Legal Cost Specialists

Defendant’s pre-issue costs

I am grateful to Kerry Underwood’s always excellent blog for bringing to my attention the case of Webb Resolutions Ltd v Countrywide Surveyors Ltd [2016] Ch Div. (A fuller case summary can be found on RPC’s website.)

The Claimant notified the Defendant of a potential claim under the Pre-Action Protocol for Professional Negligence.  The claim did not settle and proceedings were issued but the claim was abandoned before service.

Was the Defendant entitled to costs?  Yes, ruled the Deputy High Court Master and those costs could potentially include all of the pre-proceedings costs that followed the direct consequence of the Pre-Action Letter of Claim.

I am not sure how this decision squares with that of case of Citation plc v Ellis Whittam Ltd [2012] EWHC 764 (QB) where Tugendhat J ordered the Claimant to only pay the Defendant’s costs from the date of service of the claim form:

“As to the costs up to the service of the claim form, I make no order. If the Claimant had not commenced the proceedings (and I have held that it ought not to have commenced the proceedings) then the Defendant could not have sought an order for its costs for that period to be paid by the Claimant. The fact that the Claimant did commence proceedings in this case ought not to lead to the result that it becomes liable to pay to the Defendant costs which it would not have been liable to pay if it had not commenced proceedings.”

The Citation case did always appear to be something of a rogue decision.  Nevertheless, two issues are highlighted by these decisions (and see McGlinn v Waltham Contractors Ltd [2005] EWHC 1419 (TCC) for further confusion):

  1. The surprising lack of clear case law for what costs a defendant can expect to recover.
  2. The rather odd distinction between costs a potential claimant or defendant can expect to recover when a claim settles pre-issue/service. A claimant would expect to have their (potentially very significant) costs paid if a matter settled pre-issue.  No comparable right exists for defendants when a claim is successfully defended pre-issue.  In a costs shifting environment, it is not obvious why this distinction should exist.  (QWOCS has obviously expressly removed costs shifting in most personal injury claims.)  On a philosophical level, if parties are to be encouraged to try to settle claims pre-issue, why should different rules apply as to what each can expect to recover if successful pre-issue?

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