H&P Advisory Ltd v Barrick Gold (Holdings) Ltd (Re Consequential Matters) [2025] EWHC 1330 (Ch) and the application of Part 36 when just falling short of beating an offer.
Background
The Claimant was a London-based boutique investment bank founded by a well-known specialist in mining investment banking. The Defendant was a gold mining and exploration company based in Jersey. It was alleged that an agreement had been reached for the acquisition of the Defendant (then named Randgold) by Barrick. However, there was no documentary evidence of the negotiations between the parties or of any final agreement, and a dispute arose regarding the basis of the merger.
The Claimant argued that they had initiated the entire transaction through a singular moment of brilliance and rejected the Defendant’s assertion that their role was merely "peripheral." The Claimant sought $18,000,000 for their involvement in the merger.
The Court found that no contract existed between the Claimant and the Defendant entitling the Claimant to a fee for their work on the merger. However, the Court concluded that the Claimant’s efforts in promoting the transaction conferred a valuable benefit on both merging parties, estimated at approximately $2,000,000. It was also found that a contract existed entitling the Claimant to recover their expenses. Accordingly, the Court awarded the Claimant $2,000,000, plus reasonable expenses.
The Part 36 Offer
During the proceedings, the Defendant made a Part 36 offer on 5 May 2023, offering $2,000,000 plus $230,000 in accrued interest. While the final award appeared to match this offer, the case ultimately hinged on detailed calculations of interest and whether certain expenses should be included in the award.
Consideration of Expenses
The most contentious expense was the Claimant’s subscription to a premium service named "MineSpans," which provided financial models on a mine-by-mine basis for an annual fee of $75,000. The Defendant argued that this subscription was used for the Claimant’s general business operations and was no more specifically related to the merger than the cost of office rent. The Court partially agreed, but also found that the Defendant had derived some benefit from the service. A reasonable contribution of $12,500 was deemed payable by the Defendant. Although issues were raised regarding travel expenses, these were ultimately allowed.
Payable Interest
The Court then addressed how interest should be calculated, breaking it down into three sub-issues: the applicable interest period, the appropriate base rate, and any potential uplift on that base rate.
It was argued that, as a UK-based business, the Claimant would have converted the funds into sterling and thus should receive interest at the UK base rate. The Court accepted this in principle but applied the precedent set in LoneStar Communications Corporation LLC v Kaye & Ors, which held that the default interest rate for awards denominated in USD should be the US prime rate, not the Bank of England base rate.
Regarding uplift, the Court concluded that the Claimant’s business model did not involve borrowing against delayed payments, but rather holding funds briefly before distributing them. Therefore, a 1% uplift above the US prime rate was considered appropriate.
For the interest period, the Court examined whether the Claimant had promptly sought payment. If any delay in payment resulted from the Claimant’s failure to pursue the claim diligently, the Court had discretion to deny interest for that period.
The Court identified four distinct interest periods:
- From the date of the Defendant’s $2,000,000 offer – interest was denied as the delay was attributable to the Claimant.
- The period of proceedings in Wyoming, which were discontinued for lack of jurisdiction – again, interest was denied as the Claimant did not seek the $2,000,000 in those proceedings.
- The period after the Wyoming proceedings ended and before UK proceedings began.
- The period following the commencement of UK proceedings – the Court found this to be the appropriate point from which interest should run, specifically from the date of the letter before action.
The Court’s Comments
The Court observed that the Claimant had failed to beat the Defendant’s Part 36 offer by the narrowest of margins and emphasized that even the smallest shortfall was sufficient for the usual Part 36 consequences to apply.
Accordingly, the Court awarded the Defendant its costs for the period following the expiry of the Part 36 offer, reaffirming that such consequences apply even if the Claimant fell short by as little as one penny, unless it would be unjust to do so.
Analysis
This case highlights the importance of carefully considering Part 36 offers and understanding the consequences of failing to beat such offers at trial. The Civil Procedure Rules (CPR) 36.17 are clear: a Claimant must obtain a judgment that is better, in monetary terms, than the Defendant’s offer. Simply matching or falling slightly short is not sufficient to avoid cost consequences.
The decision serves as a cautionary tale for litigators to not only evaluate settlement offers in detail, but also to scrutinize any uncertainties in calculations that could render the offer riskier than it initially appears.
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