HT-2022-000255 - [2025] EWHC 2030 (TCC)

CPR 36.17(1) applies because the judgment against ABM is at least as advantageous to Matière as it offered to accept. Accordingly, rule 36.17 is engaged.

CPR 36.17(4) is in the following terms:

“(4)

Subject to paragraph (7), where paragraph (1)(b) applies, the court must, unless it considers it unjust to do so, order that the claimant is entitled to -

(a)

interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;

(b)

costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;

(c)

interest on those costs at a rate not exceeding 10% above base rate; and

(d)

provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—

(i)

the sum awarded to the claimant by the court; or

(ii)

where there is no monetary award, the sum awarded to the claimant by the court in respect of costs:

…

Amount awarded by the court Prescribed percentage

Up to £500,000 10% of the amount awarded”

CPR 36.17(5) is in the following terms:

“(5)

In considering whether it would be unjust to make the orders referred to in paragraphs (3) and (4), the court must take into account all the circumstances of the case including:

On behalf of Matière, Mr Lewis KC, who appears with Ms Ziebart, submits that Matière is entitled to all the beneficial consequences flowing from Rule 36.17 from the expiry of the relevant period, that being 25 April 2022. On his case, this includes an entitlement to indemnity costs in respect of the counterclaim from the expiry of the relevant period. That contention was the most significant issue between the parties at the hearing given that the trial process was almost exclusively concerned with the counterclaim and Matière’s actual costs exceeded its cost budget by a significant amount (c. £700k).

In essence, Matière’s submissions were as follows. Part 36 is a self-contained code. Following CPR 35.17(4), I must order the relief set out in Part 36 unless it would be unjust to do so. The burden is on ABM to demonstrate injustice which is a “formidable obstacle”. In anticipation of the points being argued by ABM, it contended that the Court’s findings of fact against Matière in respect of breach of duty of good faith were not sufficient to make a different order. In addition, not all of ABM’s allegations of breach were upheld and ABM was, itself, open to criticism. The full consequences of CPR 36.17(4) should be applied both to claim and counterclaim. The offer was a genuine attempt to settle the entire proceedings. ABM had sufficient information to accept the Part 36 Offer.

On behalf of ABM, Mr Lixenberg’s principal contention was that, on a proper construction of the Part 36 Offer, it was not a genuine attempt to settle the proceedings, which is a factor which the Court should take into account: see CPR 36.17(5)(e). The overwhelming majority of the costs were incurred in relation to the counterclaim which was distinct in character from the claim. Matière’s offer was to settle the whole proceedings including the counterclaim but was not, in that latter respect, a genuine one. As part of that submission, Mr Lixenberg emphasised that the Part 36 Offer described the counterclaim as “unmeritorious and entirely speculative” and “bound to fail”. ABM accepted that a sufficient concession on the value of the claim was made by Matière such that the Part 36 Offer amounted to a genuine offer to settle the claim, and, for that reason, that the 10% uplift on the sum recovered and additional interest should be awarded to Matière.

By way of further submission, ABM contended that the information available to ABM at the time when the offer was made was such that it would be unjust to visit the cost consequences of CPR 36.17(4) on ABM.

ABM also submitted that, in accordance with the principles set out in CPR 44.2, ABM should only be ordered to pay a proportion of Matière’s costs. Reliance is placed on CPR 44.2(4)(a) and (5), given the Court’s findings as to the extent and severity of Matière’s breaches of duty. It is also said that the Court should take account of ABM’s success on substantial parts of its case, namely in respect of the contractual issue of scope of duty and on breaches, where Matière failed. Mr Lixenberg contends that the Court should reduce Matière’s costs by 70% to take account of these matters.