Kerry Underwood

PART 36: VALIDITY OF OFFERS EXCLUDING INTEREST

leave a comment »


The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Horne v Prescot (No.1) Ltd [2019] EWHC 1322 (QB) (24 May 2019)

the Queen’s Bench Division of the High Court held that a Part 36 offer which excluded interest on costs was a valid offer.

Here, the claimant offered to accept £82,000 “exclusive of interest” and also stated that the offer did not include the costs of assessment.

The claimant was awarded £91,807.06, excluding the costs of assessment itself, on assessment and thus beat its offer, but the defendant submitted that an “exclusive of interest” offer could not be a valid Part 36 offer.

At first instance, the Master held that it was valid and here the High Court upheld that decision, holding that interest on costs is fundamentally different from interest on damages.

A bill of costs does not include interest as interest is ordinarily payable from the date of judgment until payment of the costs, under the Judgments Act 1838, without the need to claim it in detailed assessment proceedings.

Consequently, the offer was rightly described as relating to the whole of the claim in the detailed assessment proceedings and there was no severable part of the claim concerning interest.

Practice Direction 47.19 states that a settlement offer, whether made under Part 36 or otherwise, should specify whether or not it is intended to be inclusive of, among other things, interest and so it was sensible for the solicitors here to specify that the offer excluded interest and doing so did not invalidate the offer.

The court recognised the dangers in going “off script” when making an offer which the offeror wants to be a Part 36 offer, but there was no case law to the effect that including additional words which did not conflict with the mandatory requirements of a Part 36 offer invalidated it.

In any event CPR 36.5(4) did not use the word “must” and therefore was not mandatory.

The decision effectively overrides that in

 Ngassa v The Home Office & Anor [2018] EWHC B21 (30 November 2018)

where the Master held that such an offer, in an identical scenario, was not a valid Part 36 offer.

The Court of Appeal will be considering the same issue in November 2019 in the case of King v City of London Corporation.

Written by kerryunderwood

June 7, 2019 at 9:26 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: