1) Tim Alexander Gunther Nikolaus Hertel (2) Atremis International Sarl v (1) John Francis Saunders (2) Liquid Strategies Ltd Ltd (2015)

9th October 2015


Edward Cohen

(1) Tim Alexander Gunther Nikolaus Hertel (2) Atremis International Sarl v (1) John Francis Saunders (2) Liquid Strategies Ltd Ltd (2015)


[2015] EWHC 2848 (Ch)
Ch D 09/10/2015
COSTS : PART 36 OFFERS : OFFER RELATING TO ADDITIONAL CLAIM IN DRAFT AMENDED PARTICULARS OF CLAIM : WHETHER PART 36 OFFER : CIVIL PROCEDURE RULES 1998 r.36.2(2)(d), r.17.1(2), r.36.2, r.38.6, r.44.2, Pt 36 r.36.2(2)(c), r.17.3, Pt 36 r.36.11(3), Pt 17 r.17.1(2), Pt 36 r.36.2(2), Pt 36 r.36.10(1), Pt 38, Pt 36 r.36.2(2)(d), Pt 36, Pt 36 r.36.3(2), Pt 17 r.17.1(3), Pt 36 r.36.10(2), s.1, Pt 44, r.36.10


An offer made by the defendants was not a Part 36 offer despite being expressed as such. The offer was expressed to relate to an additional claim which the claimants had set out in draft amended particulars of claim; that claim was not yet "part" of the claim for the purposes of CPR r.36.2(2)(d).


The defendants (D1 and D2) appealed against orders for costs whereby they were required to pay all of the costs of the claimants (C1 and C2) (save for the costs of an amendment) up to 10 March 2015 together with the claimants' costs of a hearing on 30 March 2015, at which the issue as to costs had been argued.

C2 was a company wholly owned by C1. D2 was a company wholly owned by D1. The particulars of claim referred to a number of projects with which the parties were involved. The claimants' primary case was that in relation to such projects there was a partnership between C1 and D1. It was pleaded that D2 was to be used by D1 as "the corporate vehicle" for the purpose of the projects and that C1's entitlement to remuneration would be satisfied by payments made to C2. The claimants' alternative case was that there was a joint venture agreement between C1 and C2; it was pleaded that all payments made to D2 by third parties in relation to the projects were held by it on trust for itself, C1 and C2 so that it had a duty as trustee to account to C1 and C2. A case management conference took place in July 2014. The claimants having indicated that they wished to serve amended particulars of claim, the master ordered as follows: they were to serve a copy of their proposed amendments by 25 July 2014; the defendants were to tell them by 1 August whether they accepted the amendments; if they did not accept them, the claimants should seek permission to amend. The claimants served draft amended particulars of claim, adding the following claim: there had been an agreement between C2 and D2 under which the two companies were to collaborate and whereby D2 was to account to C2 for certain expenses and a share of remuneration received by D2 from others and which would allow C2 to invoice D2 for consultancy services provided by C1. In a letter dated 30 July 2014, the defendants' solicitors stated that they saw "no value in opposing the Amendment" and that they had "no issue with you moving your Amendment in front of the Court on the next occasion". On 17 February 2015, the defendants' solicitors sent the claimants' solicitors a letter which was headed "PART 36 OFFER". It began as follows: "We write on behalf of our clients to make an offer in settlement of your client's proposed claim, by amendment, for an account based on an agreement". The offer was accepted. At a hearing on 30 March 2015, the deputy master made the impugned orders for costs.

The defendants argued that the deputy master should not have made the usual order for costs which followed the making of a Part 36 offer, as their solicitors' letter of 17 February 2015 was not in fact such an offer: among other things, it did not conform to CPR r.36.2(2)(d), which required it to "state whether it relate[d] to the whole of the claim or to part of it or to an issue that ar[ose] in it".

HELD: (1) The offer letter stated that it related to the proposed claim by amendment for an account based on an agreement. That claim was plainly not "the whole of the claim" within r.36.2(2)(d). The question was whether that claim was part of the claim or an issue which arose in it. The defendants had accepted that if, on or before 17 February 2015, the particulars of claim had been effectively amended to include the additional claim, that claim would be "part" of the claim within r.36.2(2)(d). In that respect, it was necessary to consider the effect of the defendants' solicitors' letter of 30 July 2014 and whether "written consent" had been given to the amendment for the purposes of r.17.1(2). The answer was no. The overall sense of the letter was that the defendants were not consenting at that point; instead, they intended that there would only be permission to amend when the court granted it on a future occasion, at which time they would raise "no issue". That reading of the letter was supported by the fact that it did not say anything about the costs of and occasioned by the amendment. In the circumstances, the offer did not comply with the mandatory requirements of r.36.2(2)(d); it followed that it was not a Part 36 offer (see paras 37-40, 42 of judgment). (2) D1 was a successful party and the claimants should pay him the costs of the claim against him. As to D2, the claimants' original claim against it had failed. They should therefore pay D2's costs subject to one qualification: the defendants would be held to their agreement, made in the offer letter of 17 February 2015, to pay the claimants' costs relating to the part of the claim which they had indicated an intention to plead by amendment (paras 55-58, 60-61).

Appeal allowed

For the appellants: Charles Samek QC
For the respondents: Edward Cohen

For the appellants: Blake Morgan LLP
For the respondents: Thompson & Lilley


LTL 15/10/2015 5 Costs LR825

Click here to access case analysis on Westlaw UK

Back to Cases