Part 36 Rewards

HOCHTIEF V ATKINS ( 2019) EWHC 3028 ( TCC) saw a claimant who bettered their Part 36 quantum offer by just  £4,500 secure  an uplift of £65,000 and interest at 6% above base plus indemnity costs.

JLE V WARRINGTON NHS TRUST (2019) 1WLR 6497  –  On 21 June 2018 the claimant made a Part 36 offer in the sum of £425,000, inclusive of interest, in respect of the Bill of Costs. That offer accordingly expired on Friday 13 July 2018, i.e. the last working day before the hearing commenced.  Master McCloud assessed the bill inclusive of interest in the sum of £431,813.05, i.e. £421,089.16 plus £10,723.89 interest. The claimant therefore beat her Part 36 Offer by just under £7,000.

Had the Court  granted the default Jackson 10% uplift the claimant would receive an additional £43,181-30.

The Master considered this to be unjust given that the offer was made late on and it was only bettered by a slender margin .The Master was plainly troubled by the disparity between the amount by which the offer was beaten (£7,000) and the consequential uplift ( 6 times as much ).

She thus  declined to award the uplift. The claimant successfully appealed to Stewart J who made the award. The defendant ought to have paid up and settled. It only had itself to blame . The offer was plainly good.

In TELEFONICA  V OFFICE FOR COMMUNICATIONS (2020) EWCA Civ 1374 the claimant had bettered its offer by £4.5m or 9% yet received no more interest than would have been payable had it made no offer at all. The Appeal Court endorsed the view of Stewart J in JLE ( above ) that it would be highly unusual for the Court to grant some benefits but to withhold others .This was particularly so on the facts of this £54m case. Indemnity costs and an additional £75,000 “was an almost trivial uplift and any significant enhancement in overall relief would only have been achieved by the award of additional interest on the principal sum “ ( paragraph 42).The Judge was in error by regarding the award of 2 trivial enhancements as justification for not awarding the major enhancement, uplifted interest. The Appeal Court corrected the omission and so Telefonica gained  a useful extra £900,000.

Some Judges at first instance had flirted with the concept of withholding some of the rewards, adopting a pick and mix approach. The Appeal Court made it abundantly clear that the victor  ought to  receive each of the four enhancements pursuant to CPR 36.17(1)(b).There is nothing in the Rule which undermines or lessens entitlement to the others. The rewards are a composite package. All of them  ought to be bestowed .

On a practical note I surmise that Sir Rupert Jackson would agree. An approach which encouraged arguments about dividing up the spoils would be a blatant incentive for the paying party to raise challenges in the hope of shaving something off. Finality and certainty are secured by this approach.

HOCHTIEF was a good offer on quantum. JLE was a good one on costs. These examples demonstrate why it is crucial for a receiving party to make good, early offers to settle. We do !

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