In the recent case of Morrow v Shrewsbury RUFC Ltd an interesting question arose where a claimant received an award for future loss of earning that was far less than he had claimed. The claim was for just over £1m and the award was just over £285k.
It was found that much of the claim for future loss of earnings was exaggerated. But it was not dishonest. The Claimant has made a Part 36 offer of £800k and the Defendants had made one at £110k. So neither party had any Part 36 benefit.
The Defendants argued that the costs should be reduced by 1/3 in any event because of the exaggeration. The judge noted that the claimant’s Part 36 offer was still more than three times the eventual award. The judge considered CPR 44.5 (d) – ‘whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.’ On balance the judge was persuade that there should be some reduction in the costs.
As far as the amount was concerned there was no set formula for any reduction. Each case depended on its facts. Having regard to the additional work required in this case, the costs were reduced by 15% –
“The claimant’s exaggeration prolonged the trial and prolonged the cross-examination of multiple witnesses, including the psychological and psychiatric witnesses as well as those who gave evidence relating to the quantification of loss of earnings. Such prolongation is indicative of how the claimant’s conduct caused unnecessary costs. In my judgment, a deduction of 15% is broadly appropriate to mark the additional costs caused by the claimant’s exaggerated case. A higher deduction would in my judgment begin to make inroads into areas in which both the claimant and the defendant overstated their respective cases.” Farbey J.