Manning v The Society of Lloyds; The Society of Lloyds v Colfox and others; Philips v The Society of Lloyds
QUEENS BENCH DIVISION (COMMERCIAL COURT)
 Lloyds Rep IR 186, (Transcript)
HEARING-DATES: 31 JULY 1997
31 JULY 1997
A Scrivener QC and J Wicks for The Society of Lloyds; G Philipps for Manning, Harris, Hicks and Philips; G Platt (Solicitor) for Colfox
PANEL: MANCE J
JUDGMENTBY-1: MANCE J
There are before the court applications by The Society of Lloyds (Lloyds), as plaintiff or counterclaiming defendant in four actions, for summary judgment for declarations against individual members of Lloyds. The declarations sought are in each case to the effect that the member in question does not have the benefits of, and is not subject to the liabilities of, any Settlement Agreement with Lloyds (save, in the case of one member, a particular Action Group Settlement Agreement - AGSA).
The relevant Names are in action 1997 Folio No. 131 Sir William John Colfox Bt and his son, Mr Philip Colfox, Mr Oliver Harris and Mr Nigel Hicks, in action 1997 Folio No.1928 Mr Timothy Philips and in action 1997 Folio No.1153 Mr Jan Manning.
The actions arise out of the Lloyds Reconstruction and Renewal Plan (R&R) designed to resolve severe problems caused by accumulated losses of some £8 billion reported in respect of the 1988 to 1992 underwriting years of account. The two central elements of R & R were (i) reinsurance of liabilities for the 1992 and prior years of account into a new re-insurance company, Equitas, and (ii) the Settlement Offer, which, in very broadest outline, enabled Names at Lloyds to accept a financial package in return for settlement of their Lloyds-related litigation.
In or about July 1996 Names were sent a document entitled Reconstruction and Renewal Settlement Offer, a Finality Statement, an Acceptance Form and Guidance Notes. The Settlement Offer document is some 160 pages long, with a further 100 or so pages of appendices. Appendix 1 contained the Settlement Agreement expressed to be between Lloyds and Accepting Names, Equitas, E&O Insurers, Underwriting Agents, Auditors, Brokers, Personal Stop Loss Underwriters and others. Appendix 2 contained Terms and Conditions of the Settlement Offer. The presence of initial capital letters in these documents denotes a defined concept.
Appendix 1 provided by clause 4.3 that each Accepting Name accepted the benefit of the amount if any set out in his Finality Statement to be applied to his benefit from the Combined Litigation Settlement Funds and/or Debt Credits and any part of the Expenses Refund payable to him or to any Action Group of which he was a member and the mutual covenants and agreements and other valuable consideration given by the other Parties to the Settlement Agreement in full and final settlement of all of various defined categories of claim. These included, subject to stated but presently immaterial qualifications, claims arising out of, or in any way related to or connected with his recruitment to underwrite insurance business at Lloyds, or his membership at any time of, or the management of one or more Syndicates for the 1992 or any earlier year of account. Clauses 4.5 to 4.10 contain a series of express waivers and releases by each Accepting Name of all his claims against Underwriting Agents, Brokers, Lloyds (for itself and as trustees for other Lloyds Persons), Equitas and other parties to the Settlement Agreement.
Clauses 12.2 and 12.3 read:
12.2 Each Party hereto acknowledges and agrees that, in relation to this Settlement Agreement and the making of the Settlement Offer:
(a) no Participant or Accepting Name owes any duty to make disclosure of any matter or any duty of care in respect of the making of any statement or representation;
(b) no Participant or Accepting Name shall be entitled for any reason whatsoever to rescind, reform or avoid or otherwise howsoever to terminate or cancel this Settlement Agreement on the grounds of any misrepresentation, misstatement or non-disclosure;
(c) without prejudice to sub clause (b) above, no Participating or Accepting Name shall have any liability whatsoever for any misrepresentation, misstatement or non-disclosure; and
(d) any Claim howsoever arising out of, or in anyway related to or connected with, any of (a) to (c) above is hereby waived and released.
This clause 12.2 shall not exclude any liability for fraudulent misrepresentation.
12.3 As from the date on which the conditions in Clause 2.1 are fulfilled, Lloyds will maintain a list of the parties to this Settlement Agreement, which will be amended from time to time to include any Name or other person who may become a party pursuant to any of clauses 12.4, 12.5 or 12.7, and such list shall be available for inspection with the consent of the Solicitor to the Corporation at Lloyds to any person with a legitimate interest therein (including any Participant or Accepting Name).
Clause 12.20 reads:
12.20 This Settlement Agreement sets out the entire agreement and understanding of the Participants and the Accepting Names in respect of the matters referred to in this Settlement Agreement and they acknowledge that they have not entered into this Settlement Agreement in reliance upon any representation, warranty or undertaking which is not expressly set out or referred to in this Settlement Agreement. The Settlement Agreement will be dated the date on which Lloyds first receives a Form of Acceptance from an Accepting name. Notwithstanding any other provision of this Settlement Agreement, the terms and conditions of the Settlement Offer set out in Appendix 2 to the Settlement Offer Document shall constitute part of the terms of this Settlement Agreement. In the event that there is any inconsistency between this Settlement Agreement and the terms and conditions of the Settlement Offer set out in Appendix 2 to the Settlement Offer Document, this Settlement Agreement shall prevail and be determinative of the rights and obligations of the parties hereto.
Schedule 1 defined Debt Credits as meaning, in respect of each Accepting Name, any amount offered to him as so described and set out in his Finality Statement. The background is that Lloyds had indicated that it would assist those who wished to accept the Settlement Offer, but were unable to do so through lack of means. A procedure was established whereby Names were, by dates which were extended to 31 May (or in some cases 15 July) 1996, able to apply for relief on this ground by way of additional debt credits, known as Tranche 4. Names were notified of any Tranche 4 debt credits in their Finality Statements or at all events before the time limit for acceptance. The benefit of Debt Credits was restricted for certain categories of Names, including active underwriters of syndicates with exceptionally large losses and directors or partners of managing agents responsible for such syndicates or of members agents where the average members loss was exceptionally large. The R&R document explained:
This restriction does not imply fault, but reflects the view that, in the allocation of debt credits, it would, in most cases, be inappropriate to reduce the finality obligations of these Names to levels which would otherwise apply.
The procedure established for Tranche 4 debt credits threw up the further problem of Names who had means to accept the Offer, but who would be left as a result without reasonable income or housing. A typical example could occur where a Names funds at Lloyds were represented by a bank guarantee secured on his or her home. Lloyds therefore established a further scheme known as the Income and Housing Support Scheme (IHS) or Help for the Hardest Hit, which was explained in the R&R document as follows:
Implementation of Help for the Hardest Hit
Lloyds is committed to helping Names and their widows/widowers who no longer have reasonable housing or reasonable minimum incomes as a result of having paid their Lloyds losses. Of those names who have applied for tranche 4 debt credits, over 500 Names have also requested some protection where there funds at Lloyds are represented by a guarantee supported by a charge on their principal private residence, or where the Names are dependent on the income from their funds at Lloyds to maintain a reasonable living standard. The process and guidelines relating to the provision of assistance to such Names will be communicated to those Names by 14 August 1996 so that they have sufficient time to decide whether or not to accept the settlement offer by 28 August 1996. Only names who accept the settlement offer will be eligible for this assistance.
When making his decision to accept or reject the Settlement Offer, a Name would not therefore know for certain whether to accept whether or what IHS might be made available to him. However, he would know the general principles which Lloyds would apply, which were set out further on pages 15-16 of the document.
By Sch 1, it was provided that:
Claim means a claim, potential claim, counterclaim, claim by way of enforcement of judgment, award or order of any kind (including as to interest and costs), right of appeal, claim by way of contribution, right of set off, indemnity, cause of action, right or interest of any kind or nature whatsoever, whether known or unknown, suspected or unsuspected, whether arising in contract, tort, equity, fraud, as a consequence of wilful, reckless or negligent conduct, or of any fiduciary, statutory, regulatory or other duty, or otherwise, howsoever and whenever arising, and in whatever capacity and jurisdiction.
Appendix 2 provided inter alia that:
1. To accept the settlement offer, a Name should validly execute and return a form of acceptance in accordance with the instructions contained in that form and the accompanying guide to the finality statement and form of acceptance. Each Name who executes and returns a form of acceptance irrevocably accepts the settlement offer, agrees to be bound by the terms and conditions set out in this document and in the Settlement Agreement, makes all releases, waivers, assignments and other dispositions and grants all powers of attorney, authorities and appointments thereunder.
5. Lloyds reserves the right to determine the validity of an acceptance received by it, or on its behalf, whether or not executed and/or returned in accordance with the instructions set out in this document or the accompanying guide to the finality statement and the form of acceptance and/or whether in any form or undertaking other than the form of acceptance. At any time up to 28 February 1997, Lloyds may in its sole and absolute discretion, agree to any Name becoming a party to the Settlement Agreement by executing any other form of undertaking, as Lloyds shall in its sole and absolute discretion prescribe, to observe and perform the terms of the Settlement Agreement and/or on such other terms as Lloyds may in its sole and absolute discretion determine.
16. Unless extended, the settlement offer will close at 12 noon (London time) on 28 August 1996. . .
27. The settlement offer is indivisible and cannot be accepted in part only by any Name except pursuant to an Action Group Settlement Agreement.
The Acceptance Form sent to each Name read:
Lloyds Settlement Offer
Acceptance, Assignment, and Attorney Form
This Form must be read in conjunction with your Finality Statement, the accompanying guidance notes and the Settlement Offer Document, including the Settlement Agreement set out and described therein. By signing and returning this Form you irrevocably accept the settlement offer and become bound by the terms and conditions of the Settlement Agreement. Explanatory notes to assist you to complete this Form are set out in Chapter 3 of the accompanying guidance notes.
Section 1. Acceptance of the settlement offer
I have carefully read the Settlement Offer Document including the Settlement Agreement set out and described therein in consideration for the mutual covenants and agreements and other good consideration. I hereby irrevocably accept the settlement offer agree to be bound by the terms and conditions set out in the Settlement Agreement, make all releases waivers assignments and other dispositions and grant all powers of attorney authorities and appointments thereunder.
I hereby confirm my agreement that my share of any monies recovered in connection with my Lloyds litigation pursuant to a judgment or award or related settlement including interest held by solicitors shall be paid to Lloyds or at Lloyds direction and that my signature below constitutes my instructions to any such solicitor to make payment forthwith on written demand by Lloyds, subject to the conditions set out in clause 2 of the Settlement Agreement being fulfilled.
Signed and delivered as deed by. . .
The question in the present actions is whether the relevant Names made any settlement agreement with Lloyds. Messrs. Hicks, Philips and Manning contend that, by alteration to and/or a covering letter sent with the Acceptance Form, they made counter-offers, which Lloyds accepted in each case by returning a photocopy of their form showing that it had been stamped with a stamp, which stated at the top RECEIVED and at the bottom ACCEPTANCE and dated in between these two words. Mr Harriss primary case is that, although he added additional words to the Acceptance Form and sent a covering letter, the effect was still to accept the offer on the terms on which it was made. However, if that is wrong, he too says that he made a counter-offer which was accepted by Lloyds return of a photocopy of his Acceptance Form again showing that it had been stamped as mentioned.
Sir John and Mr Philip Colfox sent in signed Acceptance Forms with manuscript additions or adaptations made by Mr Philip Colfox. Their sole case is that the manuscript did not depart from or alter the terms of the Settlement Offer, which they therefore accepted unconditionally. They were not, it appears, sent photocopies of their Acceptance Forms, certainly not showing any such stamp as mentioned above.
A number of these Names originally raised other issues, which I shall mention briefly but which they did not pursue when the matter came before me.
I turn in more detail to the particular issues.
Messrs. Hicks, Philips and Manning
(a) Mr Hicks. Mr Hicks signed the Acceptance Form on 23 August 1996, deleting the words including interest and typing on it the following:
I agree to the preceding two paragraphs on condition a payment is made to me the undersigned amounting to £162,828. Calculations and confirming letter enclosed.
I reserve the right to withdraw from this settlement offer at any time if no payment from Lloyds has been received or alternative settlement agreement reached by 31st December 1996. Until such time a mutual agreement had been reached I the signatory retain all rights to any litigation monies held by Wilde Sapte in my name.
The amount of £162,828 was according to the accompanying calculation the result of deducting an amount allegedly due from Mr Hicks of £50,601 from funds allegedly belonging to Mr Hicks at Lloyds totalling £213,429. Both figures appeared on an August 1996 Finality Statement sent to Mr Hicks, and one may have a degree of sympathy with the view that the Finality Statement is not as clearly set out as it could have been. However, it is to my mind clear enough on any sensible examination of the Statement that it could not justify a conclusion that Mr Hicks was owed the net figure resulting from the deduction of the one figure of £50,601 from the other figure of £213,429 appearing on it. The £213,429 expressly represented his funds remaining at Lloyds as at 15 March 1996, since when the Statement showed payments made for his account totalling £208,574. The mathematical effect of this, albeit not expressly stated on the Statement, was to leave him in August 1996 with funds at Lloyds of only £4,855. In addition, the Statement also showed that, as at 15 March 1996, Mr Hicks would have had to pay £45,746 to achieve finality, and gave the detailed breakdown leading to this figure. The £50,601 was thus the amount which, on the face of the Statement, he had to pay to achieve finality in August 1996, including the amount of £4,855 already held at Lloyds. Mr Hicks had, however, been separately informed by letter from Lloyds dated 26 July 1996 that he had:
been awarded additional debt credits under the Tranche 4 allocation reducing your finality bill to nil.
For some reason no part of these appeared in his August 1996 Finality Statement, although his July Finality Statement had, it seems, included them. A proposition that the August Finality Statement represented a net credit to be released to him of £162,828 would be remarkable on any view of the document or the surrounding circumstances. It is also difficult to relate any such net credit to Mr Hickss attitude as he expressed it in a letter dated 20 July 1996, which was that he would sign the R&R document if he received the amount awarded to him as a member of the Gooda Walker Action Group in litigation leading to a judgment which that Group had pursued on his behalf. He had said there that he was:
not interested in ephemeral debt credits, moneys in trust or other euphemistic Lloyds schemes.
It is, as I have indicated, common ground that in altering and returning the Acceptance Form in the way which I have indicated, Mr Hicks was rejecting the Settlement Offer and making a counter-offer. The date on the stamp shown by the photocopy of the Acceptance Form thereafter returned to Mr Hicks appears to have been 31 August 1996. At its foot the form contained a box, with sections headed inter alia Sign, Valid, Witness and Check. The photocopy showed that someone in Lloyds had entered diagonal dashes in the spaces under Sign and Witness, a cross under Valid and an initial under Check. The internal significance of these entries for Lloyds was to indicate that on checking the Acceptance had been found by the person initialling to be signed and witnessed, but not to be valid. Mr Grabiner QC for Lloyds did not however suggest that the entries were by themselves so clear in their import that a Name receiving back such a photocopy should without more have realized that this did not connote acceptance by Lloyds of any counter-offer which he had made by alterations or additions to the Form. On the other hand, the markings in the box are not inconsistent with Lloyds case that the effect of the return of the photocopy was not and could not have been taken as an acceptance of any counter-offer made. A cross may in some contexts of course signify regularity or compliance, but it can signify non-compliance, and may do so when the dashes in the other two boxes under the other two boxes Sign and Witness were, presumably, reflecting the presence of the Names and his two required witnesses signatures.
On 16 October 1996 Lloyds wrote to Mr Hicks informing him that it was:
not treating his Form of Acceptance as a valid acceptance of the Settlement Offer as it has purportedly been made subject to certain conditions being fulfilled.
It offered him then and subsequently the opportunity to withdraw the conditions, but he refused, and maintained that Lloyds was obliged to fulfil them. He maintained in correspondence that Lloyds had counted his acceptance to satisfy the DTI and Lloyds solvency and in his Points of Defence relied on an allegation that on or about 11 September 1996 Lloyds had notified the Gooda Walker Action Group of which he was a litigating member that it had received a valid form of acceptance of the Settlement Offer from him. As I have indicated earlier in this judgment, it was not suggested before me that any such matters could give him or any Name any arguable defence to Lloyds claim to a declaration.
(b) Mr Philips. On his Acceptance Form signed 10 September 1996 Mr Philips added to the heading the words CONDITIONAL ACCEPTANCE, added the word conditionally after the word irrevocably in the first paragraph of the text, added the words as qualified in the attached letter of even date after the reference to the terms and conditions set out in the Settlement Agreement and added the words subject to compliance by Lloyds with the terms and conditions of said letter after the phrase I hereby confirm my agreement that in the second paragraph. His attached letter read:
I enclose herewith my conditional acceptance of the Settlement Offer. I confirm my acceptance of the Offer strictly subject to Lloyds agreeing a reduction of my Finality Bill to the sum of Stg£62,730 by the issue of Debt Credits, Tranche 4 Credits or whatever other credits may be appropriate to the amount of Stg£50,000.
Mr Philips was a Name who had not engaged in litigation arising out of or relating to his losses. He had complained to Lloyds and its chairman in correspondence dated 29 July and 28 August 1996 that, had he done so, instead of complying with Lloyds expressed requests to Names not to litigate, he would have been some £50,000 better off under the terms of the Settlement Offer, and had sought a further debt credit of £50,000 accordingly. Lloyds by letter dated 27 August 1996 had refused to alter their decision and had told him that his payment to finality remained as set out in his July Finality Statement.
Mr Philips Acceptance Form was dated 10 September 1996. The photocopy returned by Lloyds showed a stamp dated 19 September 1996. In Mr Philips case, the box at the foot of the page remained empty. Lloyds wrote to Mr Philips on 25 October and 13 November 1996 that it was not treating his Form as a valid acceptance, offering him the opportunity to withdraw the conditions.
(c) Mr Manning. Mr Manning had been a director of Feltrim Underwriting Agencies responsible for its finances and not its underwriting, and without, he maintained, any specific knowledge which he could have brought to bear on the situation which gave rise to the exceptional losses incurred by syndicate members for whom that agency acted. His debt credits were restricted as the R&R document indicated would be the case. He complained about this repeatedly to Lloyds and sought to have the restriction removed, by letter dated 24 June 1996, at a meeting on 30 July 1996 and by letters of the same date and of 16 August 1996. Lloyds confirmed the restriction by letter dated 25 July 1996 and indicated at the meeting on 30 July that all that Mr Manning could do would be to write another letter which would be put again before the sub-committee (which led to Mr Manning writing his letter dated 30 July). By subsequent letters dated 5th and 22 August 1996 Lloyds made it clear that there was nothing more that Mr Manning could do to have the restriction of his benefits removed.
Mr Mannings Acceptance Form was signed on 23 August 1996 and a photocopy was returned showing the stamp dated 24 August and the box at the foot completed in similar manner to Mr Hicks, save that the dashes under Sign and Witness appear more like ticks and the mark under Valid appears more like a tick turned into a cross than a simple cross. Again, Mr Grabiner did not suggest that the markings appearing in the box could by themselves be decisive in Lloyds favour. Lloyds wrote on 29 August 1996 returning the original Form, on the ground that acceptance must be unconditional, asking for the amendments to be deleted. Mr Manning replied on 4 September 1996 that Lloyds by returning the photocopy showing the stamp had already accepted his Form as valid and binding.
On 27 September 1996 Mr Manning wrote saying:
I enclose two cheques totalling £44,661 . . . in accordance with the amount shown on my Payment Form sent to you on 23rd August 1996, being in full and final settlement of all my obligations at Lloyds.
Please sign and return the enclosed copy of this letter in the stamped addressed envelope provided.
The copy bore at its foot the words Received in full and final settlement under which on 30 September 1996 a Miss Edwards of Lloyds Membership Department placed her signature before returning the copy to Mr Manning. On the same day, a Mr Patel of Lloyds Acceptance Query Team wrote referring again to the original Form dated 23rd August and saying that it could not be accepted because of the conditions attached, but that it was still open to Mr Manning to accept the Offer on its terms. The parties maintained their stances thereafter.
Mr Manning pleaded that the counter-offer made by his qualified Acceptance Form was accepted not just by the photocopy returned and the banking of the cheque and signature and return of the copy covering letter, but also by compiling and circulating a list on or around 29 August 1996 to the Action Groups of which he was a member which identified him with a Y (for Yes) under the column marked Accept in respect of Lloyds R&R Settlement Offer, by notifying one such Action Group that he was recorded as an Accepting Name which notification was communicated by the Action Group to him by letter dated 2 September 1996 headed LETTER TO ACCEPTING NAMES, by compiling and circulating lists on or around 4th and 18 September 1996 to his members agent which identified him as an acceptor of the Offer, by advising his members agent that he had accepted the . . . Settlement Offer which advice was communicated by the agent to him by letter dated 18 September 1996 and by counting him as an Acceptance in its dealings with the DTI in respect of the R&R Offer Scheme and Lloyds solvency requirements. All these additional arguments were abandoned prior to the commencement of the hearing before me.
When the hearing began, therefore, the only basis on which it was being suggested that there was any actual acceptance of Mr Mannings counter-offer consisted in the return of the photocopy and/or the banking of the cheque and signature and return of the covering letter. It was also suggested that the banking of the cheque and signature and return of the covering letter estopped Lloyds from denying that more than £44,661 was due in full and final settlement. Mr Grabiner asked me to determine these points in Lloyds favour. Mr Guy Philipps of counsel representing Mr Manning submitted that the effect of the banking of the cheque and signature and return of the covering letter was not a matter which arose on the declaration claimed by Lloyds. I indicated that it was a matter which could and should appropriately be raised at the hearing before me, and that I would be minded to give leave to allow Lloyds to seek a further declaration to enable it to be determined in all its aspects. I gave a short adjournment to enable Lloyds to give notice of the form of further declaration which they would seek and Mr Philipps to have time to consider the point. The declaration formulated by Lloyds was:
that the fact that on or about 30th September 1996 Lloyds banked two cheques . . . and/or the fact that Ms. Edwards of Lloyds, also on 30th September 1996, signed a copy of a letter dated 27th September 1996 from Mr Manning to Lloyds under the words Received in full and final settlement, did not constitute a binding contract whereby Mr Mannings obligations to Lloyds were compromised.
After seeing this declaration and considering the position, Mr Philipps conceded that the banking of the cheque and return of the signed copy could not constitute acceptance of the counter-offer which Mr Manning had made by his return of the original Acceptance Form. If that had not been previously accepted, then it had been rejected by Lloyds letter dated 29 August 1996. Further, he conceded that the banking and return could not give rise to any separate contract precluding Lloyds from recovering more than the £44,661, since, after 29 August 1996, Mr Manning was on any view aware that Lloyds was not prepared to commit itself to any settlement on terms other than the Settlement Offer without conditions. Accordingly, he conceded that, if the return of the photocopy Acceptance Form on or about 23 August 1996 did not constitute an acceptance of Mr Mannings counter-offer, then Lloyds was entitled both to the declaration originally sought and to the additional declaration now sought (in respect of which I give Lloyds leave to make the appropriate addition to their counterclaim and summons and dispense with re-service of these documents).
(d) Discussion. The relevant legal principles in considering whether Lloyds accepted the relevant Names counter-offer by returning the photocopy of his Acceptance Form showing the stamp which I have described were not in dispute. The matter is to be judged objectively. The question is whether a reasonable person in the position of the Name would in all the circumstances have regarded the return of the Names Form bearing such a stamp as an acceptance of the counter-offer. It could only constitute an acceptance, if it was unequivocally such. An act or response which might or might not be intended as an acceptance of the counter-offer is insufficient. For present purposes, under Rules of Supreme Court 1965 Ord.14, the question is whether each relevant Name has an arguable defence that it constituted such an acceptance of his counter-offer or whether there is, as it was put in National Westminster Bank plc v Daniel  1 All ER 156,  1 WLR 1453:
a fair and reasonable probability of the Name having a real or bona fide defence.
Lloyds points out that R&R was a very large exercise designed to resolve problems which threatened to bring about the collapse of Lloyds and that involving thousands of Names. No individual Name would know the precise process leading to the return of the photocopy, but the mere return of a photocopy showing a photocopied stamp was an unlikely method of acceding to counter-offers of a nature altering significantly the carefully expressed terms of the Settlement Offer and Agreement. There appears to me to be force in this. On the other hand, Names can point to the notice in App 2 para 6, to the effect that no acknowledgement would be given of any receipt of any form of acceptance, as tending to suggest that the photocopy returned must have some other purpose than as a mere record of receipt. Despite this, the deadline for acceptance in para 16 of the Settlement Offer (later extended to noon on 11 September 1996) and para 12.20 of App 1 both indicate that it would be relevant for Lloyds to record the date of receipt of signed Acceptance Forms and for Names to know that date.
Acceptance Forms received by Lloyds were actually handled by what was called the Acceptance Team, consisting on the evidence of very junior members of staff. It appears to have been standard practice for this team to affix a stamp containing the date on which the Form was received, to fill in the box at the foot (marking compliance with the Offer by a dash or tick and non-compliance by a cross), to photocopy the Form so stamped and marked and to return the photocopy to the Name. The original Form with the original stamp and markings on it would be kept at Lloyds. Names would not know of these matters, except in so far as they appeared from the photocopy returned to them. Their effect, as Mr Grabiner accepted, is that it is not open to Lloyds to suggest at least on present material that the return of the photocopy to each relevant Name was in excess of any authority. On the contrary, it appears to have accorded with Lloyds internal procedures. If it involved a purported acceptance of the Names counter-offer made by his amendment of or additions to the Acceptance Form and/or covering letter, then this occurred, or at least Names have a clearly arguable case that Lloyds was bound, even though the procedure was not intended to have that effect, subject to any further case which Lloyds might be able to mount at a trial that each or any particular Name knew that Lloyds were not in fact intending to accept his counter-offer. That the procedure was not in fact intended by Lloyds to amount to acceptance of any counter-offer seems clear. Lloyds has attested that decisions whether or not to allow Names to accept the Settlement Offer outside of the required timetable or form would have had to be taken by or with the authority of the Council of Lloyds, for example with the authority of the Assistance and Recovery Committee set up by the Council, and that the Acceptance Team was given no such authority. On the Names case, however, this is irrelevant, since they were unaware of the internal position within Lloyds and entitled to take the photocopy at face value as an acceptance of their counter-offers.
The central question is whether the return of the photocopy, showing a stamp marked RECEIVED with under that a date and under that the further word ACCEPTANCE, constituted objectively, to a Name in the relevant Names position, an acceptance of the counter-offer made by his alterations of or additions and/or covering letter to the Acceptance Form. This is a question which, it seems to me, can and should properly be determined now in each of these applications under RSC Ord.14 and, if necessary, Ord.14A. In my judgment, the return of the photocopy showing the stamp was equivocal at best, and was in fact (and despite App 2 para 6) much more readily understandable as a record for Names convenience than as an acceptance of the Names counter-offer. The words RECEIVED . . . ACCEPTANCE with a date between them are quite capable of referring to nothing more than the receipt of the Form of Acceptance. The use of a stamp within Lloyds and the return of a photocopy of a document showing that it has been so stamped are appropriate means of recording a ministerial act or event such as receipt. They are acts likely to be undertaken by junior staff on an across the board basis. They would be a surprising means of marking and communicating Lloyds consideration and approval of significant amendments to the standard form of Settlement Agreement in particular cases. Study of the photocopy returned would have shown the box completed in a manner which, so far as it could be given any significance, would tend to suggest that the photocopy could not have been meant as an acceptance of a counter-offer. Further, if the word ACCEPTANCE was understood as referring not to the Form, but to the act, the application of the stamp would suggest that the Form was being viewed (albeit contrary to the fact) as an unconditional acceptance, rather than as a counter-offer which the person applying the stamp and returning the photocopy was himself purporting to accept on Lloyds behalf.
In these circumstances, I consider that the application of the stamp and return of the photocopy was at best equivocal and was objectively incapable of constituting an acceptance of the Names counter-offers.
Consideration of the particular circumstances in which each of the relevant Names came to make the alterations and additions he did reinforces this conclusion in respect of each. For reasons which I have indicated, there was no logic at all in the credit of £162,828 claimed by Mr Hicks, and it cannot even bear any relationship to his central complaint that, as a successful litigating Gooda Walker Name, he should somehow receive the amount of the judgment due him, plus (possibly) some other benefit. No-one could, objectively, have thought that Lloyds would be prepared to accept his counter-proposal, when it was based on a complete and obvious mis-reading of the relevant Finality Statement.
Mr Philips made a complaint about the Settlement Offer the basis of which was at least comprehensible. It was that Lloyds had favoured litigating Names. This was an aspect which was clearly of fundamental importance to the whole scheme, and it made, it appears, £50,000 difference to Mr Philips alone. Mr Philips knew from correspondence as recently as the end of August 1996 that it was an aspect of the scheme which Lloyds would not alter. No-one in these circumstances could have thought it at all likely that Lloyds would simply capitulate, even in respect of an individual Name who returned an altered Acceptance Form just before the deadline for acceptance, still less that they would announce the capitulation by a photocopy document bearing a RECEIPT . . . ACCEPTANCE stamp.
Mr Manning is in a similar position. He had raised his complaint and had it refused, however understandable it was, on a number of occasions. The likelihood of Lloyds simply capitulating or announcing their capitulation in the manner suggested appears remote.
These observations regarding the particular background of the individual Names reinforce the conclusion which I have anyway reached in respect of each Name on the present applications under Ord.14. In my judgment, the three Names whose cases I have so far considered do have not any arguable defence in respect of which there ought to be a trial and Lloyds is entitled accordingly to judgment for the declarations sought.
His primary case is, as stated above, that he accepted the Settlement Offer unconditionally. He added to the Acceptance From which he signed on 23 August 1996 the words:
Accept subject to Tranche 4 & Housing Agreement in discussion with FRD
FRD referred to Lloyds Financial Recovery Department. He sent with the Form the following letter:
I enclose a completed settlement form which is sent with the proviso that I am unable to pay the amount demanded in finality but have been told to send in the form and await a tranche 4 and housing offer.
If you are unable to make any such offer I reserve my rights to pursue action for fraud.
The photocopy returned showed a stamp dated 24 August 1996 and a box completed in the same fashion as in the cases of Messrs. Hicks and Manning. Lloyds wrote on 16 October 1996 purporting to treat the Acceptance Form as an invalid acceptance. Mr Harris replied on 18 October saying that he had been advised that it would be unlawful for him to accept the offer knowing that he was unable to make the required payment, and ending:
As a Gooda Walker direct name it is obvious to all that I have been defrauded and if no assistance is available I have no alternative to pressing on with action for fraud against Lloyds.
In assessing the significance of the words added to his Acceptance Form, Mr Harris emphasizes their background in previous correspondence. After learning that Lloyds would not be able to determine his entitlement to IHS, but could only give him details of the guidelines, before the deadline for acceptance, he wrote on 8 August 1996 saying that he was unable to pay the additional £46,000 shown on his finality statement, that, whatever action Lloyds took, they would not recover more than his deposit, and that:
I have had many assurances from Lloyds that acceptance of R&R must not be stopped by lack of ability to pay and that special arrangements will be made for people whose homes are threatened, and I would very much like to accept the offer, but vague assurances are not sufficient.
If therefore you are unable to assure me that Lloyds can offer me a settlement which allows me to keep my family housed I shall be forced to reject the offer, reserve my rights and join the new fraud action group.
By a further letter dated 16 August he enclosed a completed form of application for IHS, with the hope that:
even at this late hour some specific word will come from Lloyds which would allow me to accept the R&R offer.
Failing this I will assume that you have nothing further to say on the matter and I will reserve my rights and decline the offer.
By letter dated 22 August Lloyds wrote to Mr Harris with a copy of the guidelines for IHS. Lloyds letter repeated and said that:
It is a condition of the provision of income and/or housing support that you have accepted the settlement offer by the closing date. I would emphasize that Lloyds will not pursue eligible members for their net finality bill or process the drawdown of any funds at Lloyds, whilst negotiations continue with FRD in respect of any application for income and housing support or allocation of tranche 4 debt credits associated with it.
It also said:
We are committed to assisting those members who genuinely cannot meet their obligations. Moreover, we recognize that members are concerned that they may not be able to reach an agreement or meet the cost of participation in the settlement offer whilst being required to accept it by 28 August. We have agreed therefore to limit our recovery against members eligible for income or housing support to the cost of the net finality bill and your funds at Lloyds, even if, following acceptance of the settlement offer, you cannot reach agreement with Lloyds and you are not in a position to pay your finality bill. In these circumstances, we shall not pursue, the gross finality bill and will limit our recovery to your funds at Lloyds and net finality bill - essentially the minimum exposure you presently have.
The guidelines described the basis of support by saying, inter alia:
Lloyds commitment is that it will assist with income & housing support necessary to maintain the reasonable needs of a member accepting the settlement offer. The support offered will vary by virtue of the particular circumstances of individual members.
Mr Harris telephoned the Lloyds FRD helpline given in the letter, and spoke to a Ms Smith about his concerns. She told him, according to his affidavit, that he would probably get full Tranche 4 debt credits and that he should send in his form of acceptance and await Lloyds offer of financial assistance. In the light of this, he says, he decided to trust Lloyds and to accept R&R and sent in the form as advised by Ms Smith. The covering letter, he says, made clear that he was awaiting an offer of Tranche 4 debt credits and IHS. In case it became separated, he wrote, he says, similar words on the form itself. His affidavit goes on to say that he intended thereby not to reject the offer, but to make clear:
that I had no means of paying the sum requested by way of a finality payment unless I received further assistance from Lloyds. Obviously the finality sum requested was less than my outstanding underwriting losses, and I would have been foolish to reject the settlement offer for that reason alone. (The only other avenue open to me was to seek to avoid my underwriting losses altogether on the grounds that there had been fraud on the part of Lloyds. That was the action to which I referred in the last sentence of my letter of 23 August 1996. Notwithstanding that possibility, however finality seemed preferable to possibly protracted further litigation.) I believed, however, that it would be certainly morally and possible legally wrong to enter into a commitment to pay the finality sum without having the means to do so. That was why I expressed myself on the form of acceptance and in my covering letter as I did.
I start with some basic principles conveniently summarized in a passage from Hirst Js judgment in Lark v Outhwaite  2 Lloyds Rep 132, page 139 cited to me by Mr Platt, who represented Sir John and Mr Philip Colfox before me:
Offer and acceptance
The principles are elementary and very well established. The acceptance must correspond with the offer and must be clear and unqualified, and will fail to take effect if it attempts to vary the terms of the offer or to add new terms. On the other hand statements which are not intended to vary the terms of the offer, or to add new terms, do not vitiate the acceptance even where they do not precisely match the words of the offer, and if the new term merely makes express what would otherwise be implied, it does not destroy the effectiveness of the acceptance (Chitty on Contracts 26th ed. vol. 1 par. 56.)
Mr Gilman relies on the test propounded by Kerr J. (as he then was) in Global Tankers Inc. v Amercoat Europa N.V.  1 Lloyds Rep 666, 671, viz. whether or not a reasonable person in the position of the recipient would regard the response as introducing a new term into the bargain, and not as a clear acceptance of the offer.
What Mr Harris may subjectively have intended or envisaged is thus not the test - though even the account from Mr Harriss affidavit, which I have set out, cannot really be reconciled with any suggestion that Mr Harris intended to accept the offer unequivocally. What matters, however, is what response to the Settlement Offer Mr Harris conveyed to Lloyds, objectively and, so far as material, in the light of the previous correspondence and other surrounding circumstances. The writing on the Acceptance Form and the covering letter must be read together, although each by itself would in my judgment have had the same effect. The words Accepted subject to Tranche 4 and IHS Agreement in discussion with FRD on the Form indicated that he would not prepared to be or to continue bound by any settlement agreement if no agreement could be reached on Tranche 4 and IHS benefits. His letter put the matter somewhat differently, namely that, if Lloyds was unable to make any offer of such benefits, then he reserved his rights to pursue action for fraud. Even by itself that meant clearly that, unless and until some offer of such benefits was forthcoming, he did not regard the settlement as binding in a significant respect. Read with the addition to the Form, it should probably also be understood as indicating that Mr Harris did not regard the settlement as binding unless and until he received an offer which was agreeable to him. On any basis, Mr Harriss response was clearly not an unconditional acceptance of the Offer.
Mr Philipps suggestion that the second sentence of his letter merely canvassed the possibility that a refusal to offer benefits would be a fraud in the light of the guidelines is ingenious, rather than remotely convincing. It is obvious that what Mr Harris had in mind, in common with other Names, was (as he said in his letter dated 8 August and in his affidavit) the possibility of seeking to hold Lloyds itself liable for unspecified fraud leading to or enabling the catastrophic losses which caused Lloyds and Names problems. Mr Philipps further submitted that Mr Harris cannot have intended to reject the offer, because he knew that any offer of benefits could only follow after acceptance. What Mr Harris intended must however be judged by his actual response. This sought, at best from his viewpoint, to accept subject to conditions, and therefore in law did not amount to an acceptance at all. So far as the prior correspondence and other general background is concerned, there is nothing in it to affect these conclusions. There is also no suggestion that Lloyds said anything to lead Mr Harris to think that the condition which he sought to attach was or would be acceptable.
In the alternative, Mr Harris advances the like case to that made by Mr Hicks, Mr Philips and Mr Manning, viz that his response constituted a counter-offer which Lloyds accepted by its return of the photocopy of his Acceptance Form stamped 24 August 1996. This case fails for like reasons to those which I have already given in respect of Mr Hicks, Mr Philips and Mr Manning. In respect of Mr Harris, there are additional problems arising from the nature of any counter-offer. If the counter-offer was to enter into, or only to be or remain bound by the settlement, subject to agreement on Tranche 4 and IHS benefits, no such agreement has ever been made. He was, I understand, simply offered some Tranche 4 (but no IHS) benefit if he accepted the settlement offer unconditionally. He did not agree to this and he has been treated from 16 October 1996 as a non-acceptor. If it is said that Lloyds committed itself to making an acceptable offer (or even an offer simpliciter), that would be too vague a commitment to be capable of being legally binding. Its vagueness does not however mean that Mr Harriss requirement to that effect as a condition of being bound can be ignored in deciding whether he accepted Lloyds Offer in the terms on which it was put.
Finally, Mr Harris also pleaded reliance on Lloyds notification to Gooda Walker Action Group on 11 September 1996, but did not pursue this before me.
For these reasons, Mr Harris has in my judgment no arguable defence, and Lloyds are entitled to the declaration sought against him.
Sir John Colfox and Mr Philip Colfox
The Acceptance Forms signed and returned by Sir John and Mr Philip Colfox on 11 September 1996 contained the following manuscript amendments and additions made by Mr Philip Colfox. First, Mr Colfox added to each the word unread under the introductory paragraph and the word not after the opening words I have in the first main paragraph. Second, he deleted the word irrevocably in the introductory and first main paragraphs. Third, he added the words excluding fraud waiver at the end of the first main paragraph. Fourth, he also added there + subject to attached letter dated 11 September 1996. Finally, he did not sign and deliver the Form either as a deed - indeed he crossed out the corresponding words - or in the presence of any witnesses.
The attached letter, headed Sir John and Philip Colfox Settlement Offer Acceptance read:
This letter records the understandings we have relied upon in accepting the offer. These are that all the figures produced by Lloyds are true and fair, and that nobody can assist anyone or come after us for insurance claims even to the extent of revealing our Names; also that Philip Holden will do what he can to assist in finality for us, and will expressly look at structuring our affairs together in order to prevent drawdown, and producing the best comfort that he can for our guarantors to discharge the guarantees.
We await fresh forms of acceptance to fill in again . . .
In their defence the Colfoxes allege that the letter:
incorporated, so far as [Mr Philip Colfox] recalls, the content of his conversation with Mr Holden in so far as reference is made to Mr Holden therein. The manuscript amendments to the Forms of Acceptance do not constitute conditions such as to alter the terms of the same but are by way of clarification only.
The background, taken for the most part from Mr Philip Colfoxs own affidavit, is as follows. On 12 August 1996, Mr Colfox spoke with Mr Bradley of Lloyds Central Services Unit, told him he wanted to negotiate with Lloyds and was told that he could not negotiate, that he could write a side letter but that, if anything other than a signature appeared on the Acceptance Form, it would be rejected. Mr Bradley told him that the side letters did not alter the terms of the acceptance as they only expressed hopes, such that the debt credits offer was satisfactory. Mr Colfox was still not satisfied, and after a weeks holiday telephoned a Mr Holden of Lloyds and sought a solution which amalgamated the affairs of his father, Sir John, and himself and discounted their future profits. At Mr Holdens invitation he set out his proposal in a letter dated 9 September 1996. On 10 September they spoke again and, according to Mr Colfoxs evidence, Mr Holden advised him to put his submission in a further document and send it in with a signed Acceptance Form. Mr Holden in fact made a memorandum of this conversation, which is in substantially fuller terms than Mr Colfoxs account. It records, no doubt on the basis of what Mr Colfox said, that both the Colfoxes wish to accept the settlement offer. However, it goes on to indicate that, when Mr Colfox suggested that his surplus could be utilized to meet his fathers deficit, Mr Holdens response was that he had insufficient information to comment, but that if the settlement offer was accepted, Lloyds would look at all possible methods by which the payment of Sir Johns deficit could be achieved, and that Mr Colfox might give some authority for such utilization. Mr Colfox then raised the possibility of making his offer conditional upon this issue, and Mr Holden replied that any conditionality reflected upon his acceptance would be deemed to be a non-acceptance, and that it was a commercial decision for the Colfoxes whether to accept, which they must do unconditionally. Mr Colfox ended the conversation by saying that he would discuss the position with his father, and the note concluded:
The indication was that he was likely to accept on that basis.
Time will tell!
Mr Colfox then sent another letter dated 10 September 1996, but deliberately refrained from sending in any Acceptance Form. This letter read:
This acceptance is on the understanding that you will protect our homes and incomes which would otherwise be unfairly and unduly damaged by an unsympathetic bank in order to make repayment of loans and discharge of guarantees now.
We need our affairs to be lumped together and our future revenues discounted, perhaps by an independent bank, to pay the finality bill of Sir John and repay our Bank and discharge our guarantees. The amount required by our Bank is £110,000.
The other understandings are that finality means nobody can assist anyone or come after us for insurance claims, even to the extent of revealing our Names, and also that all the figures are true and fair.
Mr Holden replied by fax on the 11th:
As I indicated on the telephone, in order for your acceptance of the settlement offer to be effective, it must be unconditional. I did indicate that I would try and assist in facilitating payment of the net finality bill. At no time was the issue of protecting homes and income addressed.
If you wish to accept the settlement offer you must do so by submission of a signed and witnessed acceptance form which is unconditional in all respects. I understand that no acceptance form has been submitted and if your letter is intended to be an acceptance it is ineffective.
Thereafter there was a further telephone conversation in which, according to Mr Colfox, Mr Holden assured him that he:
would do all he could, including a legal assignment of my funds to my father but that he would not do more than was legally possible.
This is the basis of the references in the letter dated 11 September and in the defence to Mr Holden doing what he could to assist in finality for the Colfoxes, and looking at structuring their affairs together to prevent drawdown. Mr Holden also said that, although the noon deadline for acceptances had passed, the Acceptances would still be counted if faxed in immediately.
The Acceptance Forms were then faxed with the letter dated 11 September. After receiving a letter indicating that Lloyds had no record of any acceptance, Mr Colfox spoke to a Mr Tallon on 16 September. According to Mr Colfox, Mr Tallon told him that he and his father were both on the list of acceptors, and Mr Colfox asked again for fresh forms to tidy up the acceptances. Mr Tallons report on the call indicates, however, that he in fact ascertained that the Colfoxes acceptances were conditional and under query, referred back to Mr Holdens letter dated 11 September (which stressed the need for unconditional acceptances) and was asked for blank forms in that context. In the event no new forms were ever submitted and Lloyds wrote on 7 November 1996 that the purported acceptances of 11 September were invalid because conditional.
The basic issue is, as I have indicated, whether the Colfoxes made unequivocal acceptances of the Settlement Offer. It is not suggested that any variation of the terms was agreed in the course of the communications which I have outlined. It is clear that the importance of signing an unqualified Acceptance Form was in fact drawn to Mr Colfoxs attention. It is not suggested that, even on Mr Colfoxs version of the conversation of 16 September (rather than Mr Tallons documented and probably correct account), any contract was made on that date. As with other Names, various defences were pleaded, to the effect, for example, that Lloyds accepted itself or bound itself to regard the Colfoxes as valid acceptors by, for a time, including them in lists of or figures for acceptors or notifying action groups of which they were members or their members agents that they were acceptors.
The only such plea pursued before me to any extent was a suggestion that Lloyds inclusion of the Colfoxes on a list purportedly prepared under clause 12.3 of the Settlement Agreement bound Lloyds to treat them as accepting Names for all time. I can see no basis for that. Clause 12.3 can only have any force in relation to Names who are in fact party to the Settlement Offer. Mistaken inclusion of a Name who has not validly accepted has no effect, and there is no reason why the list cannot and should not be rectified.
I come to the basic question whether the Colfoxes accepted the Offer in the terms in which it was made. The first and second points may be regarded as minor problems. The first might be regarded as a mere statement or correction of fact, rather than an alteration of any term. The second may be said to have made no effect, in view of the terms of para 1 of the Settlement Offer. The third - the addition of the words excluding fraud waiver - clearly however represented a variation of the terms of the Offer. Mr Platt suggested that it was too vague to have any effect. For reasons indicated in relation to Mr Harris, it went to a matter of concern to Names and Lloyds. It indicated that the definition of claim and the full width of the waivers in paras 4.5 to 4.10 of the Settlement Offer were not acceptable. Even if it was itself too vague to represent a counter-offer capable of binding acceptance (which I doubt), it still amounted to a clear indication that the terms of the Settlement Offer were not acceptable, and therefore a rejection of them. For that reason alone, the Colfoxes case fails and Lloyds are entitled to the declarations sought against them.
For completeness, I say a few words about the letter dated 11 September 1996. By Mr Colfoxs handwritten additions, the Acceptance Form was made expressly subject to this letter. In doing this, Mr Colfox ignored any advice given by Mr Bradley and Mr Holden, to the effect that the Acceptance Form must be accepted without qualification although wishes or hopes could be expressed in a side letter. The understandings said to have been relied upon included factual matters, which, if accepted and subsequently proved incorrect, could have entitled the Colfoxes to suggest that they were no longer bound, despite para 12.2 of the Settlement Agreement, or possibly to suggest that they had some other remedy against Lloyds. I cannot in these circumstances view the letter as a simple expression of the Colfoxes beliefs or hopes. Its effect too was, it seems to me, to qualify the acceptance.
The final point taken, mutedly, by Lloyds is the Colfoxes did not sign and deliver the Forms either as a deed or in the presence of any witnesses. Factually, this is correct, and Lloyds would no doubt have been entitled to reject the purported acceptances on this ground alone under paras 1-5 of the Settlement Offer. Lloyds did not however take this point in its letters of 18 October 1996, or so far as appears at any other time. Had it been the only point available to Lloyds, questions of waiver might have required further examination. I therefore say no more about the point.
In respect of each of the Names whose cases were argued before me, Lloyds is in the result entitled to the declarations sought. I will hear counsel as to any consequential orders which are appropriate in relation to the actions generally.