Jackson v Ministry of Defence

A claimant who recovers substantial damages and beats a Part 36 payment may remain the successful party for costs, even where the claim was substantially exaggerated. The court may reflect exaggeration, abandoned issues, the closeness of the award to the payment and costs incurred by the defendant through a proportionate costs order and detailed assessment.

Discussions and ordinary offers at a confidential, without-prejudice settlement meeting are inadmissible on costs unless made without prejudice save as to costs. Attendance alone supports no inference about what a party would have offered. An appellate court will interfere with a discretionary costs order only where it is plainly wrong.

The claimant suffered a serious knee injury while training as an Army recruit. After liability was admitted, he initially claimed more than £1 million, including substantial sums for future earnings and adapted accommodation. Much of the claim was later abandoned, and the trial judge found significant exaggeration.

The defendant paid £150,000 into court under Part 36. Following an unsuccessful confidential settlement meeting and a quantum trial, the claimant recovered £155,000. The recorder treated the claimant as successful but, because of the exaggeration and the narrow margin by which he beat the payment, awarded only 75% of his costs.

The defendant appealed, contending that it was the true successful party, that the settlement meeting should inform the costs decision and that the 25% reduction was inadequate.

1. Appeal dismissed unanimously. The claimant was successful because he established an entitlement to substantial damages and recovered more than the defendant's Part 36 payment. His substantial exaggeration did not require the court to treat the defendant as the overall winner.

2. The court could not take account of what occurred during the court-ordered settlement meeting. The scheme expressly made the meeting confidential and therefore without prejudice. An offer made there was inadmissible for costs purposes unless expressed to be without prejudice save as to costs. No reliable inference about a party's willingness to increase an offer could be drawn merely from attendance at the meeting.

3. Rule 44.3 required the recorder to consider all the circumstances, including the parties' conduct, success on individual issues, admissible settlement offers and exaggeration by a successful claimant. The recorder properly considered the exaggerated claim, the abandoned heads of loss and the small margin by which the award exceeded the payment into court.

4. Painting v University of Oxford [2005] EWCA Civ 161 was exceptional. There the claimant maintained a £400,000 claim through trial but recovered about £25,000, and the recorder had failed to address the identity of the overall winner or give that matter appropriate weight. By contrast, the recorder in the present case expressly considered the closeness of the award to the payment and made an appropriate reduction.

5. The recorder was entitled to account for costs incurred by the defendant in resisting the exaggeration when fixing the percentage reduction. Further protection remained available on detailed assessment because the claimant could recover only reasonably incurred costs, including in relation to abandoned expert evidence.

6. An appellate court may interfere with a costs discretion only if its exercise was plainly wrong. The 25% reduction applied across all costs and fell well within the recorder's wide discretion, even if another judge might have selected a larger percentage. The defendant was ordered to pay the claimant's costs of the appeal, subject to detailed assessment.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 46, unanimously dismissed the defendant's appeal against the costs order.
• Manchester County Court: Mr Recorder Berkley QC awarded the claimant £155,000 and ordered the defendant to pay 75% of the claimant's costs on the standard basis, subject to detailed assessment.