COST BITES 56: IF YOU DISCONTINUE AGAINST A DEFENDANT YOU HAVE TO PAY THE COSTS

In Lendlease Construction (Europe) Ltd v AECOM Ltd & Anor [2022] EWHC 2855 (TCC)  Mrs Justice Joanna Smith held that a claimant that was discontinuing against one of the defendants in an action should pay the costs.  There was no good reason for departing from the normal order.

“The Claimant chose to plead a case premised upon a contract which it has been unable to find. As a consequence, it has been forced to discontinue. I see no basis for doing anything other than ordering that it should pay the Second Defendant’s costs of the proceedings.”

THE CASE

The matter was listed for trial on the 22nd November 2022. On the 13th October 2022 the claimant applied for permission to make amendments to its particulars of claim.  The defendants consented to some, others were objected to (and were largely unsuccessful).  Some of the proposed amendments discontinued a claim against the second defendant. The claimant had asserted that there was a Parent Company Guarantee in force. No such contract had ever been found.

THE JUDGMENT ON DISCONTINUANCE AND COSTS

The judge held that there was no reason to depart from the general principle that a party discontinuing against a defendant should pay the costs.

1. 1. These amendments are designed to effect a discontinuance of the action against the Second Defendant, as I understood Mr Hickey to accept during the course of his submissions. The Claimant seeks the court’s permission to amend to abandon its claim, but says that no notice of discontinuance is necessary (although Mr Hickey very fairly offers to serve such a notice if the court so requires).

1. 1. The decision to abandon the claim against the Second Defendant has come about in circumstances where neither the Claimant nor AECOM has been able to locate a copy of a Parent Company Guarantee on which the claim is based. The Second Defendant did not admit the existence of the Parent Company Guarantee in the Defence, and requested a copy from the Claimant. No copy has ever been found. The Claimant denies that the Second Defendant has incurred any specific costs by reason of this claim and the Claimant maintains that there should be no order for costs against it notwithstanding the effective discontinuance.

1. 1. The Second Defendant disagrees. It says that the rules on discontinuance in CPR 38 plainly apply. In particular, the Second Defendant says that the Claimant is liable for its costs, pursuant to CPR 38.6, up to the date of discontinuance.

1. 1. The Second Defendant referred me to two authorities in which amendments in fact represented the discontinuance of causes of action: see Pycom v Campora (which appears to be unreported, a decision of Mr Recorder Richard Smith sitting as a Deputy High Court Judge) at [33] to [34], and Galazi v Christoforou [2019] EWHC 670 (Ch) per Chief Master Marsh at [44] and following. I am inclined to agree with Chief Master Marsh in the latter case, that it is hard to avoid the conclusion on the wording of CPR 38 that the filing and service of a notice of discontinuance is required in every case. However, I also note his acceptance of the fact that, in practice, the court often impliedly waives the requirement for notice and deals with costs on the hearing of the application for permission in respect of amendments. This is such a hearing.

1. 1. Whilst I am not going to require the service of a notice of discontinuance, in my judgment, there is no reason here to do anything other than apply CPR 38, and in particular CPR 38.6, to the effect that a claimant who discontinues is liable for the costs. The fact that the Claimant does not consider it likely that the Second Defendant will in fact have incurred any costs in dealing with the discontinued claim does not appear to me to affect the position.

1. 1. The notes to CPR 38.6 in the White Book make it plain that there must be unusual circumstances established if the default rule is to be disapplied. There are no such unusual circumstances here. Ms McCafferty drew my attention to Galazi at [59] where Chief Master Marsh sets out the principles that apply on an application to displace the default rule in respect of the costs of discontinuance by reference to the judgment of Moore-Bick LJ in Brookes v HSBC Bank plc [2011] EWCA Civ 354 at [6]. Having regard to the six factors specifically there identified, Mr Hickey has identified no good reason for displacing the usual presumption that the defendant should recover its costs, and pragmatism plainly does not suffice to displace the presumption. There has been no change of circumstances (the difficulty in locating the Parent Company Guarantee has been known for some considerable time) much less could it be said that any change of circumstances has been brought about by the unreasonable conduct of the Second Defendant.

1. The Claimant chose to plead a case premised upon a contract which it has been unable to find. As a consequence, it has been forced to discontinue. I see no basis for doing anything other than ordering that it should pay the Second Defendant’s costs of the proceedings. It is to be hoped that agreement can be reached on such costs, but if that proves impossible, then they will be a matter for detailed assessment in due course. It would be wholly inappropriate for the court to attempt a summary assessment of such costs at this stage.