AB & Anor v CD Ltd [2013] EWHC 1376 (TCC)

[2013] EWHC 1376 (TCC)Case No HT-11-523
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT
Venue Royal Courts of Justice, Rolls BuildingDate Tuesday, 16 th April 2013
Before
MR. JUSTICE EDWARDS-STUART__________B E T W E E N:(1) Mrs AB Claimants(2) Mr ABCD LIMITED Defendant__________Transcribed by BEVERLEY F. NUNNERY & COOfficial Court Reporters and Audio TranscribersQuality House, Quality Court, Chancery Lane, London WC2A 1HPTel: 020 7831 5627 Fax: 020 7831 7737info@beverleynunnery.com__________MR. A. SPEAIGHT QC appeared on behalf of the Claimants.MR. E. NEUBERGER appeared on behalf of the Defendant.__________J U D G M E N TMR. JUSTICE EDWARDS-STUART:INTRODUCTION
Between
AB & AnorClaimantCD LtdDefendant
[1]This is an application by the claimants for a declaration that this claim has been settled by an agreement that was made on 12th March 2013. The claimants’ claim that the terms of the settlement were that:(1) the defendant would pay a sum in relation to the claimants’ claims for damages (and I will refer to that sum as the “defendant’s figure for damages”);(2) the defendant would pay the claimants’ costs of the action on the standard basis, if not agreed;(3) the action would be stayed by means of a Tomlin order in the appropriate form; and(4) the sum to be paid would be paid within 14 days (that is, 14 days of 12th March 2012).[2]The defendant admits that the parties were agreed about items 1 and 2, although not about items 3 and 4, but they submit, or it submits, that the agreement is not binding because either(a) there was no intent to create legal relations until the agreement was reduced to writing and signed by the parties, or(b) that the offer made by the defendant was “subject to contract” and there is no such contract. There are also submissions that there was no correspondence between the offer and its acceptance so that, in any event, even if the first two objections could be overcome, the agreement would be void for uncertainty or because it was incomplete. THE FACTS[3]The claim is for professional negligence in relation to work carried out by the defendant as an architect in relation to the construction of a new yard at a substantial property owned by the claimants. It is unnecessary to say any more about the facts save to mention that the defendant had also been engaged in relation to other work at the claimants’ property, not just the new yard.[4]The trial was due to start on 15th April 2013. In February 2013 the parties entered into a mediation agreement in which Mr. Colin Manning of Littleton Chambers was appointed the mediator. The hearing of the mediation was fixed for 27th February 2013 for one day at the offices of the defendant’s solicitors. The hearing was duly held. By about 5pm there had been no agreement, but the claimants had made an offer to settle the claim, representing a sum in respect of damages and a sum in respect of costs. The defendant said it was unable to respond to this offer without making further enquiries, and so the mediator went to the claimants’ room and told them of the defendant’s position and that he could do no more that day. Mrs. AB, the first claimant, said that she and her husband were very frustrated and disappointed by this, so they and their solicitors decided they had no alternative but to prepare for trial. However, Mr. Manning, who gave evidence at my direction but limited to what was said on 27th February at the end of the mediation hearing and what was said to him and by him during telephone conversations on 12th March 2013, said that he persuaded the claimants to leave their offer open for a few more days so that the defendant could have a proper opportunity to respond to it and in the hope that they might respond positively. To this, the claimants agreed.[5]Between 28th February and 6th March 2013, there were various exchanges and messages between the parties, most but not all of them sent to or at least copied to Mr. Manning. He had, on any view, agreed that the parties could continue to use his services as an intermediary, if that would be helpful. There is a dispute as to whether this was an “ad hoc” arrangement or was simply a continuation of the mediation process. The post-hearing communications between the parties began with an email from the defendant’s solicitors to the claimants’ solicitor, which was copied to Mr. Manning dated 28th February 2013, setting out the defendant’s understanding of the claimants’ offer and asking for certain additional information. The claimant’s solicitor replied the following day, sending his email to the defendant’s solicitors but not to the mediator, in which he responded to the defendant’s queries and provided certain further information. However, it seems that the claimant’s solicitor did speak to Mr. Manning on 28th February. When the defendant’s solicitors received the claimant’s solicitor’s email, they forwarded it to Mr. Manning, saying, “He did not copy you in, but we would prefer you to be kept in the loop”. I pause at this point to note that neither solicitors appear to have treated this exchange of messages as a continuation of the mediation. Rather, in the claimant’s solicitor’s case he was communicating directly with his opponents and in the defendant’s solicitors’ case they were notifying Mr. Manning because they preferred that he should be kept in the loop, not that he had to be kept in the loop because the mediation was still on foot.[6]On 5th March 2013, the claimant’s solicitor sent a further email to the defendant’s solicitors not copied to Mr. Manning, saying that the defendant had enough time to consider the claimants’ offer and that it would expire at noon, the following day, 6th March 2013. The message was marked “without prejudice”, the previous messages having been marked “without prejudice save as to costs”. On 6th March 2013, the defendant’s solicitors sent an email to Mr. Manning but not copied to the claimant’s solicitor. It explained the breakdown of the claimants’ offer, summarised the defendant’s analysis of it and then addressed the question of the claimants’ costs. It is clear that, when doing the latter exercise, they had before them the revised costs budget that the claimants’ had submitted prior to the pre-trial review on 8th February 2013. They noted that since 8th February the claimants claim to have incurred further costs of some £56,000, of which the defendant considered that no more than about 50% were reasonable. Of the resulting and reduced total, the defendant applied a further discount of 25% to allow for the likely level of recovery following a detailed assessment. In this way the defendant arrived at a figure that it was prepared to offer in relation to the claimants’ costs. An hour later, Mr. Manning sent this email to the claimant’s solicitor, following a telephone conversation between them. The claimant’s solicitor replied at 17.03 that evening, offering to accept a figure that was midway between the rival offers plus the claimants’ costs, to be assessed on the standard basis if not agreed. The offer was said to remain open until noon the following day. He asked Mr. Manning to communicate that offer to the defendant’s solicitors.[7]The following day, 7th March 2013, the defendant’s solicitors sent an email timed at 17.14 marked “without prejudice and subject to contract”. In that email they increased the defendant’s offer in relation to the damages claim to a figure which was about £50,000 below that being asked for by the claimants and offered a sum in respect of the claimants’ costs, which was £5,000 less than their earlier offer in relation to costs, and if that figure was not acceptable the defendant said that it was prepared to pay the claimants’ costs on the standard basis following a detailed assessment.[8]In a second witness statement served in the course of these proceedings Ms. D, a partner in the defendant’s solicitors, said this about the email of 7th March 2013:
“Mr. [H’s] email [I pause to interpolate that Mr. H was her assistant] of 7th March 2013 was specifically marked ‘without prejudice and subject to contract’ as a further issue had arisen. During consideration and detailed examination of the costs element of the negotiation, I focused on the application for specific disclosure heard on 19 December 2012. The claimants’ costs of this application were £12,790.50, excluding VAT. The defendant’s costs were £18,238.29, excluding VAT. In the context of the defendant’s most recent offer of £[ ] for costs these amounts were significant. I wanted to consider this further and ascertain whether these costs, which had not yet been determined by the court, would form part of those to be assessed in the claimants’ favour, hence Mr. H’s email was carefully marked ‘without prejudice and subject to contract’ to reserve the defendant’s position.”
The figure in relation to costs of the specific disclosure application had clearly been taken from the claimants’ revised costs budget that had been submitted prior to the PTR on 8th February 2013. It is not clear what Ms. D meant by wishing to reserve the defendant’s position and she was not asked about it because she was not required to give evidence. However, at this point, I should just make some observations about this paragraph. If it was the defendant’s intention to negotiate with the claimants on the basis that the claimants’ costs, if not agreed, would be subject to detailed assessment on the standard basis but then, after agreement had been reached in principle on the amount of the damages, to introduce a new term at the stage when the agreement was being reduced to writing that a certain item of the claimants’ costs was to be excluded from the costs’ referred to detailed assessment, that, in my judgment, would amount to sharp practice. By that, I mean conduct which, whilst not unlawful, was unethical and which no reputable solicitor should countenance. If instructed to do this, I consider that an honourable solicitor should refuse. True it is that a solicitor’s paramount duty is to his or her client, but that does not justify acting in a manner that would be unethical. I do not say that this was the reason lying behind the email of 7th March 2013; I merely make these comments because that is one view of what might have occurred.[9]Reverting to the narrative, shortly after the defendant’s solicitors’ email of 7th March 2013 Mr. Manning forwarded the text of it to the claimant’s solicitor. After summarising the figures, his covering email to the claimant’s solicitor said this:
“The costs issue can be resolved by reference to detailed assessment. Both parties have said that their offers are final. To state the obvious, over the next week or so, costs will start to escalate. I am happy for either party to continue to use my services as required if there is any possibility of reaching a settlement. I await your response to the defendant’s latest offer.”
I note that Mr. Manning’s language does not suggest that he regarded himself as taking part in a continuing hearing of the mediation, albeit a hearing by correspondence, but rather as an intermediary who was happy for the parties to use his services as a mediator, as required, if there was any possibility of reaching a settlement. From this time onwards, the defendant never altered the figure that it was prepared to offer by way of damages (which is what I have called the “defendant’s figure for damages”). The only subsequent change was in relation to what it was prepared to offer in relation to costs.[10]The claimant’s solicitor responded to the email of 7th March on 8th March at 10.37 in the following terms:
“Please inform [the defendant’s solicitors] that, as a final gesture, my clients will accept [X thousand pounds] plus costs to be assessed, provided that this offer is accepted by the close of business tonight. I note that [the defendant’s solicitors] refers to its offer being ‘subject to contract’. I am not sure what that means because an agreed settlement would simply need to be reflected in a Tomlin order. In any event, my client’s counter-offer is capable of acceptance as it is, with a Tomlin order to follow if it is.”
The figure of “X thousand pounds” was roughly midway between the parties’ rival positions. In this email the claimant’s solicitor was, in my judgment, making three things clear. First, he did not understand the purpose of the defendant’s offer being made “subject to contract” because it would have to be embodied in a Tomlin order in any event. Second, his clients’ offer was capable of binding acceptance without any formality, that agreement then being embodied in a Tomlin order. Third, there was urgency in that the offer would be withdrawn at “close of business” that evening.[11]For a few days things went quiet. The next step was at about 3 o’clock in the afternoon on 12th March 2013. The defendant’s solicitors telephoned Mr. Manning to make a fresh offer on the part of the defendant. This increased the defendant’s offer in relation to costs by £15,000, but the defendant’s figure for damages remained unchanged. When he gave evidence, Mr. Manning produced his notes of the telephone conversations of that day. According to these, he then telephoned the claimant’s solicitor and relayed the offer. According to his note, Mr. Manning told the claimant’s solicitor, “Detailed assessment still a possibility if costs not agreed”. According to Ms. D’s second witness statement, there were, in fact, two further telephone conversations that day not recorded in Mr. Manning’s notes. In the first, following the communication of the offer of the claimant’s solicitor, Mr. Manning, apparently at the claimant’s solicitor’s request, telephoned the defendant’s solicitors to ask if the earlier offer of the defendant’s figure for damages plus costs, to be assessed if not agreed, was still open for acceptance, and the defendant’s solicitor confirmed that it was. The second call would then have been to the claimant’s solicitor to confirm this. I consider it likely that in the first telephone conversation with the claimant’s solicitor referred to in Mr. Manning’s notes on 12th March 2013 Mr. Manning said that he thought that the option of the claimants’ costs being assessed was still on offer, but he then went back to the defendant’s solicitors to confirm the position, which they did. Since this confirmed what Mr. Manning had already told the claimant’s solicitor, he probably did not make a separate note of his further telephone conversation with the claimant’s solicitor. But, in any event, I find as a fact that the defendant agreed and the claimant’s solicitor was told that the defendant’s offer of the defendant’s figure for damages plus the claimants’ costs, to be assessed by detailed assessment if not agreed, was still open for acceptance. No-one suggests that in the telephone conversations on 12th March 2013 there was any reference to the defendant’s offer or offers being “subject to contract”, and Mr. Manning said in evidence that there was no reference to the defendant’s solicitors’ email of 7th March 2013 during the conversations on 12th March. I accept this evidence and I find that the defendant’s solicitors said nothing on 12th March 2013 about the defendant’s offers being “subject to contract”.[12]Mr. Manning’s notes then record that the claimant’s solicitor telephoned to say that the claimants would accept the defendant’s figure for damages with costs to be assessed but that the claimants were also prepared to agree their costs in the sum of £Y. According to Mr. Manning’s notes, and I so find, the claimant’s solicitor said that the consent order settling the action would be in the form of a Tomlin order and that the sum representing the defendant’s figure for damages would be payable in 14 days. Mr. Manning communicated that message to the defendant’s solicitors. The claimant’s solicitor said that he did not expect any response because, as far as he was concerned, the claimants had accepted one of the two offers currently open and so the dispute was settled. Mr. Manning said that he heard nothing more from the defendant’s solicitors, about which he was a little surprised.[13]In the course of the evidence it emerged that Mr. H of the defendant’s solicitors sent an email to his client following the telephone conversation with Mr. Manning. This was disclosed on the express basis that it did not involve any wider waiver of privilege. This was in the following terms:
“Colin Manning got back to say the claimants will accept [the defendant’s figure for damages] in respect of damages with costs to be assessed, which, as noted below, was the offer made last Thursday. The claimants have also said that they will accept an all-in figure … (with costs accounting for £Y). As you will recall, this figure for costs is in line with the figure of just below £Y that formed part of the offer made at the mediation. The claimant has stipulated that payment should be made within 14 days of acceptance of the offer. Please let us know if you would like to discuss this latest offer further once you have had a chance to consider.”
In answer to a question, a further question, from Mr. Anthony Speaight QC, who appeared for the claimants, Mr. H said that the point which his client might have wished to discuss was the claimants’ willingness to agree their costs in the sum of £Y.[14]The following day, 13th March 2013, the claimant’s solicitor sent an email, timed at 09.57, in the following terms:
“We refer to the settlement reaching us today through the good office of Mr. Manning. We attach a draft Tomlin order. If you approve, please sign and return it to us and we will sign and then lodge it.”
The Tomlin order itself was in the following terms:
“The claimants and the defendant having agreed to the terms set out in the schedule hereto, it is ordered by consent that all further proceedings in this claim be stayed except for the purpose of carrying such terms into effect, liberty to apply as to carrying such terms into effect and that the defendant pay the first and second claimants’ costs of the claim, to be the subject of detailed assessment on the standard basis if not agreed.”
Then the schedule attached to the order simply said this:
“The defendant shall pay to the claimants by 26th March 2013 the sum of [the defendant’s figure for damages].”
[15]The defendant’s solicitors replied to this at 17.25 that day in the following terms, and this was in the form of an email that was unaccompanied by any “without prejudice” or similar marking:
“Our client confirms that [the defendant’s figure for damages] is the figure agreed in respect of liability issues. We are considering the draft Tomlin order attached to the below and will revert to you with our comments. However, we are also liaising with our client with regard to trying to reach agreement on costs as well and we shall revert to you on this as soon as we can.”
The last sentence of that email goes some way to supporting what Mr. H said in evidence, namely, that the principal issue on which the defendant’s solicitors needed to liaise with their clients was the possible agreement about the quantum of the claimants’ costs.[16]On 14th March 2013, at 15.51, the defendant’s solicitors sent the claimant’s solicitor a version of the Tomlin order with their comments shown by way of tracked changes. These included, for example, the following. In the order itself, the following words have been added to the second paragraph:
“The first and second claimants’ costs of the claim do not include the costs which they incurred in relation to their application for specific disclosure unless the court makes an order in their favour. In the event that the court makes an order in favour of the defendant in respect of the application of specific disclosure, the defendant may recover such costs from the first and second claimants.”
So far as the schedule was concerned, instead of the single bare paragraph in the claimant’s solicitor’s schedule, there was now a schedule running to seven paragraphs. The first paragraph did not change the date of payment, but merely inserted a reference to a bank transfer. The second paragraph included a provision about the payment being in full and final settlement of all claims but also included the words “and any and all claims and causes of actions, of which the claimants are aware or should reasonably be aware at the date of the Tomlin order”. Paragraph 3 contained a warranty and representation that the claimants had not “sold or transferred or assigned or otherwise disposed of their interest in the claims and causes of action which were the subject of these terms”. Then paragraphs 4 and 5 contained confidentiality provisions and, paragraph 6, the usual exemptions to those provisions. Then paragraph7 contained a provision in relation to the recovery of the costs in relation to the mediation.[17]This email enclosing the amended Tomlin order elicited a prompt and typically terse response from the claimant’s solicitor in the following terms:
“Thank you for your two emails of this afternoon with attachments. You seem to be under the impression that the settlement is still the subject of negotiation. It is not. The agreement reached is quite simple, namely, that your clients will pay [the defendant’s figure for damages] plus costs, to be assessed on a standard basis if not agreed. None of your proposed amendments, whether to the order itself or to the schedule, have been agreed nor are they implied, whether by necessity or obviousness. “Simply by way of example: “(1) There was never any discussion about reducing the costs by the costs of the specific disclosure application. These simply form part of the costs of the proceedings. The suggestion that the disclosure application should continue simply for costs purposes is, in any event, nothing short of ridiculous. “(2) It is these proceedings which have been settled, not all claims which might otherwise arise against your clients. “(3) There has never been any question of confidentiality. Had you wanted this, you should have asked for it. “We are not prepared to negotiate these matters. We have a settlement and either your clients are or are not going to abide by it. Please let us know by return. It would be a shame if we now had to have satellite litigation relating to the settlement.”
Whilst it is true that in this email the claimant’s solicitor objected to the provisions in relation to confidentiality, I doubt whether this was either a valid objection or one that would have been pursued if this had been the only alteration proposed by the defendant. From what I have seen, it was the claimant’s solicitor’s style to take a seemingly robust and intransigent approach in correspondence, although it did not always, perhaps, reflect his clients’ true position. “(1) There was never any discussion about reducing the costs by the costs of the specific disclosure application. These simply form part of the costs of the proceedings. The suggestion that the disclosure application should continue simply for costs purposes is, in any event, nothing short of ridiculous. “(2) It is these proceedings which have been settled, not all claims which might otherwise arise against your clients. “(3) There has never been any question of confidentiality. Had you wanted this, you should have asked for it.[18]In their reply, by an email dated 15th March 2013, timed at 12.39, the defendant’s solicitors stated that, whilst the parties had agreed their figure in respect of damages, the written terms of settlement had not been agreed. They asserted that the defendant’s offer had been subject to contract and, in any event, under the terms of the mediation agreement an agreement should not be enforceable unless incorporated into a written agreement by the parties. In respect of costs, the defendant’s solicitors said this:
“With regard to the costs of the specific disclosure application and as we have already stated, these should not form part of your clients’ total figure for incurred costs in any event as the application has not been determined by the court. The costs relating to that application are therefore not ‘claimants’ costs’. However, we are advised by a costs consultant that this needs to be clear on the face of the Tomlin order. It is perfectly appropriate for this clarification to be made to the order. Our client has no wish to protract matters further. They wish to put an end to this litigation and continue with their business. The costs that have been discussed in relation to your clients’ specific disclosure application are, on your clients’ approved costs budget, £12,790.50 plus VAT of £2,542.10, a total of £15,332.60. If your clients are confident they will win the application, which we assume they are, then we can simply wait for the judgment, having agreed a figure for liability. Our client is content to do this.”
That is all I need to read from the correspondence. THE MEDIATION AGREEMENT[19]This contained the following provisions. By clause 1:
“The parties will, unless and until one of the parties withdraws from the mediation or it is otherwise determined, use their best endeavours to resolve their dispute by mediation and will take all such steps as may be necessary to participate fully in the mediation process (‘the mediation’) including the taking of all preparatory steps for the mediation hearing (‘the hearing’). The provisions of the code of procedure set out in the appendix hereto, as supplemented or varied by this agreement, shall apply to the mediation and are incorporated in and form part of this agreement.”
Clause 2:
“The parties appoint the person named in the mediation particulars as the mediator.”
Clause 3 then goes on to deal with what is meant by the parties’ representative and their roles. Then I can move on to clause 6, which is in the following terms:
“The hearing shall take place at the date, time and place set out in the mediation particulars. If the dispute has not been resolved at the end of the time allotted for the hearing, then, with the agreement of all the parties and the mediator, the hearing may be continued or may be resumed at such time and place as the parties and the mediators may agree.”
Clause 7 simply deals with procedure at the hearing. Clause 8 is important, and so I shall read it in full:
“The hearing shall continue during the time allotted and shall determine upon the happening of any of the following events: “8.1 The mediator, in his absolute discretion, determines that no useful purpose will be served by continuing the hearing. “8.2 The mediator, in his absolute discretion, determines for any reason that the mediation ought to be terminated or adjourned, and a mediator shall not be required to give its reasons for so determining. “8.3 One of the parties withdraws from the mediation. “8.4 The parties reach agreement.”
Clause 9 is also important, and it reads as follows:
“If agreement is reached between the parties, the same shall not be legally enforceable unless incorporated into a written settlement agreement signed by them or their representatives who shall be deemed to have full authority to enter into such settlement agreement on their behalf.”
It then contains various provisions relating to the agreement that I need not read. Clause 10.2 provides:
“The mediation shall be confidential and shall be treated as though the same was a negotiation conducted upon a ‘without prejudice’ basis with a view to settling proceedings and shall be privileged accordingly.”
I shall just interpolate at this point that all parties agree that in the light of the authorities it is open to the court when determining whether or not a binding compromise has been reached in relation to the dispute to examine “without prejudice” correspondence for that purpose. The object of the “without prejudice” rule is to prevent communications between the parties being put before the court in relation to questions of liability and in relation to the underlying dispute.[20]I turn now to the code of procedure, which was the appendix to the mediation agreement. That contained the following provisions. Under the heading “Termination of the mediation”, clause 7 provided as follows:
“Any party to the mediation may withdraw from the mediation at any time and shall forthwith notify the mediator and the other parties in writing. In the event of a party withdrawing from the mediation: “7.1 That party shall remain liable for its share of the fees and expenses in respect of the mediation up to and including the date upon which written notice is received by the mediator, including such fees and expenses payable in advance which have become due (whether paid or not), and the mediator shall be entitled to retain or receive payment (as the case may be) of his fees and any irrecoverable expenses incurred, including any fees in respect of reading time or preparation. “7.2 The remaining parties to the mediation (if more than one) may, by notice in writing to the mediator, agree to continue the mediation as between themselves and, if they do so agree, share in the same notice informing the mediator of the issues remaining the subject of the mediation.”
Clause 8 provides as follows:
“The mediator may, in his absolute discretion, determine for any reason that the mediation ought to be terminated or adjourned and the mediator shall not be required to give his reasons for so determining.”
[21]The mediation particulars referred to the names of the parties, their solicitors, the parties’ representatives at “mediation”, the “date of mediation”, and that was given as 27th February 2013. The “start/finish time” was shown as 10.30. The particulars then contained provisions relating to the timing for the exchange of statements of case, delivery of bundles to the mediator and so on and so forth, and then the final provisions related to fees. Two things can be noted from these particulars. The first is that they did not draw the distinction between “the mediation” and “the hearing” that was seen in the mediation agreement itself. In fact, in the particulars there was no reference to “the hearing” at all. However, that does not mean that its meaning is not plain. What, in my view, is more significant is that the mediation particulars described no activity that post-dated the hearing or “the date of mediation”. In fact, as far as I can tell, the mediation procedure as a whole referred to no activity that post-dates the hearing apart from provisions relating to the payment of fees and expenses. In my judgment, this mediation was a process that began with the appointment of the mediator and ended with the conclusion of the hearing unless either(1) the hearing was continued or resumed in accordance with clause 6 of the mediation agreement that I have already read or(2) the parties agreed expressly or impliedly that the mediation should continue beyond the conclusion of the hearing if the dispute had not settled.[22]I consider that clause 6 contemplated further hearings in the presence of the parties, not a process of communication by the exchange of letters or emails. There were no further hearings in accordance with clause 6 in this case. I consider that the agreement of the claimants to leave their offer made during the hearing open after the conclusion of the hearing and the defendant’s agreement to consider it did amount to an agreement by the parties to continue the mediation until the defendant either accepted or rejected the offer or it was withdrawn. In my judgment, there is no evidence before the court that the parties agreed to extend the mediation process beyond this. I have already identified references in correspondence that point against this. I consider that the parties agreed to use the helpful services of Mr. Manning on an ad hoc basis thereafter. Indeed, I accept the evidence of Mrs. AB that at the conclusion of the hearing they were resigned to the fact that the mediation process had effectively failed and they would have to prepare for the trial. Whilst, of course, there was the possibility that the defendant might accept the offer that remained open, it is clear that the claimants did not consider this to be a likely prospect.[23]I therefore reject the submission that clause 9.4 remained binding on the parties once the claimants’ offer made during the hearing had been withdrawn or had been rejected by a counter offer made by the defendant. In my judgment, the purpose of clause 9.4 is to prevent misunderstanding. Communications made during a mediation hearing are largely oral and there can be room for misunderstanding. Clause 9 simply reflects the usual understanding by the parties to a mediation that they need to have something in writing before a binding deal can be said to be done.[24]As to the defendant’s reliance on clause 7 of the code of procedure, I consider that this is misplaced. For the reasons I have given, the mediation process will normally end at the conclusion of the hearing. The mediation agreement provides how the hearing is to be concluded. I have to say that I have never heard it suggested that once the parties have left the hearing, the mediation process having failed to produce a settlement, they would have to give notice in writing in order to terminate the process. I consider that the purpose of clause 7 of the code of procedure is to govern the conditions under which a party may withdraw from a mediation prior to the hearing. Further, clause 7.2 seems to me to be inconsistent with clause 8.3 of the mediation agreement, which brings the mediation hearing, and therefore the mediation process, to a close if one party withdraws from the hearing.[25]I turn now to the submissions in relation to the settlement. Mr. Edmund Neuberger, who appeared for the defendant, submits that the claimants’ purported acceptance of the defendant’s offer on 12th March 2013 introduced two new terms and, accordingly, that there was no correspondence between the offer and the acceptance. The new terms were said to be that the disposal of the action was to be by way of a Tomlin order and that the time for payment was to be 14 days. In my view, there is nothing in either of these points. In relation to the Tomlin order, this had been mentioned by the claimant’s solicitor in his email of 8th March 2013, to which I have already referred, and that attracted no adverse comment from the defendant’s solicitors. Further, and perhaps more significantly, professional negligence actions in this court are almost invariably disposed of by way of a Tomlin order. For a professional defendant to consent to judgment is virtually unheard of in my experience, and in this case it is clear that the defendant wanted the settlement to be confidential.[26]Mr. Neuberger relied on a decision of Mr. Stuart Isaacs QC, sitting as a Deputy High Court Judge in the Chancery Division in Brown v Rice [2007] EWHC 625. There, Mr. Isaacs held that an agreement to settle an action was insufficiently complete or was uncertain because the mode of disposal of the action, whether by judgment or Tomlin order, had not been agreed. On the facts of that case, I can see no reason to question that conclusion. It was not obvious which mode of disposal would have been agreed. Indeed, Mr. Isaacs noted that the purchaser, a Mrs. Patel, would probably have preferred a judgment. But here the facts point to a contrary conclusion. If anyone had asked the defendant how the action would be disposed of, it would have said, “By a Tomlin order, of course”. The claimants would probably have said the same, recognising that a professional defendant such as the defendant would almost certainly expect a Tomlin order. In my judgment, it was simply not a point on which there was the slightest possibility of disagreement and, as Mr. Anthony Speaight QC, who appeared for the claimants, observed, it was the mode of disposal that was in the interests of the defendant.[27]Mr. Neuberger’s second point, the 14-day period, was, I thought initially, a more formidable point, but I have been persuaded by Mr. Speaight that there is in fact nothing in it. An order that requires a party to pay a sum of money with no provision for the time for payment would, in the absence of any convention or rule to the contrary, require payment to be made immediately or, possibly, within a reasonable time. Mr. Speaight reminded me that CPR 40.11 provides that where there is an order for the payment of money the period for payment is 14 days from the date of the order unless a contrary period has been specified. In the light of this, I consider that parties who are negotiating the settlement of an action by the payment of a sum of money must be taken to assume that the period for payment will be 14 days from the date of their agreement unless they have agreed otherwise. At no stage during the negotiations in this case did the defendant’s solicitors raise any point about the need for a longer period of time in which to pay the agreed damages. If their clients needed longer than 14 days, one would have expected them to say so. Alternatively, if the true agreement was that the sum should be paid within a reasonable time of the conclusion of the agreement, then I consider that, in the absence of any unusual circumstances, and there are none here, a reasonable time would have been 14 days.[28]This conclusion is, in fact, borne out by events. When the defendant’s solicitors received the claimant’s solicitor’s draft Tomlin order on 13th March 2013, they proceeded to alter almost every provision in it, as I have already mentioned. However, the one provision that they never altered was the fact that payment was to be made by 26th March 2013, that being 14 days after the claimants’ purported acceptance of the defendant’s offer on 12th March 2013. However, Mr. Neuberger also had a further point in relation to the claimants’ purported acceptance of the defendant’s offer. In his written submissions he submitted that the reference in the claimant’s solicitor’s telephone conversation to Mr. Manning on 12th March 2013 that the claimants would accept the defendant’s figure for damages plus costs, to be assessed if not agreed, or plus £Y in respect of their costs meant that the claimants were, in effect, making a counter offer in respect of costs. I reject this submission. As Mr. Speaight pointed out, what was on offer was the payment of the claimants’ costs, to be subject to a detailed assessment on the standard basis if not agreed. If agreement had been reached on this basis, then there would be nothing to prevent the parties from agreeing the amount of the claimants’ costs at any time subsequently. All that the claimants were doing was to indicate what sum they would accept if the defendant was disposed to offer it, either then or subsequently. It was not a counter offer.[29]This conclusion is also reinforced by a passage in Chitty on Contracts 31st Edition at para.2-032. In that paragraph the authors say this:
“The test in each case is whether the offeror reasonably regarded the purported acceptance ‘as introducing a new term into the bargain and not as a clear acceptance of the offer.’ It is also possible for a communication which contains new terms to amount at the same time: (1) to a firm acceptance of the offer; and (2) to a new offer to enter into a further contract. In such a case, there will be a contract on the terms of the original offer, but none on the terms of the new offer, unless that, in turn, is accepted.”
It seems to me that the opinion in the last sentence of that paragraph is supported by the authorities cited. In my view, it applies to this case. Accordingly, for this reason also, I consider that the claimants’ stated willingness to accept £Y in respect of their costs does not invalidate an otherwise valid acceptance of the defendant’s offer.[30]I turn now to the question of “subject to contract”. I have already said that it is the defendant’s case that the offer to pay the defendant’s figure for damages plus the claimants’ costs, to be assessed if not agreed, was made on the basis that it was subject to contract, and I have already referred to the facts that in his email of 8th March 2013 the claimant’s solicitor queried why it was necessary for an offer to be subject to contract when any agreement would be embodied in a Tomlin order. There was no response to this query. Indeed, at no stage thereafter was there any further reference to the defendant’s offer or offers being subject to contract and the defendant’s email of 7th March 2013 was, as I have already mentioned, not referred to during the discussions on 12th March 2013. In these circumstances, I find that the “subject to contract” umbrella no longer applied to the offers made by either side after 8th March 2013. The defendant could have reinstated it, but, by failing to do so or to respond to the claimant’s solicitor’s query, I conclude that the defendant can no longer be taken, by reference to an objective assessment of its conduct, to be relying on the “subject to contract” umbrella. It was, of course, open to the defendant to reimpose it, but it did not do so. In the light of the fact that any disposal of the action was to have been the subject of a Tomlin order, I can see no legitimate commercial purpose in reinstating the “subject to contract” umbrella when the negotiations by both parties were being conducted by their solicitors from their offices. There was no longer the pressure or the heady dynamic of a mediation hearing.[31]Finally, other matters: it was submitted by Mr. Neuberger that there were many other matters that are usually covered by a Tomlin order that did not form part of the agreement purportedly made on 12th March 2013 and that these had to be agreed before a settlement could be achieved, for example, matters such as confidentiality, settlement of claims in the action, assignment of rights of action and so on. In my view, points such as these are typically resolved during the detailed drafting of a Tomlin order. The fact that the payment of a sum in respect of a claim for damages will be in full and final settlement of a claim made in the action goes without saying. That is what a settlement is. By the same token, confidentiality provisions are fairly normal in Tomlin orders, particularly where claims against professional men or women are concerned, and I can see no reason why these parties should not be taken to have agreed by implication that such terms should be included in the Tomlin order in circumstances where the defendant was, as is usual, making a payment in settlement of a claim without admission of liability. In any event, the use of a Tomlin order to settle an action involves, by its nature, the terms of the settlement being set out in a schedule that is separate from the order, so the concept of confidentiality is all of a piece with the use of a Tomlin order. I have already mentioned that, despite the claimant’s solicitor’s rebuttal of the suggestion that there should be a confidentiality provision, I am satisfied that if that was, in fact, the only point that had been raised matters would have taken a different course. But to the extent that the claimant’s solicitor believed that it was inappropriate I consider that he was in error.[32]As to the point about assignment of rights of action, this was one that was raised in Mr. Neuberger’s written submissions but not mentioned by him in oral submissions. However, I can see nothing in it. The assignment of a claimant’s cause of action is sometimes included in a Tomlin order, but the lack of any reference to a possible assignment of the claimant’s rights of action does not make any agreement void for uncertainty. It is a provision that could have been asked for by the defendant in the course of negotiations, but, so far as I am aware, it was never raised. I should add that the claimant’s solicitor did put forward his Tomlin order as one for the defendant’s approval. As he said in an email of 15th March 2013, he did not assume that the defendant would simply accept his wording of the Tomlin order, but he did assume that any amendments made by the defendant would reflect the agreement that the parties had made. As I have said, there is no reason to think that the claimants would have objected to the standard provisions relating to the full and final settlement of the claims made in the action or as to the confidentiality of the settlement if those had been the only additions that had been raised. Parties compromise actions week in, week out, leaving matters such as these to be dealt with by detailed negotiation of the terms of the order within the framework of the agreement reached. CONCLUSION[33]For all these reasons, I consider that the parties did conclude a binding agreement when the claimant’s solicitor telephoned Mr. Manning to communicate the claimants’ acceptance of the offer of the defendant’s figure for damages together with the claimants’ costs, to be assessed on the standard basis if not agreed, and Mr. Manning then communicated that acceptance to the defendant’s solicitors. It was by that second conversation that the agreement was concluded. It was a term of the agreement that the disposal of the action would be by way of a Tomlin order which would contain the provisions that are typically included in such orders in cases of claims against professional men or women and, in particular, terms that the payment of the defendant’s figure for damages would be in full and final settlement of all the claimants’ claims in the action and a provision for confidentiality of the settlement, if the defendant so wished. As I have already concluded, it was implicit in the defendant’s offer that payment would be made within 14 days of the conclusion of any agreement in the absence of any agreement to the contrary. In these circumstances, I will hear the parties, if necessary, as to the terms of any declaration, but I would have thought that it could be broadly along the lines of the terms that I have just outlined.[34]I should just mention that I have not cited every case to which I was referred, but I have taken them all into account.[35]In the light of the without prejudice nature of the communications and the need for confidentiality about the terms of the settlement, I have directed that this judgment is to be appropriately anonymised. It is to be reported as Mrs AB and Mr AB v CD Limited. __________

Cited in 1 later judgment