Court Of Appeal Considers Dishonesty And Part 36 Interplay

Tuson v Murphy [2018] EWCA Civ 1461

The Court of Appeal has found that a Defendant's Part 36 offer made in the knowledge of a Claimant's material non-disclosure did not alter the costs consequences. The Court of Appeal overturned a first instance decision which penalised a Claimant who had been accused of dishonesty, yet accepted a Part 36 offer of settlement from the Defendant

The High Court ordered that not only should the Claimant pay the Defendant's costs between the offer being made and the late acceptance, as usual under Part 36, but also that the Claimant's alleged dishonesty about the consequences of the accident, meant she should pay the Defendant's costs from the date the dishonesty commenced. This represented approximately 18 months' worth of the Defendant's costs, and was a departure from the usual application of Part 36.

The Court of Appeal allowed the Claimant's appeal against the additional 18 month period, stating that the Part 36 offer had been made by the Defendant in full knowledge of the alleged non-disclosure, and that the usual costs position should apply.

The Claimant was ordered to pay the costs resulting from the late acceptance of the offer.

Background

The Claimant sustained an injury in August 2010, and broke her right arm. Liability was admitted. She gave up work as a schoolteacher in September 2012 and issued proceedings in August 2013.

The claim was initially valued at £1.5million. In 2013, the Claimant obtained a playgroup franchise, and ran the first session in January 2014.

In April 2014, the Claimant served a witness statement which failed to mention the franchise. Additional statements and reports from third parties served subsequently failed to address the franchise as well. The Claimant's Schedule of Loss, served in July, included a substantial claim for future loss of earnings based on the opinion of an expert who had not been told of the franchise.

The franchise was transferred in January 2015, activity having ceased in September 2014. The Defendant was by this time aware, but the Claimant did not seek to disclose this information until a third witness statement in September 2015. The Defendant's solicitors had made the Claimant's solicitors aware of their knowledge in June 2015.

The Claimant admitted that she should have raised the matter but denied that she had been deceitful about her health. A week later, the Defendant made a Part 36 offer. On 1 December 2005, the Claimant accepted the Part 36...