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This is the first edition of the Scotland and Specialist Services division insurance news briefing.  The division, headed by Katherine Howells-Price, incorporates Lyons Davidson Scotland and our specialist defendant teams, as well as our costs experts Meruit Costs.

Fundamental dishonesty

In the recent decision in London Organising Committee for the Olympic and Paralympic Games (in Liquidation) v Sinfield [2018] EWHC 51 (QB), the High Court ruled on the issue of fundamental dishonesty with regard to section 57 of the Criminal Justice Act 2015. While there have been a number of cases that have considered fundamental dishonesty in the context of CPR 44, this is one of the first judgments to provide guidance in the context of the act.

Briefly, the facts were that the claimant brought a claim for personal injury while performing the role of a volunteer at the Olympics in 2012. The claimant stated that, as a result of the accident, he required a gardener and pleaded almost £15,000 of invoices as part of his claim. It transpired that the claimant had actually employed the same gardener for many years. The claimant responded by saying that while he had previously employed the gardener out of choice, it was now a matter of necessity. He also admitted to creating the invoices himself.

At first instance, the judge found that he had an element of a genuine claim and that overall the dishonesty did not taint the entire claim. However, on appeal, the judge held that “a claimant should be found to be fundamentally dishonest within the meaning of section 57(1)(b) if the defendant proves on a balance of probabilities that the claimant has acted dishonestly […] he has thus substantially affected the presentation of his case, either in respects of liability or quantum, in a way which potentially adversely affected the defendant in a significant way.”

It did not matter that the invoices were less than 50 per cent of the claim; the fact that the claimant knowingly made dishonest representations was significant enough to make a decision that the claimant had acted in a fundamentally dishonest way within the meaning of section 57 of the Criminal Justice Act 2015 and no evidence supported any substantial injustice. As a result, the whole of the claimant’s claim was dismissed.

Withdrawal of a Part 36 offer and the costs consequences that follow

In the recent appeal of Ballard v Sussex Partnership NHS Foundation Trust [2018] EWHC 370 (QB), the court heard submissions about the effect of a withdrawn Part 36 offer on costs. The case involved a personal injury claim against an employer. In January 2016, the defendant made an offer of £50,000. In February 2017, this offer was withdrawn and on the same date, a Part 36 offer of £30,000 was made. At the trial in March 2017, the claimant’s damages were assessed at £23,315.13 and, at first instance, the defendant was awarded costs from the expiry of the first offer made in January 2016.

On appeal, considering the contents of the offer and submissions from the parties, the judge ruled that the claimant would be entitled to their costs up until the expiry of the second offer and that the defendant be entitled only to their costs of the trial.

When considering whether to withdraw an offer and replace it with a less favourable one, parties should also consider the benefits of CPR 36.9 and changing the terms of the previous offer – thus avoiding the need to withdraw.

Court of Appeal clarifies the test for indemnity costs in fixed costs cases

The Court of Appeal in Whaleys (Bradford) Ltd v Bennett & Anor [2017] EWCA Civ 2143 has set out the basis for when indemnity costs should apply, overturning a circuit judge’s decision that indemnity costs required exceptional circumstances.

Lord Justice Newey, setting out his decision in a claim involving allegations of nuisance, trespass and conversion, held that the threshold for indemnity costs required circumstances outside of the norm and that they did not need to be exceptional. This threshold is particularly important for personal injury lawyers where fixed costs apply, because securing an indemnity order could result in hourly rate costs where fixed costs would otherwise apply or departure from a costs management order for the period where such an order applies.

Key contacts for our insurance news briefing

For more information on any of the issues raised in this article contact:

Divisional Manager/key contact for defendant – Katherine Howells-Price: [email protected]/0117 904 7002
Lyons Davidson Scotland LLP – Caroline Tait: [email protected]/0131 563 7596
Costs and Funding – Ian Curtis-Nye [email protected]/0208 3366 968