Wells v Hornshaw: Revisiting Part 36 offers post-judgment

The recent case of Wells v Hornshaw and others¹ provides helpful clarity as to the circumstances in which Part 36 offers will remain open for acceptance post-judgment pursuant to CPR 36.12.

Factual background

This case concerned an unfair prejudice petition brought by Mr Wells, a minority shareholder of a waste management company (the "Company"), pursuant to s. 994 of the Companies Act 2006. The Company and its shareholders (including Mr Wells) had entered into a shareholders' agreement that set out a specific process for valuing shares of shareholders who were seeking to exit the Company (the "Valuation Process"). Mr Wells expressed his intention to sell his shares in the Company in September 2015, yet disagreed with the valuation attributed to those shares by the Company's auditor pursuant to the Valuation Process. As a result, the sale of his shares did not proceed and he instead issued an unfair prejudice petition.

The Defendants (comprising the Company and the remaining shareholders therein) made a Part 36 offer six weeks before trial of Mr Wells' claim and the Defendants' counterclaim. Following trial, judgment was handed down and the court ordered a fresh valuation of Mr Wells' shareholding and dismissed the Defendants' counterclaim. No further remedies trial was required.

Mr Wells sought to accept the Part 36 offer after the consequential hearing, submitting that this was a split-trial case on the basis that there were still matters to be resolved, namely the price to be paid by Mr Wells for his shares and (relatedly) any points that may arise for the court to resolve in the course of the ongoing valuation exercise. As such, Mr Wells contended that the Defendants' 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

CPR 36.12 states as follows:

1. 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.
2. Any Part 36 offer which relates only to parts of the claim or issues that have already been decided can no longer be accepted.
3. Subject to paragraph (2) and unless the parties agree, any other Part 36 offer cannot be accepted earlier than 7 clear days after judgment is given or handed down in such trial.

Decision

The court disagreed with Mr Wells, holding that this was not a split-trial case, and that the case had been "decided" in accordance with CPR 36.3(e) as the issues had been resolved without the need for a further trial, such that CPR 36.12 did not apply.² As such, the Part 36 offer was not open for acceptance at the time Mr Wells had sought to accept it.

The court also stressed that, even in split-trial cases, a Part 36 offer may only be accepted in accordance with CPR 36.12 to the extent that such offer relates (in part or in whole) to matters still to be determined.

Relevance

This case serves as a useful reminder for all litigants to consider, after any trial, whether there is any tactical benefit in withdrawing or accepting any pre-existing Part 36 offers which relate to elements that are yet to be decided.