Bolt Burdon Solicitors v Tariq & Ors

For the purposes of CPR 36.17(4)(d), contractual interest awarded as part of the claimant’s entitlement forms part of the sum awarded by the court. It is therefore included in calculating the additional amount payable following a successful Part 36 offer. This differs from interest awarded under CPR 36.17(4)(a), where inclusion could produce an unintended overlap with the restriction on interest. The court’s discretion to withhold the additional amount on grounds of injustice must be exercised in the light of all the circumstances. The fact that contractual interest may exceed the claimant’s borrowing cost does not, by itself, make the additional amount unjust. A payment on account of costs may substantially exceed the usual 50 per cent where an approved costs budget exists, although caution may justify a reduction.

The judgment determined consequential matters following an earlier judgment in which the claimant had obtained judgment for principal, contractual interest and an additional amount under CPR 36.17(4)(d). The parties disputed whether contractual interest formed part of the sum to which the prescribed percentage applied, whether it would be unjust to award that additional amount, and the appropriate further payment on account of costs.

The court also addressed the agreed rate of interest on costs before judgment and the effect of the approved costs budget on the interim costs payment.

1. The claimant’s successful Part 36 offers engaged CPR 36.17. The contractual interest awarded as part of the claimant’s contractual entitlement was part of the sum awarded by the court for the purposes of CPR 36.17(4)(d). The wording contrasted with CPR 36.17(4)(a), which expressly excludes interest. The court therefore ordered a further additional amount of £2,631.15.
2. Watchorn v Jupiter Industries Ltd [2014] EWHC 3003 (Ch) was distinguishable. In that case, the interest excluded from the calculation was enhanced interest awarded under CPR 36.17(4)(a), whereas the present interest was contractual interest forming part of the substantive award.
3. The discretion to refuse relief because it would be unjust did not assist the defendants. Contractual interest became part of the overall award, and the composition of the sum to which the prescribed percentage applied was immaterial. The additional amount operated as a sanction for failing to accept a Part 36 offer and as a reward for a commendable attempt to settle.
4. The parties agreed that interest on the claimant’s costs would run at 4 per cent above base rate from the later of the date the work was done or the disbursement liability arose, and 9 March 2015.
5. A further payment on account of costs was appropriate because the claimant had an approved costs budget of £142,921. The court exercised caution because observations had been made that certain budgeted figures appeared high, and ordered payment equal to 80 per cent of the budget, namely £114,336 in total, less the £70,000 already paid. The balance of £44,336 was payable within 14 days. The defendants were also ordered to pay the costs of determining the consequential matters.