Barnett & Anor v Creggy

Interest on a foreign-currency judgment is discretionary under Administration of Justice Act 1970, section 44 A. The court should apply a compensatory commercial rate rather than automatically use the fixed sterling rate under the Judgments Act 1838.

For a Part 36 offer in sterling and a judgment in foreign currency, the comparison is made using the rate needed to purchase the judgment currency and at the date judgment is entered. Where the offer is beaten, enhanced interest and costs consequences may follow. Interest under Part 36 may be cumulative with other interest, subject to the prescribed cap. Costs should reflect substantial partial failure.

This was a consequential hearing following an earlier judgment handed down on 19 December 2014. The long-period claim for an account had been dismissed, while Jeffrey Barnett succeeded in a claim for equitable compensation and the claimants obtained an account for a shorter period.

The court determined the post-judgment interest rate on the US-dollar judgment, the proper party to prepare the account, the effect of the claimants’ Part 36 offer, and the appropriate costs order. The central issues included the relevant exchange rate and date for comparing the offer with the judgment, whether Part 36 consequences would be unjust, and how partial success should affect costs.

Consequential orders were made in the claimants’ favour.

1. Foreign-currency interest. Under section 44 A of the Administration of Justice Act 1970, the court had a discretion over interest on the judgment in US dollars. The fixed 8 per cent rate applicable to sterling judgments under the Judgments Act 1838 was not automatic. Following the compensatory approach in Novoship UK Ltd v Nikitin [2014] EWCA Civ 908, the appropriate post-judgment rate was the commercial rate of 3 per cent above six-month US dollar Libor, the same rate previously applied.
2. Account. Paragraph 2 of CPR PD 40A placed responsibility for preparing and verifying the account on the accounting party unless the court ordered otherwise. The usual order was appropriate. The defendant had to identify how he had dealt with funds entrusted to him, even though the claimants had already assembled evidence of payments.
3. Part 36 comparison. The claimants had beaten their £1.5 million offer. The relevant comparison required the rate at which the claimants would have to exchange sterling to purchase the US-dollar judgment. Under CPR 36.14(1), judgment was entered when the court made the order containing the operative judgment, not when reasons were handed down. The comparison was therefore made at the date of the order.
4. Whether consequences were unjust. The question under CPR 36.14(3) was a value judgment, not a discretion. The close exchange-rate comparison, the limitation issue, and the claimants’ failure on the long-period account did not make the consequences unjust. The defendant had knowingly accepted the risk of exchange-rate movements, and the offer had already discounted the unsuccessful part of the claim.
5. Consequences. The claimants were entitled to 4 per cent above base rate on the relevant judgment sum under CPR 36.14(3)(a), in addition to the US-dollar interest, subject to the aggregate cap in CPR 36.14(5). The enhanced interest principally compensated the non-financial burdens of litigation. Interest on costs under CPR 36.14(3)(c) was also awarded at 4 per cent above base rate. A payment of £75,000 was ordered to Jeffrey Barnett under CPR 36.14(3)(d).
6. Costs. The claimants were the successful party overall, but their failure on a substantial and time-consuming part of the claim had to be reflected. Taking account of overlapping costs and the defendant’s costs of meeting the failed claim, the defendant was ordered to pay 50 per cent of the claimants’ costs.

First-instance judgment. The judgment records that consequential matters followed an earlier judgment handed down on 19 December 2014; no appellate stage is stated.