A claimant’s offer to accept a sum which was just 0.3% less than the amount of the total claim constituted “a genuine attempt to settle the proceedings” under CPR Part 36 where there was no substantive defence to the claim: Rawbank S.A. v Travelex Banknotes Ltd [2020] EWHC 1619 (Ch).

Where a claimant obtains a judgment that is at least as advantageous as the proposals contained in its Part 36 offer, the court must (unless it is unjust to do so) award it the costs consequences set out in CPR 36.17(4), namely: an order for indemnity costs; enhanced interest on the judgment and costs; and an additional amount of up to £75,000 calculated as a percentage of the judgment sum. CPR 36.17(5) sets out a non-exhaustive list of factors that the court must consider in deciding whether this would be “unjust”, including whether the offer was a “genuine attempt to settle the proceedings”.

Previous case law established that a claimant cannot obtain the (considerable) benefits of Part 36 by demanding the defendant’s total capitulation; there has to be some genuine element of concession (see AB v CD [2011] EWHC 602 (Ch), considered here). The reference to a “genuine offer to settle” was added to CPR 36.17(5) in April 2015 in order to reflect that principle. However, in cases both before and after this amendment was made, the courts have upheld very high claimants’ offers, for as much as 95% of the claim (see for example this post).

The present decision is clearly an extreme example, with the court finding that an offer of 99.7% was valid under Part 36. Each case will of course turn on its facts and it should not be assumed that such a high percentage offer will be effective in all cases. However, the decision suggests that such an offer may be found valid where the defendant has no real defence and is simply seeking to delay the entry of judgment against it.


In mid-March 2020 the claimant bank, which was based in the Democratic Republic of Congo, placed orders with the defendant to obtain supplies of  $60 million in banknotes. The purchase price was transferred to the defendant electronically on 19 March.

Delivery was scheduled to take place on 23 March, but the defendant failed to deliver the banknotes due to the effect of international travel restrictions put in place as a result of the Covid-19 pandemic.

By early April, the banknotes had still not been delivered and the claimant was facing the real possibility of a run on the bank. Discussions took place in which the defendant made clear that it would not be delivering the banknotes or making a refund in the near future, because it was in serious financial difficulty and in need of a restructuring, which it hoped would be completed by the end of May.

The claimant applied for a freezing order. The application was heard in early May. At that hearing, the defendant accepted that there was a claim for breach of contract and did not identify any defence. Birss J declined to grant an injunction but noted in his judgment that “the truth is, there is no defence”.

On 4 May 2020 the claimant brought proceedings for breach of contract and/or misrepresentation. On the same date, its solicitors wrote to the defendant’s solicitors making an offer under CPR Part 36 to settle the proceedings on terms that the defendant pay £48,290,000 within 14 days of accepting the offer. The offer was inclusive of interest until the end of the 21 day “relevant period” for the purposes of Part 36, namely 25 May 2020.

On 18 May the claimant issued an application for summary judgment. The defendant filed an acknowledge of service later that month, in which it indicated an intention to defend the claim, but it never served a defence.

On 15 June the defendant agreed to judgment being entered against it in respect of the contractual claim and accepted that it should pay the claimant’s costs of the action and the summary judgment application. However, it argued that the costs consequences set out in CPR 36.17(4) should not apply on the grounds that the offer was not a genuine offer to settle.


The High Court (Zacaroli J) found that the offer was a genuine offer to settle, but that since the defendant was unable to pay the amount of the Part 36 offer due to its insolvency, it was unjust to make some of the orders identified in Rule 36.17(4).

The judge noted that the offer of £48,290,00 was only 0.3% less than the judgment sum of £48,448,059 (adjusted for exchange rates and to include interest up to 25 May). Nonetheless he found that it was a genuine offer to settle. The defendant’s position was that it was a tactical move designed solely to engage the enhanced payments in CPR 36.17(4). The judge disagreed, saying that the critical question is not a mathematical one – the proportion of the discount – but whether it is possible to infer from the size of the discount that there is no genuine attempt to settle the proceedings.

The judge looked at the circumstances of the case when considering that question. He took particular note of the fact that: (i) there was no issue as to the quantum of the claim so there were only two possible outcomes, namely total success or complete failure; and (ii) there was no defence to the claim. Therefore, from the claimant’s perspective, there was no realistic possibility of failure and hence by offering to accept a discount of any amount it was giving up something which it had a near-certainty of obtaining.

The judge conceded that while £158,059, being the difference between the amount of the offer and the judgment sum, was a very small amount in comparison with the principal amount of the claim, it was larger than the interest that would accrue during the period of the offer and was likely to have been greater than the costs incurred by the claimant. He also noted that the claimant had a desperate need for the money and was at a loss to understand why its money had not been returned to it.

The judge concluded that, in circumstances where a claimant has near-certain chances of success, an offer to settle on the basis that the claimant foregoes an amount equal to interest or costs is still capable of being characterised as a genuine offer of settlement under CPR Part 36.17(5) and therefore the costs consequences under CPR 36.17(4) should flow.

However the judge considered that, since acceptance of the Part 36 offer could only be made by paying the sum referred to in it, and the defendant was unable to pay that amount due to its insolvency, it would be unjust to make all of the orders set out in CPR 36.17(4). Accordingly, the judge limited his order to payment of the costs of the proceedings on the indemnity basis and interest on the principal sum owed at the rate of 8% (he did not order interest to be paid on costs nor the additional amount of £75,000).

Anna Pertoldi
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