Stratton & Anor v Patel & Anor

I handed down my judgment (Neutral Citation reference [2014] EWHC 2677 TCC) hereafter referred to herein as “the judgment”) in this case on the 1^st August 2014.

In the judgment I found that the Defendant was obliged to carry out remedial works following a fire which had caused significant damage to premises leased by the Defendant to the Claimants and used by the Claimants for the purpose of their pizza restaurant.

For the purposes of this judgment I do not need to repeat the facts as I found them in the judgment.

A significant issue between the parties was whether I should order the Defendant to pay the Claimants damages to enable the Claimants to carry out the necessary works, or whether I should accept the undertaking proffered by the Defendant to carry out the works. I decided to accept the Defendant’s undertaking.

There were arguments between the parties as to the terms of the undertaking, but in the end an undertaking was given to the Court and embodied in my Order dated the 19th December 2014.

The works have now been very largely completed, but there remain a number of issues in dispute between the parties. It is the contention of the Defendant that those issues have been settled. This judgment is concerned only with that contention: other arguments which have been raised by the Defendant are dealt with in a separate judgment to be handed down at the same time as this. I have kept the settlement issues separate in case one or other of the parties wishes to any judge dealing with this case hereafter unaware that settlement offers were made.

For the reasons set out below, I find that there was no settlement.

After the terms of the undertaking had been settled on the 19^th December 2014, remedial works were carried out by contractors engaged by the Defendant. The works were supervised by Mr. Birchall, a surveyor retained by the Defendant. Mr. Moor, a surveyor retained by the Claimants, had a watching brief.

The Court has been provided with regular reports as to the progress of the works.

It is the Claimants’ case that the Defendant has not carried out the works diligently. That suggestion is denied by the Defendant.

On the 12^th January 2016 the Claimants’ solicitor wrote to the Court saying:

“The reinstatement works were not completed by the Defendant on the 11 December 2015 as there are still outstanding reinstatement works left to be resolved to the Claimants’ satisfaction that requires further engagement by the experts.

….

The Claimants may wish to apply in due course to fix a date for the assessment of the quantum of their losses of their income/business profits during the relaunch period as per the Minute of the Order of October 2014 ….”

On the 25^th January 2016 I directed that the parties should set out their respective submissions as to the directions that each party wanted the Court to give. Following an agreed extension of time, these were to be served on the 12^th February 2016. On that day the Claimants served their submissions seeking sundry directions and orders.

The Defendant submits that before those submissions were served there had been a settlement between the parties.

The starting point for the Defendant’s argument is a letter written by FS Law (the Claimants’ solicitors) to Kidd Rapinet (the Defendant’s solicitors) dated the 1^st February 2016 and headed “Without Prejudice Save as to Costs”.

In that letter FS Law identified certain items of work which the Claimants contended were outstanding. The letter referred to the Court’s Order of the 7^th October 2014 and said:

“As you are aware the Order of 7 October 2014 also expressly provided for a further consideration of our clients losses and an assessment of damages under a number of heads including:

2.

The assessment of quantum of damages (if any) under the following heads of claim is adjourned with liberty to the Claimants to apply to fix a date for the assessment

2.1

The quantum of any residual reinstatement works to the premises

2.2

The quantum of any residual reinstatement works to or supply of the kitchen equipment and customer serving and accommodation facilities.

2.3

The quantum of any business re-launch expenses and loss of income during the re-launch period.

….

As to the various heads of damages set out … above, in the spirit of compromise and to limit further costs and on the basis that your client undertakes all outstanding works referred to by 4.00 p.m. on 3 February 2016, our clients:

(i)

Will forgo its claims for the quantum of the residual reinstatement works to the premises (save for the works that may be required to deal with the further leak damage reported on the 27 January 2016) and

(ii)

Works to or supply of kitchen equipment and customer serving and accommodation facilities

However, they do have a sustainable claim in respect of 2.3 above.

The letter then set out a calculation of the amount due under 2.3 totalling £11,119.31 and continued:

“Our clients are willing to settle the above matters on the following terms:

•

Your client shall pay our clients within 14 days of acceptance of this offer the further sum of £11,119.31 as above less the agreed set off of any rent and insurance free periods (period from 15 December 2015 to 11 January 2016

•

The above sum is inclusive of interest

•

Your client completes the outstanding works referred to above by 3 February 2016.”

On the following day, FS Law wrote another “Without Prejudice Save as to Costs” letter. After some explanation, the letter concluded:

“For the avoidance of doubt, our clients’ “Without Prejudice” offer of yesterday must be reviewed in the light of the matters set out herein. In particular, our clients revise their “Without Prejudice Offer” as set out in paragraph 12 as follows:

(a)

Loss of Income @ £214.45 per day (average rate claimed within our clients Amended Particulars of Claim) x 52 days = £11,151.40

(b)

Food wastages on the 15 January 2016 value £177.36

(c)

Lost wages @ £39.90 per hour for the 15 January 2016 = £219.45

(d)

South Eastern Electric costs for smart meter and re-energising power £ [to be advised]

(e)

Cost of Gastronome units £ [information with the experts]”

In my view this letter amounted to a retraction of the offer contained in the first letter of the 1^st February 2016.

There are obvious difficulties with acceptance of this revised offer given the open nature of items (d) and (e).

There followed a series of emails all on the 2^nd February 2016:

On the 3^rd February 2016 FS Law wrote as follows:

“Further to our “Without Prejudice” letters of 1^st and 2^nd February 2016, our clients have drawn our immediate attention to a misstatement that was made that requires us to obtain their immediate further instructions.

Under the circumstances we confirm that the “Without Prejudice Offers” made in our letters of the 1^st and 2^nd February 2016 are formally withdrawn until further notice.

For the avoidance of doubt, they are not capable of acceptance by your client by 12 noon today.”

It is the Defendant’s case that it was not open to the Claimants to withdraw the offers made in FS Law’s previous letters because consideration was given in the email exchanges referred to above for keeping the offers open until 12 noon, that consideration being the Defendant’s agreement to an extension of time for service of the Claimant’s Response to the Notice to Admit.

Because I have concluded for the reasons set out below that the Defendant did not accept those offers before the 12 noon deadline, I do not have to decide whether withdrawal of those offers was a course open to the Claimants.

At 11.39 on the 3^rd February 2016 Kidd Rapinet emailed a two page letter to FS Law which contained 10 numbered paragraphs:

It is the Defendant’s contention that this amounted to an acceptance of the Claimants’ settlement offer.

I reject this contention for the following reasons:

I will invite submissions from the parties as to what, if any, order should be made to give effect to this judgment.