Formal Settlement offers – getting the technicalities right

Thewlis v Groupama Insurance [2012] EMR 259, Leeds TCC Judge Behren

Mr Thewlis made a claim upon his insurance company Groupama in respect of substantial damage to his property.  The insurance company rejected liability and he sued.  He made a formal offer to settle his claim at a lower sum (£20,000) pursuant to Part 36 of the Court Rules.  The offer was expressed to be only open for acceptance for 21 days after which he stipulated that the Defendant could not accept it without permission of the Court.  Long after the 21 days the Defendant’s insurance company decided it was losing and therefore would accept the offer to pay £20,000.  He objected as he had not consented.

HELD:

Groupama were trying to avoid going to Court by accepting Mr Thewlis’ offer.  The Court ruled they were not entitled to accept this offer because of the contractual condition Mr Thewlis had imposed upon his offer namely that they could not be accepted by Groupama without the Court’s permission, which the Court was not willing to give.  Groupama therefore had to either make a better offer or else carry on with the trial and probably face losing.

Comment

Until recently a “Part 36″ Offer could be expressed to be wholly open for acceptance for 3 weeks after which the recipient could only change its mind and take it if it got the Court’s permission.  Recently, however, the rules had changed so that now a Part 36 Offer has to be expressed to be open until trial so that the recipient can accept it at any time.

This matters because if an offer is is a “qualifying offer”, in other words one which complies with the Court Rules, and the recipient fails to do better than he would have done if he had accepted the offer, then he faces penalties in terms of costs and interest if he fails to improve upon the offer.  This case illustrates the importance of knowing not only the legal rules but also the tactical stratagem and ploys of litigation.

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