Description
Costs consequences of fraudulent or exaggerated claims
In a claim for personal injury sustained after falling down a flight of stairs, the trial judge found that, contrary to the claimant's pleaded case, the consequences of her fall were comparatively minor and that she had deliberately concealed her history of back problems from her medical experts in an effort to increase her level of compensation.
Dealing with the costs of the claim, the trial judge found that the real winner of the trial had been the defendant, and ordered the claimant to pay the defendants costs. In doing so, he concluded that by setting out to mislead her own medical experts, the claimant had sought to manipulate the civil justice system on a grand scale. The Court of Appeal held that the trial judge had misdirected himself in characterising the claimant's actions as an attempt to manipulate the civil justice system, and it was therefore necessary for the Court of Appeal to exercise its own discretion with regard to the costs of the case.
Following the reasoning of Ward LJ (delivering the leading judgment), the first question to determine was which party was unsuccessful. Has the Claimant established a claim for damages and beaten the Defendant's Part 36 payment? If so the default position is that the Defendant should pay the Claimant's costs.
Consideration should then to be given to the factors which may justify a departure from the general rule, and in particular, the conduct of the parties. For those purposes, conduct includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue, and whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.
Once the conduct has been identified, the court should go on to examine its causative effect. To what extent did the claimant's lies and gross exaggeration cause costs to be incurred or wasted?
The punitive element of the costs rules may be engaged where "the misconduct is so egregious that a penalty should be imposed upon the offending party".
