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Commercial Disputes Weekly – Issue 16727 June 2023


"My conclusion should not be taken as any kind of discouragement to claimants making Part 36 offers"Yieldpoint Stable Value Fund LP v Kimura Commodity Trade Finance Fund Ltd

Settlement – Part 36 offer
The claimant in a debt claim for US$5m made an offer under Part 36 of the Civil Procedure Rules to accept a sum in settlement that represented 99% of the sum claimed. The defendant did not accept that offer and at the trial, the claimant was awarded the full US$5m. In assessing the costs to be awarded to the claimant, the court was asked to award it the interest and costs enhancements as a result of having obtained a better judgment than its Part 36 offer. The court refused to do this as the Part 36 offer was not a genuine attempt to settle the proceedings when analysed in the context of a claim that was ‘all or nothing’. The high offer did not reflect a very strong prospect of the claimant succeeding at trial. The judge emphasised that there was no suggestion of impropriety or disingenuity on the part of the claimant or its legal team, but parties should be encouraged to make offers not so perilously close to the full value of the claim. In the circumstances it was unjust to award the enhanced costs and interest.
Yieldpoint Stable Value Fund LP v Kimura Commodity Trade Finance Fund Ltd [2023] EWHC 1512 (Comm), 20 June 2023

Indemnity Costs
The court ordered indemnity costs against defendants who engaged in mediation, entered into a settlement agreement but then failed to carry out their obligations under that settlement agreement. The defendants were ordered to pay on an indemnity basis the costs after they reneged on the agreement. The court said that the defendants’ conduct was well outside of the norm and sufficient to justify the censure of the court. There was no evidence of the additional costs incurred because of the defendants’ change of stance but that did not matter. The purpose of the order was to mark disapproval of conduct that was likely to incur unnecessary costs, rather than compensating the party who had actually incurred those costs.
Denny v Babee and others [2023] EWHC 1490 (TCC), 19 June 2023

Freezing Order
Mr Bedzhamov was subject to a worldwide freezing order (“WFO”) in relation to proceedings alleging fraud brought by Vneshprombank LLC (“Bank”). He was also declared bankrupt in Russia and the trustee in bankruptcy had brought recognition proceedings in the English courts. Mr Bedzhamov applied for permission to sell a London property that fell within the WFO so he could pay legal costs and living expenses. The Bank was neutral on the application, but the trustee opposed the sale. The court permitted the sale on the basis that if the proposed sale did not go ahead, there was a real risk of loss of value for Mr Bedzhamov or his estate. A further delay would involve a risk that the various parties would walk away. In addition, there was uncertainty about the grant of a long lease by the landlord, which the proposed sale would remove. The WFO was therefore varied to permit the sale.
Vneshprombank LLC v Bedzhamov; Kireeva v Bedzhamov [2023] EWHC 1459 (Ch), 16 June 2023

Insurance – Covid-19
The Commercial Court has grappled with further preliminary issues arising from business interruption policies and the Covid-19 pandemic. The issues related to the coverage for closures or business interruption that resulted from an outbreak or occurrence of a notifiable disease “at the premises”. The court held that the Supreme Court decision in Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1 applied equally in relation to outbreaks “at the premises” as it did to radius clauses. Therefore, a concurrent cause analysis should be applied to each case of Covid-19 irrespective of its geographical location and the locations of other such cases. Further, the reference to closures being put in place “on the advice or with the approval of the Medical Officer of Health for the Public Authority” required a wide meaning of ‘public authority’. This would include governments and other bodies operating at a national level. In addition, the use of “suffer” meant the same as “occur” or “sustain” so a different approach between the policies was not needed.
London International Exhibition Centre Plc v Royal & Sun Alliance Insurance Plc and others [2023] EWHC 1481 (Comm), 16 June 2023

Should you wish to discuss any of these cases in further detail, please speak with a member of our London dispute resolution team below, or your regular contact at Watson Farley & Williams:

Robert Fidoe
Ryland Ash
Charles BussNikki Chu
Dev DesaiSarah Ellington
Andrew HutcheonAlexis Martinez
Theresa MohammedTim Murray
Mike Phillips
Rebecca Williams

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