The recent case of The Huntsworth Wine Company Ltd (Huntsworth) v London City Bond Ltd (LCB) [2022] EWHC 97 (Comm) reminds us how important and effective an early CPR Part 36 offer can be especially if it is made early on in any dispute by the Claimant, where costs may be awarded on an indemnity basis with an enhanced rate of interest if the claimant obtains a judgment which is equal to or more advantageous than the offer. 

The Case

Huntsworth issued a £125,000 claim against LCB for compensation relating to the theft of wine from bonded warehouses owned and operated by LCB.  Prior to proceedings, each party, naming itself as the potential claimant, made a Part 36 offer.  Judgment was awarded for £1,000 plus interest to Huntsworth and £3,662.34 plus interest to LCB in respect of its counterclaim.  LCB, as the overall winner in the litigation, had previously made an offer to settle the whole claim (including the counterclaim) for £2,000.  LCB was ultimately awarded judgment for a higher sum.

The Issues

Huntsworth argued that the Part 36 offer made by LCB was not a valid part 36 offer as LCB, the defendant in these proceedings, had described itself as the claimant.  Huntsworth also contended that, given it had already made a part 36 offer, this offer could not be a Part 36 offer or, if it was, then at least not a valid one.

Huntsworth also argued that the Part 36 offer did not set out the consequences of non-acceptance and therefore failed to meet all the requirements of Part 36. 

The Decision

It was held that the failure to set out the consequences of non-acceptance was not a fatal error.  LCB’s offer had set out that it’s liability for theft was contractually limited to £1,000 and that it was owed £3.662.34 for excise duty.  As such LCB had clearly beaten its offer.

On the issue of identity, the Judge determined that for part 36,  the question was not one of title (i.e. claimant or defendant), nor who made the first offer, nor who had issued the proceedings (in circumstances where a counterclaim was likely) but instead the role of the party in making the offer.  In this case the judge found that the offer was a valid Part 36 offer and LCB was entitled to its costs on a standard basis until the expiry of the relevant period and on an indemnity basis thereafter in accordance with Part 36.

Practical Implications

This case reminds us how important it is for a party, particularly a claimant party, to consider the making of a Part 36 offer at an early stage and for all parties to consider engaging in some form of alternative dispute resolution as quickly as possible, especially where a Part 36 offer has been made.  Parties should remember that the consequences of failing to accept a Part 36 offer that it later transpires should have been accepted are severe and the cost consequences automatic.