Part 36 uplift for beating offer includes contractual interest, High Court rules

10% uplift: applies to whole sum awarded

10% uplift: applies to whole sum awarded

The 10% uplift claimants receive for beating their part 36 offer includes contractual interest on the sum won at trial, the High Court has ruled.

Mr Justice Spencer said the wording of the CPR was clear that the interest awarded as part of the sum to which the claimant was contractually entitled was part of the award made by the court.

He was ruling in Bolt Burdon Solicitors v Tariq & Ors [2016] EWHC 1507 (QB), dealing with consequential matters following his decision in April to uphold a contingency fee agreement agreed between the claimant solicitors, a well-known London law firm, and its former clients.

The order stated that the defendants were to pay £498,083.52, together with contractual interest at the rate of 8% totalling £50,706.44, as well as an “additional amount” of £49,808.35, being 10% of the judgment sum pursuant to CPR 36.17(4)(d). One of the issues before the court was whether the 10% should apply to the contractual interest as well.

Spencer J said: “Had it been the intention always to exclude interest from the calculation of the ‘additional amount’, nothing would have been simpler than to repeat the words ‘excluding interest’ which appear in sub-paragraph (a) in relation to the entitlement to enhanced interest where these special sanctions apply.

“As a matter of statutory construction, the inclusion of the words ‘excluding interest’ in one part of the rule but the omission of the same words in another part, is a strong indication that there was intended to be a difference.”

The requirement on the court to apply 10% uplift is qualified by the words “unless it considers it unjust to do so”. The defendants argued that it would be unjust in this case because the rate of contractual interest was far higher than the claimant’s true costs of borrowing would have been and so had already been over-compensated for being out of their money.

The judge said the submission was misconceived. “The parties contracted for interest at 8% if the sum due was not paid on time. That entitlement became part of the overall award. There has been no claim for enhanced interest under sub-paragraph (4)(a) of the rule, as there could have been.

“The ‘additional amount’ is clearly designed as a penal sanction to mark a defendant’s failure to accept a part 36 offer when he should have done, and to reward the claimant for a commendable attempt to settle the case. The make-up of the overall sum to which the prescribed percentage is applied is immaterial.”

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