In a recent case (Personal Injuries Action No. 71 of 2010), the High Court only allowed a
Plaintiff 50% of costs even though a sanctioned payment was accepted within time.


The Plaintiff was involved in a minor traffic accident on 21 February 2007, claimed over $2.3m,
but accepted a sanctioned payment of $380,000. She then asked for costs of approximately
$280,000. The Defendant applied to vary the usual costs order and asked for an order that each
party pay their own costs or that the costs in relation to the loss of earnings claims be disallowed.
 

The Plaintiff had claimed approximately $1.5m for pre and post trial loss of earnings, but could
not provide any documents to substantiate her claim. Evidence showed that she had in fact been
working throughout most of the pre-trial period, but falsely stated in the Statement of Damages
that after the accident she could hardly work at all.


The Defendant contended that the Plaintiff had made the claims and signed the Statement of
Truth without an honest belief in its truth, resulting in the Defendant wasting costs in investigating
and defending such claims. On that basis, there were exceptional and compelling circumstances in
which the court should exercise its discretion on costs against the Plaintiff.


The Plaintiff argued, amongst other things, that the Defendant had not given any prior warning
that it intended to make an application to vary the costs, if the Plaintiff were to accept the
sanctioned payment. By not giving any prior warning, the Defendant’s present application
amounted to an "entrapment". The court disagreed and held that prior warning is not a
pre-requisite condition for exercise of the court’s discretion.
 

The real question is whether there were exceptional and compelling circumstances. The Plaintiff
knowingly made false claims in her signed Statement of Truth, without an honest belief in its
truth.
 

The court observed that Statements of Damages are served to give particulars of the amounts of a
claim and are to be taken seriously. They are an essential tool of the Civil Justice Reform, serving
to assist the court and the parties to achieve the underlying objectives of efficient, cost-effective
and fair disposal of litigations. The Plaintiff’s dishonest claim is precisely what Civil Justice Reform
sought to get rid of, and there should be costs consequences for the Plaintiff’s dishonesty.
 

However, the court did not go so far as to deprive the Plaintiff of all her costs. It agreed with the
Plaintiff that it would not be appropriate to make an issue specific costs order since the
Defendant’s sanctioned payment was in settlement of the whole of the Plaintiff’s claim, and not
specific heads of damage only. Under such circumstances, the court ruled (24 June 2011) it just
and proper to reduce the Plaintiff’s costs by 50%.


This judgment shows that the courts are becoming more robust at using costs sanctions against
plaintiffs who make grossly exaggerated claims. By highlighting this case, hopefully future
claimants will make more realistic claims resulting in quicker settlements and lower costs.


Click here to see table.