robin103.txt ROBINSON v SOCIETY OF LLOYD'S Commercial Court Tomlinson J Jan 26 2001 Lloyd's Name - settlement agreement - offer - acceptance validity The claimant was a name at Lloyd's and applied for a declaration that he was not a party to a settlement agreement made pursuant to a Lloyd's offer made to him in July 1996. The offer included a passage which stated: "Even where a Name validly accepts the settlement offer, Lloyd's will not be obliged to apply any debt credit and combined litigation settlement funds allocations to meet a Name's finality bill unless that Name has paid his finality bill in accordance with Chapter 5. Where such a Name does not pay his finality bill he will still be bound by the terms of the Settlement Agreement, including the waiver of claims by him against Lloyd's, agents and others." The document continued that "It is vital that all Names make arrangements as soon as possible to ensure that they are able to pay their finality bills" and in an appendix stated "A Name will become a party to this Settlement Agreement upon his form of acceptance being duly executed and returned in accordance with the terms of the settlement offer document". Similar words as to acceptance appeared elsewhere in the document. On 27 August 1996 the claimant signed and dated the acceptance and executed that document as a deed by signing it in the presence of two witnesses. He faxed and posted the form to Lloyd's under cover of a letter of the same date addressed to Lloyd's, which stated "... I am posting today the settlement offer acceptance as per this fax. As demonstrated to you, and confirmed to your New Zealand agents, I am unable to pay the finality bill. Please advise in due course what procedures you require." The document was received by Lloyd's on or before the 30 August 1996. There were six boxes on the form, the fourth of which bore the word "Valid". On the top of the document, which was copied and returned to the claimant, under the word "Valid" there was a cross completed by Lloyds' staff. On 9 October 1996 the claimant wrote to his members' agents: "... At the end of August I accepted Lloyd's settlement offer, but advised that I am unable to pay the finality bill. Now I am receiving enquiries from litigating groups that I am one who has not accepted the offer and do I wish to stay on the writs. As I have had no communication from Lloyd's would you please tell me just what is going on." He also wrote to Messrs. More Fisher Brown solicitors who were acting for certain of the names who were pursuing, or intending to pursue, proceedings against Lloyd's and who had been in correspondence with him. The letter stated "I wish to discontinue with the litigation. I did accept Lloyd's offer, but advised them I am unable to pay the finality bill. It would appear that they have chosen to regard this as non-acceptance." On 16 October Lloyd's wrote to Mr Robinson: "... I write to inform you that Lloyd's is not treating your form of acceptance as a valid acceptance of its settlement offer as it has purportedly been made subject to certain conditions being fulfilled. Lloyd's retains a discretion, however, to treat your form of acceptance as a valid acceptance in the event that you confirm immediately the withdrawal of these conditions. Please confirm by signing and returning the enclosed duplicate letter that all and any purported conditions are withdrawn" The claimant did not sign and return the letter but wrote to Lloyd's stating that he had made no conditions at all and that the fact that he was unable to pay the finality bill was simply a fact. Lloyd's then proceeded on the basis that he had accepted the settlement offer in 1996 and had become party to the settlement agreement. In 1999 Lloyd's instigated bankruptcy proceedings against the claimant. The claimant applied for a declaration that he was not a party to the settlement agreement, arguing that (as was indicated by the cross marked by Lloyds' staff in the "Valid" box on the copy of the purported acceptance letter) Lloyd's had exercised its discretion to treat Mr. Robinson's acceptance as invalid. He argued that that anything which happened after Lloyd's decided to treat the acceptance as invalid was immaterial to the question whether or not there was a concluded agreement. Held, in refusing to make the declaration, that it seemed the likely explanation of what occurred was that a junior member of Lloyd's staff decided that Mr. Robinson's acceptance was invalid and had put a cross in the "Valid" box. However it seemed to his lordship that the proper analysis of the situation was that set out in the terms of the offer to the effect that signature, completion and return to Lloyd's of the acceptance form in accordance with its terms, led to the making of a contract. His lordship noted in particular that the form stated "I hereby irrevocably accept the settlement offer and agree to be bound by the terms and conditions set out in the Settlement Agreement ...". Lloyd's had no residual right to say that acceptance was not valid. Even if his lordship was wrong, any determination of Lloyd's to the effect that an acceptance was not valid would be of no effect if (1) such determination was incorrect in point of law, or if (2) such determination was not communicated to the Name. If there was an initial determination by a junior official within Lloyd's to the effect that Mr. Robinson's acceptance was invalid, such a determination was wrong in law and the covering letter of the 27 August from Mr Robinson did not render the apparently unequivocal acceptance equivocal. Secondly, Lloyd's decision to treat the acceptance as invalid was not communicated to the claimant and could be of no effect. Sending back to Mr. Robinson a copy of the form fell very far short of any communication of a discretionary decision by Lloyd's to regard the acceptance as invalid. Examination of the correspondence and actions of the parties subsequent to the despatch by Mr. Robinson of his acceptance form led to the conclusion that at all times thereafter both Lloyd's and the claimant regarded him as being an accepting party. The claim for a declaration that Mr Robinson was not an accepting party would accordingly be dismissed. Application, for a declaration that the claimant had not accepted an offer of settlement made by the defendant. Michael Freeman (instructed by Grower Freeman & Goldberg) for the claimant. John Briggs (instructed by Lloyd's of London) for the defendant. Case reported by Dr Victoria Williams, barrister, 3 Dr. Johnson's Buildings, Temple EC4Y 7BA.