PART 36: WHEN A CLAIMANT BEATS THEIR OWN PART 36 OFFER: NO INTEREST ON THE ADDITIONAL £75,000

In FZO v Adams & Anor [2019] EWHC 1286 (QB) Mrs Justice Cutts considered the issue of whether interest was payable on the additional sums that a defendant pays when a claimant beats their own Part 36 offer.

THE CASE

The claimant had beaten their own Part 36 offer after trial.  The amounts involved meant that the claimant was entitled to the maximum sum of £75,000 allowed under CPR Part 36.(17)(4)(d). The question was whether interest should be paid on this additional sum.

THE DECISION

The judge decided that interest was not payable on this amount.

THE JUDGMENT

Interest
  1. At paragraph 53 above I invited the parties to agree the interest in this case. This they have done save for one issue which requires resolution. There having been a Part 36 offer in this case for less than the sum I have awarded, the parties are agreed that the defendants should pay £75,000 in compliance with CPR 36.17(4)(d). The question arises as to whether interest is payable on this sum.
  2. CPR 36.17(4)(a) provides for interest to be paid “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 at the relevant date”. In this case the parties have agreed a rate of 4.75% and the period has been agreed.
  3. CPR 36.17(4)(d) provides for payment of “an additional amount which shall not exceed £75,000.” The defendants agree that this is payable.
  4. The claimant contends that 36.17(4)(a) is widely drawn and plainly encompasses not only the basic judgment sum but also the additional payment. If it was intended that interest should be excluded from this payment the rule would say so. This interpretation would be consistent with the spirit of CPR 36 which was intended to encourage claimants to make offers to settle. On the claimant’s interpretation the reward is increased for a claimant who makes an earlier offer to settle which is only right.
  5. The defendants contend that the additional amount is not a “sum awarded” as it does not feature in the court’s judgment. Further the words “additional” and “amount” clearly convey that this is yet a further financial sanction to be paid by the unsuccessful defendant in addition to the enhanced interest on the damages, costs on the indemnity basis and enhanced interest on costs to which the claimant is also entitled. To award enhanced interest on this sum would be to impose a sanction on a sanction. If this were right the rule would have been drafted to make it clear.
  6. In my judgment the defendants’ interpretation of the rule is the correct one. The words “additional” and “amount” seem to me to confer that this is in addition to the award and interest set out in subsection (4)(a) and that if interest were payable on this sum the rule would have said to. I note that where interest is payable consequent to any other paragraph of rule 36.17(4) on any amount it is specifically stated.