Kerry Underwood

PART 36: 8% APPROPRIATE INTEREST RATE SAYS HIGH COURT

with 4 comments


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

Kivells Ltd v Torridge District Council [2019] EWHC 3210 (TCC)

the Technology and Construction Court, part of the High Court, held that where a claimant had matched or beaten its own Part 36 offer the appropriate rate of interest on the judgment sum and the indemnity costs under the court’s discretion in CPR 36.17(4) is 8%, that being the judgment rate.

Shortly after this decision the Queen’s Bench Division of the High Court upheld a trial judge’s decision to award interest at 10% above base rate where the claimant had beaten its own Part 36 offer – see my blog

PART 36: HIGH COURT AWARDS 10% ABOVE BASE

 

I now quote from the Kivells case:

 

“18. In my judgment the appropriate rate of interest 8% which matches the judgment rate of interest. To the extent one can apply analysis and logic to a discretionary figure, I am influenced in coming to this conclusion by the thought that the claimant should be entitled to be treated as if it had been in the position of a judgment creditor now that it has more than vindicated itself by the recovery under my judgment when compared to what was advantageously offered to the defendant by the Part 36 offer.

19.The essential thrust of CPR 36.17(4), in such circumstances and assuming normality prevails, is to put the rejected offeror into a different, superior class of judgment creditor in relation to the period beginning with the expiry of his offer. And the essential basis for that can be said to be the reflection, in hindsight, that the litigation should by then have been concluded with recognition of his entitlement. It is clear that the claimant may be awarded interest at a rate which proves to be more than compensatory. In modern times it might be said that judgment rate of 8% produces, at least in some cases, an element of over-compensation. Whether or not that is so, I have concluded in this case that it is right to award that rate to the claimant for the period of its superior entitlement as if it was then entitled under a judgment rather than simply looking to the court’s discretion for the recovery of a less generous commercial or compensatory rate over the pre-judgment period. Therefore, Mr De Waal, I am going to say it is interest at the rate of 8% per annum both under (a) and (c).

Written by kerryunderwood

December 10, 2019 at 7:13 am

Posted in Uncategorized

4 Responses

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  1. Time this 8% was reduced to something more in line with normal borrowing and lending rates.

    Anonymous

    December 12, 2019 at 8:52 am

    • In relation to judgment debts – that is where a party has a court order against them and has not paid, it is meant to be punitive, and rightly so in my view.
      Kerry

      kerryunderwood

      December 13, 2019 at 3:12 pm

      • I think there needs to be a distinction between debts where there is an unreasonable refusal to pay and the imposition of punitive interest rates on those who can’t afford to pay. Arguably any interest imposed would be punitive but I think it would be fairer, if punitive measures are to be taken, to have a fixed periodic charge.

        Anonymous

        December 14, 2019 at 12:09 pm

      • This is not about whether people can or cannot afford to pay, but rather is an incentive for paying parties to take claimants’ Part 36 offers seriously.

        Inevitably any incentive has a punitive element, as otherwise the incentive would not in fact be an incentive.

        On 12 December 2019, in similar circumstances, the Queen’s Bench Division of the High Court upheld the trial judge’s decision to award interest at 10% above base rate where the claimant had beaten its own Part 36 offer – see my blog

        PART 36: HIGH COURT AWARDS 10% ABOVE BASE.

        The court quoted from

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

        where the Court of Appeal said:

        “That does not, however, imply that the rate of interest can only be compensatory. In some cases, a proportionate rate will have to be greater than purely compensatory to provide the appropriate incentive to defendants to engage in reasonable settlement discussions and mediation aimed at achieving a compromise, to settle litigation at a reasonable level and at a reasonable time, and to mark the court’s disapproval of any unreasonable or improper conduct…”

        Kerry

        kerryunderwood

        December 17, 2019 at 3:23 pm


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