Shell UK Ltd v Molloy

Factual and Procedural Background

On 27th May 1996, the Plaintiff sustained an accident at work while employed by Company A as a scaffolder on an oil rig in the North Sea. The owner of the oil rig, Company B, admitted liability. The claim was heard before Judge Grenfell at the Halifax County Court on 1st September 2000 for the assessment of damages. Initially, the Plaintiff claimed damages on the basis that he had been off work since the date of the accident. However, this allegation was found to be fraudulent, as the Defendant discovered shortly before the hearing that the Plaintiff had returned to his pre-accident employment as early as 30th July 1997 and had worked regularly thereafter. Consequently, the Plaintiff abandoned any claim for damages after that date.

Legal Issues Presented

1. Whether the judge erred in awarding only three-quarters of the Defendant's costs after the date of the Part 36 payment instead of the full costs.
2. How courts should exercise discretion in awarding costs in cases involving fraudulent claims.

Arguments of the Parties

Appellant's Arguments

• The judge was wrong to award only three-quarters of the Defendant’s costs after the Part 36 payment.
• Given the fraudulent nature of the claim, the Plaintiff should be ordered to pay the entirety of the Defendant’s costs incurred after that date.
• The exercise of discretion by the judge was unreasonable in the circumstances.

Appellee's Arguments

The opinion does not contain a detailed account of the Defendant’s legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court acknowledged the judge faced a difficult task in determining the appropriate costs order, especially given the fraudulent nature of the Plaintiff's claim which complicated the proceedings. The Defendant had made a Part 36 payment slightly less than the final award, which was a challenging decision due to the fraudulent claim. The judge awarded the Plaintiff costs up to the date of the payment, and thereafter awarded the Defendant three-quarters of their costs. The appeal argued this was insufficient. The court considered the precedent in Bajwa v British Airways Plc, which addresses how discretion should be exercised in such cases. Recognizing the public importance of properly addressing costs in fraudulent claims, the court granted permission to appeal, indicating that the judge’s exercise of discretion might have been incorrect.

Holding and Implications

The court granted permission to appeal on the issue of costs. The direct effect is that the Plaintiff may be required to pay all the Defendant’s costs incurred after the Part 36 payment, subject to the outcome of the appeal. No new precedent was established by this decision, but the court emphasized the significance of judicial discretion in dealing with fraudulent claims and their associated costs.