Dishonesty and Exceptional Circumstances under CPR rule 45.29J

On 27 November 2020, the High Court handed down judgment in James West v Joseph Olakanpo [2020] EWHC 3830 (QB) which concerns both dishonesty and the ‘exceptional circumstances’ test for costs exceeding fixed costs in low value personal injury claims under rule 45.29J of the Civil Procedure Rules.

Rule 45.29J

Section IIIA of Part 45 applies to claims which fall out of the Portal process – i.e. claims which commence under the low value Road Traffic Accident, Employers’ Liability or Public Liability Pre-Action Protocols but which no longer continue under those Protocols (see, for example, rule 6.15 of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents). Rule 45.29J is part of Section IIIA and allows the Court to award costs in an amount exceeding fixed costs where there are exceptional circumstances.

Background

In West v Olakanpo, the Claimant alleged that the Defendant’s vehicle collided into his vehicle. The Defendant said that neither he nor his vehicle were involved in the accident at all. He adduced evidence to support his alibi that he was two hours away at the time of the accident.

The Claimant made the Defendant a Part 36 offer which, unsurprisingly given the Defendant’s arguments, the Defendant did not accept. However, six months later, the Defendant accepted the Part 36 offer.

The Claimant applied for costs on an indemnity basis under rule 45.29J.

Success under 45.29J – at first…

Upon hearing the Claimant’s application, HHJ Hellman found that whilst the court should be slow to uphold allegations of dishonesty without hearing live evidence, this was ‘a very clear cut case’. HHJ Hellman had regard to what he considered to be ‘damning’ evidence which could only be explained by the Defendant’s car having been involved in the accident (including a photograph and metadata).  

The Defendant’s argument was that he was not involved in the accident. HHJ Hellman found that if that were false, this was not merely dishonest but went to the core of the Defendant’s case, ‘akin to fundamental dishonesty by a claimant’. HHJ Hellman therefore ordered costs on an indemnity basis under rule 45.29J.

On appeal

On appeal, Robin Knowles J found that it was wrong to reach the conclusion of dishonesty and use that as the basis of a decision to award indemnity costs without testing the Defendant’s evidence (see [16]-[17]). Essentially, Robin Knowles J found that HHJ Hellman ought to have explored the Defendant’s evidence more, even if it had not been updated to respond to the evidence that the Judge considered so ‘damning’ against the Defendant. This was not a case where the Defendant had no evidence at all or where the Defendant did not turn up at trial; he had filed witness statements.

Robin Knowles J emphasised that he was ‘not to be taken to be saying that in no case could a conclusion be reached without a mini-trial; each case will turn on its facts’.

In addition, on the facts of this case, late acceptance of a Part 36 offer with no good reason for the delay was also considered to not be an exceptional circumstance of itself to award costs in excess of fixed costs: see [20]-[21].

Comment

This case reiterates two long-standing matters: (1) the Court’s reluctance to allow a finding of dishonesty without properly testing the allegedly dishonest person’s evidence; and (2) the high bar in rule 45.29J for ‘exceptional circumstances’. Dishonesty may appear to be ‘very clear cut’ but the Court will still need to consider ‘all possible scenarios’ other than dishonesty: [11].  

The following circumstances were not ‘exceptional’ for the purposes of rule 45.29J:

• the claim was valued above £25,000 (Hammond v SIG Plc [2019] EWHC B7 (Costs)). A Part 36 offer of £36,500 was accepted in that case. By contrast, a very complicated case which settled for £350,000 was found to amount to ‘exceptional circumstances’ in Jackson v Barfoot Farms (CC, 29 November 2017) cited in Hammond).
• a 19-month delay in accepting a Part 36 offer with no apparent justification in Hislop v Perde [2018] EWCA Civ 1726 (although in an ‘exceptional case of delay, it may be possible for the claimant to escape the fixed costs regime’ – see [53] of Hislop).

The West v Olakanpo judgment should therefore not come as a surprise to parties seeking costs in excess of fixed costs under rule 45.29J. The exceptionality of circumstances triggering rule 45.29J reflects the intentionally wide and comprehensive nature of the fixed costs regime.