C v D

A purported Part 36 offer cannot be time-limited so as to lapse automatically. Under Civil Procedure Rules Part 36, an unwithdrawn offer remains capable of acceptance unless it is withdrawn in the prescribed manner. Where an offer expressly invokes Part 36 and is capable of two meanings, it should, so far as reasonably possible, be construed consistently with that regime. Accordingly, wording that an offer is open for 21 days may identify the relevant period and warn of possible subsequent withdrawal; it does not necessarily make acceptance ineffective after 21 days. Withdrawal requires written notice served on the offeree. Correspondence seeking or allowing further time for a response does not, without more, withdraw the offer.

C v D arose from a contract for the sale of development land. The claimant seller alleged that a condition precedent had been fulfilled and initially sought specific performance. The defendant purchaser disputed that proposition and declined to complete.

The claimant made a letter headed as a Part 36 offer, offering alternative settlements and stating that the offer would be open for 21 days. Warren J held that Part 36 did not permit a time-limited offer but construed the letter as one which lapsed after 21 days and therefore operated only at common law. The defendant appealed after purporting to accept the £2 million alternative well after the stated period. The issues were whether Part 36 permits a time-limited offer, how the letter should be construed, and whether later emails withdrew it.

1. Appeal allowed unanimously. The defendant’s acceptance of the £2 million alternative offer was effective. The offer was a valid Part 36 offer and had not been withdrawn.

2. Part 36 is a detailed and prescriptive settlement regime. An offer made under it cannot provide for its own automatic lapse at the end of a stipulated period. It must specify a relevant period of at least 21 days, but after that period the offer remains available unless the offeror serves written notice of withdrawal. This follows from the combined effect of rules 36.2, 36.3 and 36.9 of the Civil Procedure Rules. The court followed the approach in Gibbon v Manchester City Council [2010] EWCA Civ 726: common-law rules by which an offer may lapse do not displace the Part 36 scheme.

3. The words stating that the offer was open for 21 days were ambiguous when read against the express intention to invoke Part 36. They were properly construed as identifying the relevant period during which the offer would remain available, and as warning that it might thereafter be withdrawn. That construction gave effect to the offer as a Part 36 offer and was preferable to one that would render its stated purpose ineffective. It also accorded with the objective approach to contractual construction.

4. The subsequent emails did not amount to written notice of withdrawal. They concerned the time allowed for a response and did not communicate that the offer had been withdrawn. An express time limit is not the equivalent of a prescribed Part 36 withdrawal. The claimant therefore remained bound by its unwithdrawn offer, notwithstanding that the acceptance occurred shortly before trial.

• Court of Appeal (Civil Division) — allowed the defendant’s appeal and held that the late acceptance was effective: [2011] EWCA Civ 646.
• High Court, Chancery Division (Warren J) — held that Part 36 did not permit a time-limited offer, but construed this offer as having lapsed after 21 days and therefore as operating outside Part 36.