ON APPEAL FROM CENTRAL LONDON CIVIL JUSTICE CENTRE
Mr Recorder Cohen QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE ELIAS
LORD JUSTICE PATTEN
|- and -
|McMILLAN WILLIAMS & ORS
Tim Calland (instructed by Dewar Hogan) for the Respondent
Hearing date : 12th July 2010
Crown Copyright ©
Lord Justice Patten :
"(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."
(i) it is not usually part of the function of the court on an application under CPR 38.6 to attempt to reach a decision on whether or not the claim would have succeeded;
(ii) the rule embodied in CPR 38.6 that the party who discontinues should pay the defendant's costs is the normal rule and it is for the party discontinuing to justify some other order:-
"….The form in which that rule is expressed—which differs from the earlier rule, RSC Ord 21, r 3—makes it clear that the normal order on discontinuance is that the claimant bears the defendant's costs up to the date on which notice of discontinuance is served. The rule makes it clear that a court may order otherwise; but the burden is on the party who seeks to persuade the court that some other consequence should follow; and the task of the court is to consider whether there is some good reason to depart from the normal order.
 The judge directed himself by reference to two authorities to which he referred—Britannia Life Association of Scotland v Smith  CA Transcript 353, a pre-CPR case and Everton v World Professional Billiards and Snooker Association (Promotions) Ltd  All ER (D) 172 (Dec), a post-CPR case—that he had to look at the state of the action as it was at the date when the application for leave to discontinue was made and see what was the fair and just thing to do at that time. He thought that that was really all that had to be done. He went on to say ( All ER (D) 159 (Jun) at ):
'Taking into account what is fair and just, I take into account the following matters: whether the application by the defendant can be safely equated with defeat or an acknowledgment of defeat, whether the proceedings have in some way become academic, whether the claimant has obtained some legitimate benefit from the proceedings which it might not otherwise have obtained, what the economic value of the claim is, what the potential benefits of the claim might be, what the strength of the claim on a very prima facie basis is, not so as to conduct a mini-trial but simply to see whether there was a reasonable basis for the claim and a continuing reasonable basis for the claim.'
 In making that list of the matters which he took into account, the judge made no reference to the relevance of any change (or not) in circumstances between the date when the proceedings were started and the date when the application to discontinue was made or the decision to discontinue was taken. In other words, he left out of account any consideration as to why a claim which was started on the basis of certain expectations should be discontinued without an order for costs against the claimant in circumstances where the expectations have not, in fact, changed—even though they may have been re-evaluated."
(See Chadwick LJ at paras 24-26);
(iii) The court has therefore to be persuaded that it is just to depart from the normal rule but:-
"…. The rule recognises that justice will normally lead to the conclusion that a defendant who defends himself at substantial expense against a plaintiff who changes his mind in the middle of the action for no good reason—other than that he has re-evaluated the factors that have remained unchanged—should be compensated for his costs."
(See paragraph 36).
"…. The substratum of the claim, that is to say the entirety of the damage which has been sought to be recovered, has substantially been recovered. True it is, that that recovery was a voluntary act on the part of the claimant in accepting the Part 36 which has been made; but, as it seems to me, that is nonetheless a change of circumstances. Through, in itself, it is not necessarily determinative, it leads on to the consideration of other factors or features of the case in deciding how the discretion should be weighed.
14. Secondly, it seems to me really the nub of the question here must come to what was the appropriate order, what was the appropriate course to be followed, in circumstances where the substratum of the claim had disappeared as a result of the Part 36 offer made by the first three defendants? Is the defendant right in saying that the claimant really should have insisted that there be a trial in order to decide how the costs ought to fall? In some situations, unfortunate though that may be, this may be the correct view. However, it is not in my judgment the invariable position and the court has to consider many features."
"Having weighed all of these factors together, it seems to me that the overriding feature is in the circumstances of this case, the right thing to do was for the claimant to accept the Part 36 offer and to have discontinued the proceedings. That said, it seems to me that the court's discretion in this case ought to be exercised in favour of disapplying the ordinary rule because of that change of circumstances which have saved costs, court time and, I would add as well, professional time on the part of the defendants who are solicitors, who would inevitably have had to come, attend and give evidence in a way for which they would have received no professional compensation at all".
Lord Justice Elias :
Lord Justice Ward :