Widlake v BAA Ltd

A claimant who establishes a genuine personal-injury claim and obtains judgment exceeding the defendant’s Part 36 offer is ordinarily the successful party for costs. That is the starting point, not a conclusive answer. Under the Civil Procedure Rules, the court must consider all the circumstances, including dishonest exaggeration, the costs caused by it, and each party’s conduct in settlement.

Exaggeration may justify disallowing wasted costs and, where misconduct is sufficiently egregious, a punitive costs sanction. The sanction must reflect the distinction between an invented claim and an exaggerated genuine claim. A defendant which knows the relevant facts but does not make an adequate Part 36 offer bears the resulting costs risk. A claimant’s failure to negotiate may also count against that claimant.

Ms Widlake, a security guard employed by BAA Ltd, fell on a loose stair rider at Stansted Airport. Liability was admitted. The dispute concerned the extent and duration of the back injury, whether pre-existing degeneration had been accelerated, and the amount of special damage.

HHJ Seymour QC awarded damages of £5,522.38 plus agreed interest. The award exceeded BAA’s £4,500 Part 36 payment. The judge nevertheless ordered Ms Widlake to pay BAA’s costs because he found that she had concealed her prior back history and grossly exaggerated her claim.

Ms Widlake appealed only against that costs order. The central issue was how the court’s costs discretion should be exercised where a claimant has recovered damages exceeding a defendant’s Part 36 offer but has dishonestly exaggerated aspects of a genuine claim.

1. Appeal allowed. Ward LJ, with whom Smith and Wilson LJJ agreed, held that the judge had misdirected himself by treating the case as more serious than Molloy v Shell UK Ltd [2001] EWCA Civ 1272. The claimant had lied to medical experts, but the defendant had access to her medical records and its own expert evidence. The conduct did not amount to a grand-scale manipulation of the civil justice system or an abuse of process.

2. The obiter observations in Molloy v Shell UK Ltd had to be read with considerable caution in light of Shah v Wassim Ul-Haq [2009] EWCA Civ 542. A genuine claim is not defeated merely because it has been dishonestly exaggerated. The court should instead award the damages proved and address the misconduct through the proper exercise of its costs discretion.

3. The claimant was the successful party: she had established a genuine claim and beaten the defendant’s Part 36 payment. That conclusion was the starting point under CPR 44.3, but the court had to consider all the circumstances. Exaggeration was properly treated as conduct relevant to the issue of quantum, rather than as a separate contest requiring identification of an issue-winner.

4. The principal inquiry was the causative effect of the exaggeration on costs. The claimant could not recover costs attributable to the misleading reports obtained from Miss Porter. BAA was entitled to recognition of costs unnecessarily incurred in meeting an inflated claim. Deliberate dishonesty could also justify a punitive costs sanction, but judges had to distinguish carefully between a concocted claim and an exaggerated one.

5. BAA nevertheless had the means to protect itself through Part 36 and, after receiving its medical evidence, did not make an offer sufficient to secure the usual costs consequences. Conversely, the claimant’s failure to negotiate counted against her. Balancing those matters, the proper order was no order as to the costs below.

• Court of Appeal (Civil Division): Allowed Ms Widlake’s appeal in Widlake v BAA Ltd [2009] EWCA Civ 1256 and substituted no order for the costs below.
• Queen’s Bench Division: HHJ Seymour QC assessed damages in favour of Ms Widlake but ordered her to pay BAA’s costs on the standard basis.