Offer made before appeal of settlement plus costs on indemnity basis - offeror waiving interest uplift on damages and costs awarded - waiver of interest not part of settlement offer when considering indemnity costs

Ali Reza-Delta Transport Co Ltd v United Arab Shipping Co SAG (No 2): CA (Lords Justice Peter Gibson and Tuckey and Mr Justice Nelson): 17 June 2003

In November 2002, a judge awarded $115,800 (73,000) damages to the claimants, representing the market value in Europe of equipment destroyed or damaged in Saudi Arabia by the defendant.

On appeal, the court substituted an award of $227,400.

The claimants had made three offers under part 36 of the Civil Procedure Rules 1998 (CPR) and did better than both their first two offers made before trial.

The Court of Appeal awarded costs of the trial on an indemnity basis and interest at 3% above the prime rate.

The third offer was made on 10 March 2003 before the appeal, when they offered to accept $227,400 plus the costs of the trial on the indemnity basis, but waiving any interest uplift on both the damages and costs awarded.

The offer was not accepted and the matter came to appeal.

The issue was whether the Court of Appeal could order indemnity costs.

The court had drawn attention to Mitchell v James [2002] EWCA Civ 997, The Times, 20 July, 2002; [2003] 2 All ER 1064 and invited written submissions on its applicability.

Chirag Karia (instructed by Jackson Parton) for the claimants; Ricky Diwan (instructed by Hill Taylor Dickinson) for the defendant.

Held, dismissing the point on costs, that concessions as to interest uplift over the ordinary rate were not intended to be any part of a part 36 offer to be taken into account in determining the applicability of CPR rule 36.21 as to entitlement to indemnity costs.