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When is a claimant who chooses to exaggerate not dishonest?

One example of this is to be found in the conceptually difficult judgment of Mrs. Justice Farbey in Morrow v Shrewsbury Rugby Union Football Club Limited [2020] EWHC 999(QB).

In that case, although it was held that there could be no suggestion that the claimant lacked the capacity to make decisions in his own case and it was further held that he had “chosen” to put forward an exaggerated claim, he was held not to have been dishonest.

The background to this conundrum is a personal injury claim arising from an accident in which Mr. Morrow was struck on the head and injured by a rugby post whilst watching a game of rugby on the defendant’s pitch. Liability was not in dispute. The claimant, claimed damages exceeding £1m, including a loss of future earnings of nearly £950,000. He was awarded £285,658.08. A short time before trial the claimant had made a Part 36 Offer to accept £800,000. The defendant had made an offer at a much earlier stage in the sum of £110,000.

The question before the Court was whether the claimant should recover all of his costs of bringing his claim notwithstanding that he had bettered the defendant’s offer.

The defendant submitted that the claimant should not recover his costs in full because significant time had been taken up in the proceedings, particularly at trial, in investigating and dealing with the claimant’s exaggerated account of his pre-accident difficulties, the impact of the accident and his post-accident progress, as set out in an earlier judgment from February 2020 at [2020] EWHC 379(QB).

The defendant argued that a number of the claimant’s witnesses had given exaggerated evidence. His wife’s evidence about the claimant’s health had been highly unreliable and in the main rejected. The evidence given by witnesses in regard to the claimant’s likely future earnings had been unreliable, exaggerated and florid, with evidence from the claimant’s former line manager on likely salary increases being particularly implausible.

The advancing of an exaggerated claim for loss of future earnings, it was submitted, had caused significant time to be unnecessarily taken up in investigating and meeting it, both in the course of the proceedings generally and, more specifically, at trial. More generally, much of the expert opinion evidence adduced by the claimant in relation to his medical condition had not been accepted (where it was different from the defendant’s expert evidence).

The defendant invited the Court to treat the claimant as having lost on central issues, particularly in relation to the loss of future earnings. It was argued that the various factors warranted a one-third reduction to the costs that would be awarded to the claimant on a detailed assessment.

The claimant submitted that the defendant, in its written case, had only accepted the sum of £829.54 for past losses, and an unassessed amount for general damages. All other claims were denied, including loss of earnings. The claimant, therefore, had to go to court to achieve an award of more than £110,000, which was the defendant’s only offer and which was easily beaten.

In addition, the Court had rejected the defendant’s argument as to the legal test for causation.

Further, the court had found that the claimant would probably have worked until his 55th birthday on the basis of a concession made by the defendant’s consultant psychiatrist in cross-examination. It had until then been the defendant’s case that that the accident was simply coincidental to the claimant having to give up work in any event. The defendant, it was argued, ought to have “stress tested” the psychiatrist’s evidence before trial. Had that happened, the medical basis upon which the defendant’s case was founded would have been appreciated to be far weaker than it was on paper. The defendant would have appreciated that, on its own evidence, its Part 36 offer was inadequate.

Moreover it was argued, the claimant’s Part 36 offer of £800,000 was approximately 60% of the pleaded claim. This in itself indicated a significant inclination by the claimant to negotiate, and the offer should be considered in the context of various failures of the defendant to negotiate.

The Court considered CPR 44.2, together with the cases of Fox v Foundation Piling Ltd [2011] EWCA Civ 790 and Widlake v BAA Ltd [2009] EWCA Civ 1256 in which Ward LJ observed at paragraph 42:

“Defendants are…used to having to cope with false or exaggerated claims. defendants have a means of protecting themselves. Part 36 is that shield. The court may not now always attach the same significance to a defendant’s failure to beat his payment into court as applied in the days before the CPR. Coming close can now sometimes have an impact on costs. But the rule remains that a defendant has this ability to win outright by making an offer which the claimant fails to beat and where, as here, the facts were well-known to this defendant from the time of Mr Karpinski’s report, the fact that it did not make a sufficiently high Part 36 offer counts against it. The basic rule is that the claimant gets his (or her) costs if the defendant fails to make a good enough Part 36 offer so that goes to the claimant’s credit on the balance sheet.”

Farbey J also referred to Welsh v Walsall Healthcare NHS Trust [2018] EWHC 2491(QB) in which Yip J. had regarded part of the claimant’s conduct of proceedings as going beyond “the ordinary situation where one part of a party’s case is stronger than another and depends on consideration of the evidence at trial” (para 24) such that it was not reasonable for the party to have brought a particular issue to trial and maintained it. The judge noted that Yip J departed from the general rule by reducing the successful claimant’s costs by a “meaningful” proportion, not as a mathematical exercise but as a judgment as to how best to do justice between the parties (paras 43-44). On the facts of that case, the deduction was 15%.

Farbey J held:

“29 It is not in dispute that I should make an order for costs in favour of the claimant who is the successful party. He has beaten the defendant’s Part 36 offer by a considerable margin. The issues for me to decide are (i) whether there are any reasons for departing from the general rule that costs follow the event; and (ii) if so, the extent of the deduction that I should make.

  1. In accordance with my findings in the February judgment, I am in no doubt that the claimant exaggerated his claim for loss of future earnings. He was not dishonest. His psychiatric or psychological condition (including what I have called anankastic stubbornness in the judgment) may have made him prone to exaggeration and prone to pursue his claim beyond what common sense and realism would dictate. However, he was at all material times able to instruct and take advice from his lawyers. Litigation involves strategic decisions. There is – and could be – no suggestion that he lacked the capacity to take them. I do not accept that he would have been unable rationally and reasonably to make decisions in his own case. He chose to put an exaggerated claim to the court…
  1. In my judgment, the claimant preferred to put forward an exaggerated case in court. The extent of the exaggeration is reflected in the gulf between the damages claimed and the damages awarded. The defendant’s Part 36 offer proved too low but the defendant’s offer was significantly closer to the damages awarded than the claimant’s offer.
  2. That said, in the absence of dishonesty, the claimant’s exaggeration is not the sort of egregious misconduct that in itself deserves a punitive costs order (Widlake, para 48, above). Although the defendant’s Part 36 offer was closer to the award of the damages than the claimant’s offer, it represented an assessment of the value of the case which I rejected. Both as a matter of law and as a matter of fact, the defendant denied that the accident caused the claimant to be unfit to work. The defendant lost on that issue. Its legal argument on causation failed. Its reliance on the February 2016 email as demonstrating that the claimant would have given up work was misplaced. The defendant chose to contest almost every allegation and almost every issue relating to quantum. The breadth of the defendant’s denials meant that the claimant would have needed to come to court to recover the damages which flow from my judgment.”

Having made those findings, Farbey J. held that a 15% reduction in costs was appropriate and ordered that the defendant should pay 85% of the claimant’s costs to be subject to a detailed assessment if not agreed.

In this case, therefore, the fact that the Claimant’s psychological or psychiatric condition may have made him prone to exaggerate his claim, was enough to render his choice to do so one which was not dishonest.

Written by Robert O’Leary.

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