High Court Addresses Key Issues in Part 36 Offers and Costs in Old Park Capital Maestro Fund Limited v Old Park Capital Limited

Citation: [2023] EWHC 3057 (Ch)
Judgment on

Introduction

In the High Court judgment of the Chancery Division concerning Old Park Capital Maestro Fund Limited v Old Park Capital Limited (in liquidation), Mr. Justice Richards addresses several consequential matters following a judgment handed down on 27 July 2023. The case examines a number of principles, including the application of Part 36 offers and the respective obligations regarding costs, interest, and payments emanating from a declination to accept a settlement offer. This article aims to dissect the judgment and unpack the pertinent legal principles for clarity in their practical application for legal professionals in the UK.

Key Facts

The case involves a dispute between Old Park Capital Maestro Fund Limited (the Claimant or Fund) and Old Park Capital Limited (in liquidation) (the Defendant). The Claimant offered to settle its case through a Part 36 offer dated 4 April 2023 in the sum of USD 4,175,182.99, which the Defendant declined. The subsequent trial judgment was for the Claimant, matching the offered settlement sum. The Defendant contended that the judgment had not beaten the Part 36 offer due to currency fluctuations. Additional consequential matters included the question of pre-judgment interest, whether the Part 36 offer was a genuine attempt to settle, and how the court should approach costs and interest incurred before and after the offer’s relevant period.

Part 36 Offers and Judgments

The court considered the principles of Civil Procedure Rules (CPR) 36 in determining whether a claimant who wins a judgment equal to or better than a Part 36 offer should be entitled to enhanced costs and interest benefits. The question hinged on whether the judgment achieved by the Fund was “at least as advantageous” as the original Part 36 offer. Importantly, the analysis of whether an offer was beaten involves examining the offer and judgment values without necessitating a currency conversion, contrary to the Defendant’s argument. Assessing the “genuineness” of a Part 36 offer, the court must consider if there was a realistic prospect of recovery beyond the principal sum offered, which includes potential pre-judgment interest.

Determine Application of Enhanced Costs and Interest

When enhanced costs and interest are justified under CPR 36.17(4), the court must not only assess whether these are merited but also determine the appropriate rate. The judgment establishes that the court has the discretion to consider economic reality and a broad range of factors impacting interest rates on both damages and costs.

Proportionality in Costs Recovery

The principles of recovery of litigation costs were addressed in the context of both successes and failures of the parties’ various claims. Considering that the underlying grievance against the Defendant was substantially the same despite multiple legal approaches, the court weighed the efforts and resources expended on different aspects of the claims to arrive at a fair and reasonable deduction in the Defendant’s liability for costs.

Outcomes

Mr. Justice Richards determined that the Fund had indeed beaten the Part 36 offer and was entitled to the benefits provided under CPR 36.17(4), despite the objections put forth by the Defendant. Furthermore, the court outlined the following orders under this rule:

  • Interest on the judgment sum since the expiration of the relevant period at a rate up to 10% above the base rate.
  • Costs for the claims against the Defendant on an indemnity basis since the expiration of the relevant period.
  • Interest on those costs at the same rate applicable to damages.
  • An additional sum of £75,000 under the provisions of CPR 36.17(4)(d).

For costs incurred before the expiration of the relevant period, the court concluded a standard basis award of costs, lessened by 15% to account for the Claimant’s failures in some claims. Pre-judgment interest was awarded from the dates of investment to the relevant period at the rate of the base rate plus 2%.

Justice Richards also stipulated the rates for post-judgment interest, the specifications for a payment on account, and guidelines for the calculation of such a payment.

Conclusion

The judgment reinforces the importance of Part 36 offers and the consequences of not accepting reasonable settlement terms by providing clear guidance on the determination of “advantageous” terms in the context of judgments and settlement offers. For legal professionals, this case underscores the significance of assessing the potential outcomes and costs implications of declining a Part 36 offer. The principles applied in this judgment provide a framework for similar deliberations in future dispute resolutions and inform judicial discretion in the award of costs and interest.

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