H&P Advisory Limited v Barrick Gold (Holdings) Limited: Consequential matters

Background

At the centre of the dispute was a claim by H&P, a boutique investment bank founded by Ian Hannam, for over US$18 million in fees allegedly owed for advisory services rendered in connection with the 2018 merger (the Merger) between Barrick Gold Corporation and Randgold Resources Limited. H&P’s case rested on two alternative foundations: first, that there had been an oral agreement entitling it to an US$18 million fee and second, that it was entitled to remuneration on a restitutionary quantum meruit basis (for the same amount) for the value of services provided.

In its substantive decision in March 2025, the Court found no evidence of any concluded oral agreement but held that H&P had made some contribution to the early stages of the Merger and awarded H&P US$2 million on a quantum meruit basis, plus expenses. The hearing of consequential matters was convened to settle the outstanding issues of expenses, pre-judgment interest and costs. The Court’s comments on pre-judgment interest and the operation of the Part 36 offer made are of wider interest.

The Decision

Having first determined which of the Claimant’s claimed expenses were reasonable and recoverable, the Judge then proceeded to consider the remaining issues of pre-judgment interest and the applicable duration of the interest period. 

• Pre-judgment interest rate

The Court adopted the approach taken by Mr Justice Foxton in LoneStar Communications Corporation LLC v Kaye & Ors [2023] Costs LR 1317, which confirmed that the default interest rate for US$ awards in the Commercial Court should be US Prime. The Judge noted that it was not the Court’s role to conduct a detailed enquiry into the rate at which the particular recipient of compensation might have borrowed funds but should have regard only to the nature of the recipient’s business as a representative of a class of business whose financial characteristics were similar. The Judge therefore rejected H&P’s evidence in relation to the cost of commercial funding of smaller US companies and applied the US Prime Rate plus a 1% uplift.

• Duration of pre-judgment interest

The Judge observed that, as a general rule, pre-judgment interest on an award for economic loss should run from the date the loss was sustained. However, the Court retains discretion to award interest from the date the cause of action arose or from any later date deemed appropriate, as established in BP Exploration Co (Libya) Ltd v Hunt [1982] 1 All E.R. 925 (HL). In exercising this discretion, the Judge noted that where a claimant’s failure to prosecute the claim is the predominate cause of being kept out of their money, a court may decline to award interest.

In this case, the Court found that the appropriate timeframe for interest to begin running was 5 from April 2022 (the date on which the letter before action was sent) up to judgment. The Judge ruled that interest should not accrue any earlier than this due to the following factors:

i. Very shortly after the announcement of the Merger, on 27 September 2018, Barrick offered H&P a sum of US$2 million in addition to their reasonable expenses. H&P declined this offer. The Judge stated that it would be “bizarre” [29] to award H&P their interest from this period as it was “H&P’s own actions which were the cause of their not receiving this money” [29].

ii. The commencement of the US proceedings in February 2019 (which were dismissed on jurisdictional grounds) concerned the question of whether Barrick had entered into a binding contract with H&P to pay it US$18 million. At no point did H&P press or raise the alternative restitutionary quantum meruit claim for US$2 million. 

iii. The letter before action (sent on 5 April 2022) which followed the discontinuation of the US proceedings and the commencement of proceedings in the English court, was the appropriate date for interest to run from, as this was the first time it was clearly communicated to Barrick that a claim for restitutionary quantum meruit claim was being pursued. 

Drawing on Lady Justice Arden’s view in Benedetti v Sawiris [2010] EWCA Civ 1427, the Judge reiterated that a claimant who refuses an offer that would have satisfied their claim assumes the risk of doing so. The Judge noted that H&P could have secured US$2 million simply by accepting the offer they received from the Defendant in 2018, but instead H&P rejected the offer, choosing “a path of litigation rather than discussion – a choice which has ended poorly for them” [34]. 

Part 36 offer

Once the above determinations on expenses and interest were made, the Judge turned his attention to the Part 36 Offer made by Barrick in May 2023 in the sum of US$2,230,000. The Judge confirmed that H&P had failed to obtain a judgment more advantageous than the Part 36 Offer (the relevant sum calculated as US$2,227,745). The Court noted that it must apply the costs consequences set out in CPR 36.17(3) “unless it considers it unjust to do so” [43], taking into account the circumstances set out at CPR 36.17(5) and for that test to be met: “[t]here must be something about the particular circumstances of the case which takes it out of the norm” [57] (Downing v Peterborough & Stamford Hospitals NHS Foundation Trust [2014] EWHC 4216 (QB) at [61] (Sir David Eady)).

Although H&P argued that the usual cost consequences should not apply, the Judge emphasised that the “injustice” exception under CPR 36.17(5) is a high bar, noting that the purpose of Part 36 would be undermined if courts routinely departed from its consequences. There was nothing in the circumstances of this case that justified such a departure. 

The Court ordered that Barrick should pay 50% of H&P’s costs up to the end of expiry of the relevant period for acceptance of the Part 36 offer in May 2023, but thereafter, H&P should bear the remaining costs of the litigation.

Commentary

This case is a useful reminder that the purpose of pre-judgment interest is to compensate a claimant for being kept out of their money. It may not be payable in circumstances where the reason for the non-payment is a refusal by the claimant to accept that payment. In this case H&P were offered US$2 million plus expenses in September 2018. H&P rejected this offer and “chose a path of litigation” [34] only to be awarded the same amount at trial. The Judge considered that it would be highly undesirable to allow a party to recover interest where their “impoverishment is a result of their own deliberate act” [32] – namely a refusal to accept an offer which meets the claim.

It is also a powerful illustration of the way in which Part 36 offers can shift the costs burden between the parties and significantly impact the financial outcome of litigation.