Successful claimant Part 36 offers and whether the uplift can be claimed on contractual interest

Bolt Burdon for claimant, Lopian Wagner for defendant

For Part 36 offers made on or after 1 April 2013, an uplift of 10% on the first £500,000 (and 5% of any amount above that figure, subject to a cap of £75,000) awarded by the court is now available to a claimant who betters its Part 36 offer. The claimant in this case bettered its Part 36 offer and the issue was whether it was entitled to the uplift on the contractual interest to which it was entitled and which it was awarded (here, the contractual interest was 8%).

Reference was made to an earlier High Court decision – Watchorn v Jupiter Industries [2014] – in which the judge refused to apply the uplift to the contractual interest element of the sum awarded. In this case, Spencer J held that he was not bound by that decision and said that the uplift could be applied to contractual interest (he declined to discuss the situation for discretionary interest). He also rejected the argument that it was unjust to award the additional amount here because the rate of contractual interest was far higher than the claimant's true costs of borrowing would have been. The judge said that: " The "additional amount" is clearly designed as a penal sanction to mark a defendant's failure to accept a Part 36 offer when he should have done, and to reward the claimant for a commendable attempt to settle the case. The make-up of the overall sum to which the prescribed percentage is applied is immaterial".

Case Alert - [2016] EWHC 1507 (QB)