DISHONEST EXAGGERATION OF CLAIM – FACTORS RELEVANT TO COSTS ORDER

The claimant appealed against a decision that, although her claim for personal injuries against the defendant had succeeded, she should pay the defendant’s costs. The claimant was injured as a result of an accident at work for which the defendant admitted liability. She sustained bruising which resolved over a period of time though there was a dispute as to whether the effect of the accident was to aggravate pre-existing back pain for 12 months or to advance the deterioration of her pre-existing low back problem by about five years. The claimant retained a consultant and told her that she had no history of back pain. She retained a second consultant whom she advised that she had no back pain prior to the accident. This second consultant agreed with the defendant’s expert that the claimant had a significant pre-accident history of lumbar symptoms. The judge held that, while the claimant had injured her back in the fall, the consequences were comparatively minor and she had deliberately concealed her history in an effort to increase the amount of compensation which she would recover. On the basis that her injuries would have resolved within 12 months of the accident, the judge assessed quantum of damages for PSLA at £3,500 and loss of earnings of £2,022.38, which was undisputed. The defendant had made a part 36 offer of £4,500 but, although the claimant had beaten that, the judge ordered her to pay the defendant’s costs. The claimant submitted that costs should be disallowed only in so far as they were attributable to the exaggeration and that the defendant should have protected itself by making a better part 36 offer. On that basis, the defendant should pay the claimant’s costs because she recovered more than had been offered and any exaggeration should be reflected in a reduction of the proportion of costs she should be entitled to recover. 

 

It was held on appeal that the judge erred in characterising the claimant’s action as an abuse of the court’s process. There was no general rule of law that the dishonest exaggeration of a genuine claim would result in the dismissal of the whole claim. It was held that the CPR should be used to determine who was the successful party. The claimant was successful in that she had beaten the part 36 offer. The exaggeration of the claim was “unreasonable conduct” which the court could take into account when considering CPR 44.3(4)(a). The exaggeration was also conduct to be taken into account under 44.3(5)(d) in disapplying the general rule that the successful party was entitled to its costs. In a case of misconduct the court was entitled to deprive a party of costs by way of a punitive sanction. Though the claimant was “the successful party” she should recover nothing in respect of the first consultant’s reports and the defendant should have some compensation for the wasted costs incurred in having to consider those reports. The claimant’s exaggeration meant that the litigation became heavily contested when it could have easily settled, putting the defendant to unnecessary expense. However, the defendant had also failed to protect its position by making an increased part 36 offer. Balancing the factors, the correct order was no order as to costs.