CPR 36.17(4): Another Case Of Just Consequences

consequences

There have been a number of cases recently dealing with the consequences under CPR 36.17(4) of a claimant beating its own Part 36 offer.

In this case the claimant beat its offer of £250,000 by over £200,000, being awarded approximately £458,500 at trial.

The defendant argued that notwithstanding this fact, it would be unjust to visit the consequences set out in CPR 36.17(4) upon them as:

  • the claim had been pleaded as being potentially worth in excess of £1 million, whereas it had been established to be worth considerably less than that;
  • the offer had been made at a relatively late stage in the litigation, some four months approximately before the trial;
  • they had themselves made efforts to compromise the proceedings both before and after the making of the Part 36 offer; and
  • if accepted, the defendant would have had to pay the claimant’s costs that had been incurred in the context of a ‘£1 million claim’, rather than one with the lesser value vindicated by the judgment.

HHJ Russen QC rejected all of these submissions.

“the point that the offer was made in the context of what the council says was an inflated claim … at over £1 million, is, in fact, a reason that reinforces the impact of the spurned Part 36 offer. In the sense that the offer being made was one quarter of the potential value of the claim and therefore in a sum which should have provided greater impetus for the council to accept it. Hindsight reveals that the defendant council had the chance to confirm that this was never a £1 million plus claim.”

Noting that:

“once it has decided it is not unjust that [the four consequences under CPR 36.17(4)] should follow, [the court] only has a discretion on two matters, or perhaps one matter to be applied twice, and that is the rate of interest to be applied both on the judgment sum and the indemnity costs element in respect of the period from 4 April 2019.”

the Judge went on to visit each of the consequences under CPR 36.17(4)(a)-(d) upon the defendant, including:

  • A 10% uplift on damages;
  • Indemnity costs from expiry of the relevant period; and
  • Enhanced interest on both damages and indemnity costs at 8%

“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… I have concluded in this case that it is right to award [interest at the judgment rate of 8%] 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.”

KIVELLS LTD V TORRIDGE DISTRICT COUNCIL [2019] EWHC 3210 (TCC)