Brennan v Eco Composting Ltd. & Anor

Interest on a Part 36 payment paid into court for a claimant under a disability is allocated according to the date of valid acceptance. Under CPR 21.10, acceptance is not valid until the court approves it. Accordingly, the offeror is entitled to interest accruing up to the date of approval, and the claimant is entitled to interest thereafter, subject to any agreed different arrangement.

The Part 36 Practice Direction must be read with the CPR. It does not create a different allocation rule for claimants under a disability. The overriding objective does not require a contrary result.

The claimant, a patient, sought approval of his acceptance of a £600,000 Part 36 payment made into court by the defendants. The defendants initially applied for permission to withdraw the payment, but later abandoned that application. The court approved the settlement on 10 November 2006.

The parties disputed who was entitled to interest accruing before the matter first came before the court on 3 October 2006. The central issues were whether acceptance occurred when it was intimated on the claimant’s behalf or only when approved by the court, and how the Part 36 Practice Direction interacted with CPR 21.10 and the Court Fund Rules 1987.

1. Allocation of interest. The Part 36 Practice Direction 7.10 provides that interest accruing up to the date of acceptance is paid to the offeror, while interest accruing from acceptance until payment out is paid to the offeree. The special treatment of money paid into a basic account for a claimant under a disability does not alter that allocation.
2. Meaning of acceptance. CPR 21.10 makes any acceptance of money paid into court on behalf of a patient invalid without court approval. The acceptance therefore occurs, for the purposes of the Practice Direction, only when the court approves it. This conclusion was supported by Dietz v Lennig Chemicals Ltd [1969] 1 AC 170 and the Court of Appeal’s application of that reasoning in Whitwood v Drinkall [2003] EWCA Civ 1547.
3. The claimant’s intimation of acceptance did not bind the parties before approval. There was nothing unjust in that result, since the claimant could account for the timing of approval when deciding whether to accept the payment and arrangements could be made for an early hearing.
4. The Practice Direction is guidance indicating the normal practice of the courts. As explained in R (Mount Cook Land Limited) v Westminster City Council [2003] EWCA Civ 1346, it must be followed unless amended, but yields to a clear conflict with a rule. Here there was no conflict; the Practice Direction was ancillary to and supportive of CPR 21.10.
5. The defendants were entitled to all interest accruing on the payment between the date of payment into court and 3 October 2006. The claimant was entitled to interest thereafter. The court ordered that the accrued interest on £600,000 for the earlier period be paid forthwith to the defendants.