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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Henderson & Jones Ltd v Salica Investments Ltd & Ors [2025] EWHC 838 (Comm) (07 April 2025) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2025/838.html Cite as: [2025] EWHC 838 (Comm) |
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KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
HENDERSON & JONES LIMITED |
Claimant |
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- and - |
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(1) SALICA INVESTMENTS LIMITED (2) DIGITAL HOME VISITS LIMITED (3) DIGITAL HOME VISITS TECHNOLOGIES LIMITED (4) DOMINIC ANTHONY CHARLES PERKS |
Defendant |
____________________
Edward Brown KC and Alexia Knight (instructed by Foot Anstey LLP) for the First and Fourth Defendants
The Second Defendant is in liquidation and was not represented
The Third Defendant is in administration and was not represented
Hearing date: 04 April 2025
____________________
Crown Copyright ©
Mr Justice Calver :
INTRODUCTION
a. Issue 1 – Interest on the judgment sum;
b. Issue 2 – The validity of the Claimant's Part 36 offer as set out in a letter dated 31 October 2023, and if it is valid, whether that offer has been beaten;
c. Issue 3 – Whether, in light of my conclusion on the validity of the Part 36 offer, the Defendants should be required to pay the Claimant an additional amount of £75,000 pursuant to CPR r. 36(17(4)(d);
d. Issue 4 – Whether the Claimant should be awarded indemnity costs, either on the basis of having beaten their Part 36 offer or by reason of the Defendants' conduct and this Court's findings in the case;
e. Issue 5 – The sum to be awarded to the Claimant on account of costs;
f. Issue 6 – The interest rate on costs to be paid up to the date of the Claimant's Part 36 offer; and
g. Issue 7 – In light of my conclusion on the validity of the Part 36 offer, what interest rate should apply to costs to be paid as a Part 36 consequence.
Issue 1 – Interest on the judgment sum
17. The guidance to be derived from these cases includes the following:
(1) Interest is awarded to compensate claimants for being kept out of money which ought to have been paid to them rather than as compensation for damage done or to deprive defendants of profit they may have made from the use of the money.
(2) This is a question to be approached broadly. The court will consider the position of persons with the claimants' general attributes, but will not have regard to claimants' particular attributes or any special position in which they may have been.
(3) In relation to commercial claimants the general presumption will be that they would have borrowed less and so the court will have regard to the rate at which persons with the general attributes of the claimant could have borrowed. This is likely to be a percentage over base rate and may be higher for small businesses than for first class borrowers.
(4) In relation to personal injury claimants the general presumption will be that the appropriate rate of interest is the investment rate.
(5) Many claimants will not fall clearly into a category of those who would have borrowed or those who would have put money on deposit and a fair rate for them may often fall somewhere between those two rates.
"(2) … the Court adopts a broad brush. For practical reasons it will not make an enquiry into the claimant's actual loss; nor will it enquire or speculate as to what the claimant would have done with the money had he not been deprived of it. The Court almost invariably adopts as its measure what it would have cost a person in broadly the same position as the claimant to borrow the money of which he was deprived. Thus, to quote Steyn J in Banque Keyser Ullman again, the aim is to establish the rate(s) at which "a person in the position of the claimant would have had to pay to borrow the money" over the period for which interest is awarded…
…
(6) Moreover, there is also a consistent line of authority supporting rates above the Commercial Court rate where the claimant is a small business or (as in this case) a group of individuals. Thus:
(a) In Jaura v Ahmed [2002] EWCA Civ 210, the "real costs of borrowing incurred by…small businessmen" were fixed at 3% over base, Rix LJ observing (at paragraph 26) that "The law should be prepared to recognise, as I suspect evidence might well reveal, that the borrowing costs generally incurred by them are well removed from the conventional rate of 1% above base (and sometimes even less) available to first class borrowers".
"The relevant principles are not contentious. The rate of interest is at the discretion of the court.
Secondly the purpose of an award of interest is fairly to compensate the recipient for being deprived of money that he should have received. Thirdly a "broad brush" approach is taken to determine what rate of interest is just and appropriate. As Andrew Smith J put it in Fiona Trust and Holding Corporation and Others v Yuri Privalov and Others [2011] EWHC 664 (Com) at para. 16:
"… it would neither be practical nor proportionate (even in a case involving as large sums as these) to attempt a minute assessment of what will precisely compensate the recipient. In particular, the courts do not have regard to the rate at which a particular recipient of compensation might have borrowed funds. This policy is adopted in order to control the extent of the enquiry to ascertain an appropriate rate: see Banque Keyser … the court will, however, consider the general characteristics of the recipient in order to decide whether to assess interest at a rate that is higher or lower than is conventional. So, for example, in Jaura v Ahmed [2002] EWCA Civ 2010, Rix LJ awarded interest at the base rate plus 3% to reflect that "small businessmen" had been kept out of their money and in recognition of the "real cost of borrowing incurred by such a class of businessmen". Thus, the court will examine what has been called "a question of categorisation of the plaintiff in an objective sense" (see the Banque case Allman case) … recognise relevant characteristics of the party who was awarded interest and reflect them when determining the fair and appropriate rate. …"
Issue 2(a): Was the Claimant's offer of 31 October 2023 Part 36 compliant?
19. Paragraph 2.1 of the Letter provides that 'If the Defendant accepts this Part 36 Offer after the end of the Relevant Period, they will be liable for the Claimant's Costs….'.[1] However, no definition of 'Relevant Period' is set out in the Letter. On this basis, the Defendants argue that the Part 36 offer is defective for failing to satisfy the requirement under r. 36(5)(1)(c). It is said that without having been appropriately defined, the 'Relevant Period' could very well have been any period of time, and there is no assumption that it would be 21 days (or indeed any other period). To find that the Part 36 offer is valid in such circumstances would be liable to cause substantial uncertainty in other cases.
"This Offer is made pursuant to Part 36 of the Civil Procedure Rules and is intended to be a defendant's Part 36 offer. Therefore, our clients will be liable for your client's costs in accordance with CPR 36.13, if the offer is accepted within 21 days (the "Relevant Period").
… If you consider this offer to be in any way defective or non-compliant with Part 36, please let us know by return."
"We write further to your WPSATC letter of 03 May 2023, together with the Part 36 Offer of the same date. For the avoidance of doubt, that Part 36 Offer of £2 is rejected. In response, pursuant to CPR Part 36, we set out below an offer by the Claimant to settle the whole of the claim against the Defendants…
The below Part 36 Offer will remain open for acceptance for a period of 21 days (the "Relevant Period") and thereafter, until and unless we formally write to you withdrawing this offer. Please note that if this Part 36 Offer is accepted then the Defendants will be liable for the Claimant's costs in accordance with CPR 36.13.
"We write further to the recent WPSATC correspondence between our clients. We understand that our client recently communicated a WPSATC offer to settle the claim to your clients. We are now instructed to (essentially) repeat that offer under the terms of Part 36 CPR so as to afford our client the protections and potential benefits of CPR 36 (and in particular, CPR 36.17).
…
This settlement is inclusive of interest up until the expiry of the Relevant Period.
Thereafter, interest is claimed at 35% per annum above the Bank of England Base rate and will accrue on a daily basis. Such interest is claimed pursuant to the amendment to CPR r.36.5(5) introduced by the Civil Procedure (Amendment) Rules 2021 and in accordance with the Court of Appeal's decision in Calonne Construction Ltd v Dawnus Southern Ltd [2019] EWCA Civ 75.
…
If the Defendants accept this Part 36 Offer after the end of the Relevant Period, they will be liable for the Claimant's costs (including any costs incurred after expiry of the Relevant Period) as well as interest accrued from the end of the Relevant Period at the rate of 35% above the Bank of England base rate."
14. In addition, Rix LJ relied on the rule of construction (traditionally expressed by the Latin maxim verba ita sunt intelligenda ut res magis valeat quam pereat) that the court should prefer a construction that allows an instrument to be effective over one which would render it void, ineffective or meaningless. The judge concluded that both
constructions of the offer letter were feasible and reasonable, but favoured the construction that was consistent with the clear intention to make a Part 36 offer and which ensured that such offer was effective rather than ineffective.
15. In his own judgment, Rimer LJ powerfully explained why it is of no utility to consider the meaning of the critical passage in isolation from the context in which it was made. As Lord Hoffmann cautioned in Charter Reinsurance Co Ltd v Fagan [1997] AC 313, at 392A:
"It is artificial to start with an acontextual preconception about the meaning of words used and then see whether that meaning is somehow displaced."
16. That is, of course, because as Lord Hoffmann subsequently explained in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, at page 913:
"The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter for dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to
mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax…"
17. In C v D, Stanley Burnton LJ added simply, at [84]:
"Any ambiguity in an offer purporting to be a Part 36 offer should be construed so far as reasonably possible as complying with Part 36. Once it is accepted that a time-limited offer does not comply with Part 36, one must approach the interpretation of the offer in this case on the basis that the party making the offer, and the party receiving it, appreciated that fact."
18. Lewison LJ pithily summarised the resulting principle as "validate if possible" in the subsequent case of Dutton v Minards [2015] EWCA Civ 984…
It follows from my answer to the first issue that there is a necessary inconsistency between an offer being both time-limited and a Part 36 offer. An offer may be one or the other, it cannot be both. That is the objective context in which the offer in this case was made by the claimant's solicitors to the defendant's solicitors. Both the writer and the reader of that offer must be taken, objectively, to know the legal context. Of course, mistakes occur and must be allowed for. However, the question is how a reasonable solicitor would have understood the offer in that context, including the known context of the dispute as it stood at that time: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998]1WLR 896.
Issue 2(b):Was the Part 36 Offer beaten?
a. Interest on the judgment sum at up to 10% above base rate;
b. Costs on the indemnity basis;
c. Interest on those costs at up to 10% above base rate; and
d. An additional amount not exceeding £75,000.
Issue 5 – Payment on account of costs?
Issue 8 – Permission to appeal
Costs of hearing of consequential matters
Note 1 Other references to the ‘Relevant Period’ are also made throughout the Letter. [Back] Note 2 Mr. Sims KC pointed out that, consistently with this, the relevant period referred to in the case of Calonne Construction Ltd v Dawnus Southern Ltd [2019] EWCA Civ 75 was 21 days. [Back]