AB & Anor v CD Ltd

A binding compromise may arise from communicated acceptance even though the parties later expect to record it in a Tomlin order. The essential question is whether the offer and acceptance objectively establish agreement on the material terms. A mediation agreement requiring a signed written settlement governs the mediation process only within its proper scope. It does not necessarily regulate later, ad hoc negotiations. A customary mode of disposal may be implied where there is no realistic prospect of disagreement. Unless the parties agree otherwise, payment of an agreed sum is ordinarily due within 14 days. An acceptance remains effective even if it also indicates willingness to accept a different sum on a further term.

The claimants sought a declaration that professional negligence proceedings against the defendant architect had been settled during post-mediation negotiations.

The parties had agreed the damages figure and that the claimants’ costs would be assessed on the standard basis if not agreed. The defendant contended that no binding agreement existed because its offer was subject to contract, the mediation agreement required a signed written settlement, and the communications introduced uncertainty concerning the Tomlin order, payment period and costs.

The central issues were whether the mediation agreement continued to govern the later communications, whether the claimants’ acceptance corresponded with the defendant’s offer, and whether the parties had concluded a binding compromise before the Tomlin order was drafted.

1. Disposition. The court held that the parties concluded a binding agreement when the claimants’ solicitor communicated acceptance of the defendant’s figure for damages together with costs to be assessed on the standard basis if not agreed, and that acceptance was communicated to the defendant’s solicitors through the mediator.
2. Mediation agreement. The mediation ordinarily ended with the mediation hearing. The parties had agreed to keep the claimants’ offer open while the defendant considered it, but there was no agreement that the mediation process continued thereafter. The later communications were conducted on an ad hoc basis. The written-settlement requirement in clause 9 therefore did not apply to the later agreement. The withdrawal provisions in the procedural code did not alter that conclusion.
3. Correspondence and certainty. The reference to a Tomlin order did not introduce a new term. In this professional negligence claim, a Tomlin order was the obvious and customary method of disposal, and the defendant had raised no objection. The usual provisions could be settled during drafting. The absence of terms concerning assignment or other matters did not make the compromise uncertain.
4. Payment and costs. CPR 40.11 supported the conclusion that payment was due within 14 days of the order. In the absence of any contrary agreement, the parties could be taken to assume a 14-day period, or that period would constitute a reasonable time. The claimants’ indication that they would accept a specified costs figure did not amount to a counter-offer. It was compatible with acceptance of the offer for costs to be assessed if not agreed.
5. Subject to contract. Objectively, the subject-to-contract qualification no longer applied after the claimant’s solicitor queried it and the defendant failed to reaffirm it. The defendant could have reinstated the qualification but did not do so. The court also observed that introducing a new exclusion from recoverable costs after agreement in principle on damages could amount to sharp practice, although it did not find that this had occurred.
6. Authority. Brown v Rice [2007] EWHC 625 was distinguished. That case concerned circumstances in which the parties had not agreed whether the action would be disposed of by judgment or Tomlin order; here, the factual circumstances made a Tomlin order the obvious agreed mode of disposal.

First-instance decision. The judgment does not state any prior appellate decision.