LORD CHANCELLOR GETS A BONUS: THE POWERFUL RESULTS OF A CLAIMANT’S PART 36 OFFER

There are many interesting issues in the judgment of Mr Justice Holgate in The Lord Chancellor -v- Charles Ete & Co [2016] EWHC 275 (QB) which may be interesting to examine at a later date. However one significant point was that the claimant Lord Chancellor made a Part 36 offer to settle. He achieved a better outcome at trial and received additional damages, and interest as a result.

KEY POINTS

  • The claimant made an effective Part 36 offer and obtained more than that offer at trial.
  • Consequently the claimant received an additional £64,759.18 in damages plus additional interest and costs on the indemnity basis from the date of the expiry of the offer.

PRACTICE POINTS

This case highlights the major advantages in making a claimant’s Part 36 offer.

THE CASE

The claimant was seeking recovery of payments on account paid to a firm of solicitors. Liability was disputed and there was a counterclaim.  Judgment was obtained for £795,183.96. The Lord Chancellor had made Part 36 offer to settle in the sum of £700,000 inclusive of interest.

JUDGMENT ON COSTS

  1. There will be judgment for the Claimant in the sum of £795,183.69. The Defendants’ Counterclaim is dismissed. It also follows that the First Defendant’s Claim transferred from the Central London County Court to the High Court must be dismissed.
  2. At 15.14 on 15 February 2016 the Claimant applied by email for orders for costs and interest. The Claimant relied upon his Part 36 offer dated 26 October 2015, in which he offered to settle the claim and counterclaim, and also the First Defendant’s claim in the County Court, for a payment by the Defendants to the Claimant of £700,000 (including interest), plus costs to be assessed on the standard basis if not agreed. The letter warned the Defendants of the orders that would be sought (in effect under CPR 36.17) if the offer was not accepted within 21 days and the Claimant obtain a judgment equal to or more advantageous than the offer.
  3. The 21 day period expired on 18 November 2015. On 16 November the First Defendant rejected the Claimant’s Part 36 offer and made a counter-offer by repeating its own earlier Part 36 offer sent by letter dated 15 November 2013. The Defendants proposed that the debits or nil assessments applied in the Firm’s BACS statements should be “lifted” or reversed, that the Defendants should be given a minimum of 36 months within which to submit bills on certificated matters, that those bills should be paid within a reasonable time following assessment and that the contracts for family and crime work be restored forthwith.
  4. The Defendants were given an opportunity to reply to the Claimant’s application. They made no response and did not ask for any extension of time for making a response.
  5. Given the conclusions I have reached, plainly the Claimant has obtained a judgment against the Defendants which is more advantageous to him than his Part 36 offer and the provisions of CPR 36.17(4) apply. The Claimant is entitled to the orders he seeks under those provisions unless it would be unjust to make any or all of them, having regard to the matters set out in CPR 36.17(5). I do not consider that there are any circumstances which would make it unjust to make the orders sought. The Defendants have not attempted to suggest otherwise. The Claimant made a reasonable offer within about 3 months from the exchange of most of the evidence and just under 3 months before the trial was due to start. It was a genuine attempt to settle the proceedings. The Defendants’ Part 36 offer was wholly unrealistic, having regard to the auditor’s findings and their implications for recoupment of POAs and termination of the contracts and the continuing failure of the Defendants to advance material evidence to contradict those findings despite having had good opportunities to do so.
  6. I will therefore make the orders sought by the Claimant, namely for interest on the judgment sum at 4% pa to 17 November 2015 and at 10.5% pa from 18 November 2015 to 18 February 2016 (amounting to £133,275.44 in total); the Claimant’s costs in relation to the High Court proceedings brought by the Claimant and the proceedings commenced in the County Court by the First Defendant be paid by the Defendants on the standard basis down to 17 November 2015 and from the following day on the indemnity basis; interest on the Claimant’s costs incurred from 18 November 2015 at 10.5% pa; and an “additional amount” of £64,759.18 pursuant to CPR 36.17(4)(d) comprising 10% on the first £500,000 of the judgment sum awarded (£50,000) and 5% on the balance of £295,183.69 (£14,759.18).

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