Westbrook Resources Ltd v Globe Metallurgical Inc

I now have to consider my jurisdiction under CPR 36(14) in circumstances where the Claimant has, as a result of my judgment, recovered a sum which is in excess of that which they offered to accept through the mechanism of a Part 36 offer which was made by letter dated 29^th November.

The Part 36 offer, I am told, was to settle the claim for a total payment of $1.74m, the date for acceptance of the offer was 20^th December 2007, and the figure of $1.74m was inclusive of interest to the date on which the period stated under CPR 36(22) expires, which would have been 20^th December, and, of course it included the interim payment which had already been made in the sum of $850,000, pursuant to my order when I gave judgment on liability.

The Claimant has obtained a higher figure on judgment. The figure which the Claimant has been awarded, taking into account the interest calculation, is $1,753,857.16 inclusive of interest, which is therefore $13,857.16 in excess of the Part 36 offer. Although $13,800 is, of course, a substantial sum of money in anyone’s book, it has to be said that in the context of the amount awarded it is, as Mr. Hantusch has calculated, a margin of less than 1%, that is to say 0.8%.

The rationale behind CP 36 is, as Mr. McParland rightly observes, to promote settlement. The paradigm situation in which an offer will be made under CPR 36 is in circumstances where what is sought to be achieved is a settlement of an entire action, that is to say both questions of liability and questions of the assessment of the damages to which the Claimant may be entitled.

To that extent, therefore, this Part 36 offer was an offer made in circumstances which are not usual, in the sense that liability had already been determined against the Defendant, and the Defendant had already made an unsuccessful application for permission to appeal but had indicated a settled intention to seek permission to appeal from the Court of Appeal, for which purpose I extended time until after the assessment of damages.

As Mr. Hantusch rightly observes, the Part 36 machinery does not provide any mechanism whereby a defendant in the position in which Globe found itself may protect its position in so far as concerns an appeal on liability. Mr. McParland observes, rightly, that one response which Globe could have made to the Part 36 offer would have been that they could agree that the figure of $1.74m was the appropriate quantum figure but without prejudice to the right to seek from the Court of Appeal permission to appeal against the judgment on liability. It would then have been for Westbrook to decide whether or not to accept that counter offer.

It has to be said, therefore, that this is, for that reason, a slightly unusual situation and is a situation in which the full intent of the rule is not really engaged, in the sense that what the rule is seeking to achieve is a compromise, or a settlement, comprising all the issues in the action, although having said that there is, of course, no reason why the machinery should not be used, as it was here, by the Claimant in a perfectly sensible attempt to avoid what has in the event been an expensive and time consuming exercise in seeking to quantify the damages.

However, in all the circumstances I am not persuaded that it is appropriate that I should here award an enhanced rate of interest, which is in any event only for a relatively short period in the overall context, nor that I should award the Claimant their costs on an indemnity basis for the short period after 20^th December.

What the rule provides is that the court will make an order so far as concerns interest on costs, unless it considers it unjust to do so, and will likewise order costs on the indemnity basis for the relevant period, unless it considers it unjust to do so. I do consider that in all the circumstances of this case, and as Mr. Hantusch points out the court must take into account all the circumstances, it would be unjust to direct that in relation to this last period the Defendant should have to pay an enhanced rate of interest, or costs on an indemnity basis.

In reaching that conclusion I have regard particularly to the fact that to all intents and purposes, as Mr. McParland put it, the Claimant’s assessment of the amount which they would recover was spot on, and although the test is whether or not the judgment finally recovered is at least as advantageous to the Claimant as the proposals contained in the Claimant’s Part 36 offer, there must be room for a sensible application of the de minimis principle, and, as I have said, in the context of this action, where there were any number of competing factors which went into the quantification of damages, to have beaten the offer by simply 0.8% is, in my judgment, de minimis. In effect, they have recovered the amount which they themselves calculated was the appropriate amount. Acceptance of the offer would have saved costs but would not have amounted to a compromise.

For all those reasons, therefore, I do not propose to make an order pursuant to CPR 36(14) for enhanced interest or indemnity costs. The order which I shall make is the order which the parties are now agreed is, subject to that point, the appropriate order, which is that the Defendant shall pay the Claimant’s of the entire action on the standard basis, to be assessed if not agreed.

I have already directed a payment of £250,000 on account of costs. That I did when I gave judgment on liability in the light of the bill of costs then before me. It appears that a further £90,000 odd has been expended in costs by the Claimant since then. But what Mr. McParland seeks is in fact an uplift to the payment on account in the sum of about £100,000, which would secure the result that the Claimant would now receive an interim payment of 60% of its total bill.

Mr. Hantusch objects that that is an attempt to revisit my previous order and he submits, in my judgment with some force, that the appropriate course is to award a proportion of the further costs that have been incurred since the last occasion. He does not oppose, or at any rate he does not strenuously oppose an order for a further payment on account of costs in the sum of £50,000, and that is the amount which I direct.

Lastly, I am asked to give an opinion, as it is put, that the trial of the action and the subsequent assessment of damages was fit for the attendance of two counsel for the Claimant. Mr. Hantusch, having represented the Defendant alone, has had the invidious task of resisting a direction, or an expression of an opinion of that sort, but, in my judgment, it is not in any event appropriate that the court should suggest to the costs judge that this was a case fit for the attendance of two counsel. No doubt the Claimant was greatly assisted by having two counsel, but even in a case which was fought in quite the manner in which this case was fought this court should, in my judgment, be slow to regard what was at the end of the day a straightforward sale of goods case as something requiring the attendance of two counsel on one side. Hard, therefore, though it may seem to the Claimant, in my judgment it is not appropriate that I should express the view that the case was fit for the attendance of two counsel.