant’s costs.

The defendant initially acted consistently with that draft order, but later sought an order that the claimant pay the defendant’s costs after expiry of the Part 36 relevant period. The issues were whether the claimant’s correspondence accepted the defendant’s Part 36 offer, whether it was instead a counter-offer, whether that counter-offer was accepted, and what costs terms governed the settlement.

1. Application dismissed. Judgment was entered for the claimant in the form of the parties’ agreed consent order, so far as it related to costs.
2. The correspondence was to be construed objectively. Part 36 is not itself contract law, but its operation occurs against the background of contractual principles, including the rule that words or conduct may bind a party where they would lead a reasonable person to believe that the party intended to be bound.
3. The claimant’s letter of 30 April 2010 was not a written notice accepting all the terms of the defendant’s earlier Part 36 offer. In context, the references to the defendant’s offer could reasonably relate to the monetary figure alone. The heading Without Prejudice Save As To Costs, the reservation concerning costs, and the enclosed draft consent order were significant. The draft order expressly provided for the defendant to pay the claimant’s costs. The absence of filing under Practice Direction 36A and the absence of reference to the Part 36 payment period reinforced that conclusion.
4. The letter was therefore a counter-offer. The defendant accepted it by words and conduct. Its solicitor referred to settlement, informed the court that settlement had been agreed, requested the electronic consent order, and sent two cheques. Those acts would convey to a reasonable person with the relevant background knowledge that the defendant regarded the matter as finally disposed of on the terms of the claimant’s draft order.
5. The defendant’s later attempt to introduce liability for its costs after 7 December 2009 did not alter the concluded agreement. The court therefore did not need to decide whether the defendant’s letter of 12 November 2009 complied with CPR rule 36.2.