London Trocadero (2015) LLP v Picturehouse Cinemas Ltd
| Jurisdiction | England & Wales |
| Judge | Robin Vos |
| Judgment Date | 19 November 2021 |
| Neutral Citation | [2021] EWHC 3103 (Ch) |
| Docket Number | Claim No: PT-2020-000828 |
| Court | Chancery Division |
[2021] EWHC 3103 (Ch)
Robin Vos
(SITTING AS A DEPUTY JUDGE OF THE HIGH COURT)
Claim No: PT-2020-000828
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
PROPERTY, TRUSTS & PROBATE LIST (ChD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Nicholas Trompeter QC (instructed by Druces LLP) appeared for the Claimant
Jonathan Seitler QC (instructed by CMS Cameron McKenna Nabarro Olswang LLP) appeared for the Defendants
Hearing date: 3 November 2021
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to BAILII. The date and time for hand-down is deemed to be Friday, 19 November at 10:30am.
Introduction
This judgment relates to the costs to be awarded against the third defendant, Cineworld Cinemas Limited following a successful summary judgment application made by the claimant landlord in respect of arears of rent and service charges against all three defendants.
By way of a very brief background, the first defendant is the current tenant and the claimant is the current landlord under two leases. The second defendant was the original tenant under the first lease and the third defendant is the guarantor under both leases.
The premises in question are used as a cinema. Arrears of rent and service charges had built up as a result of the COVID pandemic which, for a large part of the period in question, had resulted in the cinema being closed. The result of the summary judgment application confirmed that this did not however relieve the tenant from its obligation to continue to pay rent and service charges.
The hearing on 3 November was to deal with a number of consequential matters arising as a result of the summary judgment in favour of the landlord, including costs. I awarded indemnity costs against the first and second defendants based on the landlord's entitlement under the terms of the leases to recover its costs of enforcing the tenant's obligations under the lease. This was uncontested. However, in the case of the third defendant, the landlord has opted to rely on a Part 36 offer which was communicated by the landlord's solicitors to the defendants' solicitors on 15 December 2020 and which specified a relevant period of 21 days, expiring on 5 January 2021.
The offer specifically stated that it only related to part of the claim, being the rent which had become due on 30 June 2020 and on 30 September 2020 together with contractual interest. The total rent due was £841,965 and the interest up to the date of the offer was £8,402.34. The landlord stated that, in settlement of this part of the claim, it was willing to accept the full amount of the rent without any interest. At the time, this therefore represented approximately 99% of the amount claimed.
It is accepted that the summary judgment against the third defendant is at least as advantageous to the landlord as the proposals contained in the Part 36 offer thus, in principle, triggering the consequences set out in CPR rule 36.17. The third defendant however contests this for two reasons:
6.1 It says that the Part 36 offer is invalid as it was not properly served on the third defendant in accordance with CPR Part 6 as required by CPR rule 36.7(2).
6.2 In any event, the third defendant says it would be unjust to impose the consequences provided for by CPR rule 36.17 for a number of reasons, including the fact that it was not a genuine offer to settle the proceedings but was simply a litigation tactic designed to put pressure on the defendants.
Assuming there is a valid Part 36 offer, I also need to decide what order for costs should be made for the period up to and including the 5 January 2021. The third defendant argues that it has been successful in part of its case and that this should be reflected by making a proportionate costs order which gives the claimant 67% of its costs.
If it turns out that the Part 36 offer is invalid, I need to decide what order for costs should be made.
Validity of the Part 36 offer
Until 2007, CPR rule 36.8(1) provided that a Part 36 offer is made when it is received by the person to whom the offer is made. From 2007, CPR rule 36.7 has provided that a Part 36 offer is only made when it is served on the offeree. The White Book (at 36.7.2) concludes from this that “it is unlikely that anything less than formal service under Part 6 will suffice”.
On this basis, Mr Seitler submits that the Part 36 offer has not been validly made and is therefore of no effect.
Mr Trompeter accepts that the Part 36 offer was not properly served in accordance with Part 6 as it was sent by email and the requirements of paragraph 4 of Practice Direction 6A were not complied with. However, he argues that CPR rule 3.10 saves the day. This provides as follows:
“ 3.10 General power of the court to rectify matters where there has been an error of procedure
Where there has been an error of procedure such as a failure to comply with a rule or practice direction —
(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and
(b) the court may make an order to remedy the error.”
Mr Trompeter submits that the failure to serve the offer in accordance with CPR Part 6 is an error of procedure which does not therefore invalidate the Part 36 offer unless the court so orders. He also invites the court to make an order remedying the error if it is considered necessary in accordance with CPR rule 3.10(b).
In support of his submission, Mr Trompeter refers to the decision of Master Yoxall in ( Thompson v Reeve 20 March 2017, unreported). That case related to the service of a notice withdrawing a Part 36 offer. As in this case, the notice of withdrawal was sent by email which did not constitute service in accordance with CPR Part 6. Relying on the decision of Popplewell J in Integral Petroleum SA v SCU-Finanz AG [2014] EWHC 702 (Comm) the Master concluded at [20] that CPR rule 3.10 has a wide effect and could be applied in the particular circumstances of that case.
Mr Seitler draws a distinction between the withdrawal of a Part 36 offer and the making of a Part 36 offer. He submits that it is vital to identify the date when a Part 36 offer is made as this fixes the start of the “relevant period” which has a number of implications, for example the costs consequences which differ depending on whether a Part 36 offer is accepted before or after the end of the relevant period (see CPR rule 36.13). Given the deliberate change in the CPR in 2007 requiring a Part 36 offer to be served rather than just received, Mr Seitler suggests that it cannot have been intended that a Part 36 offer which is not properly served could nonetheless be valid just because it is received.
The issue in Integral Petroleum did not relate to the service of a document in relation to a Part 36 offer but instead dealt with the defective service of particulars of claim which, again, were sent by email without complying with the requirements of Practice Direction 6A. This was relevant as the court was being asked to set aside a judgment in default of a defence. One of the grounds for the application was that the time for filing a defence had not expired as the particulars of claim had not been properly served. The claimant relied on CPR rule 3.10.
In concluding that CPR rule 3.10 applied so that the service of the particulars of claim by email could be treated as effective, Popplewell J relied heavily on the decision of the House of Lords in Philips v Symes (also known as Philips v Nussberger) [2008] 1 WLR 180. That case concerned the service of a claim form and associated documents on defendants in Switzerland. As a result of mistakes made by the Swiss authorities, the English language claim form was not included in the pack served on the second defendant and the third defendant was not served at all. Lord Brown (with whom the other judges agreed) took the view that CPR rule 3.10 applied. He considered it arguable at [31] that an order could be made under paragraph (b) of rule 3.10 that the relevant defendant should be regarded as properly served given that paragraph (a) of rule 3.10 provides that an error of procedure does not invalidate any step taken in the proceedings unless the court so orders (the relevant step being the service of the proceedings).
In this context (and relying on the decision of the Court of Appeal in Golden Ocean Assurance Limited v Martin [1990] 2 Lloyd's Rep 215), Lord Brown noted at [32] that rule 3.10, like its predecessor, RSC Ord 2, r 1 “was a most beneficial provision, to be given wide effect”.
Although Lord Brown considered that it may not be necessary, given the effect of CPR rule 3.10, he went on at [35] to dispense with service under CPR rule 6.9 (as it was at the time), holding that the court had power to make an order which had the effect of treating the claim form as having been validly served at the date of the original attempted service.
In deciding whether to make an order dispensing with service, Lord Brown commented at [37] that the power should be exercised sparingly and only in the most exceptional circumstances. It does however seem clear that this comment was made in the context of the service of a claim form and the particular issue in that case which was whether the effect of making the order would alter the priority of the seisin of proceedings under an international...
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...36 offer unless the Court so ordered relying on the decision of Robin Vos in London Trocadero (2015) LLP v Picturehouse Cinemas Ltd [2021] 4 WLR 143 at [25]. Further, he submitted that the Court has power to make an order validating the service under either CPR Part 3. 10 or 6.28 and that ......
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Are Your Part 36 Offers Valid?
...Part 36 offer are also valid if served by email which was the case in London Trocadero (2015) LLP v Picturehouse Cinemas Ltd & Ors [2021] EWHC 3103 (Ch). It was held that CPR 3.10 applied (which provides the Court the power to remedy the defect where there has been an error of procedure) an......