Coldunell Ltd v Hotel Management International Ltd
| Jurisdiction | England & Wales |
| Judge | Veronique Buehrlen |
| Judgment Date | 02 December 2022 |
| Neutral Citation | [2022] EWHC 3084 (TCC) |
| Docket Number | Case No: HT-2020-000141 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2022] EWHC 3084 (TCC)
Veronique Buehrlen KC (SITTING AS A DEPUTY HIGH COURT JUDGE)
Case No: HT-2020-000141
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Henry Webb (instructed by IBB Law) for the Claimant
Kester Lees (instructed by Pinsent Mason) for the Defendant
Hearing dates: 11 November 2022
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on Friday 2 December 2022
DEPUTY HIGH COURT JUDGE Veronique Buehrlen KC:
Introduction
Judgment was handed down in this matter on 27 May 2022. However, regrettably it was not possible for the parties to agree the terms of the order following that judgment because of disagreement as to the consequences of offers made by the Claimant under CPR Part 36. As a result, it was ordered on 10 June 2022 by consent that there be a further hearing to deal with costs and consequential matters (“the 10 June 2022 Order”). The 10 June 2022 Order also provided for the payment by the Defendant to the Claimant of £597,117 as payment of the judgment sum together with £203,764 by way of an interim payment on account of the Claimant's costs.
The matters for determination at this hearing concern the validity of the Claimant's Part 36 offers and, subject (in part) to the outcome of that issue, determination of:
(i) What interest is payable on the judgment sum and for what period;
(ii) The basis on which costs should be awarded and the amount of the payment on account of those costs;
(iii) Whether there should be interest on costs and, if so, at what rate and for what period; and
(iv) Whether there should be an order for the payment of an additional sum under CPR Part 36.17(4)(d).
The various settlement offers
Before setting out the terms of the Claimant's 2 July 2019 Offer it is relevant to note that prior to these proceedings, the parties were party to an earlier set of proceedings, known as the Lease Renewal Proceedings. Those proceedings were settled in June 2019 when HHJ Luba Q.C. made an order including an order for the Claimant to pay a proportion of the Defendant's costs of those proceedings. I refer below to that order as “the 2016 Costs Order”.
The Claimant made two relevant settlement offers in respect of these proceedings said to have been made pursuant to CPR Part 36:
(i) The first was an offer to settle upon payment by the Defendant of the sum of £495,000 made on 2 July 2019 (“the Claimant's July 2019 Offer”); and
(ii) The Second was an offer to settle upon payment by the Defendant of the sum of £380,000 made on 13 November 2019 (the Claimant's 13 November 2019 Offer and together “the Claimant's Offers”).
The Claimant's 2 July 2019 Offer read as follows:
“We refer to the recent mediation in relation to our client's terminal dilapidations claim (including its claim for loss of profits) in respect of the above property (“the Claim”) … This Offer is made pursuant to Part 36 of the Civil Procedure Rules, and it is intended to be a claimant's Part 36 offer. Accordingly, if your client accepts this Offer within 21 days (“the relevant period”), your client will be liable for our client's costs, in accordance with CPR 36.13. Terms of the Offer
Our client is willing to settle the Claim, including any actual or proposed counterclaims, in the matter referred to above on the following terms:
• Your client to pay our client, within 14 days of accepting this Offer, the sum of £495,000 (“the settlement sum”), by electronic transfer into the following account:
…
• This Offer takes account of any counterclaims that your client may have against ours in this matter including, without prejudice to the generality of the foregoing, your client's claim for costs pursuant to the Order of His Honour Judge Luba QC dated 27 June 2016.
• The settlement sum does not include costs and, as mentioned above, your client will be liable to pay our client's costs on the standard basis, to be assessed if not agreed, up to the date of service of notice of acceptance if this Offer is accepted within the relevant period.
• The settlement sum is inclusive of interest until the relevant period has expired. Thereafter, interest at a rate of 8% p.a. will be added.
Failure to accept this Offer
If your client does not accept this Offer, and our client obtains a judgment which is equal to or more advantageous than this offer, our client intends to rely on CPR 36.17. In other words, our client will be seeking an order in the following terms:
• Your client to pay our client's costs up to the expiry of the relevant period.
• Your client to pay our client's costs on the indemnity basis from the date on which the relevant period expired, with interest on those costs of up to 10% above base rate and interest on the whole or part of any sum awarded at up to 10% above base rate for some or all of the period starting from the same date.
• An additional amount of 10% of the first £500,000 and 5% of any amount above that figure of the damages awarded by the Court up to a maximum of £75,000.
If you consider this offer to be in any way defective or non-compliant with Part 36, please let us know by return.
…”
There were three other settlement offers made in these proceedings:
(i) An earlier offer made by the Claimant to settle upon payment by the Defendant of the sum of £675,000 also said to have been made pursuant to CPR Part 36; and
(ii) Two Calderbank offers made by the Defendant:
a. The first made on 24 May 2019 in the sum of £275,000; and
b. The second made on 3 December 2019 in the sum of £325,000 (together “the Defendant's Offers”).
The Defendant's Offers were inclusive of costs and stated to be made on the basis that the sum of £25,000 was to be deducted from the Settlement Sum offered “by way of set-off in respect of” the Claimant's liability for costs under the 2016 Costs Order. The Defendant's offers were withdrawn by email dated 27 January 2020.
The Parties' Submissions
It is the Claimant's case that its 2 July 2019 Offer was a valid Part 36 offer. Judgment against the Defendant having been at least as advantageous to the Claimant as that offer, the Claimant is entitled to the benefit of the provisions of CPR Part 36.17(4) and therefore to:
(i) Interest on any sum of money awarded at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired, being 23 July 2019;
(ii) Costs on an indemnity basis from the same date;
(iii) Interest on costs not exceeding 10% above base rate; and
(iv) An additional amount calculated in accordance with CPR Part 36.17(4)(d).
Mr Lees submitted on behalf of the Defendant that:
(i) The Claimant's Offers were outside the scope of Part 36 because they did not comply with CPR Part 36.2(3). The reason they did not comply with CPR Part 36.2(3) was because they were stated to take into account the Claimant's liability for costs pursuant to the 2016 Costs Order.
(ii) The Claimant's Offers did not comply with the requirements of CPR Part 36.5(d) because:
(a) They incorporated a matter (the Claimant's costs liability pursuant to the 2016 Costs Order) that was neither part of the claim nor an issue arising in the claim or a counterclaim; and
(b) They did not sufficiently clearly define the claim they were settling.
(iii) The Claimant's Offers were not properly served and without valid service there was no valid Part 36 offer.
(iv) Even if there was a valid Part 36 offer, it would be unjust to give the Claimant the benefit of the provisions of CPR Part 36.17 on the grounds that:
a. The Claimant unreasonably refused a second mediation of the terminal dilapidations claim when a second mediation stood a reasonable and realistic prospect of success;
b. The Claimant's claim was overstated and some 40% of the value of the claim abandoned shortly before trial; and
c. There was late disclosure by the Claimant of a report dating back to 2015 concerning the condition of the carpets at the Property.
The validity of the Claimant's 2 July 2019 Offer as a CPR Part 36 offer
I need only consider the validity of the Claimant's 2 July 2019 Offer under Part 36 because if that offer is a valid Part 36 offer it is the earliest of the two relevant offers in time and therefore that relied upon by the Claimant to trigger the consequences set out at CPR Part 36.7.
Mr Lees first relies on CPR Part 36.2(3) by which:
“A Part 36 offer may be made in respect of the whole, or part of, or any issue that arises in –
(a) a claim, counterclaim or other additional claim …”
Mr Lees submitted that in so far as the Claimant's 2 July 2019 Offer included a reference to the 2016 Costs Order, the offer was not made in respect of any issue arising in the claim or any counterclaim taking the offer outside the confines of the CPR Part 36 provisions. He relied on the fact that no counterclaim had been intimated by the Defendant at the time the Claimant's 2 July 2019 Offer was made and submitted that the Defendant's entitlement to the lease renewal costs was not a matter capable of coming before the Court in these proceedings. This being because liability for payment of the costs had already been dealt with by the terms of the 2016 Costs Order and the quantification of those costs was a matter for detailed assessment.
It is correct that at the time the Claimant's 2 July 2019 Offer was made no counterclaim had been brought by the Defendant. That reflected the fact that the Claimant's 2 July 2019 Offer pre-dated the issue of...
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