Yieldpoint Stable Value Fund, LP v Kimura Commodity Trade Finance Fund Limited

A claimant’s very high Part 36 offer is not necessarily a genuine attempt to settle merely because it includes a discount or waives interest. The question is objective and requires a broad evaluation of the offer in its litigation context. The court should assess the apparent strength of the claim when the offer was made, the closeness and uncertainty of the issues, and whether the offer created a meaningful prospect of avoiding trial or further use of court resources. Hindsight from the judgment must be excluded so far as possible. The offeree bears the burden of showing injustice under CPR 36.17(5)(e), but where the offer was effectively a demand for payment of almost the whole claim in a genuinely binary and uncertain dispute, the court may refuse all enhancements under CPR 36.17(4)(a)-(d).

The claimant succeeded at trial in recovering US$5 million plus interest under an earlier judgment, [2023] EWHC 1212 (Comm). At the consequentials hearing, it sought the benefits of a Part 36 offer made on 9 January 2023. The offer sought US$4.95 million inclusive of interest, representing approximately 96 per cent of the claim value at the end of the acceptance period.

The defendant argued that the offer was not a genuine attempt to settle under CPR 36.17(5)(e) and that it would therefore be unjust to award the claimant the post-judgment enhancements under CPR 36.17(4)(a)-(d). The central issue was whether the offer had created a meaningful chance of settlement in the context of an uncertain, all-or-nothing contractual dispute.

1. Application dismissed in substance. The Part 36 offer was not a genuine attempt to settle the proceedings. It would therefore be unjust to award the claimant any of the enhancements under CPR 36.17(4)(a)-(d).
2. The inquiry under CPR 36.17(5)(e) is objective. The court should adopt a broad-brush evaluation of the offer in its proper context. The trial judge is particularly well placed to assess the strength of the claim and the closeness of the case.
3. The purpose of Part 36 is to encourage constructive offers capable of having a meaningful impact on the prospect of avoiding trial or further consuming judicial resources. The rule is not confined to 100 per cent claimant offers, and it is unnecessary to show that an offer was a tactical step. Tactical purposes are inherent in Part 36 offers, although a cynical attempt to manipulate the regime is unlikely to be effective.
4. The offeree bears the burden of proof or persuasion on injustice. That burden is formidable where the claimant has obtained a judgment at least as advantageous as its offer. It nevertheless remains necessary to assess whether the offer was genuinely capable of settling the dispute.
5. A very high claimant offer may be genuine where the claim was obviously strong when the offer was made. The assessment must be made without hindsight so far as possible. A marked disconnect between the discount offered and the offeror’s reasonable contemporary assessment of its prospects may indicate that the offer was not genuine.
6. Here, the dispute was binary. It involved uncertain contractual construction and competing interpretations, with no realistic intermediate outcome. The offer represented about 96 per cent of the claim and was expressed against a background of confidence in entitlement to substantial damages, without explaining the interest calculation. In those circumstances, it did not create a meaningful prospect of settlement. The court’s conclusion involved no criticism of the claimant or its legal team.
7. The conclusion was confined to the particular offer and circumstances. It was not a discouragement to claimants making Part 36 offers; offers less perilously close to the full value of an uncertain claim may be more effective.

First-instance consequentials decision following the claimant’s successful trial judgment in [2023] EWHC 1212 (Comm). The judgment records that the defendant sought permission to appeal, but no appellate decision is stated.