Court of Appeal upholds validity of a Part 36 Offer which referred to an unpleaded counterclaim and post ‘Relevant Period’ interest

CALONNE CONSTRUCTION LTD v DAWNUS SOUTHERN LTD [2019] EWCA CIV 754

The Court of Appeal has dismissed a challenge to the validity of a Part 36 Offer on grounds that i) it was made in respect of both a claim and a proposed counterclaim which had yet to be pleaded and ii) it contained provision for interest to accrue at a particular rate after the expiry of the “Relevant Period”. Lady Justice Asplin distinguished Hertel & Anr v Saunders [2018] EWCA Civ 1831 and concluded that:

“It cannot be correct that the defendant must go to the expense of pleading the counterclaim and if necessary, obtaining permission in relation to it, or alternatively, issuing separate proceedings in order to be able to make a Part 36 offer in relation to it or which takes the counterclaim into account. Such a consequence would be contrary to the policy behind both Part 20 and Part 36 itself.”

and…

“there is nothing in Part 36 and in CPR 36.5 in particular, which precludes the inclusion of terms as to interest in a Part 36 offer which are intended to apply after the Relevant Period has expired.”

CALONNE CONSTRUCTION LTD v DAWNUS SOUTHERN LTD [2019] EWCA CIV 754