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Feltham v Bouskell  EWHC 3086 (Ch) is the first reported case dealing with ‘bonus payments’ which become due when a Claimant beats his or her Part 36 offer at trial.
The substantive dispute in Feltham concerned a claim for negligence brought by a beneficiary under a will against a firm of solicitors which had failed to follow instructions to prepare that will. The Claimant had made a Part 36 offer which had expired two working days before the trial.
At trial, the Claimant had beaten her Part 36 offer. In so doing, CPR 36.14(3)(d) provided that the Court was required to award the Claimant an additional amount on her damages unless it was considered unjust to do so. This bonus payment would have amounted to a little under £75,000.
It was the Defendant’s position that it would, in the circumstances of this case, be unjust to award the additional amount. The Defendant relied on the following factors in support of this position:
Firstly, CPR 36.14(4)(b) provides that the timing of an offer is a factor that the Court will take into account when determining whether it is unreasonable to award an additional amount. The Defendant therefore submitted that the last-minute nature of the offer should be taken into account.
Secondly, CPR 36.14(4)(c) proscribes that the Court has to have regard to the information available to the parties when the offer was made. The Claimant had failed to plead a significant aspect of her case which was only raised as an issue during opening arguments. Further, the Claimant had failed to disclose documents that were materially important to the matter.
The Court agreed with the Defendant that the manner in which the case was conducted meant that it would be unjust to make an award of an additional amount. The Court went on to decide that, had it not been decided that it was unjust to award an additional amount, it would have imposed a reduction to the Claimant’s costs to reflect her conduct.
The changes to Part 36 had the clear intention of encouraging early settlement of disputes This judgment appears to demonstrate that, if one wishes to take advantage of these changes, then litigation must be conducted within the spirit of CPR. That is to say that early offers will be more likely to result in a bonus payment, but any form of misconduct – such as by failing to properly plead a case or failing to disclose documents – may result in an decision that it would be unjust to award an additional amount.
An application for permission to appeal was made at the conclusion of the hearing but was refused. From a practitioner’s point of view, this may be considered unfortunate as guidance from the Court of Appeal as to the circumstances in which it should be considered unjust to award an additional amount would help clarify a new and somewhat grey area of CPR.