Kerry Underwood

PART 36 AND INTEREST AND UPLIFT

with 2 comments


In Mohammed v The Home Office [2017] EWHC 3051 (QB)

the Queen’s Bench Division of the High Court considered the issue of upon what sum the 10% uplift on damages under CPR 36.17(4)(d)(i) should be calculated when a Claimant matches or beats its own Part 36 offer.

There are conflicting High Court decisions on this point and the options are that the meaning of “the sum awarded to the Claimant on the claim” could be:

(i) the sum net of any interest;

(ii) the sum together with interest awarded in the usual way, before considering any interest under Part 36;

(iii) a sum with all interest awarded, including any enhanced interest under CPR 36.17(4)(a).

That provision states that, unless it considers it unjust to do so, the court must award interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired.

Here, the High Court held that the sum awarded for the purposes of calculating the 10% uplift on damages should include basic interest, whether awarded pursuant to contract or the court’s discretion, but not any enhanced interest under CPR 36.17(4)(a).

The court also considered the rate of enhanced interest and the principles to be applied.

The court held that judges are required to take into account all of the circumstances, but that does not mean that every circumstance will be relevant.

Here the successful Claimant was “a prolific and violent offender.”

The Home Office argued that this should be reflected in a lower rate of interest on the award.

The court rejected that argument and said that that was reflected in the award, and not the rate of interest on the award.

The focus of the enquiry under Part 36 must be on the conduct of the litigation and not on the Claimant’s character.

Here the judge awarded interest on the award at 6% over base rate from the expiry of the relevant period for accepting the Claimant’s Part 36 offer until judgment.

Relevant factors included:

  • the level of the offer, £70,000.00, which was very much the sum that the Defendant valued the claim at and consequently the Defendant should have recognised the offer as a reasonable one putting it at risk under Part 36 if liability was established;

 

  • the time between offer and judgment, which was just over seven months;

 

  • the Claimant’s conduct of the case which was in the words of the court presented “fairly and moderately” and where “a fair and properly reasoned settlement offer was made.”

 

  • the Defendant’s conduct of the case, and the court found that The Home Office should have recognised the weakness of its defence much earlier than the afternoon before trial and should have conceded liability earlier;

 

  • The Home Office’s failure to re-evaluate the claim upon receipt of the Claimant’s Part 36 offer;

 

  • the additional trouble and expense that the party succeeding on its Party 36 offer had been put to.

Here, the High Court considered the detailed guidance given by the Court of Appeal in

OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195

and

McPhilemy v Times Newspapers Ltd & Ors [2001] EWCA Civ 871

but said the facts here were very different.

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Written by kerryunderwood

December 4, 2017 at 8:36 am

Posted in Uncategorized

2 Responses

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  1. Why is it that a claimant is treated more favourably than a D under cpr 36.17? Both win at trial in terms of a part 36 being beaten or not and rules favour C in terms of interest and indemnity costs.

    Also, should a C get interest after relevant period if he fails to beat D part 36 at trial? If yes why?

    David

    December 4, 2017 at 2:26 pm

    • David

      You are wrong. The Claimant is not treated more favourably than a Defendant under CPR 36.17.

      Exactly the opposite is true – when a Claimant accepts a Defendant’s Part 36 offer late, the Claimant has to pay the Defendant’s costs from the date of expiry of the relevant period, and also forfeits its own costs for that period, even though it has won the case.

      By contrast a Claimant has to obtain judgment to be sure of getting anything extra; the cases, as you are well aware, are all over the place as to whether a Claimant is entitled to indemnity costs on late acceptance by a Defendant.

      What you seem to misunderstand is that if a Claimant does not get enhanced interest and/or indemnity costs, then a Defendant has no incentive to accept a Claimant’s offer, as there is no penalty on the Defendant as the successful Claimant gets its costs in any event.

      When a Claimant wins the case, but fails to beat a Defendant’s Part 36 offer, the Claimant is punished twice. Firstly by forfeiting its costs from the expiry of the relevant period and secondly by having to pay the Defendant’s costs for that period.

      Yes, a Claimant should get interest after the relevant period as the Claimant is still being kept out of its money and only gets the award that is ordered at trial, or on acceptance and only gets ordinary interest on that sum.

      Ordinary interest is compensation for being kept out of your money and what has happened when a Claimant fails to be beat a Defendant’s offer is that the Claimant has been kept out of its money, albeit that the Claimant could have accepted the offer and then not been kept out of its money.

      The Defendant has its remedy, and that is to make a payment into court under CPR 37 and rely on a defence of tender before claim, which is a defence, and if successful, means that the defendant wins and is awarded all of its costs.

      Kerry

      kerryunderwood

      December 8, 2017 at 10:10 am


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