Dan Dyson considers Claimant’s Part 36 offers and the question of whether judgment at trial is more advantageous than the offer due to an award of interest.

Claimant’s Part 36 offers are deemed to be inclusive of interest (CPR 36.5(4)).  CPR 36.17(4) provides that where judgment against the defendant is at least as advantageous to the claimant as the offer then unless the court considers it ‘unjust’ to do so, the costs consequences of CPR 36.17(4) (a)-(d) will apply.   What happens where the interest awarded on the judgment sum by the court means that the judgment is at least as advantageous as the offer? 

The question arises in the context of an application for permission to appeal Dan Dyson has recently been instructed to make.  At trial, the judge found the sum awarded to be more advantageous than the Part 36 offer, after factoring into the judgment sum interest he awarded pursuant to section 69 of the County Courts Act 1984.  Without the addition of the pre-judgment interest the Part 36 offer would not have been beaten by the damages awarded alone. Yet the trial judge refused to implement the costs consequences of Part 36 because he considered it to be ‘unjust’.  He considered it to be ‘unjust’ due to the number of years that had elapsed since the date of the offer and the judgment itself, during which there had been a rise in interest rates.  If permission is granted, then an updated note will be issued on the outcome of the appeal.

In the meantime, it is always worth having regard to whether an award of interest on any judgment sum might bump a claimant’s Part 36 offer into being beaten when evaluating litigation risk.   HH Judge Pelling QC in Purrunsing v A’Court & Co [2016] EWHC 1528 explained that in order to ensure a like for like comparison the calculation of the award of interest should include the period starting with the date the cause of action accrued and ending at the expiry of the Part 36 offer.  Only this section of judgment interest should go towards the calculation of the judgment sum for a comparison with the Part 36 offer.

This would mean that taken to its natural conclusion there is a better prospect of a claimant beating their Part 36 offer the earlier the offer is made as the potential interest period and total award will increase.  This would seem consistent with the overriding objective.  Whereas, it could also reward the Claimant who makes a finely judged pre-action part 36 offer and delays in issuing proceedings.  Although it is highly unlikely that this latter option would be an advantageous litigation strategy, as a claimant generally wishes to obtain judgment and payment as soon as possible.