Defendants can also be dishonest in personal injury matters, resulting in the disapplication of fixed costs after trial

October 30 2023

Sam Aynsley, instructed by Admiral Law, recently appeared in fast track PI RTA liability dispute on behalf of a claimant (“C”) at the County Court at Bristol, where District Judge Ellery made a finding of dishonesty against the defendant (“D”), so that D was ordered to pay C’s costs on the indemnity basis, fixed costs being disapplied (Broadhurst v Tan), and D being ordered to pay C’s N260 costs schedule in full.

The case is a reminder that punitive costs orders for dishonesty are not the sole preserve of dishonest claimants. CPR 44.16(1) is merely an exception to the QOWCS enforcement restriction and the court can make an indemnity costs order against a party that has been dishonest in the presentation of its claim or defence.

D was the named defendant (with his insurer involved in the usual manner) and brought no counterclaim. Quantum for vehicle related damages and PI was uncontroversial and was agreed (subject to liability) at the door of court.

Facts and findings

The Judge determined that D had lied about entering the roundabout from a different junction to C. In truth, D had driven behind C for quite some distance and quite aggressively as both vehicles approached the roundabout. D had also lied about the mechanics of the accident. C had not pulled out of a different junction into D’s path as D proceeded around the roundabout. In truth, both vehicles entered the roundabout at the same time and from the same junction. D tried to pass C from the right to take the roundabout’s first exit, driving his vehicle into collision with the front offside wheel arch of C’s vehicle.

The Judge agreed that both accounts were irreconcilable with any determination that both C and D held a genuine belief in the truth of their account - in short, one party had come to court to lie. The Judge preferred the evidence of C for a host of reasons. D had provided no photographs of his hired vehicle, and alleged that it had sustained no damage at all. This was in spite of there being substantial damage to the offside front wheel arch of C’s vehicle and D’s case that C had suddenly pulled out in front of him. D had suggested for the first time in his oral evidence that there was no damage to his vehicle because the “step” of his hired van impacted with C’s vehicle, but conceded that the step was only about six inches high and did not accord with the damage above C’s wheel arch.

Following judgment, District Judge Ellery made an order that C’s costs would be assessed on the indemnity basis following a submission that D’s dishonesty was “outside the norm” of litigation, the court being referred to CPR44.2(5)(a)-(c) along with relevant White Book commentary regarding indemnity costs. It was successfully argued that an honest man in D’s position would have accepted responsibility for the accident at the outset, and quantum would likely have been resolved at stage 2 of the portal process incurring minimal costs, but instead C was unreasonably put to the cost and trouble of overcoming D’s dishonest defence at trial.

The Judge, having determined that costs were to be assessed on the indemnity basis, disapplied fixed costs (Broadhurst v Tan), and the costs and disbursements included in C’s statement of costs were summarily assessed in full. There had been no offers on the table from C; Admiral Law had instead prepared the form N260 anticipating a finding of dishonesty against D. D had made a 50 50 offer before trial, which was rejected by C, who steadfastly maintained the honesty of his account.

Further reflections

Dishonesty in litigation is to be deplored whether it arises from a claimant or defendant’s presentation of their case. In some cases defendants will adduce witness evidence that entirely denies a claimant’s version of events on liability, sometimes with a factual narrative that lacks real credibility or even feasibility. The author can recall past occasions reviewing a defendant’s witness evidence and considering that he would be giving his client a firm FD warning if they were relying on evidence of the same quality.

Some defendants might consider that they have little to lose, forming the view that the matter will likely settle, and the notional risk of an adverse outcome on liability will reflect in a better negotiated outcome. Some insurers also believe that fundamental dishonesty “only applies to the Claimant”. This is of course wrong/an oversimplification. Dishonest parties can be penalised in costs regardless of whether they brought the claim or whether they are defending it; “Fundamental Dishonesty” (capital “F” and “D”, in the CPR.44.16(1) sense) is merely an enforcement exception.

Claimant solicitors, in fixed costs cases where the evidence discloses diametrically opposed factual accounts, and when confident that the claimant enjoys a reasonable prospect of proving their version of events (and having properly advised their client of the risks involved), perhaps ought to remind the defendant’s representatives that indemnity costs orders are not a “one way street”, and should prepare a schedule of the costs of the entire action, as was done in this matter.

Another argument that did not need to be deployed but would have likely succeeded would have been that D’s dishonesty warranted an order in excess of fixed costs on an CPR.45.29J  ‘exceptional circumstances’ basis. The ‘exceptional circumstances’ exception survives the 1st October 2023 changes as rule CPR.45.9. Furthermore, post 1st October 2023, CPR 45.13(2) allows for a party that establishes unreasonable behaviour to apply for an order that those fixed costs be increased by an amount equivalent to 50% of the fixed costs which would otherwise be payable. Dishonesty that goes to the root of the claim never permits of a reasonable explanation, whether arising from a claimant or a defendant. Claimant representatives should be alive to the beneficial costs orders to be won in appropriate cases where it is established that a defendant has been dishonest in the presentation of its defence, and should not be afraid to contend for e.g. a 50% uplift when appropriate. Depending on the particular circumstances of a particular case, it may be sensible to provide advance written warning to the defendant’s representatives to maximise the chances of such a costs order.