In two cases favourable to the paying parties, the courts have clarified the application of the 10% uplift payable to a claimant that has beaten its own Part 36 offer. The courts considered whether an uplift of less than 10% can be ordered and whether interest is payable on an uplift under CPR 36.17(4)(d).
Reduction in the 10% uplift
In White v Wincott Galliford Ltd [2019] 5 WLUK 451 the successful claimant made a Part 36 offer to the defendant in respect of the claimant’s costs. The judge awarded the claimant the hourly rates it had claimed, meaning it had beaten the Part 36 offer to the Defendant.However, the judge was critical of the claimant’s conduct and considered whether it had jurisdiction to reduce the uplift. While previous decisions had established that proportionality was not a reason to disallow an additional amount, the court held that it could use the “injustice testˮ in CPR 36.17(4) to ascertain whether or not it would be unjust to award the full 10% uplift. In this instance the court declined to allow an uplift at all, but Deputy Master Friston stated in his judgment that it would be open to the court to make a partial uplift of up to 10% if the circumstances called for it.
Interest on additional amount
In Fzo v Adams and another [2019] EWHC 1286, the claimant was awarded more damages than it had offered to accept by way of a Part 36 offer and was therefore entitled to an uplift. The court considered whether interest should also be paid to the claimant on top of this uplift, as CPR 36.17(4)(a) allows interest to be paid “on the whole or part of any sum of money (excluding interest) awarded”.
The court found that the uplift for beating a Part 36 offer was not within the definition of “sum awarded”, as it was not included in the court’s judgment, and therefore no interest was payable.
Comments
These cases highlight the court’s discretion when considering the consequences of beating a Part 36 offer. A party who has beaten its own Part 36 offer can be awarded no uplift or a partial uplift, rather than the maximum of 10%, depending on the circumstances of the claim. Possible circumstances could be the Part 36 offer was only marginally beaten, the conduct of the receiving party or that the Part 36 offer was mere gamesmanship and not intended to be a genuine means to resolve the claim or an issue within the claim. The Court has also confirmed that interest is not applicable to any uplift that is allowed.
For further information, please email the authors or your usual CMS contact.
The authors would like to acknowledge the assistance of Becky Copley, paralegal at CMS Sheffield, in preparing this article.
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