FIXED COSTS, PRE-ACTION CONDUCT: DEFENDANT ORDERED TO PAY DISCONTINUING CLAIMANT’S COSTS
the defendant was ordered to pay all of the claimant’s costs where the claimant discontinued shortly before trial following disclosure by the defendant of documents which it should have disclosed during the portal process.
The matter was an Occupiers’ Liability slipping case. The defendant denied liability and stated that it had no documents to disclose.
Proceedings were issued. The defendant then disclosed documents showing that it had a reasonable cleaning and inspection system.
The claimant discontinued.
The claimant was awarded fixed costs up to the post-listing, pre-trial stage less the fixed recoverable costs sum applicable had the matter settled pre-issue.
The court described the defendant’s conduct as “entirely unacceptable” and was critical of the National Health Service Litigation Authority.
The Pre-Action Protocol for Personal Injury Claims provides that:-
“The Defendant should also enclose with the response, documents in their possession which are material to the issues between the parties, and which would be likely to be ordered to be disclosed by the court, either on an application for pre-action disclosure, or on disclosure during proceedings.”
CPR 44.2(1) provides:-
“(1) The court has a discretion as to –
- whether costs are payable by one party to another;
- the amount of those costs; and
- when they are to be paid.”
CPR 44.2(4) states:-
“(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –
- the conduct of all the parties;”
CPR 44.2(5) says:-
“(5) The conduct of the parties includes –
- conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;
- whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
- the manner in which a party has pursued or defended its case or a particular allegation or issue; and
- whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.
The court awarded costs on the basis of the stage costs of £3,790.00 without the added 20% of damages as no damages were recovered.
It then set-off the stage costs of £950.00 which the claimant would have incurred anyway, representing the point where the matter would have been stopped had the NHSLA disclosed its evidence when it should have done so.
Consequently the defendant was ordered to pay the claimant £2,840.00 plus VAT and disbursements.
Of course in a Conditional Fee Agreement case, as this was, a claimant would normally be prevented from recovering costs due to the indemnity principle. However that principle does not apply in fixed costs cases – see Nizami v Butt  EWHC 159 (QB).
The court also recognized the extra danger involved of defendants behaving badly in fixed costs cases:-
“15. The Defendant’s behaviour in the conduct of this litigation was entirely unacceptable. It’s exactly the type of conduct which Part 44.2 is designed to address. Under the modern costs provisions, of course, the costs sanctions become increasingly important. The Claimant’s solicitors are pursuing these matters, PI claims, and at the end of the claim are recovering costs which are fixed and which are not by any stretch of the imagination, generous. There is a danger of — I am not saying it has happened in this case — this is a pure inadequacy of approach by the Litigation Authority and the Trust, but there is a danger that defendants and their representatives will cause difficulties in the course of litigation, so as to run up the work which claimant’s solicitors are having to do in the knowledge that those solicitors cannot recover costs reflecting that work. And of course, it always has to be borne in mind the provisions of CPR 1.3, that the parties to litigation have an obligation to assist the Court to further the overriding objective. The overriding objective firstly being to try and avoid costs and the issue of proceedings if at all possible, which is the whole purpose of the pre-action protocol, of course and secondly, when such claims are brought that they be dealt with in an efficient manner, in a proper manner so as to avoid excessive costs, involving public resources, delay and so on.”
The court rejected any suggestion that CPR 44.2 did not apply to fixed costs cases:-
“18. I am satisfied that the provisions of Rule 44.2 can be applied. It would be a nonsensical situation if the rules which are provided by Rule 44.2 to give the Court the power to impose sanctions to penalise those who abuse the system, and clearly there has been abuse here by the Trust and possibly by the Litigation Authority initially representing them. I am certainly not suggesting that Weightmans have been dealing with it improperly, they are obviously having to deal with what information they are supplied. But it would be a nonsensical situation if the rules, in an appropriate case where the fixed costs regime did apply, precluded the Court from imposing the sanctions provided under Rule 44.2 and 44.2, of course, gives the Court an unqualified discretion. I do not accept that I am bound by the Part 45 scales, but I clearly have to bear them in mind. It would be nonsensical if the Claimant’s solicitors could achieve a windfall and recover more costs than they would have done had the matter gone to trial or settled in favour of the Claimant at the stage that it was discontinued. That would be absolutely nonsensical.”
Although this is a first instance decision it is of considerable importance as this type of scenario is not uncommon. The whole issue will become of much greater importance as and when fixed costs spread to much higher value claims and also to non-personal injury claims.
I am grateful to Emma Ireland of Scott Rees and Co both for bringing this matter to my attention and supplying me with the judgment and for pursuing the matter on behalf of the claimant in the first place.