Feltham v Bouskell

Interest on a judgment sum should reflect the circumstances in which the money was held and its potential to earn a return. A rate modestly above base rate may be appropriate, while the maximum enhancement permitted by Part 36 should not be imposed where prevailing rates would make it effectively penal. Where a claimant beats a Part 36 offer, the additional payment is ordinarily required unless the circumstances make it unjust. The court may consider the timing of the offer, the information available to the parties, the conduct of the parties, and the significance of any late or unpleaded matters. A claimant should not be penalised twice in costs for matters already taken into account when refusing the additional Part 36 payment.

The judgment dealt with interest and costs following a successful claim in which the claimant recovered £650,000 and was awarded £62,000 for costs incurred in an earlier probate action. The claimant had made a Part 36 offer of £700,000, which she beat at trial. The court had to determine the appropriate rates and commencement dates for interest, whether the additional amount under CPR 36.14(3)(d) would be unjust, and whether the claimant’s costs should be reduced because of an unpleaded allegation, late disclosure of nursing notes, an unsuccessful share claim, and an unsuccessful claim concerning executor’s costs.

1. Interest on the judgment sum. The court rejected both the proposed rates of 2% and 1% above base. It ordered interest at 1.5% above base from 20 August 2009. The estate assets were potentially capable of being sold, increasing in value, or earning interest, so separate interest was not awarded for the earlier period.
2. Interest on probate-action costs. Interest on the claimant’s £62,000 costs was awarded at 1.5% above base from the dates on which the costs were paid.
3. Part 36 interest. The claimant had beaten her offer and was entitled to enhanced interest under CPR 36.14(3)(a). The court considered that a rate near the permitted maximum would be penal in light of current interest rates and ordered 3.5% above base from 3 June 2013.
4. Additional amount. CPR 36.14(3)(d) required an additional amount unless it was unjust to order it. Applying the factors in CPR 36.14(4), the court treated the very late offer, the fact that it was only just beaten, the unpleaded allegation concerning Dr Staunton, and the late disclosure of nursing notes as important. The nursing notes should have been disclosed because the pleadings referred to the earlier probate action and the testator’s mental condition was in issue. In those circumstances, ordering the additional amount of up to £75,000 would be unjust.
5. Costs. The claimant recovered all her costs. The matters relied on by the defendant did not justify a reduction, particularly because the first two matters had already been taken into account in refusing the additional Part 36 payment. The claimant was also awarded indemnity costs from 3 June 2013 and interest on costs at 1.5% above base, with enhanced interest at 3.5% above base from that date.
6. An interim payment on account of costs of £75,000 was ordered. Permission to appeal was refused.

First-instance judgment following an earlier trial judgment in the same proceedings. The citation of that earlier judgment was not stated in the judgment.