Westbrook Resources Ltd v Globe Metallurgical Inc

Where a claimant beats a Part 36 offer, the court retains a discretion to withhold enhanced interest and indemnity costs if, having regard to all the circumstances, granting them would be unjust. The court may apply the de minimis principle where the judgment exceeds the offer only marginally. The purpose of Part 36 is ordinarily to encourage compromise of the whole action. Where liability has already been determined, an offer directed only to quantum may engage that purpose less fully, particularly if acceptance would not compromise the liability dispute. The court must assess the practical and litigation context rather than apply the financial comparison mechanically.

The claimant had succeeded on liability and obtained an interim payment. It then made a Part 36 offer of $1.74 million, inclusive of interest and the interim payment, to resolve the quantification of damages. The defendant had unsuccessfully sought permission to appeal on liability and intended to pursue permission from the Court of Appeal.

The claimant ultimately recovered $1,753,857.16, exceeding the offer by $13,857.16, or approximately 0.8%. The issues were whether the claimant should receive enhanced interest and indemnity costs under CPR 36(14), whether a further payment on account of costs should be made, and whether the court should express an opinion that the case was fit for the attendance of two counsel.

1. Part 36 consequences. The claimant’s recovery was technically at least as advantageous as its offer. However, CPR 36(14) required the court to consider all the circumstances and permitted departure from the usual enhanced-interest and indemnity-cost consequences where those consequences would be unjust.
2. Relevant circumstances. The offer was unusual because liability had already been decided and the defendant’s appeal position remained unresolved. Part 36 contained no mechanism enabling the defendant to accept the quantum figure while preserving its right to appeal liability. Acceptance would therefore have avoided the costs of assessing damages but would not have compromised the whole action.
3. Marginal excess. The claimant had exceeded its offer by only 0.8%. In the context of the competing factors affecting the assessment of damages, that margin was de minimis. The claimant had in substance recovered the amount it had calculated as appropriate.
4. Orders. It would be unjust to award enhanced interest or indemnity costs for the period after expiry of the offer. The defendant was ordered to pay the claimant’s costs of the action on the standard basis, subject to assessment if not agreed. A further payment on account of costs of £50,000 was ordered. The court declined to express an opinion that the case was fit for the attendance of two counsel, observing that it was ultimately a straightforward sale of goods case.

Not stated in the judgment.