Calonne Construction Ltd v Dawnus Southern Ltd [2019] EWCA Civ 754

Two questions arose on appeal: (1) was a Part 36 offer invalidated by inclusion of a counterclaim yet to be pleaded?; and (2) did the inclusion of a term as to interest (8% per annum after expiration of the offer) render the Offer invalid?

The Court of Appeal found that it did not matter that the counterclaim had not been pleaded. The Court noted that the purpose of Part 20 is to enable counterclaims to be managed effectively and conveniently. Nothing exempts counterclaims from the provisions of Part 36. A proposed counterclaim is treated as a claim for the purposes of Part 36.

Part 36.7 provides that a Part 36 offer can be made at any time, including before the commencement of proceedings. Therefore, the offer could not be invalid because the counterclaim had not been pleaded.  To rule otherwise would mean that a defendant would have to go to the expense of pleading a counterclaim in order to make a Part 36 offer.

The inclusion of a term as to interest after the end of the Relevant Period did not invalidate the offer (although Part 36 offers will be treated as inclusive of interest until the Relevant Period expires).