BARRY V ESSEX COUNTY COUNCIL [2025] EWCC 64

Enhanced interest on costs under CPR 36.17(4)(c) is calculated on the aggregate sum of post-offer costs from the offer’s expiry date, not item by item from when each cost was incurred.

• Where a court order for interest on costs pursuant to CPR 36.17(4)(c) specifies a rate and a start date without further elaboration, it is to be construed as applying that rate to the aggregate of all costs incurred from that single start date, rather than requiring an item-by-item calculation from individual dates of incurrence. [45-48, 69]
• The calculation of interest on costs under CPR 36.17(4)(c) should be approached in a broad-brush manner to avoid prolonged argument and excessive complexity; a method that requires interest to be calculated separately on each individual cost item from its specific date of incurrence is inconsistent with this principle. [46, 66-67]
• The policy underlying the enhanced interest sanction in CPR 36.17 is not purely compensatory and can include a non-compensatory, punitive element designed to encourage settlement, which can justify an interest calculation method that results in a claimant receiving more than a strictly compensatory sum. [62-64]
• The decision in McPhilemy v Times Newspapers Ltd on the mechanics of calculating interest on costs is not binding authority on lower courts for subsequent cases, particularly where the factual justification for its reasoning (compensation for loss of use of money paid on account) is absent, such as in cases funded by a conditional fee agreement. [50-58, 62]
• When interpreting a costs order, the absence of express wording directing a complex or unusual method of calculation (such as interest running from individual dates of incurrence) indicates that the court intended the standard, more straightforward method of calculation to apply. [47-48]