Petrotrade Inc. v Texaco Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Woolf MR,Clarke,Latham L JJ |
| Judgment Date | 23 May 2000 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 May 2000 |
Costs - Discretion of court - Indemnity basis - Defendants rejecting claimants' offer of settlement - Claimants awarded damages in excess of offer - Whether costs to be awarded on indemnity basis -
The following case is referred to in the judgment of Lord Woolf MR:
Little v George Little Sebire & Co The Times, 17 November 1999
No additional cases were cited in argument.
APPEAL from Langley J
The claimants, Petrotrade Inc, sought damages from the defendants, Texaco Ltd, for breach of contract. On 11 December 1998 Langley J granted the claimants summary judgment in the sum of US$140,660.75 plus interest but that decision was overturned on 6 May 1999 by the Court of Appeal (Kennedy, Otton and Clarke LJJ). On 21 December 1999, following the service of amended points of claim, Langley J again gave summary judgment for the claimants for the same amount plus interest.
The defendants appealed with the leave of the judge and the claimants cross-appealed against the judge's refusal to award enhanced interest and costs on an indemnity basis after the defendants had failed to beat an offer to settle which the claimants had made pursuant to CPR Pt 36.
The facts relating to the cross-appeal are stated in the judgment of Lord Woolf MR.
Sara Cockerill for the defendants.
Michael Nolan for the claimants.
Clarke LJ, with whom Lord Woolf MR and Latham LJ agreed, delivered a judgment dismissing the defendants' appeal. The following judgments relating to the cross-appeal were then delivered.
LORD WOOLF MR
53 The cross-appeal is as to Langley J's decision on 21 December 1999. Langley J refused to award the claimants enhanced interest and costs on an indemnity basis, despite the fact that the claimants had made a Part 36 offer which was lower than the amount of the judgment in favour of the claimants.
54 The particular significance of the cross-appeal is that it is the first opportunity which this court has had to consider the general approach to be adopted by a court where a defendant is ordered to pay a sum in excess of a claimant's offer under Part 36.
55 Part 36 is one of the cornerstones of the reforms of procedure made by the CPR. Part 36 makes significant changes to the previous practice and procedure relating to payments into and out of court under what was
56 A Part 36 offer may relate to the whole claim, to part of it or to any issue that arises in the proceedings: see rule 36.5(2). In addition a Part 36 offer is not confined to money claims. However, if a defendant's offer includes an offer to settle a money claim, a payment into court is required once proceedings have started: see rule 36.3. There are procedural requirements which have to be complied with, otherwise the offer will not strictly speaking constitute a Part 36 offer. This does not prevent a party making an offer in whatever manner that party chooses, but if that offer is not in accordance with Part 36, “it will only have the consequences specified” in Part 36 “if the court so orders”: rule 36.1.
57 This appeal is primarily concerned with rule 36.21. The terms of that rule are:
(Rule 36.12 sets out the latest date when the defendant could have accepted the offer.)“(1) This rule applies where at trial—(a) a defendant is held liable for more; or (b) the judgment against a defendant is more advantageous to the claimant, than the proposals contained in a claimant's Part 36 offer.
“(2) The court may order interest on the whole or part of any sum of money (excluding interest) awarded to the claimant at a rate not exceeding 10% above base rate for some or all of the period starting with the latest date on which the defendant could have accepted the offer without needing the permission of the court.
“(3) The court may also order that the claimant is entitled to—(a) his costs on the indemnity basis from the latest date when the defendant could have accepted the offer without needing the permission of the court; and (b) interest on those costs at a rate not exceeding 10% above base rate.
“(4) Where this rule applies, the court will make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so.”
“(5) In considering whether it would be unjust to make the orders referred to in (2) and (3) above, the court will take into account all the circumstances of the case including—(a) the terms of any Part 36 offer; (b) the stage in the proceedings when any Part 36 offer or Part 36 payment was made; (c) the information available to the parties at the time when the Part 36 offer or Part 36 payment was made; and (d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer or payment into court to be made or evaluated.
“(6) The power of the court under this rule is in addition to any other power it may have to award interest.”
58 It will be noted that the opening words of rule 36.21 are “This rule applies where at trial” (my emphasis). Those words are not to be ignored. They mean that the rule does not apply where, as in this case, summary judgment is given under Part 24. Rule 24.1 sets out a procedure by...
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