A judge was wrong to penalise a claimant for not disclosing an important piece of evidence, given that the defendant made the part 36 offer she accepted in full knowledge of her dishonesty, the Court of Appeal has ruled.
It said the defendant could have made a different type of offer that took the claimant’s conduct into account.
Tuson v Murphy  EWCA Civ 1461 was a claim brought by Anna Louise Touson after she fell from her horse during a lesson at the defendant’s riding school and broke her right arm. She subsequently developed obsessive compulsive disorder (OCD) which two psychiatrists attributed to the accident.
In May 2012, liability was admitted subject to an agreed deduction of 15% for contributory negligence. She gave up her work as a schoolteacher in September 2012, and issued proceedings in August 2013.
Her claim was initially valued at over £1.5m, based on the premise that she would be unable to work again, but in November 2013 Ms Tuson obtained a franchise in a playgroup organisation called Creation Station.
When she served her first witness statement in April 2014, Ms Tuson did not mention this work, which ended later in 2014, but the defendant learnt about it in 2015.
In her third witness statement in September 2015, she said the aims of buying the franchise were to create a playgroup for her son and help her with her OCD – she did not intend to, and did not in fact, make any money from it.
A week later, the defendant made a part 36 offer of £352,060 – valuing the claim at more than £400,000 given the contributory negligence deduction – which was accepted on 1 December 2015; the 21 days for acceptance expired on 8 October.
His Honour Judge Charles Harris QC ruled that the “normal” order that the defendant pay the claimant’s costs up to the date when the offer expired would be unjust.
This was because “it would mean that the claimant is not sanctioned in any way… for presenting her case on a misleading basis, for failing to disclose discoverable documents and for failing to tell the defendant, the court and the doctors about activities which she engaged in, which clearly cast significant doubt on her assertions about the extent to which she was disabled by OCD”.
He ordered that Ms Tuson pay the defendant’s costs from 1 April 2014, the date of the first witness statement.
On appeal, Lord Justice Bean – giving the unanimous ruling of the Court of Appeal – said the claimant’s “modest attempts to run a playgroup do not amount to evidence that the claimant’s disability was fabricated”.
However, they were “certainly material to her argument that she was, and might remain for a long period, incapable of any work”.
The reasons given in her third witness statement were “unconvincing” and HHJ Harris was “entitled to describe her conduct as dishonest and misleading”.
But he continued: “Nevertheless, I cannot agree with the judge’s decision on costs or the reasoning which led him to that decision.
“His judgment, with respect, does not grapple with the argument that the defendant’s part 36 offer was unconditional, rather than a Calderbank offer, and that it was made with knowledge of the claimant’s material non-disclosure.
“The defendant’s insurers, through their very experienced solicitors, made the unconditional part 36 offer in full knowledge of the claimant’s material non-disclosure, and knowing that acceptance within 21 days would (by virtue of CPR 36.13(1)) give the claimant her costs to date as of right.”
Bean LJ noted that in the landmark Summers v Fairclough Homes case, “where the dishonesty of the claimant was on a scale far greater than in the present case”, the Supreme Court emphasised the importance of the defendant’s ability to make an offer on special terms as to costs.
In that case, Lord Clarke said there was no reason why a defendant should not make a Calderbank offer “in which it offers to settle the genuine claim but at the same time offers to settle the issues of costs on the basis that the claimant will pay the defendant’s costs incurred in respect of the fraudulent or dishonest aspects of the case on an indemnity basis”.
Bean LJ added that it was not unjust to make the defendant pay the claimant’s costs up to the date of the offer’s expiry, as nothing changed in the weeks until the delayed acceptance.
He ordered the defendant to pay the claimant’s costs up to 8 October 2015, and the claimant to pay the defendant’s costs until to 1 December 2015.