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Blackham v Entrepose UK, Court of Appeal, 27 July 2004

5 August 2004
The issues

Payments into Court – Part 36 Payments – Calculation of Interest

The facts

The Claimant had an accident at work to his right thumb on 1st May 1998. A Claim Form was issued on 10th April 2001. On 12th November 2001 the Defendant’s solicitors gave notice of a Payment into Court which increased the gross amount of the compensation payment offered to £40,000.00. The notice stated that the Defendants reduced this sum by £9,770.12 in accordance with Section 8 of and Schedule 2 to the Social Security (Recovery of Benefits) Act 1997. The Part 36 Payment Notice by CPR 36.22(1) was to be treated as inclusive of all interest until the last day on which it could be accepted without needed the permission of the Court.

At Trial the Judge entered Judgment in the sum of £40,854.03. That sum was inclusive of interest which continued to accrue after the time at which the Claimant had decided not to accept the £40,000.00 in Court.

As at 3rd December 2001 the same award inclusive of interest to that date would have been £39,644.71. The Defendants argued that the Claimant had failed to better the Part 36 Payment and that the costs they had incurred after 3rd December 2001 should be paid to them by the Claimant.

The Judge disagreed and granted the Defendant permission to appeal.

The decision

1. In deciding whether a Claimant bettered a Part 36 Payment it was necessary to compare like with like. There was no policy reason as to why a Payment into Court should include a prudent allowance for interest accruing in the future up to the date of the Trial when the purpose of the offer was to provide a sum which if accepted, the Claimant could invest on his own account being no longer kept out of it by non payment.

2. The Judge had suggested that the Defendant could always top up a Payment into Court with further interest. This however would expose the Defendants to the risk of having to pay both sides’ costs from the date the Claimant ought to have accepted the money in Court to the date that he did accept it. This would be unjust and inconsistent with the overriding objective.

3. A Judge should ask himself what the Payment into Court represented and then consider whether the amount for which he had directed Judgment to be entered as compared with that payment was less than that amount. If this principal had been followed the sum of £40,000.00 would have been compared with the sum of £39,644.71 for which he was entering Judgment in respect of the damages plus interest up to 3rd December 2001. He would therefore have concluded that the Claimant had failed to beat the Part 36 Payment.

4. Judges should therefore perform the exercise previously prescribed in the note to the 1999 White Book (Volume1, note 22/1/10 on page 411).

Appeal allowed. Judge’s Order altered to the extent that the Claimant was ordered to pay the costs of the Defendant from 3rd December 2001 onwards.

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