Another claimant has been denied the Part 36 benefits of beating their own offer after the court decided it was not a legitimate attempt to settle.

Stephen Houseman KC, sitting as a judge of the High Court in Yieldpoint Stable Value Fund, LP v Kimura Commodity Trade Finance Fund Ltd, said the offer to settle had amounted to a ‘pay up now, accept that you are wrong’ ultimatum rather than a meaningful effort to settle.

The judge stressed that his ruling should not be taken as any kind of discouragement to claimants making Part 36 offers, added that his decision was, if anything, an ‘encouragement to make offers at a level not so perilously close to the full value of the claim in a case of such adversarial intensity’.

The decision follows a case reported earlier this month from Birmingham County Court where a claimant who beat her own Part 36 offer by 7p should be penalised for what the district judge called a ‘tactical step’.

In Yieldpoint, the court heard that the claimant had succeeded at trial in its claim for repayment of $5m (£3.9m) plus interest. Its costs had come to around £410,000 and it invoked Part 36 on the basis that the judgment was more favourable than the offer that had been made.

Yieldpoint had offered to settle for $4.95m, which represented 99% of the principal claim (which dropped to 96% after interest was taken into account).

Houseman said he was concerned whether the Part 36 offer was a genuine attempt to settle the claim given the starkly binary nature of this dispute and its ‘far from obvious’ outcome at the time. Witness statements were not exchanged until two months after the offer and the trial judgment reflected this was a case ‘up for grabs to the end’.

The judge said: ‘This was not a case where a very high claimant offer reflected a very strong prospect of the claimant succeeding at trial. The parties were diametrically and evangelically opposed in terms of their characterisation - and, I sensed, subjective understanding - of the deal they had concluded. A discount of 1% is meaningless in such context.’

He concluded that the Part 36 offer was not genuine, although he noted this did not reflect any impropriety or cynical manipulation by the claimant or its lawyers.

Houseman added: '[The claimant] took a legal risk of [the defendant] Kimura accepting the Part 36 offer, but did not thereby create a meaningful chance of settling the dispute ahead of trial. Cleansed of hindsight, Kimura was never likely to accept the Part 36 offer.’

 

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