The Court of Appeal ruled that Part 36 of the Civil Procedure Rules dealt with liability for costs, not liability for damages. The Court said that had the defendant wished to protect itself with regard to the interest that was claimed as damages, it should have made an open offer, which the judge could have taken into account when assessing the damages. The Court only allowed the defendant half its costs since the date of the 2001 payment in, as a consequence of its conduct of the litigation following the payment in.
*William John Henry Johnson vs Gore Wood & Co, 27 January 2004, Court of Appeal (Civil Division), Judgment of Lady Justice Arden
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The defendants were faced with a claim for interest payments. The claimant had taken out loans to fund a planned development for which, as a result of the defendants' negligence, he had failed to acquire the necessary land. The sum sought as damages therefore continued to rise until the loans could be paid off. The defendants made a payment into court. This proved to be significantly in excess of what the claimant eventually recovered. The defendants thought it was not fair in the circumstances that they should have to pay further interest after the date of the payment in. They appealed arguing that the overriding objective of the court rules supported their position. The Court of Appeal refused the appeal. It held that as the judge had to decide all questions of liability and the amount of money awarded before any payments into court could be brought to his or her attention, the argument was unsustainable. So if you find yourself in this position, consider making an open offer of settlement to obtain protection.