Matthew Shaw v Gillian Wilde [2024] EWHC 1660 (KB)
This analysis supplements our main article summarising the fundamental dishonesty aspects of the judgment in the case of Shaw v Wilde, which resulted in an unprecedented FD finding and dismissal of a £6.6m claim - read the case details here. There is also an analysis of the substantial injustice element of the case here. You can also download the full judgment.
As can be seen from the main judgment, this was a hard-fought case, culminating in a two-week trial. Keoghs had been instructed by Hastings Direct over a period of 4.5 years; the claimant’s team even longer than that. As such, legal costs were significant with the claimant’s budget approved at £1,297,773 plus VAT, and the defendant’s at £848,061 plus VAT. Inevitably, costs issues were the subject of significant legal argument, and the judge was invited to adjudicate.
Following dismissal of the claim due to a finding of fundamental dishonesty (FD) the claimant had no entitlement to damages, but prior to FD being pleaded he had received a total of £150,000 by way of interim payments. The judge found ‘save for exceptionally good reason’ the court’s default position should be that where interim payments exceed the amount awarded, the claimant should be ordered to reimburse the defendant pursuant to CPR 25.8(2)(a), and Practice Direction 25B. Any inability to repay was regarded as irrelevant to the making of such an order, and the judge rejected the submission the claimant had not been unjustly enriched, since he was holding £150,000 which belonged to the defendant.
In terms of FD litigation this case was unusual - a split trial adjudicated liability (‘the preliminary issue’) prior to quantum. The defendant’s allegations of contributory negligence concerning speed were unsuccessful, such that the claimant stood to recover 100% of any damages assessed or agreed in his favour. At paragraph 25 of the judgment the defence relating to issues of contributory negligence was described as ‘meritless’. However, that is difficult to reconcile with settlement offers advanced by the claimant, which provided for reductions to his own damages of 5%, 15%, and 25%. All those offers were rejected, as a term of acceptance was payment of the claimant’s liability costs, and the defendant argued there should be no such liability for costs if the claim were to be subsequently dismissed for FD (note – the inclusion of costs terms in the offers meant some were defective Part 36 offers, but the court regarded them as admissible regardless, with the claimant conceding they should have been made as Calderbank offers).
The judgment reminds litigants s.57 of the Criminal Justice and Courts Act 2015 (’the Act’), and the QOCS rules, do not affect the principles to be applied in making orders for costs, only the amount of costs and whether such orders can be enforced, respectively.
Under CPR Part 44.2 the judge considered it ‘plain’ the court can order the defendant to pay the claimant’s liability costs, despite the final outcome being dismissal of the claim due to FD. This is amplified later in the judgment as the judge’s ‘firm conclusion’. It is contended that the normal, default order ought to be that the claimant should pay the defendant’s costs of liability associated with any claim where the claimant is found to be fundamentally dishonest, save and except cases where the court may conclude that a defendant’s position on liability was ‘meritless’ which is likely to be rare.
Conversely, the claimant was ordered to pay the defendant’s costs of quantum and FD. The court rejected the suggestion those costs should be reduced to reflect the claimant’s attempts to mediate and settle quantum issues. There was no obligation upon the defendant to engage with those offers in the face of an arguable FD defence. In fact, the only ‘attractive’ offer was the defendant’s invitation to the claimant to withdraw his claim, while retaining the interim payments amounting to £150,000; an offer the claimant had rejected.
Since the court’s valuation of the claim for FD purposes was £1.2m, and the claimant’s liability for the defendant’s costs estimated at £823k, he was not ordered to pay any sum on account of quantum and FD costs to the defendant (due to the operation of s.57(5) of the Act which provides the court must deduct the amount of damages it would have awarded but for the dismissal, from the amount which it would otherwise order the claimant to pay in respect of the defendant's costs) – see paragraph 31 of the judgment.
However, relying upon s.51 of the Senior Courts Act 1981, the judge ordered the claimant’s liability to repay interim payments of £150,000 to be set off against the defendant’s liability to him in respect of the costs of the preliminary issue. The judge considered it would be a very unfair outcome for the defendant to pay the costs of liability in full, with the claimant keeping interim payments of £150,000, to which he was not entitled.
The claimant was refused permission to appeal to the Court of Appeal in relation to the judge’s finding he would not suffer substantial injustice if his claim were dismissed for FD; the judge considering his construction of the Act to be ‘the same as several other judges in this jurisdiction’. Furthermore, the judgment fell within the ‘wide bounds’ of the court’s discretion, in ‘what is essentially a jury question’.
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