Mohammed v The Home Office

Part 36 sanctions are intended to encourage reasonable settlement conduct. Once the claimant obtains a judgment more advantageous than the offer, the usual orders should be made unless unjust. The claimant’s character and general history are ordinarily irrelevant to enhanced interest; the focus is on the parties’ conduct of the litigation.

A 10% enhancement over base rate is a maximum, not a starting point. The court must assess a proportionate rate in all the circumstances, including the time elapsed, the defendant’s conduct and the disruption caused. The additional amount under CPR r.36.17(4)(d) is calculated on the gross award that would have been made without Part 36, including basic interest but excluding enhanced interest awarded under r.36.17(4)(a).

The claimant had obtained damages of £78,500 in an earlier false imprisonment claim against the defendant: [2017] EWHC 2809 (QB). Interest was agreed at £2,753. The claimant had previously made a Part 36 offer of £70,000, which the judgment exceeded.

The court considered the consequences under CPR r.36.17(4), including enhanced interest on damages and costs and the additional amount. The principal dispute concerned the appropriate rate of enhanced interest and whether the additional amount should be calculated on damages alone or on damages together with basic interest.

1. Usual Part 36 orders. It was not unjust to make the usual orders under CPR r.36.17(4). The purpose of Part 36 is to encourage reasonable offers and their acceptance. The relevant inquiry concerned the conduct of the litigation, not whether the claimant had led a blameless life.
2. Enhanced interest on damages. Following the guidance in OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195, the court held that 10% above base rate was the maximum possible enhancement, not a starting point. The rate had to be proportionate to all the circumstances. Relevant matters included the period between expiry of the offer and judgment, the reasonableness of the defendant’s continued litigation, and the general level of disruption. The claimant’s criminal background was irrelevant to this exercise.
3. The offer was reasonable, the defendant should have reassessed its weak defence earlier, and the claim was reasonably conducted. The case was not an extreme example of unreasonable litigation. Enhanced interest on damages was therefore awarded at 6% above base rate from 23 March 2017 to judgment.
4. Interest on costs. Costs were awarded on the indemnity basis from 23 March 2017. Interest on costs was also awarded at 6% above base rate, running on costs incurred after that date from the date the work was done or the disbursement liability arose.
5. Additional amount. The court confined Watchorn v Jupiter Industries Ltd [2014] EWHC 3003 (Ch) to the exclusion of enhanced Part 36 interest. Under r.36.17(4)(d)(i), the relevant amount included basic interest, whether contractual or discretionary, but excluded enhanced interest under r.36.17(4)(a). The additional amount was accordingly 10% of the damages award including agreed interest under the Senior Courts Act 1981.

First-instance post-judgment determination following the earlier false imprisonment judgment reported at [2017] EWHC 2809 (QB).