Webb Resolutions Ltd v Countrywide Surveyors Ltd  Ch Div (4 May 2016)
A High Court Deputy Master held that a Defendant was entitled to costs of and incidental to a professional negligence claim where the Claimant had notified the Defendant of the claim under the Pre-Action Protocol for Professional Negligence, proceeded to issue the claim but then abandon it prior to service of the claim.
The Deputy High Court Master commented that the scope of such costs could potentially include all that followed as the direct consequence of the Pre-Action Letter of Claim, contrary to the decision made in Citation Plc v Ellis Whittam Ltd  EWHC 764 (QB).
The dispute had two significant issues to determine:-
- If a costs liability was triggered by the issue of proceedings, rather than service;
- If so whether costs should include pre-action costs as well as costs incurred after the issue of the claim.
As to be expected following the case of Citation Plc v Ellis Whittam Ltd  EWHC 764 (QB) the court held that the issue of the Claim Form fundamentally changed the position regarding a liability for the opponent’s costs as Section 51 of the Senior Courts Act 1981 and CPR 44 applied, whereas they did not apply if proceedings had not been issued.
The Deputy High Court Master made it clear that exactly how much of the Defendant’s expenditure could be said to be “costs of and incidental to” the claim would have to be determined in the assessment of costs. However, the Deputy High Court Master went on to comment that the Defendant’s costs could potentially include all that followed as the direct consequence of the Pre-Action Letter of Claim as such costs would be incidental to the claim that would eventually be issued. This is contrary to Citation Plc v Ellis Whittam Ltd  EWHC 764 (QB) where a High Court Judge sitting in the Queen’s Bench Division ordered the Claimant to pay the Defendant’s costs only from the date of service of the claim form.
In reaching the finding of the Defendant’s entitlement to costs the Deputy High Court Master commented that it would be wrong to ignore the considerable expense the Defendant had incurred in dealing with the claim, and also to disregard the manner in which the Claimant had at all times been aware of how disproportionate the costs were in relation to the size of the claim. The Claimant had mentioned the disproportionate costs in correspondence.
The court also held that, just because the Claimant would not have incurred a liability for costs had no claim had been issued, it did not follow that where a claim had been issued, the court should not make an order for costs.
Once proceedings have been issued costs are always in the discretion of the court and each case will depend upon its facts. This case does however have significant potential implications in that should a Defendant be awarded costs, the scope of such costs could arguably include anything following the Pre-Action Letter of Claim, as opposed to the date of the claim form in the previous case of Citation Plc.
The conflicting cases do illustrate the lack of clarity in the law where a Defendant is awarded costs when the Claimant abandons the claim following issue but prior to the service of proceedings. If you are ever in a situation where you are faced with an adverse costs order MRN can help. In addition to recovering costs on behalf of our clients our team of experts have a proven track record in providing assistance in challenging the receiving parties’ costs, often achieving significant savings against the costs claimed.