Precedents Cited

The judgment extensively referenced several key cases to underpin its reasoning:

• Jaura v Ahmed [2002] EWCA Civ 210: Emphasized that interest should reflect the real cost of borrowing for entities similar to the claimant, moving away from the default base rate plus one percent.
• Tate & Lyle Food and Distribution v Greater London Council [1982] 1 WLR 149: Established that commercial interest should mirror the rate at which the claimant could borrow, considering general attributes rather than specific circumstances.
• Fiona Trust v Privalov [2011] EWHC 664 (Comm): Clarified the court's broad discretion in awarding interest rates and acknowledged LIBOR as a common reference point.
• Carrasco v Johnson [2018] EWCA Civ 87: Reinforced that interest compensates for being kept out of money, not for profit or damage, and highlighted the compensatory nature of interest awards.
• OMV Petrom SA v Glencore International AG [2017] 1 WLR 3456: Demonstrated the upper limits of enhanced interest rates, awarding up to 10% above the base rate in extreme cases to discourage unreasonable conduct.

These precedents collectively shaped the court's approach to determining appropriate interest rates and the conditions under which enhanced rates could be justified.

Legal Reasoning

The court's legal reasoning was methodical, focusing on interpreting CPR Part 36's provisions concerning interest and costs. Central to this was the distinction between compensatory and enhanced interest rates:

• Compensatory Interest: Intended to compensate the claimant for the period during which they were deprived of the funds due to the defendant's actions. The court assessed the appropriate base rate by considering industry-standard rates like LIBOR, moving away from fixed margins above the base rate.
• Enhanced Interest: Granted to penalize the defendant for unreasonable conduct, such as refusing settlement offers or engaging in protracted litigation without merit. The court emphasized that such enhancements should be proportionate to the misconduct.

In this case, the court found that while Assetco's Part 36 offers were substantial, Grant Thornton's conduct warranted an enhanced interest rate. Drawing from the OMV Petrom case, the court recognized the necessity of discouraging unreasonable litigation conduct but avoided the extreme 10% uplift, instead opting for a balanced 3% enhancement over the compensatory rate.

Additionally, the court addressed Grant Thornton's application for a stay pending appeal. Evaluating the risk of Assetco potentially distributing funds to shareholders before any appeal decision, the court mandated that the awarded sums be paid into court with a secured interest rate, ensuring that Grant Thornton could recover the funds should the appeal succeed.

Impact

The judgment has several implications for future litigation, particularly concerning the application of CPR Part 36:

• Enhanced Interest Rates: Courts may award enhanced interest rates exceeding compensatory amounts when defendants exhibit unreasonable conduct, thereby reinforcing the punitive aspect of Part 36 provisions.
• Criteria for Enhancements: The detailed analysis provides a framework for assessing when and how much to enhance interest rates, balancing deterrence against fairness.
• Stays of Execution: The approach to Grant Thornton's stay application underscores the importance of securing awarded funds to protect the claimant's interests during the appeal process.
• Cost Management: By allowing discretion in awarding costs and interest, the judgment encourages parties to engage constructively in settlement negotiations to avoid punitive consequences.

Overall, the judgment reinforces the structured use of Part 36 as both a punitive and incentivizing tool, promoting efficient and reasonable litigation practices.