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Petrotrade Inc v Texaco Ltd, Court of Appeal

16 June 2000
The issues

Whether An Award Of Enhanced Interest And Costs On An Indemnity Basis Should Apply Where Summary Judgment Was Given.

The facts

The Claimant cross appealed (in a case where the Defendant appealed against the entry of summary judgment – that appeal was dismissed) against the Judge’s refusal to award enhanced interest and costs on an indemnity basis after it had made a Part 36 Offer to settle for a sum which was greater than the amount of the judgment in its favour. The applicability of Rule 36.21 was not argued before the Judge at first instance.

The decision

(Lord Woolf) Rule 36.21 provided for costs sanctions where “at trial” a Defendant was held liable for more than the proposals contained in the Part 36 Offer. Therefore the rule did not apply where summary judgment was given under Part 24.

The Court has however always had the power which is discretionary towards costs on an indemnity basis and to award interest at such rate as is considered just. In circumstances such as these, it was possible for the Court when exercising underneath its general jurisdiction as to interest, to give a higher rate of interest than the going rate. This should be borne in mind otherwise Claimants will be deterred from seeking summary judgment which would be contrary to the ethos and policy of the Civil Procedure Rules. His Lordship was confident that if that had already occurred on occasions the Court would use its “ample powers to ensure that a Claimant did not benefit by any such tactic”.

In this particular case His Lordship would have considered awarding interest 4% above base rate for 12 months and making an order for indemnity costs from the time of the Part 36 Offer.

The Judge however had not heard this argument and it will be wrong to interfere with his discretion under those circumstances.

Cross Appeal dismissed.

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