Db UK Bank Limited (T/a Db Mortgages) v Jacobs Solicitors

A common-law offer is rejected when the offeree makes a counter-offer, even where the counter-offer is made under Civil Procedure Rules 1998 Part 36. The self-contained Part 36 regime protects a Part 36 offer from implied rejection, but that principle does not operate in reverse.

An offer is not uncertain merely because the timing of payment depends on processing by a third party. The court should not imply a 21-day acceptance period into a non-Part 36 offer without a proper basis. A settlement may be concluded by clear acceptance even though an agreed Tomlin Order remains unsigned.

The Bank brought a professional negligence claim against the Solicitors arising from a 2007 mortgage transaction. Shortly before trial, the Solicitors’ solicitors restated a without-prejudice save-as-to-costs offer, which included payment through the Financial Services Compensation Scheme and contemplated a Tomlin Order.

The Bank later made a compliant Part 36 offer. It subsequently purported to accept the earlier offer. The Solicitors denied that a binding settlement existed, raising uncertainty, implied rejection by counter-offer, lapse after 21 days, and non-conforming acceptance. The central issue was whether the claim had been settled.

1. The claim had not been settled. The Bank’s Part 36 offer of 19 May 2016 operated as a counter-offer. Applying the common-law rule that a counter-offer rejects the earlier offer, the Solicitors’ non-Part 36 offer was no longer open for acceptance.
2. The Solicitors’ offer was nevertheless sufficiently certain. It identified the settlement sum, the proportions payable by the Financial Services Compensation Scheme and the client, and the need to await the scheme’s processing. The court should be slow to set aside bargains for uncertainty.
3. Gibbon v Manchester City Council [2010] EWCA Civ 726 established that Part 36 is a self-contained code and that a Part 36 offer remains open unless withdrawn in accordance with the rules. That reasoning did not displace the common-law rule governing the effect of a Part 36 counter-offer on an earlier common-law offer.
4. No 21-day acceptance period could be implied. The offer was not a Part 36 offer, and there was no general default period of 21 days. A non-Part 36 offer could remain effective without a time limit because it could be withdrawn before acceptance.
5. Had the offer remained open, the Bank’s letter of 22 June 2016 would have been an effective acceptance. The covering letter expressly accepted the payment terms. The unsigned draft Tomlin Order did not prevent a concluded agreement, although it was intended to be entered subsequently.

The claim was therefore to proceed to trial.