COLDUNELL LIMITED v HOTEL MANAGEMENT INTERNATIONAL LIMITED

A Part 36 offer may address a set-off arising from an existing liability where that set-off is an issue arising in the claim. An offer may contain additional settlement terms, provided it satisfies Part 36’s mandatory requirements. Defective service does not automatically invalidate an offer where it was received, its timing is clear and no prejudice results. Where judgment is at least as advantageous as a valid offer, the Part 36 consequences apply unless unjust. The court retains a proportionate discretion over enhanced interest and any additional sum.

The claimant obtained judgment for £597,117 in proceedings concerning terminal dilapidations and loss of profits. It sought the costs and other consequences of two settlement offers made under CPR Part 36, including a July 2019 offer to settle for £495,000. The defendant challenged the offer’s validity because it included the claimant’s liability under an earlier costs order, was insufficiently clear, and had been served by email without prior consent.

The court also determined interest on the judgment sum and costs, the basis and amount of costs, and the additional sum under CPR Part 36.17(4)(d).

1. The July 2019 offer was within CPR Part 36.2(3). The claimant’s liability under the earlier costs order gave the defendant a potential set-off against the dilapidations claim and was therefore an issue arising in the claim.
2. The offer complied with CPR Part 36.5(d), since it clearly settled the whole terminal dilapidations claim, including loss of profits and the relevant costs liability. Part 36.2(2) preserved the ability to make an offer in whatever terms the party chose, subject to compliance with Part 36.5.
3. Although the offer had been sent by email without consent under CPR PD6A, para 4.2, the defect did not invalidate it. Applying CPR 3.10 and following London Trocadero (2015) LLP v Picturehouse Cinemas Ltd, the offer had been clearly communicated, its date was certain and no prejudice resulted. The court would, if necessary, validate service under CPR 3.10(b) or 6.28.
4. Judgment was significantly more advantageous than the offer. The consequences under CPR 36.17(4) therefore applied unless unjust. The claimant’s refusal of a further mediation, the initial overstatement of the claim and late disclosure did not make relief unjust. The late abandonment of part of the claim affected the extent of relief but was not decisive.
5. Following OMV Petrom SA v Glencore International AG, enhanced interest had to be proportionate and could include a non-compensatory element. Interest was awarded at 5 per cent per annum on the judgment sum from 28 September 2016 and on costs from 24 July 2019. Costs were awarded on the indemnity basis, with the payment on account increased to £229,235.
6. The additional sum under CPR 36.17(4)(d) was discretionary. The court awarded 60 per cent of the maximum, namely £32,914. The claimant also recovered the costs of the consequential issues hearing.