Essex County Council v UBB Waste (Essex) Ltd (No. 3)

A Part 36 offer must comply with the mandatory requirements of Civil Procedure Rules 1998 Part 36, but an ambiguity in an otherwise genuine Part 36 offer may be construed so as to make it effective where that construction is reasonable. A failure to comply with a mandatory requirement cannot be cured by treating the offer as a near miss or by estoppel. A non-compliant offer remains relevant to the general costs discretion under Part 44. Whether a judgment is at least as advantageous as an offer is assessed overall, particularly in non-monetary claims. Indemnity costs require conduct unreasonable to a high degree and out of the norm. Partial success may be recognised by a proportionate percentage reduction rather than an issue-based order.

The parties had litigated a 25-year contract for the design and operation of a waste treatment facility. In the principal judgment, Essex County Council v UBB Waste (Essex) Ltd (No. 2) [2020] EWHC 1581 (TCC), the Authority obtained declarations, substantial damages and a right to terminate, while UBB recovered limited compensation on its counterclaim.

This judgment determined consequential issues concerning interest, the validity and effect of the Authority’s Part 36 offer, indemnity costs, recognition of UBB’s partial success, interest on costs and the time for payment.

1. The Authority’s offer was a compliant Part 36 offer. Although the letter referred to 21 days from its date, the reasonable construction was that the relevant period ran from the date on which the offer was made, namely deemed service on 8 March 2019. That construction gave effect to the clear intention to make a Part 36 offer and was consistent with C v D [2011] EWCA Civ 646.

2. If the offer had been non-compliant, the defect could not have been cured as de minimis. Rule 36.2(2) prevents a non-compliant offer from receiving Part 36 consequences. It could nevertheless be considered under the general costs discretion in Part 44, but could not be treated as a compliant Part 36 offer. Estoppel likewise had no role in the self-contained and prescriptive Part 36 regime.

3. The Authority obtained a judgment at least as advantageous as its offer. The comparison required an overall value judgment, not a term-by-term comparison. The monetary judgment substantially exceeded the value sought by the offer, and the principal declaratory findings corresponded to most of its proposed terms.

4. The usual Part 36 consequences followed. The Authority received interest on the judgment sum and costs at 10% above base from 29 March 2019, indemnity costs from that date and the additional sum of £75,000.

5. Interest under section 35A of the Senior Courts Act 1981 was awarded at 2.4%, representing the broad commercial borrowing cost of a local authority. No proof of actual borrowing was required. A conventional rate of 1% above base was not presumed appropriate.

6. UBB’s conduct justified indemnity costs. Unfounded allegations of lack of good faith, an opportunistic and substantial counterclaim, and the use of an obviously conflicted expert were conduct out of the norm and unreasonable to a high degree.

7. UBB’s limited success on a discrete issue was recognised by reducing the Authority’s pre-29 March 2019 costs recovery by 5%. The reduction was preferable to an issue-based order. Costs after that date were recoverable without deduction under Part 36.

8. Interest on costs ran at 2.4% from when the costs were incurred until 14 September 2020, and thereafter at the statutory rate under section 17 of the Judgments Act 1838. The judgment sum and interim costs payment were payable within 14 days.

The judgment concerned consequential orders following the first-instance merits judgment in Essex County Council v UBB Waste (Essex) Ltd (No. 2) [2020] EWHC 1581 (TCC). No appeal stage is stated.