4 August 2022

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Part 36 offer of just 1.15% less than sum claimed was genuine offer to settle

High Court said offer was “an entirely sensible course” for a business which had no interest dragging out the case

A part 36 offer that represented just a 1.15% discount on the sum claimed was a genuine offer and the usual consequences of beating it should apply, the High Court has ruled.

In Omya UK Ltd v Andrews Excavations Ltd & Anor [2022] EWHC 1882 (TCC), Roger ter Haar QC, sitting as a deputy High Court judge, held that both defendants were liable to the claimant for the full amount claimed, £765,094.

Nearly 18 months before judgment, the claimant made a part 36 offer of £756,287. The judge said that, like the 2020 Rawbank case – where the offer was a 0.3% discount on the claim value – this was a case “in which there was never likely to be (and in the end there was not) any significant debate as to quantum”.

It was also relevant, he said, that if interest accrued was taken into account, the discount rose to 5%.

“Further, as in Rawbank, it is relevant that the defence put forward lacked credibility: the defendants' best hope was that some or all of the witnesses would not give evidence whether out of disinclination, anxiety or ill-health.

“In my judgment the defendants have failed to establish that the offer made was not a genuine attempt to settle: on the contrary, on the information available to me I conclude that it was indeed a genuine attempt to settle – an entirely sensible course for a commercial enterprise such as the claimant which had no interest in the proceedings being dragged out and faced risks that important witnesses might not appear at trial.

“These matters indicate to me that the claimant had every incentive to try to achieve a settlement and that this was not, as in some cases posited in the authorities, a cynical attempt to manipulate a scheme designed to encourage settlement.”

Mr ter Haar said that none of the other factors he had to take into account made it unjust to apply the normal consequences of a refusal to accept a part 36 offer.

This meant that the defendants had to pay an extra £63,255 pursuant to CPR 36.17(4)(d)(i).

The claimant sought interest under part 36 at a rate of 10% over base. The judge noted that the defendants’ defence pursued from June 2020 to December 2021 was “wholly implausible and that it was unreasonable to pursue that defence”.

He continued: “It is also relevant in this case that what was done by the defendants was clearly done with a view to very substantial reward. On the other hand, proportionality requires me to have regard to the maximum rate of enhanced interest permitted under part 36 and prevailing commercial rates.

“It was submitted to me, and I accept, that an appropriate range is between 4 and 8% above base. In my judgment a figure towards the bottom end of that range, i.e. 5%, is appropriate.”

The judge also ordered that the defendants pay indemnity costs up for the period up to the date of expiry of the part 36 offer.

This was for several reasons, including that the defendants were responsible for organised tipping on a vast scale, which was characterised by the judge as “[about] as serious an environmental crime” as could be imagined.

But they denied any liability for the scheme and any knowledge of the dumping throughout and pleaded “an utterly implausible defence”.

Ian Bridge and Adam Porte (instructed by Geldards) for the claimant. Philip Sissons (instructed by Gentle Mathias) for the defendants.