Discontinuance of Proceedings Costs

There are naturally costs consequences which derive from discontinuing proceedings in a civil matter. The Civil Procedure Rules, namely CPR 38.6, deals with the discontinuance of proceedings costs. CPR 38.6(1) states the following as the general rule of thumb for costs following discontinuance of proceedings.

CPR 38.6 (1):

‘Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant.’

Whilst the general rule of thumb seems to be that the Claimant will bear their own costs of the action and pay the Defendant’s costs incurred, there are exceptions where the Court may make no order as to costs. The main factor which gives rise to a “no costs order” in discontinuance of proceedings costs is where the Defendant has acted unreasonably throughout the course of the action. There are a number of other factors which the Court can consider in applying their discretion to depart from the general rule of thumb as found in the case of Brookes v HSBC Bank PLC (below).

Making a “no costs order” when proceedings have been discontinued lies heavily on the Court’s discretion. It therefore falls that factors which can indicate a “no costs order” are heavily established through common law. 

Hewson v Wells & Ors [2020] EWHC 2722 (Ch)

The more recent case of Hewson v Wells & Ors dealt with the Defendant’s behaviour and where this may give rise to “No Order for Costs”.

Within this case, the Claimant filed a Part 8 Claim Form seeking a declaration which would state that she had a beneficial interest in a property. The Claimant’s longstanding partner whom she lived with, had died. The Defendants’ in the action were the partner’s children and their mother whom all had a beneficial interest in the property. There was a deed in place which listed the Claimant, Defendants and the Deceased as parties to the Deed. The Claimant issued Part 8 proceedings under the Inheritance (Provision for Family and Dependants) Act 1975, seeking to inspect the Deed. There was some delay from the Defendants in providing the Deed to the Claimant. However, when the Deed was received from the Claimant, she discontinued proceedings and made an application to disapply the rules in relation to the discontinuance of proceedings costs.

As stated above, the general rule is that the Claimant will be liable to pay the Defendant’s costs of the action until the date of the Notice of Discontinuance being served, as per CPR 38.6 above.

It is also worth noting that the Court has a duty to consider all of the circumstances in a case, including the conduct of the parties before making an order, as per CPR 44.2. In this case, the Court considered CPR 44.2(5) on what conduct includes. Furthermore, the Court also relied on the cases Brookes v HSBC Bank PLC [2011] EWCA Civ 354 and Nelson’s Yard Management Co Ltd & Ors v Eziefula [2016] EWCA Civ 235.

In the Court of Appeal case of Brookes v HSBC Bank PLC, at paragraph 6, the principles where the Court’s discretion can be applied under CPR 38.6 were summarised. Within these principles, it was stated that in order for the Court to depart from the general rule that the Claimant pays the Defendant’s costs of discontinued proceedings, the Claimant must show that there had been a change in circumstances which arose as a result of the Defendant’s unreasonable conduct.

In the case of Hewson v Wells & Ors, the Court found that the change in circumstance was that the Deed was disclosed to the Claimant by the Defendant. Furthermore, it was held that the reason for this change in circumstance was the Defendant’s delay in providing the document, which was deemed to be unreasonable behaviour on the Defendant’s part. It took the Defendant 18 months to provide the Deed to the Claimant after the initial request to provide the Deed for inspection prior to the issuing of Part 8 proceedings.

For those reasons, the Claimant’s application for “no order as to costs” was successful.

How Can ARC Costs Assist?

As specialist Costs Draftsmen and Costs Lawyers, ARC Costs can assist you in recovering your costs and also disputing any costs which you may have been ordered to pay. As independent costs experts, we can advise you on costs orders made (Bills of Costs and Costs Negotiations) and on applications in relation to costs, and concerning any entitlement to/liability to pay costs (the latter may require preparation of Points of Dispute in relation to any Notice of Commencement received).

If you have a query which you would like to discuss or if you require our assistance on a costs matter, please contact us at info@arccosts.co.uk, or alternatively, call one of our costs experts direct on 01204 397302.

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