“Striking Gold or Missing the Mark? The Costly Consequences of Part 36”
The High Court has recently handed down Judgment in H&P Advisory Ltd v Barrick Gold (Holdings) Ltd [2025] EWHC 562 (Ch) (12 March 2025) and subsequently H&P Advisory Ltd v Barrick Gold (Holdings) Ltd (Re Consequential Matters) [2025] EWHC 1330 (Ch) concerning a commercial dispute and Part 36 consequences. The substantive action was an US$18 million claim by a boutique investment bank for commission on the merger of Randgold Resources and Barrick Gold Corporation. The merger created an industry-leading gold investment vehicle.
The claim was advanced by H&P on two fronts: (i) an alleged oral agreement, and/or (ii) a quantum meruit for restitution of unjust enrichment. It was asserted that they had been formally engaged as financial advisers during a major merger. Although the contractual claim failed, the Court acknowledged the value of services rendered by awarding a restitutionary quantum meruit of US$2 million plus expenses (such expenses to be addressed thereafter). The case became heavily contested over consequential matters, including whether H&P’s refusal to accept earlier settlement offers affected their entitlement to interest and litigation costs.
Notably, Barrick had offered US$2 million plus accrued interest under Part 36 which, after the calculation of interest, it transpired H&P had narrowly failed to beat “by a whisker”. As such, the primary issue was, therefore, whether the usual principles of Part 36 should apply – CPR 36.17.
The High Court had little sympathy for H&P’s contentions that it was unjust for the formal principles of Part 36 to apply because they were a sophisticated commercial organisation well capable of considering such issues. It was found that the precise breadth of the “whisker” was unimportant therefore matters proceeded on the basis that the ordinary rules of CPR 36 should apply.
H&P faced adverse costs consequences for advancing unsuccessful aspects (i.e., alleged oral contract) and failing to beat Barrick’s Part 36 Offer. The Court found no injustice in applying the usual rules. As a result, H&P recovered only 50% of their pre-offer costs and were ordered to pay Barrick’s costs thereafter.
This case is a stark reminder of the benefits and pitfalls of Part 36 and its consequences. The Judgment offers crucial insights as to the Court’s approach to costs following partial success at Trial and the financial and procedural implications of failing to beat a Part 36.
Costs lawyers can play a vital role in cases like this by navigating the technical and strategic issues surrounding costs recovery generally and Part 36 implications. PIC would be able to advise on the potential costs consequences of failing to beat a Part 36 Offer. Furthermore, we formulate and advance strategic Part 36 Offers during detailed assessment proceedings to maximise its benefits in costs recovery.
Mathew Lawton, Costs Lawyer
19.06.2025