Tue, 26 Jun 2018
Personal Injury and costs law specialist Stephen Goodfellow of No5 Barristers’ Chambers has spotlighted a recent Court of Appeal case in which a claimant secured costs despite a judge describing her conduct as being ‘dishonest and misleading’.
In Tuson v Murphy  EWCA Civ 1461 the Court of Appeal held that the claimant was entitled to her costs up to the expiry of the relevant period of the defendant’s Part 36 Offer - even though the claimant’s material non-disclosure was dishonest and misleading.
The claim was for loss and damage arising from a riding accident on August 2010 in which the claimant broke her arm and allegedly developed Obsessive Compulsive Disorder as a result. It was valued by the claimant at up to £1.5 million, on the basis that she would be unable to work again.
The claimant, however, failed to disclose that in November 2013 she obtained a franchise in a playgroup organisation that ran ‘messy play’ workshops for children. She ran the workshops between January 2014 and September 2014.
The claimant served a lengthy witness statement, employment expert report and schedule of loss in 2014, which all failed to disclose the playgroup. She also failed to inform the parties’ psychiatric experts.
Barrister Stephen Goodfellow commented: “The defendant became aware of the playgroup in April 2015 and made a Part 36 Offer in September 2015 for £352,600 gross in full and final settlement. It contained the standard term that if accepted within 21 days the defendant would pay the claimant’s legal costs pursuant to r.36.20.
“The claimant though did not accept this offer until December 2015, after the defendant served a new psychiatrist’s report disputing the cause of her OCD.
“After a costs hearing, HHJ Harris QC held that the usual costs order would be ‘unjust’ as the claimant would not be punished for failing to disclose discoverable documents and misleading the defendant. The defendant was ordered to pay the claimant’s costs only up to April 2014.”
Stephen went on to evidence:
• Civil Procedure Rules PR 36.13(5) provides ‘the court must, unless it considers it unjust to do so, order than a) the claimant be awarded costs up to the date on which the relevant period expired’.
• CPR 36.13(6) states that in considering whether it would be ‘unjust’, the court must take into account all the circumstances of the case including the matters listed in CPR.36.17(5), including ‘the information available to the parties at the time when the Part 36 offer was made’.
“On appeal, the Court of Appeal stated that although this was not a case of gross exaggeration the claimant deliberately withheld information that was relevant and the judge was entitled to describe her conduct as dishonest and misleading (paragraph 23),” said Stephen.
He said that the court highlighted that the defendant made an unconditional Part 36 offer in full knowledge of the material non-disclosure and that the emphasis by the Supreme Court, in Summers v Fairclough Homes Ltd  1 WLR 2004, of the importance of a defendant making a Calderbank offer on special terms as to costs (para.26).
The Court of Appeal, he added, stated that ‘costs decisions are fact-sensitive and it may be unwise to attempt to list the categories of case in which it would be unjust to make the normal order’ and that it was not ‘entirely a matter of discretion, either generally or even in any case where a party has behaved dishonestly’ (para. 29).
It highlighted the passage in Smith v Trafford Housing Trust  EWHC 33220(Ch), that: “The Court does not have an unfettered discretion to depart from the ordinary cost consequences set out in Part 36.14. The burden is on the Claimant who has failed to bear the defendant’s Part 36 offer to show injustice is a formidable obstacle to the obtaining of a different costs order,” referred to as the ‘formidable obstacle’ test.
Finally, concluded Stephen, it approved the judgment in Tiuta PLC(in liquidation) v Rawlinson and Hunter (a firm)  EWHC 3480, where it emphasises the difference between a. a case where the fact known to the defendant’s advisors at the time of the Part 36 Offer do not change significantly during the period before the delayed acceptance and b. a case where the defendant’s advisors’ assessment at the time of the Part 36 Offer is upset or undermined by subsequent events or discovered facts.
The following passage from Tiuta was highlighted (para.33): “If nothing emerges from the facts to show that the defendant's assessment of the risks and benefits involved in making the offer he made is in some significant way upset or contradicted or misinformed, it is highly unlikely to be unjust to apply the default rule.”
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