The government announced on Tuesday (10 July) that the planned additional sanction to reward claimants’ Part 36 offers will be subject to a tapering off mechanism for higher value claims.
The Legal Aid, Sentencing and Punishment of Offenders Act 2012, which implements a number of the key Jackson reforms (see post), enables court rules to require a defendant to make an additional payment to the claimant where the defendant has rejected a claimant’s Part 36 offer but failed to do better at trial.
The government’s announcement confirms that, as anticipated, this additional payment will be calculated as 10% of damages (or for non-damages claims, 10% of costs). However, it will be tapered down for claims over £500,000 so that the maximum sanction is likely to be £75,000. Accordingly, the new sanction will have little relevance to larger commercial claims. The existing sanctions for claimants’ offers (i.e. indemnity costs and enhanced interest on both damages and costs at up to 10% above base rate) will continue to apply to all claims.