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Making an offer: make the proper calculation

1 July 2016
The High Court has confirmed that the 10% uplift for beating a Part 36 offer will apply to contractual interest.

The case of Bolt Burdon Solicitors v Tariq & Ors involved a claim for professional fees. Judgment was handed down in April 2016 in favour of the claimant who was also awarded a sum in excess of their Part 36 offer. The defendants were ordered to pay the sum awarded, plus contractual interest at 8% together with an additional amount, being 10% of the judgment sum. The issue before the court was whether the 10% uplift should be awarded and whether contractual interest should be taken into account.

The defendants argued that it would be unjust to do so in this case, as the rate of contractual interest was far higher than the claimant’s true costs of borrowing would have been and so they had already been over-compensated . The judge stated “that the parties contracted for interest at 8% if the sum due was not paid on time and that entitlement would become part of the overall award”.

It was held the wording of the CPR was clear and the additional amount should be calculated by applying the prescribed percentage to ‘an amount which is the sum awarded to the Claimant by the Court’.

This situation came about as a result of the defendants’ failure to accept a Part 36 offer when they should have done, and to reward the claimant for a commendable attempt to settle the case.

This case illustrates how the rules make it abundantly clear that parties must do their utmost to settle cases and that the courts will enforce the rules strictly in this regard.

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