| PRACTICE — Settlement of action — Offer to settle — Acceptance of offer — Disposition of interest in land — Offer to settle and terms contained in document signed by one party — Acceptance in document signed by other parties — Whether acceptance of offer involving disposition of interest in land enforceable notwithstanding failure to comply with statutorily prescribed formalities — Law of Property (Miscellaneous Provisions) Act 1989, s 2 — CPR Pt 36
Orton v Collins and others [2007] EWHC 803 (Ch)
ChD: Peter Prescott QC, sitting as a deputy High Court judge: 23 April 2007
Where a CPR Pt 36 settlement involving a disposition of an interest in land accorded with the Rules, it was not defeated by s 2 of the Law of Property (Miscellaneous Provisions) Act 1989 for failure to comply with the formalities prescribed therein.
Peter Prescott QC, sitting as a deputy judge of the Chancery Division, so held allowing the appeal of the defendants, John Brook Collins and eight others, from the decision of Master Moncaster on 9 January 2007 to dismiss their application for a declaration that the action between them and the claimant, Kim Andrew Orton, which involved the disposition of an interest in land, had been validly compromised by the defendants’ acceptance of the claimant’s Part 36 offer.
The parties were members of a solicitors’ firm which leased its offices from another partnership. The claimant, a member of both partnerships, issued the instant proceedings seeking a declaration that the partnerships be dissolved and an order for sale of the freehold property. The claimant made a Part 36 offer to withdraw the notices of dissolution which he had served, retire from the partnerships and dispose of his interests in the office premises. The defendants accepted the offer. The claimant then alleged that there had been no settlement agreement since the Part 36 offer and notice of acceptance did not comply with s 2 of the 1989 Act, which required a single document incorporating all the express terms of the contract and signed by both sides, whereas in the instant case there were two documents, one signed by the claimant the other by the defendants, and only one contained the settlement terms.
PETER PRESCOTT QC said that where a Part 36 acceptance did not create a contract, it could still be enforced by the court. Where the parties chose to employ machinery prescribed by the court’s rules to settle their disputes, they must be taken to submit to the consequences, namely that if the offer were accepted the court might enforce it. Parties were not forced to make or accept a Part 36 offer and the obligation which arose was not primarily contractual: it was sui generis. The parties had arrived at an enforceable settlement and the court had the power to order them to sign a single document incorporating the settlement terms.
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