DID A CLAIMANT DO BETTER THAN ITS OWN PART 36 OFFER? THE SECOND PART OF THE ESSEX CASE

Continuing with the issues about Part 36 in  Essex County Council v UBB Waste (Essex) Ltd (No. 3) [2020] EWHC 2387 (TCC) looked at in the earlier post. The judge went on to consider whether the claimant had, in fact, done better than its own Part 36 offer.

 

“… the court must first consider the question of whether it has obtained a judgment that is “at least as advantageous” as its Part 36 offer: r.36.17(1)(b). In money claims, and following the introduction of what is now r.36.17(2), this causes no difficulty. The assessment of the relative values of offers and judgments in non-monetary cases is, of course, more subjective. There may be, as in this case, a mismatch between the precise non-monetary terms of the offer and the judgment, but that cannot of itself be fatal. The threshold question is not whether the judgment was at least as advantageous as the offer in each and every respect, but rather whether the overall terms of the judgment are at least as advantageous as the offer. While subjective, this requires a value judgment that the trial judge will usually be in a good position to make.”

THE CASE

The judge had found that an offer made by the claimant was a valid Part 36 offer.  The judgement goes on to consider whether the offer made was more advantageous than the judgment obtained.  The offer had been made in terms of declarations sought.  The offer was not accepted and the claimant went on to obtain judgment for £8 million in addition to certain (but not all) of the declarations sought.

THE JUDGMENT ON THIS ISSUE

4. WAS THE JUDGMENT AT LEAST AS ADVANTAGEOUS AS THE OFFER?
    1. Before the Authority can access the benefits under the Part 36 regime, the court must first consider the question of whether it has obtained a judgment that is “at least as advantageous” as its Part 36 offer: r.36.17(1)(b). In money claims, and following the introduction of what is now r.36.17(2), this causes no difficulty. The assessment of the relative values of offers and judgments in non-monetary cases is, of course, more subjective. There may be, as in this case, a mismatch between the precise non-monetary terms of the offer and the judgment, but that cannot of itself be fatal. The threshold question is not whether the judgment was at least as advantageous as the offer in each and every respect, but rather whether the overall terms of the judgment are at least as advantageous as the offer. While subjective, this requires a value judgment that the trial judge will usually be in a good position to make.
    2. Here, the offer did not seek any monetary award, but proposed the following declarations in settlement:
“(i) The Defendant has failed, in breach of contract, to achieve Service Commencement by the Acceptance Longstop Date under the Contract.
(ii) The Defendant’s design for the Facility once executed was at all material times incapable of passing the contractual Acceptance Tests, and has not passed the contractual Acceptance Tests as at the date of the Defendant’s acceptance of this Offer.
(iii) The Defendant is not entitled to operate the modifications made to the Facility for the production of QSRF.
(iv) The Authority is entitled to terminate the Contract under clause 67.
(v) The composition tests carried out by UBB between Q1 2016 and Q3 2018 were not valid Composition Tests as defined by the Contract, and the results of such tests are of no contractual effect and did not engage Clause 21.9A.2 of the Contract.
(vi) The Composition Test results are to be determined during the Commissioning Period on a rolling annual average basis using the average results from the four most recent Composition Tests (or, where there are less than four Composition Tests, the average of the available Composition Tests).
(vii) The requirements for an Impact and Remedy Report (Clause 21.9A.2 of the Contract) is only engaged if the results of the four most recent Composition Tests (or where there are less than four Composition Tests, the average of the available Composition Tests) confirm, on a rolling annual average basis, that the composition of the input Contract Waste does not fall within Composition Band A.”
    1. Plainly the Authority did better in monetary terms in that it has obtained a net judgment, after setting off UBB’s modest success on its counterclaim, worth over £8 million at the time of the offer. Further, a number of the proposed settlement terms can be directly equated to the declaratory relief achieved by the Authority after trial:
41.1 Paragraphs (i) and (iii) of the offer were in the same terms as the declarations granted at paragraph 391 of my principal judgment.
41.2 The declaration obtained, at paragraph 423 of my judgment, that the Authority was entitled to terminate the contract as at 13 June 2019 by giving notice pursuant to clause 67 equates to the proposal at paragraph (iv) of the offer. The possibility that such right of termination might thereafter be lost is not in point since it applies equally to the proposed offer and the declaration actually obtained.
    1. I did not grant declarations in the terms proposed by paragraphs (ii), (vi) and (vii) of the offer, but I plainly made findings to such effect:
42.1 As to (ii), see paragraphs 169-211 and 392 of my judgment.
42.2 As to (vi), see paragraphs 328-334.
42.3 As to (vii), see paragraph 334.3.
    1. The Authority did not obtain a declaration that corresponds to paragraph (v) of its offer. Indeed, I found that it was not necessary to determine the merits of the Authority’s challenge to the composition tests because, upon my construction of the contract and other findings, nothing turned on the validity of the tests: see paragraphs 354-364 & 428.
    2. Weighing the failure to obtain a declaration that had no bearing upon the outcome of this litigation against the additional benefit not sought in the offer of a judgment worth over £8 million at the time of the offer, I have no hesitation in concluding that the Authority obtained a judgment that was at least as advantageous as its Part 36 offer.
5. THE ORDER UNDER PART 36
    1. If the offer was a valid Part 36 offer, UBB rightly does not argue that it would be unjust to make the usual orders under r.36.17(4). Accordingly, the Authority is entitled to:
45.1 r.36.17(4)(a): interest on the judgment sum at a rate not exceeding 10% above the Bank of England base rate from 29 March 2019;
45.2 r.36.17(4)(b): costs on the indemnity basis from such date;
45.3 r.36.17(4)(c): interest on the costs awarded under r.36.17(4)(b) at a rate not exceeding 10% over base; and
45.4 r.36.17(4)(d): the additional amount of £75,000.