Langleys represented East Riding of Yorkshire Council in a highways claim brought against them by Mrs Hullock arising out of a tripping accident on the 19 October 2004. Primary liability was admitted on 7 March 2005 and liability was apportioned in the favour of the Claimant on a 75/25 basis.
The claim was originally pursued in excess of £100,000. The Claimant contended she required ongoing care, she could not walk long distances and required assistance with most aspects of daily life.
On 29 November 2005 the Claimant served a schedule of general and special damages. The special damages claim was for £93,000 most of which was made up of the cost of past and future care of £7065 per annum. An interim payment was made by the Defendant on 13 April 2006 in the sum of £15,000.
On 5 January 2007 the Claimant’s Solicitors made an offer to settle in the sum of £100,000.
The Defendant contended that the Claimant was exaggerating her claim and obtained surveillance evidence in June 2007 which was disclosed. A joint report was obtained in December 2007 which confirmed that the Claimant was not as disabled as she had stated and she was able to walk significant distances.
On the 24 January 2008 the Claimant then made an offer to settle for £15,000 contended she had not sought to exaggerate her claim, nor had she acted dishonestly.
First Instance Decision
At trial the issue proceeded on the issue of costs only, the parties having agreed damages in the sum of £15,000 before trial.
Both parties asserted they were the successful party. The Claimant sought an order that the Defendant pay the Claimant’s costs in the indemnity basis from 16 February 2008 when the Part 36 offer had expired. The Defendant contended that the Claimant should receive costs up to the date of the interim payment but the Claimant should pay the Defendant’s costs thereafter.
At trial the Judge held that the Claimant had succeeded in obtaining a judgment for £15,000 and taking into account the exaggeration of the Claimant, ordered the Defendant to pay 50% of the Claimant’s costs. He stated that the general rule was that the Claimant should be awarded her costs as the Defendant had never made any Part 36 offers.
Appeal
Langleys, represented by Jason Cox of Ropewalk Chambers, appealed the decision of the trial Judge on the basis that the trial judge had erred in the exercise of his discretion under CPR 44.3 in three ways:
1) By failing to identify who was the successful party
2) By a failure to adequately address the effect of the interim payment on 13 April 2006
3) By finding the care claim was exaggerated and failing to give weight to that.
The Court of Appeal found that the trial Judge was wrong to find that Mrs Hullock was the successful party because she had obtained £15,000. The Defendants willingness to make an interim payment was relevant as to the real issue at trial which was the past and future care claim. Up until March 2008 the claim for care was £93,000, which was then reduced down to £6,500 following surveillance evidence. What kept the parties from settling was the claim for care.
The Trial Judge had held that there had been exaggeration of the claim and the Claimant had abandoned the claim for future care. However, the Trial Judge had failed to give adequate consideration to the effect of the special damages claim and the interim payment in April 2006 in relation to costs.
The Court of Appeal held that the real winner was the Defendant. There was no justification for the Claimant’s Part 36 offer in January 2007 and the dispute would have been settled without proceedings had the Claimant not persisted in an exaggerated claim for special damages in November 2005.
The appeal was allowed and it was ordered that the Defendant should pay the Claimant’s costs to the 13 April 2006, the date of the interim payment and the Claimant was ordered to pay the Defendant’s costs thereafter
Comment
The decision in Painting v Oxford University (2005) was followed by the Court of Appeal, in that the Court must first address who is the successful party when exercising their discretion under CPR 44.3.
It is important for local authorities to be alive to exaggerated claims and undertake surveillance evidence where possible. Where it is proven that a claim could have settled at an early stage, but for the exaggeration of the Claimant’s claim for care and assistance, then it is important to look at who is the real winner in the case when addressing costs.
The Court of Appeal stated that an interim payment should not be treated as being equivalent to a Part 36 offer because it is not an offer to settle. Wherever possible it will be prudent to make a Part 36 offer at the same time as making an interim payment, even if they are for the same amount. However, failing that the Court will give effect to the interim payment as clear evidence of a willingness to settle and this will be highly relevant to costs in the context of exaggeration.
If you have any queries regarding this case or any of the issues it raises then please feel free to contact Helen Brown, Head of the Public Sector Unit and Partner, on telephone 01904 683026 or email
helen.brown@langleys.com.