Stratton & Anor v Patel & Anor

A settlement requires acceptance of an offer on its stated terms. A response which proposes different terms, leaves material matters unresolved, or contemplates a further agreement or Tomlin Order is ordinarily a counter-offer rather than acceptance. Where acceptance has not occurred by the relevant deadline, the court need not decide whether the offer could otherwise have been withdrawn.

The claim arose from fire damage to premises leased by the defendant to the claimants for use as a pizza restaurant. In an earlier judgment, the court required remedial works and accepted the defendant’s undertaking to carry them out. The undertaking was embodied in an order dated 19 December 2014, while certain issues concerning residual works and losses remained for later determination.

In February 2016, the claimants’ solicitors made without-prejudice offers concerning outstanding works and business losses. The offers were revised, extended correspondence followed, and the offers were then withdrawn. The defendant contended that its solicitors’ letter of 3 February 2016 accepted the offers before the deadline. The central issue was whether that correspondence created a binding settlement.

1. No settlement. The court rejected the defendant’s contention that the parties had reached a binding settlement.
2. The claimants’ letter of 1 February 2016 proposed terms concerning outstanding works and a quantified claim for loss of income. The letter of 2 February revised the offer and introduced further items whose amounts or supporting information remained open. The second letter therefore retracted or superseded the first offer, and the revised offer contained obvious difficulties for acceptance because material items remained unresolved.
3. The court did not need to determine whether the claimants were entitled to withdraw the offers. The defendant had not accepted them before the agreed deadline.
4. The defendant’s solicitors’ letter sent at 11.39 on 3 February 2016 was a counter-offer, not an acceptance. It proposed different treatment of outstanding works, offered different monetary terms, dealt with one item but did not address the cost of the Gastronome units, and contemplated that the parties would agree and finalise a Tomlin Order.
5. A communication that leaves material terms for future agreement, or proposes terms materially different from the offer, does not constitute acceptance of the original offer. The court invited submissions on the consequential order.

Not an appeal. The judgment refers to an earlier judgment in the same proceedings, [2014] EWHC 2677 (TCC), which required remedial works and accepted the defendant’s undertaking. That undertaking was embodied in an order dated 19 December 2014.