Alison Grant & Ors v FR Acquisitions Corporation (Europe) Ltd & Anor

A pre-commencement Part 36 offer need not exactly mirror the relief claimed. It complies if made by reference to identified claims and containing a genuine and clear proposal. For a claim not framed as a money claim, whether judgment is at least as advantageous is a broad evaluative comparison, not the arithmetic test in CPR 36.17(2). The court may consider contractual deferral, uncertain benefits, timing, contingencies and the real crux of the dispute. If the offer is beaten, the consequences under Part 36 follow unless unjust. Indemnity costs and interest on costs may be ordered, but interest on money not yet due may be unjust. An additional amount may be awarded as a prescribed incentive.

Following an earlier substantive judgment in favour of the joint administrators of Lehman Brothers International (Europe), the court determined the remaining costs and consequential issues. The respondents disputed whether an offer made before proceedings was a compliant Part 36 offer, whether the declaratory relief obtained was at least as advantageous as the offer, and whether the enhanced Part 36 consequences would be unjust. The court also considered permission to appeal the substantive declarations. The central issues concerned the relationship between a pre-action offer and the prospective claim, the comparison of declaratory relief with a settlement offer, and the appropriate costs and interest orders.

Outcome. The Administrators’ Offer complied with Part 36. The declaratory relief was at least as advantageous as the offer. The court ordered indemnity costs from expiry of the relevant period, interest on costs at 4.5%, and the maximum additional amount of £75,000. It refused interest on sums not yet immediately payable and granted permission to appeal the substantive declarations.

1. Compliance. CPR 36.5, read with CPR 36.7, requires an offer to relate to an identified claim, part or issue. For prospective proceedings, the claim must be genuine and clear, but exact correlation with the relief ultimately obtained is unnecessary. The offer’s accelerated payment provision did not prevent compliance, even though that acceleration could not itself have been obtained in the proceedings. The court relied on Hertel v Saunders [2018] EWCA Civ 1831 and Calonne Construction Limited v Dawnus Southern Limited [2019] EWCA Civ 754.
2. Comparison. The proceedings were not framed as a money claim, so the mathematical test in CPR 36.17(2) did not apply. The comparison was broader and included the contractual suspensory condition, the value of delayed payment, possible future default, interest and the real crux of the dispute. Applying the open-textured approach in Carver v BAA plc [2008] EWCA Civ 412, the court held that the relief was at least as advantageous.
3. Unjustness. The court applied the principles in Smith v Trafford Housing Trust [2012] EWHC 3320 (Ch), Lilleyman v Lilleyman (No. 2) [2012] EWHC 1056 (Ch) and Downing v Peterborough & Stamford Hospitals NHS Foundation Trust [2014] EWHC 4216 (QB). The discretion to depart from the ordinary consequences was circumscribed. The clear, informed and genuine offer, together with the respondents’ weak reliance on a highly theoretical future default, did not justify total departure.
4. Consequences. Interest under CPR 36.17(4)(a) was unavailable because the declarations did not award money immediately due. Indemnity costs were compensatory rather than penal. Interest on costs was ordered at a proportionate rate of 4.5%. The additional amount under CPR 36.17(4)(d) was a prescribed reward for a genuine offer and was ordered at the maximum.
5. Permission to appeal. Permission was granted because the issues were complex, another court might reach a different conclusion, substantial sums were involved and the questions had general commercial interest.

The judgment records that the substantive declarations had been made in an earlier main judgment. It grants the respondents permission to appeal those declarations. No appellate decision is recorded.