Mead engaged Southern to provide mechanical and electrical services at a business centre in Somerset. Southern referred disputes under the contract to adjudication. The adjudicator awarded Southern £124,511.26 plus VAT and interest to be paid not later than 7 days after the award. On the seventh day Mead proposed making payments by instalments. Southern instructed solicitors and threatened that, unless payment in full was received, reinforcement proceedings would be issued. 

 

Mead responded stating that it had paid £50,000 in good faith and had to discuss matters with its bankers. Four days later, Southern commenced proceedings. Mead acknowledged service of the proceedings by letter after the prescribed date. Mead did not dispute the decision of the adjudicator but proposed that it would pay £50,000 by the end of October 2009; £50,000 by the end of November 2009; with the balance to be paid by 15 December 2009. 

 

Southern responded and effectively agreed to be paid by instalments, concluding with a balancing payment. Correspondence continued between the parties as to the amounts included in the balancing payment. Southern stated its legal costs were to be included and made reference to costs in a telephone conversation between the parties. 

 

The parties disagreed as to whether there had been a full and final settlement reached and whether it was inclusive of Southern’s costs. Mead submitted that there was a full and final settlement excluding costs, and Southern submitted there was no full and final settlement, but if there was, it necessarily included costs. 

 

The Judge found that the original letter from Mead to the TCC, copied to Southern, was an offer. The offer included a term that Mead would pay the balance. As Southern had expressly claimed costs on the TCC claim form that Mead had acknowledged, objectively, Mead’s offer must be seen to include costs as well as interest. So, when Southern wrote back confirming the dates and that it would receive a balancing payment by 15 December, the parties had an agreement in principle that Mead would also pay interest and costs.