Part 36 and purported acceptance post judgment.
The case Wells v Hornshaw & Ors [2024] EWHC 2019 (Ch) (31 July 2024) (bailii.org) concerned alleged unfair prejudice under Section 994 of the Companies Act 2006.
The parties had a shareholder’s agreement which included a mechanism for agreeing the Petitioner’s shares on his exit. The agreed valuation carried out on his exit in 2016 valued his shares at £550,00.00. The Petitioner was unhappy with that figure and commenced proceedings claiming he was not bound by the valuation. The Respondents’ Counterclaim sought to hold the Petitioner to the original 2016 valuation.
The court had given directions on 17 August 2021 which envisaged a trial of the allegations made in the Petition and the Respondents’ Counterclaim and possibly a further trial to ascertain the price to be paid for the Petitioner’s shareholding.
The Respondents made a Part 36 offer relating to the price to be paid for the shareholding on 4 August 2023, 6 weeks before the trial of the allegations to take place in September and October 2023. It was held at trial that the Petitioner was bound by the agreed valuation. The Petitioner purported to accept the offer of 4 August 2023 on 22 April 2024.
The Petitioner sought to persuade the Court that the Part 36 offer remained open to acceptance and that he should receive the sum offered and costs of the proceedings up to the end of the relevant period, on the basis that the directions order of 17 August 2021 contemplated the matter being resolved by way of a split trial and that there were ongoing matters, including the valuation of his shares, and that the case had not been decided. The Petitioner contended that the Respondents’ failure to withdraw the Part 36 offer within 7 days of judgment meant that it remained open for acceptance pursuant to CPR 36.12(3).
CPR 36.12 states as follows:
- This rule applies in any case where there has been a trial, but the case has not been decided within the meaning of rule 36.3.
- Any Part 36 offer which relates only to parts of the claim or issues that have already been decided can no longer be accepted.
- Subject to paragraph (2) and unless the parties agree, any other Part 36 offer cannot be accepted earlier
The Court held that this was not a split-trial case, and that the case had been “decided” in accordance with CPR 36.3(e) and there would not need be a further trial. The Part 36 offer was not open for acceptance at the time the Petitioner had sought to accept it.
Bob Hanlon, Costs Lawyer
03.10.2024