Molloy v Shell UK Ltd

A claimant fails to better a Part 36 payment where the judgment does not exceed the gross sum specified in the payment notice. Unless that result would be unjust, the claimant must pay the defendant’s costs incurred after the last date for accepting the payment without permission.

When exercising its costs discretion, the court must consider the parties’ conduct as a whole, including conduct before proceedings and any deliberate exaggeration. Gross and sustained dishonesty may require the claimant to pay all relevant post-payment costs, even if the claimant has technically bettered the payment.

The claimant suffered an accident while employed as a scaffolder on the defendant’s oil platform. Liability was conceded, leaving damages to be assessed. Although the claimant alleged prolonged incapacity and claimed more than £300,000, the defendant discovered shortly before trial that he had returned to offshore scaffolding work considerably earlier than disclosed.

The county court awarded £18,897. Before trial, the defendant had made a Part 36 payment whose notice specified gross compensation of £20,009.20. The judge nevertheless awarded the defendant only 75 per cent of its costs incurred after the payment.

The defendant appealed against that costs order. The issues were whether the claimant had bettered the Part 36 payment and whether his extensive dishonesty required an award of all the defendant’s post-payment costs.

1. Appeal allowed unanimously. Laws LJ delivered the reasoned judgment, with which Mummery LJ agreed. The claimant had not bettered the Part 36 payment. Under Rule 36.23(4) and paragraph 10.5 of the associated Practice Direction, the comparison had to be made with the gross sum specified in the payment notice. The judgment of £18,897 was below the specified gross sum of £20,009.20.

2. Rule 36.20 therefore ordinarily required the claimant to pay the defendant’s costs incurred after the last date on which the payment could have been accepted without the court’s permission, unless that order would be unjust.

3. Independently of the Part 36 comparison, the only proper exercise of the costs discretion was to award the defendant all its costs incurred after the payment. The claimant had deliberately and grossly exaggerated his claim. He had concealed his return to offshore scaffolding, deceived examining doctors and obtained sick notes on a false basis. His signed particulars of claim were seriously dishonest.

4. Rule 44.3 required consideration of the parties’ conduct as a whole. That included conduct before and during proceedings, the manner in which the case was pursued and the exaggeration of a successful claimant’s claim. If the county court considered only conduct after the Part 36 payment, it erred in principle.

5. Bajwa v British Airways [1999] PIQR Q152 illustrated that a claimant’s limited success may be outweighed by the defendant’s accurate valuation and the claimant’s extravagant case. The present circumstances were substantially more serious because they involved a sustained and cynical abuse of the court’s process.

6. The defendant was awarded 100 per cent, rather than 75 per cent, of its costs incurred after the Part 36 payment. The respondent was also ordered to pay the costs of the appeal, subject to detailed assessment.

1. Court of Appeal (Civil Division): The defendant’s appeal was allowed unanimously. The claimant was ordered to pay all the defendant’s costs incurred after the Part 36 payment and the costs of the appeal, subject to detailed assessment.

2. County Court: His Honour Judge Grenfell awarded the claimant £18,897 in damages and ordered him to pay 75 per cent of the defendant’s costs incurred after the Part 36 payment. The appeal concerned only that costs order.