PT-2021-000393 - [2025] EWHC 2749 (Ch)

On the facts of this case I do not consider that any offer of payment was made. There was one tender, made in May 2021, that resulted in part-payment of the Loan and does not give rise to any issue in dispute. Everyone now accepts that LCL has given proper credit for that payment. There was what seems to me obviously a contractual offer on 9 November, when Gunnercooke wrote to HCA with what was described as a “formal offer” and attached a settlement agreement signed on behalf of LCL. That offer was not accepted. Mr Wheeler conceded that the first communication on which the Claimants rely, from 16 March 2021, was a contractual offer and that the other communications from March and April 2021 were “probably” also contractual offers. For my part I would think many solicitors would be somewhat surprised by that; typically, the emails exchanges and discussions work out the commercial terms of the deal but it would only be finally agreed in a more formal settlement agreement. In a sense that is irrelevant, however, in that even if they were contractual offers they would be different to, and fall short of, being offers of payment.

With a view to avoiding repetition, so far as that is possible, a lot of these communications involved common themes, and it is worth saying what those are at the outset.

Turning to the details of what are said by the Claimants to be the offers of payment, on 16 March 2021 Mr Amin, of HCA, wrote to Ms Swainson, of Gunnercooke, offering:

Self-evidently that is neither a tender of payment nor an offer of payment under the terms of the Facility Letter because the funds are not immediately available. Nor do I accept this was a freestanding offer of payment at some point in the future because it is conditional on settling the default interest dispute; I struggle to see how, objectively, one can read the “In return” language in point 3 in any other way.

This email must also be read in the context of the message to which it responds, an email from Ms Swainson to Mr Amin sent 24 minutes before. This states, in relevant part:

Mr Amin was responding to that request for clarification and, like Ms Swainson, saw this as part of a package deal that would address both repayment of sums due and settle the default interest question.

The next communication relied on is described in the Defence to Counterclaim as an open offer made on 23 March 2021. This is the letter to which I have already made some reference. The letter to which I was referred as evidencing this offer in fact stated “our clients’ proposal will be set out in open correspondence as follows”. I did not see that open offer, although presumably it was in substantially identical terms. These were (emphasis added):

A lack of clarity arises because the whole of points 1-4 and, separately, just point 4 are both described as the Claimants’ proposal, and the concluding quoted paragraph refers to LCL agreeing to “the above proposal” without apparently seeing the ambiguity. On balance it seems to me that it must mean the whole of points 1-4. It is seen as an alternative to the Claimants taking “pre-emptive steps” to protect all of the Downhills Way Properties and the point 4 proposal relates only to two of them. That would also seem to me the more commercially sensible reading; it makes more sense if the Claimants were trying to settle everything, not just the mechanism for resolving the default interest point.

Ultimately that is academic; what matters for the Claimants’ current case is whether points 1 and 2 formed a free-standing proposal. Nothing in the language supports that. On the contrary, the opening language suggests that what followed was intended to form a single proposal. Moreover, for the Claimants to be right that this was an offer of £1.85 million one has to understand that Mr Amin’s references to “our clients’ proposal” and “the above proposal” permit 1 and 2 to be severed from 3 and 4, but do not permit for 1 to be severed from 2. Otherwise this would not be a single offer of £1.85 million but, rather, separate offers (presumably capable of separate acceptance) of £1.2 million and £650,000. No words are identified that might convey that somewhat complex structuring whereby 1 and 2 are linked to one another but not to any other points.

The exchange that follows is also somewhat notable. The following day, Ms Swainson responded, stating: “It is noted and understood that £1.2m will be secured over 199, 201 and 203 Downhills Way and that LCL will release its security over those properties.” I recognise that “understood” is not sufficiently clear to amount to acceptance, but at the same time there was no push-back on point 1; on the contrary, Ms Swainson recognised that LCL would need to release its security on the three properties in question. In respect of point 2 she asked to see the offer letter in relation to the £650,000 bridging loan.

Mr Amin responded on 25 March. In respect of point 1 all that he said was, “Noted.” On the Claimants’ current case that is an odd response. Accepting that Ms Swainson’s reply had been ambiguous, had Mr Amin intended to make a free-standing offer one would expect some request for clarification – do we have a deal on that point or not?

On Ms Swainson’s second point – sight of the offer letter – HCA stated their understanding that this was being finalised and would be available shortly. Their understanding apparently changed overnight, since they wrote on 26 March enclosing a term sheet from Overture Capital and noting: “Our clients do not wish to incur unnecessary and abortive legal expense in dealing with compliance with OCL’s requirements if as we suspect, your client will simply let matters drag on (for the purpose [sic] which we do not understand).”

There was some disagreement as to how great a hurdle it was to move from the term sheet to a final loan. Mr Cowen’s submission was that all that was left were the formalities. Mr Wheeler submitted that key details remained to be decided. On balance I agree with Mr Wheeler’s submission. The security required included a personal guarantee from Houssein Houssein, who had never previously been personally liable in respect of any of the debt. All of the documents had to be translated into Turkish for the benefit of Mrs Houssein, suggesting she had not at that stage seen them in a form that she understood. She would then have to agree to the loan agreement (as a director of CEK), a personal guarantee and a charge over 71 Hamilton Road. There remained considerable uncertainty.

Again, I do not say these are factors relevant to the interpretation of the earlier proposals; those must be assessed objectively by reference to the materials available at the time. They are, though, relevant on two levels. First, the Claimants’ case is that their “offer” was wrongfully rejected. But Ms Swainson did not reject it; she sought more details about it. Ultimately those details showed that part of the offer was not backed by any funds, let alone immediately available funds. Even so, the discussions continued.

Secondly, these communications that come after the 23 March offer but before subsequent offers do inform how LCL was entitled to understand, and so respond to, other offers that came later. The Claimants had offered payment when what they meant was that they would pay if they could secure financing. That would, in my view, fall some considerable way short of what could properly be termed an offer of payment. Put at its highest it could only ever be a conditional offer of payment at some time in the future, should funds become available. LCL was entitled to want more certainty than that under the terms of the Facility Letter.

The next communication on which the Claimants rely is an exchange on 30 March 2021, evidenced by a letter the following day from HCA to LCL’s solicitors referencing a conversation between Mr Murad and Ms Swainson in which “we canvassed whether the £350,000 requested by LCL could be reduced to £150,000 which would be payable immediately”.

As before, it is important to put things in their context. On 30 March, Gunnercooke wrote to HCA with a proposal for settling the outstanding issues. This included payment by the Claimants to LCL by 14 April 2021 of £1.85 million in exchange for a release of LCL’s security over 199, 201 and 203 Downhills Way and 71 Hamilton Road and payment of £350,000 to settle the default interest issue. There then obviously followed a telephone call in which a lower figure of £150,000 was “canvassed” and subsequently rejected by Gunnercooke.

This, it seems to me, falls well short of an offer of anything. First, the meaning of the verb “to canvas” in this context is to discuss or debate, not to offer. Secondly, it is in my experience quite common in settlement negotiations for solicitors to explore the scope of the possible even without instructions – “If my client were minded to suggest X, how do you think your client might see that?” That is consistent with canvassing (or floating or mooting); it is well understood that it is part of the process of discussions rather than an attempt to conclude them. Thirdly, all of the prior exchanges had been in writing. It would be unusual then to switch to making a formal offer orally, especially given that this was a discussion between lawyers rather than between principals. Fourthly, it is wholly inconsistent with the idea that the question of payment of the £1.85 million was severable from the other elements of the dispute. Gunnercooke proposed such a payment in their 30 March letter, so on the Claimants’ current case they could simply have accepted that. Instead, in their response on 31 March HCA stated: “In principle we have instructions to negotiate a sensible settlement and your offer goes a long way towards meeting our clients’ requirements.” It was seen, rightly in my view, as a composite offer, a package deal, with the objective of both parties being to resolve the whole dispute. Nothing was agreed until everything was agreed.

The negotiations rumbled on, and by 7 April HCA made further “proposals” which were “in the interests of resolving matters without recourse to legal proceeding”. The “proposals” were:

Ms Swainson responded later that day:

Mr Amin replied the following day to “float a potential solution which could save my clients are [sic] more money,without any specific instructions from my client”.

This exchange, to my mind, highlights the deep flaws in the Claimants’ position.

First, I do not regard it as a sensible reading of HCA’s 7 April letter to treat the proposals as severable. I recognise that they are referred to in the plural, but acceptance of only part or parts of paragraph 4 without accepting the whole would not achieve the aim of “resolving matters without recourse to legal proceedings”.

Secondly, and very obviously, if one were to accept the Claimant’s current case that its proposals were severable, such that the offer of payment of £1.85 million was capable of separate acceptance and should have been accepted, that is what LCL did. While this offer, presumably meaning only 4.1 and 4.2, is referred to in the section of the Defence to Counterclaim headed “Particulars of Wrongful Refusals”, it is wholly unclear how a refusal can be constructed from the language Ms Swainson used in response to those sub-points. On the contrary, in my view the words used by Ms Swainson really could not have been much clearer in evidencing agreement; they are not qualified in any way. It is not at all apparent what more LCL could be expected to do, and the Defence to Counterclaim, in simply characterising LCL’s conduct as “wrongful”, does not assist in identifying anything. It does not even reference Ms Swainson’s email. If HCA’s offer is properly characterised as severable, on the question of payment of the £1.85 million the parties had reached agreement and, on the Claimants’ case, payment of the £1.85 million should have been made shortly thereafter. That did not happen.

On the contrary, while, on the Claimants’ current case, Ms Swainson’s reply should have been the end of the discussion, for Mr Amin it was merely the beginning. In his view, at least, everything remained in play. I recognise that Mr Amin made clear, in making his further proposal, that he did not have instructions. He did have instructions regarding the 7 April proposal, however, and so had it been intended that the proposal to pay £1.85 million was severable he would presumably have understood that once agreement was reached his instructions were that that aspect of the dispute was resolved.

Again to be clear, Mr Amin’s follow-up proposal was subsequent to, and so does not inform the proper characterisation of, the HCA letter of 7 April and the Gunnercooke response the next day. It does inform subsequent discussions, however, because it is obvious from this exchange that the payment proposals were not to be understood as freestanding or in some other way capable of independent acceptance. That could change (indeed did change) with the use of clear language, but the package proposals were precisely that – packages to be taken or left as a whole.

Thirdly, while it is the case that Ms Swainson made an apparent counter-proposal in respect of 4.3, in fact it was more by way of clarification than alteration. It simply was not clear from HCA’s letter what was to happen in respect of any further breaches of the Facility Letter. In any event, what she said did not in any way relate to the payment of the £1.85 million.

Fourthly, the only thing that plainly was rejected, albeit by way of counter-offer, was the proposal to pay £350,000 in 4.4. Nothing was immediately being offered in respect of that payment – it was to happen “as soon as possible” – and the whole payment was conditional on Mrs Houssein receiving advice from a bilingual advisor (rather, for example, than from an advisor whose advice was then translated, which would presumably have been easier to secure). Nothing was said about what would happen if Mrs Houssein was unhappy with that advice, although as Mr Wheeler submitted if the condition was to have any meaning it logically followed that this would entitle her to refuse to make the payment. The whole proposal was contingent and uncertain. What LCL sought to do was to inject some certainty around the payment and its timing, requiring payment on or before the Repayment Date which was still four months away. It was an entirely reasonable approach in my view. While it could be characterised as a refusal, in no way was it a wrongful refusal.

Finally, to the extent it is needed this exchange supports my understanding of what was meant by something being “canvassed” in earlier exchanges; as I have noted, to canvas and to float seem in this context to mean the same thing: ideas for further discussion. Moreover, Mr Amin, at the very least, was familiar with the practice I described above where solicitors will raise ideas in discussions even without express instructions in an attempt to understand the other side’s position.

The next communication on which reliance was placed is an email sent on 11 May 2021 from Mr Amin to Ms Swainson and expressed to be without prejudice save as to costs. The offer was:

Again, multiple difficulties arise with construing this as a severable offer of payment or part payment. It is, at most, a settlement offer. That is evidenced both by it being without prejudice save as to costs and by the reference to “full and final settlement of all claims”. The Claimants’ objective was to wrap up the dispute as a whole. That dispute included a claim in debt but nothing in this letter suggests that LCL could have accepted just that element of the proposal. Had, for example, Ms Swainson replied accepting points 2 and 3, rejecting the balance and providing account details it is inconceivable that any onlooker would think agreement had been reached and payment ought to follow.

Given the rather vague conditions attached to this proposal it is not clear whether it was a true contractual offer, capable of immediate acceptance, or an invitation to treat, which would involve some further step. Nor does that matter, however, because LCL rejected the proposal and made a counter-proposal; that, in turn, was rejected by the Claimants and the application before Falk J, as she then was, proceeded the following day.

On 12 May 2021 Mr Amin wrote to Ms Swainson noting: “For the avoidance of doubt, my client’s offer to settle is now no longer open for acceptance.” An offer to settle proceedings is not the same thing as a tender of payment said, in those proceedings, to be due from the borrower to the lender. This simply reflects all of the correspondence to date – the Claimants were seeking not simply to repay the Loan but also to get rid of the claims and proceedings that the Loan had spawned. The offers were offers made in the course of settlement negotiations; they were not a tender, or anything resembling a tender. The case the Claimants now advance is wholly at odds with what they thought at the time. More to the point, it is wholly at odds with what anyone, reading their proposals objectively, would have concluded the Claimants were offering.

Also on 12 May 2021 HCA wrote to Gunnercooke stating:

The last sentence mischaracterised what had gone before. What had been proposed was a package deal, including but not limited to a payment of £1.2 million. That much is obvious from Mr Amin’s reference, earlier the same day, to the “offer to settle” no longer being open for acceptance. This letter was critically different – it simply proposed repayment of amounts due with a corresponding discharge of security. Indeed, as Mr Amin made clear in an email to Ms Swainson on 28 May 2001: “I would just like to remind you that the £1.2 million is being paid by Mrs Houssein, on the basis previously stated, namely against the appropriate discharges (as required by her conveyancing solicitors) and entirely without prejudice to the litigation between our respective clients.” Payment was made to LCL shortly after that email was sent.

Exchanges continued over summer 2021, including some offers of settlement. There followed a mediation on, it appears, 27 September 2021. By this stage, of course, the remaining balance of the Loan was in default, the Repayment Date having been 7 August 2021. Following the mediation, on 7 October 2021 Mr Charlesworth, of Gunnercooke, wrote to the mediator to decline an offer of £700,000 payable “now”, which presumably meant at some point in the near future rather than on that date, and £100,000 a year later. Mr Charlesworth proposed three alternatives, with the total increasing as more time to pay was given.

In response, on 14 October 2021 Mr Amin wrote to the mediator, rejecting LCL’s offers and repeating the Claimant’s earlier offer in the following terms: “My clients will pay £700,000 within 28 days of acceptance of the offer, a further £100,000 in 12 months [sic] time (secured against 71 Hamilton Rd), in full and final settlement.” The Claimants rely on this as an offer of repayment.

The analysis here follows the pattern of earlier offers. For the reasons I have given it is plainly not a tender. Nor is it an offer of payment. Simply the context suggests that. Not only is this without prejudice, it is made via a mediator. One does not typically need to engage the services of a mediator to repay a debt; the value that they add is in resolving disputes, not facilitating payments of undisputed sums. Moreover, by its terms the offer seeks to roll up a number of matters – “in full and final settlement” – and not just repayment. It is not an offer to repay an undisputed sum; it is an attempt to settle a dispute arising out of a debt.

On 1 November 2021 Ms Golant, of HCA, wrote to Mr Charlesworth essentially repeating the offer of 14 October 2021. In the Defence to Counterclaim this is described as an open offer, but I note that five minutes after sending it Ms Golant sent a follow-up email stating that her email was “without prejudice save as to costs and still under the ambit of mediation privilege”. For the reasons I have given above, it does not seem to me to change anything even if the offer had been expressed to be open: it would still be an offer to settle a disputed claim. The analysis is therefore the same as for the 14 October offer.

Finally, following my First Judgment there were offers to pay £630,000 in return for a release of the charges over 205 and 207 Downhills Way, with the issue of interest to be addressed following the then pending appeal. The charge over 71 Hamilton Road would remain.

Again, it seems to me that these were offers of settlement, strictly partial settlement, aimed at narrowing the issues in dispute. They were not an offer of payment under the terms of the Facility Letter. That permitted LCL to hold onto all of its security until it was paid the capital and interest in full. As a consequence of the Court of Appeal Judgment and this judgment LCL in fact has had throughout had a right to charge the Default Rate, such that what was offered was not full redemption. In return for paying just the capital the Claimants were seeking something – release of the security – to which they were not entitled. In my view that was an offer to renegotiate the terms of the Facility Letter, not an offer of payment under them.

Accordingly, nothing that the Claimants did stopped interest running on the Loan. The Court of Appeal Judgment found, however, that interest at the Standard Rate stopped on the Repayment Date. Thereafter, the only interest that could run under the terms of the Facility Letter is therefore at the Default Rate, which in turn gives rise to the penalty issue.