I'm interested in…

  • Strategy & Procedure
  • Catastrophic Injury
  • Professional Indemnity
  • Motor
  • Fraud
  • Disease
  • Liability
  • Commercial Insurance
  • Costs
  • Local Authority
  • Scotland

Surveillance evidence guidance for costs budgets & Part 36 costs consequences

Purser v Hibbs & Anr
High Court
19 May 2015

Andrew Cousins reviews the recent High Court decision in Purser v Hibbs & Anr (2015) which raises two interesting issues following a discovery of dishonest exaggeration through the use of surveillance evidence.  The court had to consider whether to disapply the usual costs consequences to allow the defendant to recover costs prior to the expiry of a Part 36 Offer and also how to approach the costs of surveillance when preparing costs budgets.

Background

The claimant brought a claim for personal injury and losses following a road traffic accident. Liability was admitted and expert evidence was prepared. The defendant’s insurers decided to conduct surveillance and in August 2013 made a Part 36 Offer of £95,000.

The claimant did not originally accept the offer but did subsequently accept it when the defendant disclosed the surveillance evidence in October 2014. It was common ground that the defendant was entitled to its costs following expiry of the Part 36 Offer. The issue before the court was whether the claimant should be entitled to its costs up to that date. This fell to be decided under the pre-April 2015 rules and according to CPR r.36.10(5) under which the normal costs consequences apply “unless the court orders otherwise”.

The defendant argued that as the claim was dishonestly exaggerated he should be allowed his costs both before and after the date of expiry of the offer.

Findings

His Honour Judge Moloney QC held:

Part 36 costs consequences

Although the old rule 36.10 gives no express guidance as to the criteria to be applied, a test was set out in the case of Lumb v Hampsey (2011) HC. That test appears to be indistinguishable from the new CPR r.36.13(5) so that the appropriate test is whether the usual costs rules should be departed from because it would be unjust to apply them. In considering this, the court had in mind that the claimant had been malingering and was capable of working and caring for herself. The claimant had been misleading lawyers and medical experts as far back as when the Part 36 Offer was made.

The defendant however could not establish that the claimant’s deceitful conduct extended back before the time they made the Part 36 Offer and as such could not show that it was unjust to depart from the normal costs rule.

The court had other powers however to utilise against the claimant and it was appropriate to stigmatise the claimant’s conduct by directing that the defendant’s costs from the date of expiry of the Part 36 Offer should be paid on the indemnity basis along with interest. It was also appropriate to order that the claimant pay the costs of the surveillance evidence on the indemnity basis even though such costs were not included in the costs budgets.

Cost of surveillance

The court was satisfied that the facts of the case showed that the surveillance was reasonably conducted and did disclose deceit. The evidence demonstrated a good reason for allowing those costs and for doing so despite the fact that the matters were not referred to at any time in the costs budgets. The court expressly stated that it would not wish to discourage the judicious use of surveillance evidence or alert fraudsters to the use of surveillance.

Comment

The court’s decision regarding the costs consequences of Part 36 highlights the broad range of powers the court has to determine costs. As ever though costs remain a case sensitive point where the court has a wide discretion when deciding what order is appropriate in each case.

Even though the claimant was deceitful and was caught out by the surveillance evidence, it was not unjust to depart from the normal costs rule as the defendant could not overcome the hurdle that the claimant’s conduct extended back beyond the Part 36 Offer and as such could not satisfy the court that it was appropriate to depart from the normal rule. The judgment therefore reinforces the approach by the courts that there should not be frequent deviation from normal rules as this might create uncertainty. 

The most useful comments in the judgment concern how to approach the costs of surveillance evidence in cases subject to costs management. There have been differing opinions as to how the costs of surveillance evidence should be approached in costs budgets with some questioning how a statement of truth on a costs budget can be signed when it is known that a revision will need to be made when surveillance evidence is served.

In contrast to this, others have queried how a defendant can reasonably keep hold of crucial evidence that needs to be disclosed at a tactical point in the case if they are required to disclose its existence for administrative reasons at a CCMC.  The issue of how to approach surveillance in costs budgets has been a relevant issue for defendants to consider now for some time as the concept of keeping part of your case secret is anomalous with the prospective approach of costs budgets. It is impossible to maintain the necessary secrecy over surveillance evidence if the costs associated with it have to be disclosed a CCMC which will take place before directions regarding disclosure and witness evidence have been complied with.

The court’s decision here supports the defendant’s position that surveillance evidence still needs to be kept secret for the purposes of costs budgets and the court gave a specific endorsement that it does not want to hinder the judicious use of such evidence. Interestingly, the judge acknowledged this opinion differs from the note in the White Book which suggests some allowance should be made in budgets for surveillance. A defendant can always include the costs of surveillance evidence in their costs budget but this would cause the required element of secrecy to be lost.

The court’s approach helpfully indicates that this secrecy surrounding surveillance evidence does not invalidate the recoverability of the costs. In order to succeed in recovering those costs though the court will need to examine the overall position of the case including the cogency of the surveillance evidence, its effect upon the case and how the claimant’s claim has been advanced.

Contact

For further information please contact Andrew Cousins, Solicitor Advocate on +44 (0)161 603 5093.

By Andrew Cousins

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Top