Of mountains and molehills
A very common argument in relation to costs is that a winning party has exaggerated their
claim and should be penalised in relation to costs to reflect such conduct. Generally, the
Courts are reluctant to make such a finding and there is an important distinction between an
exaggerated claim, where costs sanctions may be appropriate, and a claim that has not succeeded in its entirety where, generally speaking, no such sanction should be applied save
for costs associated with particular failed issues. A recent case, Widlake v BAA Ltd. (2009),
considers the approach taken by the Court in a case where there has been clear exaggeration
on the part of a Claimant.
The Claimant fell down a staircase whilst carrying out her duties as a security guard at
Stansted Airport, suffering soft tissue injuries and some continuing pain to her lower back.
She instructed Ward Gethin Solicitors to bring a claim for personal injury against her employer BAA. The cause of the accident, and this was not in dispute, was a loose rider immediately below the top step and liability was readily admitted by the Defendant. The real
dispute between the parties, however, related to quantum and, in particular, the extent of the
back injuries suffered by the Claimant as a result of the accident
The Claimant’s initial witness statement, prepared in October 2004, less than 3 months after
the accident, referred to some ongoing back pain which placed some modest limitations on
her hobbies and work. However, by June 2007, when the Claimant’s first Schedule of Special
Damages was served, the Claimant sought damages for future loss of earnings in the sum of
nearly £150,000, on the basis that the she was no longer able to work as a security guard as
a result of her accident related back pain. This was supported by a revised witness statement,
in December 2007, which referred to chronic and debilitating back pain which was having
a major effect on the Claimant’s daily life and prevented her from returning to work. The
Claimant, in her examination by both the Claimant and Defendant medical experts, had reiterated the seriousness of her back problems and the debilitating effects on her daily life. Both
medical experts accepted that there was some ongoing back pain, due to the aggravation of
a pre-existing back problem, but they were in disagreement as to the extent of the problem.
The Defendant’s expert’s opinion was that the accident related pain would have resolved after a 12 month period, whereas the Claimant’s expert opined that the accident had aggravated the pre-existing condition by a period of 5 years. On the basis of this issue, the
parties’ valuation of the Claimant differed substantially. The Defendant valued the claim at
£3,250 for general damages and £2,000 for special damages but the Claimant’s valuation was
£11,000 for general damages and £24,000 for special damages. In light of their valuation, the
Defendant made a Part 36 offer and payment of £4,500 in July 2008. This was rejected and
the matter proceeded to trial on the 28th November 2008 before HHJ Seymour Q.C.
The judge identified the key issues to be determined:
“The important issues for determination at the trial were thus, first, whether the effect
of the accident on Miss Widlake’s back was simply to aggravate the pain resulting from
pre-existing degenerative changes for about 12 months or to advance the inevitable
deterioration in the pre-existing low back problem by about 5 years; and, second, the
extent of the pain which Miss Widlake actually suffered between the days of her accident and the end of the period which I find is that over which the pain in the back was
aggravated or by which the inevitable deterioration in her condition was advanced.”
(at paragraph 6)
In addition to the medical evidence, the Defendant relied upon surveillance evidence which,
it was argued, demonstrated that the Claimant’s back pain was not causing her any disability
at all. The Claimant’s response was that, at the time of the surveillance, she had just taken
her painkillers and, therefore, whilst she was relatively asymptomatic at that precise time, the
ongoing pain was such that she needed to take painkillers 4 or 5 times every day just to go
about her daily life. In addition to the surveillance evidence, there were inconsistencies in the
Claimant’s evidence. She had initially not mentioned her pre-existing back problems to the
Claimant’s medical expert and, when pressed on this point under cross examination, merely
commented that she had forgotten about her previous problems when she had been examined
by the expert. The Defendant also referred to comments in the evidence of both experts that
there may be some degree of exaggeration of symptoms, albeit possibly not deliberate, by the
Claimant.
In light of these issues, the judge was not impressed by the Claimant’s case. In his view,
there was deliberate exaggeration of the claim, lies told to the medical experts and an
implausible explanation to the surveillance evidence. In light of the same, the Claimant’s
damages were assessed at £5,522.38 plus interest agreed at £355.33 on the basis that the
Claimant had suffered modest injuries which would have resolved after 12 months.
In relation to costs, despite the Claimant having beaten the Defendant’s Part 36 offer, the
judge gave a robust judgment. Having referred to the earlier authorities of Molloy v Shell UK
Ltd (2001) and Painting v University of Oxford (2005) and their suggestion that exaggeration
should be punished in relation to costs, he held that the Claimant’s ‘cynical and deliberate’
manipulation of the claim was such that the Claimant should be ordered to pay the Defendant’s costs on the standard basis. The Claimant appealed that order.
On appeal, it was the Claimant’s position that the judge was wrong to disallow all the Claimant’s costs and order the Claimant to pay the Defendant’s costs. The effect of any
exaggeration, it was submitted, should be limited to those additional costs which had been
incurred as a result of that conduct and it was disproportionate to disallow all the costs of a
legitimate claim. The Defendant, by contrast, argued that the exaggeration so permeated the
Claimant’s case that the punitive costs order was justified. The Claimant, it was argued, had
deliberately exaggerated her claim, made no attempt to settle matters and should, in those
circumstances, be penalised accordingly.
LJ Ward, giving the judgment of the Court, considered the Claimant’s conduct and its effects
on the course of the litigation and the costs incurred. In conducting this analysis, the Court
considered that there was an important distinction between an entirely fraudulent claim and a
claim that was merely exaggerated:
‘I sound a word of caution: lies are told in litigation every day up and down the country and quite rightly do not lead to a penalty being imposed in respect of them. There
is a considerable difference between a concocted claim and an exaggerated claim and
judges must be astute to measure how reprehensible the conduct is.’ (at paragraph 41)
Furthermore, the Defendant had the protection afforded by a Part 36 offer. If a Defendant
fails to beat their own Part 36 offer, then they should expect to meet the consequences, namely having to pay the Claimant’s costs. Against this, the Court had to weigh the Claimant’s failure to make an offer of their own and the inescapable fact that the Claimant’s
case was exaggerated and that the Claimant had clearly lied to her own medical experts when
she did not mention her pre-existing back problems.
Taking all of these various factors into account, the starting point for considering the costs
was that the Claimant had beaten the Defendant’s offer and was, therefore, entitled to her
costs. However, these costs should not include any costs in relation to the initial medical
evidence which did not make any reference to her pre-existing back problems. Such evidence
was worthless and was a direct effect of the Claimant’s dishonesty. Furthermore, the Claimant’s exaggeration of her claim and failure to negotiate made this litigation heavily
contested and costly for both parties. This must be reflected in the final costs order. Balancing all of these factors, the appropriate order was that each party should bear their
own costs and, consequently, the appeal was allowed in those terms.
This is an important refresher from the Court of Appeal of the effects of exaggeration on the
costs of a claim. Exaggeration is clearly an important factor, but it is not the only consideration for the Court. Of particular importance is the view, expressed by the Court of
Appeal, that CPR Part 36 offers a Defendant an effective remedy against exaggerated claims
which, if they fail to adequately use, may still, even in cases of exaggeration, lead to them
having to bear some or all the costs of such a claim. The message is clear. Defendants must
make sure they have adequate protection from their Part 36 offers and, where they fail to do
so, may have to face the costs consequences.
Paul Jones
Technical Director
LCN
Cases Cited:
Widlake v BAA Ltd. [2009] EWCA Civ 1256
http://www.bailii.org/ew/cases/EWCA/Civ/2009/1256.html
Molloy v Shell [2001] EWCA Civ 1272
http://www.bailii.org/ew/cases/EWCA/Civ/2001/1272.html
Painting v University of Oxford [2005] EWCA Civ 161
http://www.bailii.org/ew/cases/EWCA/Civ/2005/161.html