Blackham v Entrefose - Accrued Interest and Part 36 Payments
Blackham v Entrefose - Accrued Interest and Part 36 Payments
Facts:
The Claimant sustained personal injury. On the 12th November 2001 the Defendant made a CPR Part 36 payment into court of £40,000. The offer was not accepted and at trial on 16th February 2004, the Claimant was awarded £40,854 which included damages and interest up to the date of judgment.
First Instance Decision:
Judge O’Rourke considered the award to have beaten the Part 36 offer and accordingly made an adverse costs award against the Defendant.
Appeal Decision:
The Court of Appeal’s principle consideration in this case was: what factors should be taken in to account when deciding whether the Claimant at trial had bettered the Part 36 payment?
The Judgment argues that interest accruing between the last date for acceptance of the Part 36 offer and the Judgment date should be deducted from the final award when deciding if the offer has been beaten or not. The word ‘better’ in rule 36.20 should be interpreted with that effect.
In this case the final award was £40,854. The Part 36 offer had been £40,000 which on the last day for acceptance represented an award of £39,644 for damages (the difference being accrued interest). As the part 36 offer had been made over two years before judgment and with the allowance of interest in that period, the sum awarded by the trial Judge was less than the element of damages in the offer. On that basis, the Claimant had failed to beat the Part 36 offer and the Defendant was entitled to their costs from the last date for acceptance.
Comment:
The trial Judge was of the view that there was no policy reason why a Part 36 payment should include an allowance for future interest when the purpose of Part 36 was to allow the Claimant to settle the matter at an early stage and invest the money on his/her own account. The Court of Appeal disagreed, specifically citing policy considerations of fairness to defendants.
Although it may be argued that the Judgment complicates the Part 36 procedure, it is clearly attractive to defendants to know that interest accruing after the making of a Part 36 payment may be taken into account when deciding whether a claimant has been awarded more than the sum paid in.