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This case is indeed getting more and more complex by the day. The opponent's solicitor has now confirmed its possession of the file released to it by a solicitor and former partner of the second firm (AKA the completing solicitors or Firm A). The opponent's solicitor, enjoying the benefit of the documents within the file has indicated that it will give disclosure of the documents within the file on a date in October 2008 and has withheld delivery of the Part 36 offer which a week ago was close to delivery and all indications are that a substitute Part 36 offer will shortly surface the terms of which will be more favourable towards the bank.

 

The inference is that the receipt of the file has lead to a change in the bank's strategy and the the substitution of the Part 36 offers as indicatd previously.

 

What to do?

First the file disclosed is an 'entire file'. By that I understand the solicitor claims he was retained by [1] the bank and [2] you and the entire file represents documents which might or would attract legal advice privilege for both [1] the bank and [2] you.

 

One may fairly conclude that the documents disclosed in the file and which attact legal advice privilege for the benefit of the bank, were documents of which the bank was aware prior to when it embarked on its negotiations culminating in it nearly but not quite issuing the intended Part 36 offer and that these documents have not influenced its strategy in the litigation. Conversely therefore and continuing this surmise, the remaining documents have. Those will be documents which came into existence for the purpose of receiving or giving legal advice to you in relation to the further advance.

 

As I indicated in an earlier post, there are serious questions about the manner in which this solicitor came into possession of the file. Irrespective of whether he was lawfully in possession of the file, what is unquestionable and clear to me, is that by handing over the entire file, the solicitor as a former partner of Firm A, committed an actionable breach of confidence when he disclosed documents belonging to you and which attracted legal advice privilege, to the bank.

 

The disclosure of the file containing material attracting legal advice privilege by a person's solicitor may where the client consents, amount to a waiver of privilege. In this case, consent was absent and in my view waiver has not taken place.

 

There are two remedies. The first would be to apply to the court in the present case for an injunction by which the bank is restrained from using any of that evidence found within the file and which attracts legal advice privilege which you have not waived. The law on this topic has a recent see-saw history. The judgment of Mr Justice Lawrence Collins in Istil Group Inc and anor v Zahoor [2003] is ilustrative and to begin with, here's a brief outline of Goddard v Nationwide Building Society [1987] 1 QB 670 mentioned in the case and concerning issues perhaps not dissimlar from the circumstances you find yuorself in.

 

Goddard was an action by home-owners against a building society based on the alleged negligence of its surveyor, and on misrepresentations by the building society's manager. The solicitor who had acted for the plaintiffs on the house purchase also acted for the building society. The solicitor sent to the building society a copy of an attendance note which recorded advice given to the plaintiffs, on which the building society relied in its defence. The plaintiffs applied successfully to strike out the relevant passages in the defence, on the basis (inter alia) that they were confidential and privileged. The defendant had argued that the court should undertake a discretionary balancing exercise.

 

Collins said:

 

In Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027, 1046 Slade LJ referred to Nourse LJ's judgment, and said that the court "should ordinarily intervene in such cases, unless the case is one where the injunction can properly be refused on the general principles affecting the grant of a discretionary remedy…."

 

81. In Webster v James Chapman & Co [1989] 3 All ER 939 Scott J (as he then was) was concerned with a case where an expert's report intended for the plaintiff was enclosed with a letter to the defendant's solicitors. When informed of the mistake the plaintiff's solicitors sought the return of the copy inadvertently sent and an undertaking that they would make no use of it. The plaintiff's solicitors subsequently received a revised report which was more favourable to his position, which was disclosed to the defendant's solicitors as being a report which would be relied on at trial.

 

82. It was held that once a privileged document or a copy passed into the hands of another party, prima facie the benefit of the privilege was lost and the party who had obtained the document then had in his hands evidence which could be used at trial. But if the privileged document was also a confidential document, it was as such eligible for protection against unauthorised disclosure or use. Where protection of confidential information was sought the court was required to exercise its discretion by balancing the legitimate interests of the plaintiff in seeking to keep the confidential information suppressed and the legitimate interests of the defendant in seeking to make use of it. In carrying out that balancing exercise the circumstances in which the information came into the hands of the defendant, the issues in the action, the relevance of the document and whether it would in one way or another have to be disclosed, together with the privileged nature of the document, were all highly relevant. Since the conduct of the defendant's case would be seriously embarrassed if the defendant was not able to make use of the report, since it had come into the possession of its solicitors through no fault of theirs and since there would be no injustice to the plaintiff if the report were in evidence, together with the revised report, the plaintiff would be refused relief.

 

83. Scott J said (at 945):

"The law regarding confidential information is … now relatively well settled. The court must, in each case where protection of confidential information is sought, balance on the one hand the legitimate interests of the plaintiff in seeking to keep the confidential information suppressed and on the other hand the legitimate interests of the defendant in seeking to make use of the information. There is never any question of an absolute right to have confidential information protected…Whether the unauthorised use of confidential information or of confidential documents will be restrained is essentially discretionary and must … be dependent on the particular circumstances of the particular case. The privileged nature of the document in question is bound to be a highly material factor but would not … exclude from the scales other material factors."

 

84. In so holding Scott J refused to follow Nourse LJ's view in Goddard v Nationwide Building Society [1987] QB 670, 685, that once it is established that confidentiality is established, there is no discretion in the court to refuse to exercise the equitable jurisdiction according to its view of the materiality of the communication, the justice of admitting or excluding it or the like. Scott J said that he did not think that statement represented the ratio of the case.

85. In Derby v Weldon (No. 8) [1991] 1 WLR 73, 84 Vinelott J disagreed. He considered that both May LJ and Nourse LJ had based themselves on Lord Ashburton v Pape, and that that decision was not based solely on the ground that the information had been imparted in confidence; where an injunction was sought in aid of legal professional privilege, no balancing act was called for, since the balance between conflicting policy considerations (completeness of evidence before the court and the protection of legal professional privilege) had been already struck by the making of the rule of legal professional privilege. Dillon LJ said (at 99)

"I see no reason why any such balancing exercise should be carried out. The court does not, so far as privileged documents are concerned, weigh the privilege and consider whether the privilege should outweigh the importance that the document should be before the court at the trial, or the importance that possession of the document and the ability to use it might have for the advocate; and, again, where the privilege is being restored because the inspection was obtained by fraud or by taking advantage of a known mistake, there is to my mind no logic at all in qualifying the restoration of the status quo by reference to the importance of the document. 'You have taken advantage of an obvious mistake to obtain copies of documents; we will order you to return all the ones that are unimportant but you can keep the ones that are important' would be a nonsensical attitude for the court to adopt."

 

86. In Pizzey v Ford Motor Co Ltd, The Times, March 8, 1993, in which it was conceded by counsel that a balancing exercise was inappropriate, Mann LJ referred to the fact that Vinelott J in Derby v Weldon (No.8) had considered that Webster was inconsistent with Goddard, and that the Court of Appeal had rejected the idea of a balancing exercise. He went on:

"Dillon LJ did not in terms refer to Webster case, but I regard the decision as having been disapproved by the court even although Webster was not a case of discovery. If my regard had been otherwise then I would respectfully have held that the decision in Webster ought to be disapproved now."

 

87. In the context of an application for an order for disclosure of privileged documents, the House of Lords in R v Derby Magistrates' Court, ex parte B [1996] AC 487 rejected the use of a balancing exercise between the public interest in securing the availability of all relevant evidence and the public interest in upholding legal professional privilege.

 

Collins propounded a six part test thus:

 

First, the starting point is that the essence of legal professional privilege is that it entitles the client to refuse to produce documents which are covered by the privilege, or to answer questions about privileged matters. But it has been said that once a privileged document is disclosed, the privilege itself is lost: see Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027, per Slade LJ accepting argument to this effect. In Black & Decker Inc v Flymo Ltd [1991] 1 WLR 753 Hoffmann J said that once a privileged document was disclosed the question was one of admissibility, and not privilege.

 

90. Second, since the decisions from Lord Ashburton v Pape to the modern decisions involve the equitable jurisdiction to grant injunctions to protect breach of confidence, it follows that the normal rules relating to the grant of equitable remedies apply. In Goddard Nourse LJ expressly mentioned (at 685) delay as a factor (and this was repeated by Slade LJ in Guinness Peat, at 1046). It must also follow that other equitable principles on the grant of injunctions apply, such as consideration of the conduct of the party seeking the injunction, including the clean hands principle.

 

91. Third, in such cases the court should "ordinarily" intervene: Guinness Peat at 1046.

 

92. Fourth, Nourse LJ was not saying in Goddard that the court should never apply the general principles relating to confidential information. What he was saying was that in this context (protection of privileged documents under the Lord Ashburton v Pape principle) the court was not concerned with weighing the materiality of the document and the justice of admitting it. That was also the view of Vinelott J and Dillon LJ in Derby v Weldon (No. 8) and of Mann LJ in Pizzey v Ford Motor Co Ltd.

 

93. Fifth, there is nothing in the authorities which would prevent the application of the rule that confidentiality is subject to the public interest. In this context, the emergence of the truth is not of itself a sufficient public interest. The reason why the balancing exercise is not appropriate is because the balance between privilege and truth has already been struck in favour of the former by the establishment of the rules concerning legal professional privilege: see The Aegis Blaze [1986] 1 Lloyd's Rep 203, 211; R v Derby Magistrates Court, ex parte B [1996] AC 487, 508.

 

94. Sixth, other public interest factors may still apply. So there is no reason in principle why the court should not apply the rule that the court will not restrain publication of material in relation to misconduct of such a nature that it ought in the public interest to be disclosed to others: Initial Services Ltd v Putterill [1968] 1 QB 396, 405 per Lord Denning MR, who quoted Wood V-C in Gartside v Outram (1856) 26 LJ Ch 113, 114: "There is no confidence as to the disclosure of iniquity". But the defence of public interest is not limited to "iniquity": Lion Laboratories Ltd v Evans [1985] 1 QB 526, applying Fraser v Evans [1969] 1 QB 349, 362, where Lord Denning MR said that iniquity is merely an instance of just cause or excuse for breaking confidence. See also Attorney General v Guardian Newspapers (No.2) [1990] 1 AC 109, at 268-269, per Lord Griffiths; and Ashdown v Telegraph Group Ltd [2002] Ch 149, approving Hyde Park Residence Ltd v Yelland [2001] Ch 143, 172, per Mance LJ.

 

In short, it seems to me that in circumstances where the former solicitor disclosed documents in breach of confidence, the third test applies and applying the fifth test, the 'truth' test, public interest in 'truth' does not sufficiently outweigh the competing interest of privilege. There would appear therefore to be reasonable grounds for seeking an injunction.

Any application should be made promptly since it involves the use of the court's equitable jurisdiction in which delay may operate as a factor in the balance (the second test).

 

The second remedy is in an action against the solicitor for damages for breach of confidence where the measure of damages would be assessed by reference to the difference between the two Part 36 offers or the loss sustained by reason of the proven consequences of the disclosure in breach. Seeking a remedy in this regard will inevitably require the disclosure by the bank of its legal professional alternatively litigation privilege documents surrounding its intentionss to issue a Part 36 offer prior to its recent receipt of the file. That remedy may involve difficulties of the kind already discussed. A get around would obviously be consent. Alternatively, it may be possible to show that privilge did not attach, particularly where for example the naure if the intention had been frankly and openly (ie 'off the record and 'without prejudice') discussed with you over the telephone. Certainly in one case (Conlon v Conlons Limited [1952] 2 All E.R 462 CA), a client's leter to his solicitor authorising him to offer terms of settlement were held not privileged, though this may have been in the context of determining the scope of the solicitor's authority to compromise litigation.

 

Conclusion

Remedies are available. The existence of some damage is likely to be presumed but where damage is substantial and the entirety of the actual damage is to be sought, a degree of cooperation from the bank is likely to be required. Conversely some resistance may be anticipated.

 

A neat approach to the duality of the remedy may be to write to the solicitor who disclosed the file complaining [1] he lacked your authority to disclose your documents which attracted legal professional privilege [2] disclosed them in breach of confidence and [3] to your opponent in litigation with [4] consequential and direct harm resulting unless restrained. He should therefore immediately [5] call for the immediate return of those documents (ie the ones over ywhich you had not waived privilege) and [6] an undertaking from the bank and its solicitors that (a) it will not disclose the documents in the litigation or lead secondary evidence as to their contents and (b) all retained copies have been collected in and destroyed.

 

The letter might close with a wring that unless a satisfactory conclusion is achieved swiftly, a claim will comence against him for damages for breach of confidence. Likewise you might care to forward a copy of yuor letter to the solicitor to the bank's solicitor with your own demand for compliance with [5] and [6] above, failing which an application for an injunction will result.

 

x20

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x20, when I saw your reply my chin dropped. I can't thank you enough. This gives me the direction I needed. I have spoken with the Solicitors Regulatory Authority today and they have asked me to submit my documents for their inspection, I may also be able to enlist the assistance of the banks solicitor as you suggest once the proposed deal we discussed has been finalised as despite our opposing roles our relationship has been cordial. However, I was expecting to hear Friday or today whether this discussion and figure will approved and accepted by the bank. That hasn't materialised yet, although with what is going on in the banking world today I am not totally surprised. However, during their last 'vacant' period they were plotting so I am not holding my breath.

 

The Part 36 offer I made was sent with the knowledge of what they were to include in their own as I had been advised on the telephone what it contained, mine arrived first, their one was sent a couple of days later in the format they had discussed 'as a matter of completeness', but there had been no mention of changing disclosure documents as they had at that time not received the aforementioned file. To be honest, the arrangement or 'advice' which would be deemed 'private' or on file would have been scant to say the least as I hadn't sought advice other than a short discussion about one of the transaction amounts at the time, but none the less the banks solicitors have 'waived the file in the air' and said " lookie here, we have the file and are changing our position" using it at this precise moment to wrong foot me and it worked to a degree making me settle for less and unsettling my will of steel, so what you have written here has given me the momentum to progress. You will not have noticed much of the work I have done in the Cabot Fan Club (a small group of people who have wrought havoc and considerable change to Debt Collection Agencies, Cabot being one) over the past two years on this forum and beyond, but those who have and for which I have gained all my little green pips in rep points, would no doubt confirm that with the tools I have now been provided with by you, no stone will remain unturned until I have wrung this one dry.

 

My sincerest thanks to you. I do not know from where you have sprung, but I trust you won't mind me embarrassing you a little by saying you are a real asset to this forum and a considerable booster to thousands of people's confidences, which is what this forum is all about and makes it what it is.

 

;)

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Another twist. I have been supplied with the new disclosure documents including some of these documents from this file obtained from the solicitor, one of which is a letter from the bank to firm A which, is dated the same date of the enhanced final offer of the further advance some 2 months after my initial vist to the solicitors in question. It reads:

 

 

"We have agreed to advance an additional £xxxx to Mr xx and Mrs xxxx

We shall be grateful if you will act for xx bank concerning this additional loan, protecting our interests and undertaking that the offer conditions of our additional advance mortgage offer dated xx xxxx 2003 have been complied with or will be complied with on or before completion of the advance.

The offer may contain conditions asking you to check specific points which have come to our attention or which may be of particular concern to us, Any such conditions do not limit your responsibilities to us under the general law as a solicitor or licensed conveyancer acting for us.

We enclose:

1. Copy additional loan offer

2. xxx bank mortgage conditions

Yours faithfully"

 

 

How does that affect the file situation the banks solicitors have now received? - the file and their disclosure documents still contain private and privileged documents which should have been cleansed though. I have informed the banks solicitors that I intend to issue an injunction should they not make a suitable offer, return the file or destroy any copies. I'm hoping that will kick them into action.

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This is not a letter which would attract for your benefit, legal professional privilege. It is an invitation to act for the bank. An invitation which was evidently taken up in circumstances where perhaps the firm ought not to have done, owing to conflict of interest considerations.

 

I do not read the letter as affecting any of my earlier opinions regarding confidentiality and the admissability of documents disclosed in breach of confidence.

 

x20

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This is not a letter which would attract for your benefit, legal professional privilege. It is an invitation to act for the bank. An invitation which was evidently taken up in circumstances where perhaps the firm ought not to have done, owing to conflict of interest considerations.

 

I do not read the letter as affecting any of my earlier opinions regarding confidentiality and the admissability of documents disclosed in breach of confidence.

 

x20

 

Thank you x20

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Hallo again,

 

During a without prejudice telephone conversation with the banks solicitor we discussed the possible financial remedy which pitched the settlement halfway between their Part 36 and mine. Seemed satisfactory to me but needed approval from the bank. A following conversation suggested this figure may be rejected as it was too high but no other was put forward and I was told it may take 2 weeks to get a response. Conveniently for them having rejected officially now my own part 36, their Part 36 offer expires 13th Oct and is still open to me, after which we are talking big costs if I get the wrong judge on the day, (and it is a distinct possibility given others experiences of District Judges understanding complex CCA issues which mine is). This leaves options open, 1) I just accept their offer which is far less than I had felt reasonable and one which would have been a significant amount higher had this client file or ours not been released by this solicitors firm. 2) Apply for an injunction to stop the use of the file and brazen it out ( I have written as previously suggested x20 to the solicitor who released it) or I accept the part 36 offer or any other the bank suggests in full and final and sue this solicitor for what may have been settled if I can extract that from the banks solicitors once all this has been finalised.

 

I have now signed a consent order that vacated the hearing for today adjourning proceedings for 2 months to allow the parties to attend a mediation the result of which would be put before the court before 12th December along with suggestions for directions, thereafter listed for a case management conference 1st available date after 12th which will be way into the new year taking this case over a year. By this time the part 36 offer will be well and truly expired. Not quite sure what to do.

 

I have spoken with the solicitors regulatory Authority and they have asked me to submit a file and complaint, but as yet the losses will not be known. It could end up as a win -win for me and the bank and the solicitor who disclosed this file bridging the gap - does that make any sense x20 and am I heading in the right direction do you think?

 

Thank you.

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During a without prejudice telephone conversation with the banks solicitor we discussed the possible financial remedy which pitched the settlement halfway between their Part 36 and mine. Seemed satisfactory to me but needed approval from the bank.

 

With them having rejected your original Part 36 offer, can't you make a new one along these lines?

 

Cheers

Michael

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With them having rejected your original Part 36 offer, can't you make a new one along these lines?

 

Cheers

Michael

 

Didn't realise I could - can I? - the other thing thinking about it, would be that their one would have expired so I was already vulnerable for costs, more so than now or if I accept this offer of theirs.

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Didn't realise I could - can I?

 

I'm no expert, but I wouldn't have thought there's a limit on the number of Part 36 offers you can make if your prior ones have been rejected - of course, ISTBC on this..... :)

 

the other thing thinking about it, would be that their one would have expired so I was already vulnerable for costs, more so than now or if I accept this offer of theirs.

 

Only if you win the same or don't win as much as they're offering isn't it?

 

Cheers

Michael

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One last point, If a part 36 offer expires on a date, say the 10th at what time of day is it possible to say yes or no to accepting the offer, close of business 5pm or does the offer have to be in before the 10th ie the 9th.?

 

I'm thinking I have such a strong hand anyway I might just go through the process of mediation and a hearing because quite honestly all this faffing around is pointless when my case is so strong.

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OK, so the bank have notified you they will not be accepting your Part 36 offer and the 21 days for the acceptance of the bank's Part 36 offer runs out on 13 October.

 

It's difficult to be able to guage what to do. Part 36 Offers get chucked around like poker cards and a lot of the skill, besides pitching the offer wisely, is the bluff and brinkmanship that accompanies the offer in the course of inter-party dealings. You know better than anyone whether you're up for a game of cards at the stakes involved.

 

Certainly you can weigh in with another Part 36 Offer. These offers are designed to lead to settlements so keep going with them if you wish to. The only word of caution is that if the first offer is followed by a second, poorer offer and then a third, a negotiating trend may creep in and you would not want to create a perception in the mind of your opponent that by hanging on, a yet poorer offer still is just around the corner. Like I said, it's all cards, all pose and posturing.

 

The costs consequences of a failure to beat or accept an opponent's Part 36 Offer kick in where the court is satisfied that an offer under Part 36 was available for acceptance and on the court's finding on the case, acceptance of that offer would have been the proper course for one of those parties to take because the finding is no more advantageous for the party who ought to have accepted the Part 36 offer.

 

A Part 36 Offer can be accepted at any time until it is withdrawn. The offer will be accompanied with a statement saying by when the offer may be accepted adding that it may be accepted after this date so long as there is subsequent agreement on the cost and interest consequences of late acceptance. The minimum period of time is 21 days from receipt of the offer but an offeror can specify a period longer than 21 days if he wishes to.

 

On the point of the timing of an acceptance. the timing must coincide with the terms of the offer. So if the offer speaks of just a date, acceptance may occur anytime before or on that date. If an hour of the day is specified, then clearly acceptance must be made before that time.

In my experience the vast majority of litigants will not get picky about precision timing on the acceptance. The idea is to settle the litigation, not generate satellite issues about moments in time during a day.

 

x20

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Thier Part 36 was sent by email on 18th September, counting weekends 21 days ends on Wednesday the 8th, it states:

 

" This offer will remain open for acceptence for 21 days from the date it is made (i.e. received by you) After 21 days you may only accept the offer if we agree the liability for costs or the court gives permission"

 

However, a subsequent letter states:

 

" We remind you that our client's Offer made on the 18th September remains open for acceptance until 13th October 2008" After this time days (actual wording) you may only accept the offer if we agree the liability for costs or the Court gives permission"

 

So which one do I go by do you think? I have to make sure I get this right if I decide to act one way or another.

 

Also, If I put another part 36 offer in that takes the 21 days way past this one, so surely this offer they made will have expired, if I put one in how does this work when it comes to costs?

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In the first letter they didn't specify a date. In the second they did. If, after specifying 13 October you accepted on say 12 October, they'd have a hard time persuading the court you had no right to accept it on that day.

 

Costs works like I said it did earlier, ie:

The costs consequences of a failure to beat or accept an opponent's Part 36 Offer kick in where the court is satisfied that an offer under Part 36 was available for acceptance and on the court's finding on the case, acceptance of that offer would have been the proper course for one of those parties to take because the finding is no more advantageous for the party who ought to have accepted the Part 36 offer.

 

x20

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Elizabeth a Solicitor acting in PI matter cannot take part of the damages (contingency is not allowed ......yet) They rely on the defense to pay their costs not the claimant.

 

Also whilst the comments about part 36 offers are quite correct judge must award more etc it's not impossible for a Judge to disregard a lower offer if he thinks a LiP has not had the implication of refusing the offer explained fully by the offeree.

 

In addition a court may consider that as the LiP has no legal representation to advise or referances to search as to the scale of offer they may in the interests of justice disregard a higher part 36 when it comes to awarding adverse costs

 

Although having said all that I wouldn't want to be the one to chance it

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Be a touch careful if you are thinking about accepting the offer that expires 13 October. I suspect that throwing your own offer into the mix would represent a counteroffer and hence constitute rejection of their offer, mening it won't be there if you decide to accept it.

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Hi,

As I said at post no2. Part 36 offers are not rejected by counter-offer. A Part 36 offer will be available for acceptance on the terms set out in it at any time up until it is withdrawn. The usual rules about offer and acceptance are dis-applied. The reasons for this are [1] Part 36 is a legal concept designed to encourage negotiations and [2] the usual offer and acceptance rules were developed for the benefit of the open market. In litigation you can not 'sell' what you have to offer to another litigant.

 

To be honest Andrew and in terms of negotiating practice, appreciating the subtleties and distinctions between 'this offer' and 'that offer' and that 'similar offer' dressed up to look like 'some other offer' or whatever it may be, is becoming something of a blur without proper numbers thrown in and to me at least, is getting in the way of offering any meaningful advice.

 

x20

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If a Pt36 offer is not a genuine attempt to settle but merely a tactic then you can ask the court to consider disregarding it when reaching a judgment. You would have to explain your reasons ei the behaviour of the other side

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They have to give you 21 days to consider any such offer

 

.....but what happens if the 21 days is up on Wednesday and I slip in another one?

 

 

Got your PM and whoa, you could be out until a week next Tuesday and I'd still be unsure I'd have the definitive answer![/I]

 

Edited by andrew1

 

You'll understand when I say I'll need to absorb all this a bite size at a time.

 

If you need anymore x20, just ask...:-D

Edited by andrew1
MIB's in a poker game!
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