Robert Colicci & Ors v Nora Mikhailovna Grinberg & Anor

A Part 36 offer is interpreted objectively against its wording and relevant background. It may propose an outcome which the court could not itself order after trial, provided that it relates to the claim. Whether an offer is a genuine attempt to settle is assessed in all the circumstances. The court should avoid an unrealistic assessment of how the offeror ought to have valued its prospects of success. The strength of the case, the discount, the information available, the timing and the costs consequences may all be relevant. Part 36 consequences should be applied unless the circumstances make them unjust. A party ordered to pay costs will ordinarily make a payment on account, but a stay may be appropriate where immediate payment would be oppressive because the paying party’s available funds are tied up in an asset benefiting the receiving party.

This was a reserved judgment on costs following a four-day trial. The claimants had succeeded on their principal claim concerning the interpretation of a 2017 agreement and had failed on an alternative rectification claim. The court therefore considered the appropriate costs order up to 23 March 2022.

The court then determined whether the claimants’ settlement offer of 1 March 2022 was a valid Part 36 offer, whether the result was at least as advantageous as the offer, and whether it would be unjust to award the enhanced costs consequences. It also considered an interim payment on account of costs and whether that payment should be stayed.

1. Costs before 23 March 2022. The claimants were the successful parties, but their alternative rectification claim had failed and had substantially increased the costs. An issue-based order was impracticable because the evidence and legal analysis overlapped. The claimants were therefore awarded 40 per cent of their costs to that date on the standard basis.
2. Validity of the offer. The offer to pay £150,000 for transfer of the shares was objectively an offer to compromise the substantive claim, not an offer to contribute towards the defendant’s costs. Its express identification as a Part 36 offer and its terms made that clear. It related to the claim as required by CPR 36.5(d). Following Jockey Club Racecourse Limited v Willmott Dixon Construction Limited, an offer may take effect under Part 36 even if it proposes an outcome which the court could not order after trial.
3. Advantage and genuine settlement attempt. The judgment was more advantageous to the claimants than the offer. The relevant valuation was £1.6m, being the only valuation existing when the offer was made. The offer represented 90.6 per cent success, together with payment of costs to acceptance. The court rejected the submission that it was not a genuine attempt to settle. The guidance in Jockey Club, JMX v Norfolk & Norwich Hospitals NHS Foundation Trust and Yieldpoint Stable Value Fund v Kimura Commodity Trade Finance Fund was illustrative. The key consideration was whether there was a marked disconnect between the discount and the offeror’s reasonably discernible contemporary assessment of its case. It was generally unrealistic to reconstruct that assessment, since offers reflect several considerations.
4. Part 36 consequences. It was not unjust to apply CPR 36.17(4). The offer was clear, made when substantial further costs could be saved, and supported by sufficient information. The court was required to apply the regime rather than first exercise a general discretion and then test the result against Part 36. Indemnity costs and the additional payment therefore followed from 24 March 2022, with interest at 4 per cent above base rate.
5. Payment on account. Under CPR 44.2(8), an interim payment of £165,000 was ordered. The order was stayed because the defendant’s ability to pay depended on realising an interest in a jointly owned warehouse, while the claimants retained the benefit of an asset whose sale would enable payment. The claimants were at liberty to apply to lift the stay if those circumstances changed.

The judgment followed a trial and an earlier judgment handed down on 18 May 2023. No appeal was determined in this judgment.