Part 36 offer that included nothing for counterclaim “not a genuine attempt to settle”

High Court refuses to award indemnity costs despite counterclaim being dismissed

A claimant which effectively made a ‘nil’ offer in respect of a counterclaim in its successful part 36 offer did not make a genuine attempt to settle the counterclaim, the High Court has ruled.

As a result, Alexander Nissen KC, sitting as a deputy High Court judge, ruled that the claimant could not have indemnity costs in relation to the counterclaim.

Matiere SAS v ABM Precast Solutions Ltd [2025] EWHC 2030 (TCC) concerned a claim for an unpaid debt of £373,295. The defendant issued a counterclaim for nearly £19m. At trial, Judge Nissen found the claimant entitled to the full sum claimed and dismissed the counterclaim entirely.

In April 2022, two months after the defence and counterclaim were issued, the claimant made a part 36 offer to settle the claim and counterclaim for £350,000. It described the counterclaim as “unmeritorious and entirely speculative” and “bound to fail”. There was no response from the defendant.

After the ruling, the claimant sought all of the part 36.17(4) consequences of beating its offer but the defendant argued that this would be unjust because, per part 36.17(5)(e), it had not represented a genuine attempt to settle the counterclaim.

The defendant accepted that, in relation to the claim, the claimant should receive the 10% uplift and additional interest.

Judge Nissen held the wording of the offer clear such that “there can be no doubt that the offer was an attempt to settle the claim and counterclaim”. But there was nothing to suggest it made “any monetary allowance, other than nil, for the counterclaim”.

He rejected the submission that the claimant was right to be confident in its defence of the counterclaim.

“A key reason why I disagree is that Matière knew (or should be taken to have known) that the nature of its own conduct was of a type that was likely to place it in breach. The fact that, at the time of the offer, the correct legal basis of the duty had not been set out by ABM should not have played a significant part in its thinking because there was always a risk that that basis could have been improved upon.

“In any event, at the date of the offer, Matière could not have been so confident about its prospects that the counterclaim would fail that it was worth offering a nil amount in respect of it. An offer of ‘nil’ in respect of the counterclaim, if accepted, would have amounted to total capitulation.”

The offer in relation to the claim was a genuine attempt, however, and the judge said “I see no reason why the provisions of CPR 36.17(5)(e) cannot be interpreted flexibly to take account of this distinction in an appropriate case”.

He ordered the defendant to pay costs of the counterclaim and interest thereon on the standard basis, and the indemnity basis in relation to the claim.

The defendant had also cited part 36.17(5)(c) – that the information available to it at the time the offer was made, as there had been no disclosure at that point – was such that it would be unjust to impose the CPR 36.17(4) cost consequences.

Judge Nissen rejected this: “Whenever a part 36 offer is made, the offeree will not have as much information available to it as will ultimately have been available to the court at the end of the trial process. But that can rarely be a relevant reason in the sense contemplated by CPR part 36(5)(c).

“To engage that provision, one would expect the offeree to show why the information unavailable to it mattered to its decision not to accept the offer at the time it was made.”

ABM’s submission failed for three reasons, he explained. “Firstly, it was surely for ABM to determine the robustness, or otherwise, of its own counterclaim… Secondly, shortly before trial, but long after the disclosure which it lacked at the time of the part 36 offer, ABM offered to accept £5m in respect of its counterclaim. It is, therefore, fanciful to suggest it might have accepted the ‘nil’ offer made in April 2022 if it had had access to more information at an earlier stage…

“Thirdly, at the time of the part 36 offer, ABM already had sufficient information of its own to enable it to consider whether to accept a ‘nil’ offer in respect of the counterclaim.”

Jonathan Lewis KC and Caroline Ziebart (instructed by Wallace) for the claimant. Marc Lixenberg (instructed by Barton Legal) for the defendant.