Lawyers Briefing Notes

Mon, 13 Dec 2010

Exaggerating Claims

When exercising its discretion in relation to costs, under Rule 44.3(5)(d) of the CPR, the court will take in to account the conduct of the parties including whether the claimant has exaggerated the claim in whole or in part.

In Morton v Portal Limited [2010] EWHC 1804 (QB) the High Court confirmed that exaggeration for the purposes of that rule indicated conduct meriting the court’s criticism, not mere overestimation of a genuine claim.

The claimant, who was a subcontractor to the defendant, was seriously injured after falling through a roof. An issue arose as to the costs of and incidental to the assessment of the claimant’s claim for past and future loss of earnings. In a witness statement dated February 2009 the claimant admitted, among others, to not declaring “cash in hand” work to the Inland Revenue. In July 2009 the claimant claimed £1.72 million for past and future loss of earnings but eventually accepted less than £385,000 because much of the claim could not be substantiated.

When addressing costs, the claimant argued that although his action understated the profits of his company it did not cause any detriment to the defendant. However, the defendant said this demonstrated that the claimant’s accounts, which formed the basis of the assessment of past and future loss, could not be believed.

The High Court held that this did not point to exaggeration in the sense of conduct open to criticism asserting that someone who is prepared to deceive the Inland Revenue cannot be assumed as a person equally willing to deceive the court. As a result the Court was unwilling to reverse the default position on costs, in whole or in part, in that the losing party pays the costs of the winner.

It is easy to be sympathetic to the defendant. The wording of Rule 44.3(5) includes conduct before as well as during the proceedings and it must surely be that if the conduct is even remotely causative in the proceedings, whether this relates to the reliability of evidence and or credibility, then it merits criticism. Perhaps, this case will be confined to its facts if and when it is considered in the future.

An exaggeration is not going to bring a genuine claim, as opposed to a concocted claim, to an end but may be taken in to account when addressing the issue of costs. The rationale is that a defendant has a means to protect themselves by the shield that is CPR Part 36. This will be the starting point in deciding who should pay the costs of the claim and to what extent.

However, even if the claimant manages to obtain a more advantageous judgment than the defendant’s Part 36 offer, the court will consider the degree that the claimant’s exaggeration caused the incurring or wasting of costs in any order it decides to make and given the wide discretionary powers this could lead to the claimant having to pay the defendant’s costs or an amount commensurate with the level of exaggeration.