“WITHOUT PREJUDICE SAVE AS TO COSTS OFFER MADE PURSUANT TOCPR PART 36 As you are aware, we are in the process of preparing our client’s defence and counterclaim which will be filed on3rd March 2017 . . . . . . We are therefore, authorised by our client to make your client, the following offer to settle under Part 36 (“the Offer”). This Offer is intended to have the consequences set out in Part 36 of the Civil Procedure Rules. In particular, your client will be liable for our client’s costs up to the date of notice of acceptance which must be in writing (“Notice of Acceptance”), in accordance withCPR 36.11 , if the offer is accepted within 21 days (“the Relevant Period”). This offer will remain open for a period of 21 days from the date of receipt of this letter. Terms of the Offer Our client is willing to settle the whole of your client’s claim contained within the claim number HT2016000331, together with the counterclaim which our client will shortly be issuing within the same proceedings: 1. You pay to our client the sum of£100,000 (“the Settlement Sum”) payable within 14 days of service of the Notice of Acceptance. 2. 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. 3. The Settlement Sum is inclusive of interest until the relevant period has expired. Thereafter, interest at a rate of 8% per annum will be added. . . .”
“ . . the judgment of the court is given by Lord Justice Lloyd, where it’s absolutely plain that he considers that there is nothing preventing an offer purporting to settle a counterclaim not yet formulated which would take the offer outside Part 36.”
“(3) 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; or (b) an appeal or cross-appeal from a decision made at a trial. (Rules 20.2 and 20.3 provide that counterclaims and other additional claims are treated as claims and that references to a claimant or a defendant include a party bringing or defending an additional claim.)” 19. Rules as “[a] claim brought by a defendant in response to the claimant’s claim, which is included in the same proceedings as the claimant’s claim.”
“(1) This Part applies to – (a) a counterclaim by a defendant against the claimant or against the claimant and some other person; (b) an additional claim by a defendant against any person (whether or not already a party) for contribution or indemnity or some other remedy; and (c) where an additional claim has been made against a person who is not already a party, any additional claim made by that person against any other person (whether or not already a party). (2) In these Rules – (a) ‘additional claim’ means any claim other than the claim by the claimant against the defendant; and (b) unless the context requires otherwise, references to a claimant or defendant include a party bringing or defending an additional claim.”
“(1) A Part 36 offer must – (a) be in writing; (b) make clear that it is made pursuant to Part 36; (c) specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.13 or 36.20 if the offer is accepted; (d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and (e) state whether it takes into account any counterclaim.”
“(1) . . . may be made at any time, including before the commencement of proceedings.” (b) make clear that it is made pursuant to Part 36; (c) specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.13 or 36.20 if the offer is accepted; (d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and (e) state whether it takes into account any counterclaim.”
“. . . offering to accept something to settle their own claim, counterclaim, additional claim, appeal, cross-appeal or costs assessment proceedings on terms that their opponent pays their costs.”
“Accordingly, our client has a counterclaim against you in the Claim for the debt [giving the amount] plus interest. Such counterclaim has not yet been pleaded in the Claim but our client intends to amend his pleadings to incorporate this counterclaim in the future, if required. For the reasons set out previously in correspondence with you and in our client's submissions to the Court, we do not consider that the claims you are pursuing against our client have any reasonable prospect of success. However, our client realises that significant cost and inconvenience will be caused to all parties concerned if this matter is taken any further. Our client is, therefore, willing to accept payment of [a specified sum, smaller than that identified above as the subject of the intended counterclaim] ("the Sum") in full and final settlement of the whole of our client's claim and the whole of your claim against our client. For the avoidance of doubt, this offer includes all of the claims you have advanced against our client in the Claim. This letter is intended to have the consequences of a claimant’s offer to settle in accordance with Part 36 of the Civil Procedure Rules. . . . . . . As required byCPR 36.3 (3)(a), the Sum is inclusive of interest up until the expiry of the Relevant Period. Thereafter interest, calculated at 1% above Bank of England base rate from time to time, will accrue on the Sum. . .”
“. . . Here, what is more, there was an existing claim but only a proposed or contemplated counterclaim. It seems to me that it was entirely appropriate and legitimate for the offer letter to spell out the fact that it was not just an offer in accordance with Part 36, but that it was an offer made by the Respondent by way of a claimant's offer. Whether it is properly to be regarded as a claimant's offer depends on the construction of the offer as a whole, not just on the statement by the offeror, but to make this statement does not mean, as the Applicant submitted, that it is not a Part 36 offer at all.”
“. . . The situation is unusual because the counterclaim had not been pleaded, and therefore did not yet exist as a claim in the proceedings. However, the counterclaim was a genuine claim, whose nature was clear, and which was for a stated amount, albeit a relatively modest amount compared to the sum that was said to be at stake on the claim. As rule 36.3(2) [r36.7] says, a Part 36 offer may be made before the commencement of proceedings. So the fact that the counterclaim had not been formulated or pleaded does not of itself matter. The Applicant pointed out that the Respondent would require permission to amend his proceedings to include the counterclaim, because of rule 20.4(2)(b). The offer letter recognised that this would be necessary, and I do not need to decide whether such permission would have been, or would be, granted. 18. A Part 36 offer made in respect of the whole of a claim, as this was, must state that it does so relate, and it must also state whether the offer takes into account any counterclaim. This offer did so state; it made it clear that the offer was put forward on a net basis, and that acceptance of it would constitute full and final satisfaction both of the proposed counterclaim and of all claims asserted by the Applicant against the Respondent. It would therefore settle both the liability on the proposed counterclaim and the liability on the claim. In those circumstances, it seems to me that rule 36.3(4), with its reference to "the proceedings in respect of which [the Part 36 offer] is made", applied in the present case to both the claim and the counterclaim. Accordingly, it seems to me to follow that, where rule 36.10(1) speaks of "the costs of the proceedings", it means in the present case the costs both of the counterclaim and of the claim. 19. The Applicant argues that rule 36.10(6) is inconsistent with that. I have set this rule out already. He argues that this rule only applies to a claimant, properly so-called, who makes an offer which takes into account the defendant's counterclaim and that it does not apply if it is the defendant, albeit claimant on the counterclaim, who makes an offer on a net basis taking into account the claimant's original claim. He says this is so because the claimant's original claim cannot properly be fitted within the words "takes into account the counterclaim". 20. It seems to me that that would be a curious reading of the rule. It is quite common to find, on the one hand, a monetary claim for a given amount and on the other hand a counterclaim, which is raised both by way of set-off and defence and by way of counterclaim, for a different, and often larger, monetary amount. A typical example is a claim by a professional for fees, met by a defence and counterclaim for damages for negligence. There may or may not be an issue as to liability for the fees (possibly only as regards quantum), but there will usually be a real issue on the negligence claim. On the Applicant's argument, the original claimant could make a Part 36 offer which would have the consequences attaching to a claimant's offer as regards both the costs of the claim and the counterclaim, but the defendant could not do so. Accordingly, the result as between the parties, as regards the opportunity for using Part 36 as a claimant, would depend on what might be a matter of chance as to who started the proceedings. The Applicant submitted that the policy behind that was that the claimant could not choose whether he was sued by the defendant by way of counterclaim or by way of separate action whereas the defendant could choose how he wished to proceed. If the defendant to the first proceedings wished to be able to make an offer as claimant he should bring separate proceedings rather than counterclaim. That would seem to me to be odd and unsatisfactory because, naturally enough, the defendant would wish to, and indeed possibly need to, defend and counterclaim in the first action in order to set up his cross-claim as a defence to the claimant's claim. To read the rules in such a way that separate proceedings, rather than a counterclaim in the same proceedings, were desirable does not seem to me to be either sensible or consistent with the overriding objective. 21. In any event it seems to me that the Applicant's reading of rule 36.10(6) is incorrect. It fails to take into account the provisions of Part 20 dealing with counterclaims. The express purpose of Part 20 is to enable counterclaims and other additional claims to be managed in the most convenient and effective manner. By rule 20.2 it applies both to counterclaims against the claimant, or against the claimant and others, and also to additional claims by a defendant against someone who may or may not already be a party to the proceedings, and of course to yet further additional claims by parties brought in as defendants to additional claims themselves. By rule 20.2(2), for the purposes of the rules, "additional claim" means any claim other than the claim by the claimant against the defendant and "unless the context requires otherwise references to a claimant or defendant include a party bringing or defending an additional claim". By rule 20.3(1) "an additional claim shall be treated as if it were a claim for the purposes of these rules, except as provided by this Part." Nothing in Part 20 excepts Part 36 from the provisions of that rule. Thus the Respondent's proposed counterclaim is to be treated as if it were a claim and the Respondent, as the party bringing the counterclaim, is to be treated as within references to a claimant; correspondingly, in relation to his position defending the proposed counterclaim, the Applicant is treated as within references to a defendant. Accordingly, going back to rule 36.10(6), that rule covers the Respondent's costs as the party bringing the additional claim and the rule has the effect that his costs include any costs incurred in dealing with the counterclaim of the Applicant who is for this purpose treated as within the reference to the defendant. The Applicant's argument is that that contention cannot succeed because he has not brought a counterclaim. He has brought an original claim but not a counterclaim. I agree that the word does not fit perfectly but it seems to me that, making the adjustments that need to be made in order to apply Part 20 to Part 36, where one is talking about a situation where the "defendant" is himself the original claimant as well as the defendant to a counterclaim, the reference to the defendant's counterclaim in rule 36.10(6) is to be taken as being to the original claim, i.e. the cross-claim to the new counterclaim by the original defendant, the Respondent. Only in that way does it seem to me that the rule can apply in an evenhanded way, as it plainly should, and so as not to have arbitrary results according to which party brought proceedings first.”