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This case is a salutary reminder that we need to keep clear in our minds the distinction between the substantive law and the procedural law. Changes made to the Civil Procedure Rules are not capable  of effecting changes to the substantive law however much one might wish that they did so.

In John Laing Construction Ltd v Dastur [1987] 1 W.L.R. 686, Parker LJ said,

The defence of tender is a common law substantive defence to which the rules … have nothing to do. They cannot in any event amend the substantive law.

Further even where the editors of the White Book had concluded that a particular procedural rule did have an impact, that carried no weight so that practitioners who had relied upon the White Book text found that what seemed like a sensible move did not have the expected effect.

In RSM, Underhill LJ said,

18 The definition in the glossary would appear to represent a deliberate attempt by those responsible for the drafting of the CPR to expand the scope of the defence of tender before action so as to cover claims for unliquidated damages, though it seems a decidedly oblique way of doing so. The introductory commentary to Pt 16 in the White Book (para. 16.0.1) identifies one of the differences from the old RSC as being that:

“The defence of tender before action (which has been renamed tender before claim) is available in response to claims for damages as well as debts.”

That statement (which also appears in the current (2007) edition of Bullen, Leake and Jacob (see para.1-14)) goes back to the first edition of the new-style White Book, in which the editors were closely associated with those responsible for the drafting…

19 Whatever the history…I do not believe that the apparently intended change is effective. The authorities to which I have referred to make it clear that the defence of tender is a substantive rule of law and not a matter of procedure. It seems to me right in principle that such a rule cannot be amended by rules of court, which of their nature only regulate practice and procedure.

A further word of warning 

Chitty makes the following point at paragraph 21-089

A tender by negotiable instrument, such as a…cheque, is not a valid tender; but the creditor may waive an objection to the form of the tender, e.g. if the creditor asks for payment by cheque or objects to the tender only on another ground, such as the amount of the tender.

Application

Suppose,

A owes £100,000 to B. B demands payment of that amount plus interest.

A tenders that amount. B refuses the amount tendered.

A has a complete defence at law to the claim and, if proceedings are issued, can pay the disputed sum into court (under CPR 37.3) and file a defence alleged tender before action.  

All this seems perfectly reasonable. But what if the claim is not for a specific (liquidated) sum but rather for damages (an unliquidated sum).

Now you would have thought that the same rule would apply. It does not. The defence of tender before action is not available in claims for damages. In Davys v Richardson (1888) 21 Q.B.D. 202 Lindley LJ said, (at p.205),

I am of opinion that the law remains as it was before the Judicature Acts, and that you cannot now, as you could not then, set up a defence of tender in answer to a claim for unliquidated damages.

In such circumstances when faced with a claim for damages all that A can do is

  • make a Part 36 offer before proceedings. If B accepts it then A will have to pay B’s legal costs;and/or
  • make a voluntary interim payment to stop the clock running on the interest.

Of course A can, if it wants, send an amount offered in full and final settlement hoping that B will accept it. If B does not accept it however there is no defence of tender on which to fall back.

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