Law report - Commentary: The thorny issue of exaggeration vs over-estimation

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The key issue here is whether the claimant has made a genuine over-estimation or exaggeration. If exaggeration is proved, then there can be substantial costs issues for the claimant to face.

The Civil Procedure Rules deal with exaggeration as follows:

1 CPR 44.3(1) provides the court with the general discretion to decide whether costs are payable by one party to another.

2 44.3(2) provides the general rule that the unsuccessful party will be ordered to pay the costs of the successful party; but the court may make a different order. The court must consider several factors when making a costs order, most notably the conduct of the parties.

3 44.3(5)(d) specifically states whether a claimant who has succeeded in their claim in whole or in part, exaggerated their claim.

However, the court will not make an order as to exaggeration lightly. In the recent case of Clarke v Maltby (2010) the defendant alleged that the claimant had over-stated her symptoms but did not have any expert evidence to support that contention. The court found against the defendant and made an indemnity costs order in favour of the claimant. Indemnity costs provide that any doubt on assessment be resolved in favour of the receiving party.

The court will consider what actually constitutes 'exaggeration'. In Morton v Portal (2010), where the claimant initially pleaded his loss of earnings claim at £1.72m — yet accepted £385 000, the court found he had not exaggerated his claim. The judge in that case stated: "It cannot be assumed that a person who has been willing to deceive the Inland Revenue should be regarded as someone who is willing to deceive a court or has done anything else in his dealings with the court such as would merit criticism."

The court will consider the conduct of the parties, and additionally the extent of any offers made in settlement. Derisory offers of settlement may be considered by the court as poor conduct on both sides. Where settlement is achieved by a Part 36 offer, establishing exaggeration can be difficult.

The court will consider fundamentally whether there is evidence of exaggeration, and whether any exaggeration was intentional or a genuine or misguided overestimation.

Kelly Matthews, BLM Southampton

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