White Collar Legal recently secured a successful outcome at Clerkenwell County Court in an application seeking the benefits of Part 36 following Default Judgment in a relatively modest debt recovery claim.
While the underlying invoice dispute involved a comparatively small sum, the case highlights the significant financial consequences that can arise when parties fail to engage properly with court proceedings or settlement opportunities.
Background to the Claim
The claim arose from an unpaid invoice under a contract for services. The original invoice value was £612.71. Importantly, the contract contained express provisions allowing for:
- Contractual costs at £151.00 per hour
- Contractual interest at 12.5%
Proceedings were commenced on 13 May 2025, with the claim formally issued on 3 June 2025. By the point of issue, the total claim value had increased to £1,776.99 due to the contractual costs and accrued interest.
The Defendant sent an email (reportedly drafted using an AI too) indicating an intention to dispute the claim. However, no formal Acknowledgment of Service or Defence was ever filed.
In response, White Collar Legal issued a detailed reply and made a Part 36 settlement offer in the sum of £747.61. No response was received.
Default Judgment Granted
Following the Defendant’s failure to engage with the proceedings properly, a request for Default Judgment was submitted on 23 June 2025 for £2,015.41.
Default Judgment was subsequently granted on 17 July 2025.
After judgment was entered, the Defendant was again given an opportunity to resolve matters. On 30 July 2025, correspondence was sent seeking payment of the judgment sum and warning that an application would be made to seek the additional benefits available under Part 36 if payment was not received.
Again, there was no response.
Application for Part 36 Benefits
On 27 August 2025, an application was issued seeking the enhanced remedies available under CPR 36.17(4), including:
- The 10% uplift on damages
- Enhanced interest up to 10% above base rate
- Indemnity costs of the application
- Interest on those costs
The matter was listed for hearing on 28 April 2026 at Clerkenwell.
Bundles were prepared and filed in advance of the hearing in accordance with the court’s requirements.
Defendant’s Application to Adjourn Refused
On the day of the hearing, the Defendant applied for an adjournment, arguing that:
- He intended to make an application to set aside the Default Judgment
- He had insufficient time to obtain legal advice
The Court dismissed the application to adjourn and proceeded with the hearing.
The Claimant was represented by Farah L Shaharuddin, instructed through Ashley Taylors Legal, and successfully obtained an order varying the Default Judgment to include the requested Part 36 benefits.
As a result, the total amount payable increased to £3,346.94.
Key Legal Takeaways
1. Part 36 Can Be Highly Effective in Lower Value Claims
This case demonstrates that Part 36 can still be a powerful strategic tool even where the underlying claim value is relatively modest.
As the matter had not yet been allocated to the Small Claims Track, the Claimant remained entitled to seek the significant costs and interest consequences available under Part 36.
2. Ignoring Settlement Opportunities Can Be Extremely Costly
The Defendant had the opportunity to settle the matter for £747.61.
By failing to engage, the Defendant ultimately became liable for approximately 4.5 times that amount.
Early engagement and sensible negotiation can significantly reduce financial exposure.
3. AI Is Not a Substitute for Proper Legal Advice
The Defendant’s informal AI-assisted email did not amount to compliance with court procedure and ultimately failed to protect their position.
While AI tools may assist with drafting or research, they should never be treated as a replacement for professional legal advice or proper procedural compliance.
4. Early Legal Advice Matters
Had the Defendant obtained legal advice at an earlier stage, there may have been opportunities to defend the claim properly, negotiate settlement, or avoid the substantial additional liabilities that followed.
Conclusion
This case serves as a reminder of the importance of engaging properly with legal proceedings, responding to settlement offers, and obtaining timely legal advice.
It also demonstrates the potentially powerful consequences of Part 36 where a party unreasonably fails to accept a reasonable settlement offer.
If you require advice regarding debt recovery, contractual disputes, or litigation strategy, contact White Collar Legal for tailored legal support.
Get in touch on 0151 230 8931 or philip@whitecollarlegalandadmin.com