PT-2022-BRS-000087 - [2025] EWHC 2609 (Ch)

It must be borne in mind that the Part 36 regime is not a contractual one, albeit that it has similarities. No doubt that is what Newey LJ was referring to in the dicta in Adams set out above.

The only issues raised by Vivian at the time of receipt of the offer (which contained the usual requirement that the recipient should identify any deficiencies in the offer as a Part 36 Offer) were in a letter from Coodes dated 08 March 2024. They suggested that Luke’s Part 36 offer was not a viable offer, and thus may not be a genuine offer, because (i) the offered land did not directly conjoin Vivian’s existing land and it was suggested that the fields did not have their own access and (ii) it was asserted that the land was expressly offered without connection to a water supply. As Ms John pointed out, these complaints are unfounded:

As to the latterly raised objections in Mr McKean’s written and oral submissions, I find that the submissions relating to the whether or not the Will would be admitted to probate and/or it was the claim or counterclaim that was successful and/or that the third tractor was unaccounted for to be pedantic in their nature. Clearly these are the sort of technical details that could have been sorted out had the Part 36 Offer been accepted. In fact, the third tractor would, by implication, have remained with Luke in any event as part of the residue.

The submission that the offer was not Part 36 compliant because Luke did not own the land in question, it being vested in the executors, is almost contrived: clearly the executors would abide by any agreement the parties had come to, within reason. Similarly, the bank: the net value of the estate even three months after the offer had been made was approximately £487,599, net of the Barclays loan. It is inconceivable that the bank would not have accommodated a settlement that provided for the repayment of the loan or at least left them with sufficient equity to give them comfort, safe in the knowledge that the estate could finally be administered.

This is even less attractive as an argument. The relevant law was set out by Joanna Smith J at paragraph 19 of Leonard. I do not set it out here because the argument does not warrant it, but I bear that passage in mind.

As Ms John calculated, the offer represented 14.6% of the estate at November 2023 values, and the authorities she cited at paragraph 18 of her skeleton argument (Leonard itselfand Grierson v Grierson [2024] EWHC 3048 (Ch)) indicate that much lower percentages will suffice. The offer was made post-mediation and the acceptance period extended well beyond the exchange of witness statements on 25 January 2024 i.e. to 5 February 2024. There is no question that Vivian was not in a position to assess it when it was made. The offer was certainly a genuine attempt to settle in my judgment.

Accordingly, I find that Luke’s Part 36 Offer made on 15 January 2024 was valid and, since Luke has obviously beaten it, the consequences set out in Part 36.17 must be considered. Luke will be entitled to the costs consequences set out in CPR 36.17(4) subject only to the defendants satisfying the court that it would be "unjust" to make such an order.

In considering whether it would be unjust to make an order under CPR 36.17(4), the court must take into account:

Mr McKean in his skeleton argument relied on all his arguments in relation to the Part 36 Offer to submit that it would be unjust to visit the full Part 36.17(5) consequences on Vivian. He thus appears to rely solely on paragraph (e) of subsection (5) of the Rule. In is oral submissions he expanded that position to include, not only the “doubts” about the Part 36 Offer itself but all the conduct points he made in the costs and consequentials hearing. He submitted that 10% would be “way too punitive”, although he did accept that Coodes had not raised the issues that he had raised at this hearing, but emphasised that they had claimed that the offer was incapable of being accepted, albeit for different reasons.

Ms John submitted that Luke had beaten the Part 36 Offer by a long way, with 100% success in the proceedings. There were conduct issues against Vivian, too: in particular, the failure to disclose those matters relating to Burhos and his persistence in pursuing the testamentary incapacity claim to the bitter end despite its obvious flaws, including the way the personality disorder was raised and how Dr Series had been either misled or under-instructed by failing to provide all of the relevant witness statements to him.

Dealing with the 36.17(5) considerations in turn:

Taking these matters into account, I do consider that there needs to be some adjustment to the paragraph 4 provisions to prevent an unjust result, principally because it would be unjust to charge interest on all costs at the full rate for the entire period of the litigation when the offer was made three months before trial. On the other hand, ‘all circumstances of the case’ includes the conduct in relation to the personality disorder issue. I therefore reduce the figure in sub-paragraph (c) to 5%. The balance of the sub-paragraph shall apply in full.