Costs News

20 January 2022
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Party who ended up as defendant in claim could make claimant’s part 36 offer

A party named as a defendant in proceedings could make a claimant’s part 36 offer before the case had been issued and where they obtained more from their counterclaim, the High Court has ruled.

His Honour Judge Pearce, sitting in London as a High Court judge, also stressed that, just because a claimant described itself as such did not mean the other party could not make a claimant’s part 36 offer.

The Huntsworth Wine Company Ltd v London City Bond Ltd [2022] EWHC 98 (Comm) saw Huntsworth awarded £1,000 – having claimed £125,000 – for the theft of wine stored at a bonded warehouse run by LCB in Cambridgeshire. LCB was awarded £3,662 for its counterclaim.

As the case proceeded under the shorter trials scheme, HHJ Pearce undertook a summary assessment and first had to deal with whether LCB’s August 2019 part 36 offer was a valid claimant’s offer, as it argued. If so, it beat the £2,000 offer made.

The offer intimated a county court claim which was ultimately not brought. By this stage, Huntsworth too had intimated a claim, served draft particulars of claim describing itself as the claimant and LCB as the defendant, and served a claimant’s part 36 offer a month earlier.

Huntsworth contended that this meant LCB could not make a part 36 offer as if it were a claimant because it was not in fact the claimant.

HHJ Pearce acknowledged that as CPR 36.7 made clear that a part 36 offer may be made at any time, including before the commencement of proceedings, “this opens the possibility that, as here, there may be a dispute as to whether a party is entitled to avail itself of the benefits of a claimant’s part 36 offer since at the time of the offer being made there may be no clarity about who is the claimant”.

Citing the Court of Appeal ruling in AF v BG [2009] EWCA Civ 757 and Friston on Costs, the judge said most of the factors highlighted by both pointed towards LCB’s offer being treated as claimant’s part 36 offer.

These included the assertion – which turned out to be correct – that there was a net sum due and owing from Huntsworth to LCB; the offer was to receive a net sum; and the offer was incompatible with being a defendant’s offer “since, if it were, the statement that ‘if the offer is accepted within 21 days of service of this notice, the defendant will be liable for the claimant’s costs in accordance with rule 36.1’ would not make sense”.

That Huntsworth had itself already made a claimant’s part 36 offer did not bear much weight, HHJ Pearce said, given the problems that could occur if parties were “simply able to assert their status as claimant for all purposes by being the first to make such an offer”.

He noted that, in AF v BG, the Court of Appeal was not deterred from a finding that the offer was a claimant’s part 36 offer, even though the offeror was not merely anticipated to be a defendant in due course (as Huntsworth argued here) but actually was the defendant in the litigation and had not even made a counterclaim at the time of the offer.

HHJ Pearce said: “This demonstrates that the emphasis is to be laid not on a particular party’s title within the litigation but rather on their role in making the offer.”

The judge held that LCB’s part 36 offer was valid and went on to summarily assess costs.

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