ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
His Honour Judge Waksman Q.C.
9MA06132 & 9MA08155
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE MOORE-BICK
| ERICA BROOKES
|- and -
|HSBC BANK PLC
|And between :
|GERARD ANTHONY JEMITUS
|- and -
|BANK OF SCOTLAND PLC
WordWave International Limited
A Merrill Communications Company
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Miss Sonia Tolaney and Mr. James MacDonald (instructed by Addleshaw Goddard LLP) for HSBC Bank Plc
Mr. Fred Philpott (instructed by SCM Solicitors) for Bank of Scotland Plc
Hearing dates : 23rd February 2011
Crown Copyright ©
Lord Justice Moore-Bick :
"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."
(1) when a claimant discontinues the proceedings, there is a presumption by reason of CPR 38.6 that the defendant should recover his costs; the burden is on the claimant to show a good reason for departing from that position;
(2) the fact that the claimant would or might well have succeeded at trial is not itself a sufficient reason for doing so;
(3) however, if it is plain that the claim would have failed, that is an additional factor in favour of applying the presumption;
(4) the mere fact that the claimant's decision to discontinue may have been motivated by practical, pragmatic or financial reasons as opposed to a lack of confidence in the merits of the case will not suffice to displace the presumption;
(5) if the claimant is to succeed in displacing the presumption he will usually need to show a change of circumstances to which he has not himself contributed;
(6) however, no change in circumstances is likely to suffice unless it has been brought about by some form of unreasonable conduct on the part of the defendant which in all the circumstances provides a good reason for departing from the rule.
"28. . . . the appeal does, I think, raise, in relatively stark terms, a question, the answer to which could be of some general application in similar cases. The argument for MW challenges as contrary to principle the Recorder's conclusion that a claimant who has achieved what amounts to the satisfaction of his whole claim against one set of defendants can rely upon the avoidance of a trial on liability against the remaining defendants to recover costs alone as justifying a departure from the ordinary rule that on discontinuance a claimant should pay the defendant's costs."
"30. No judge encourages litigation about costs and a major theme of the CPR is the avoidance of unnecessary disputes and the costs which they can generate. But the avoidance of the costs of a trial is the necessary consequence of any discontinuance and cannot, of itself, justify a departure from the normal rule that the discontinuing party pays the other side's costs up to the date of discontinuance. There has to be something more than that to justify that departure. Otherwise the normal rule would be displaced in every case.
31. In this case there was nothing more. As already mentioned, the claimant knew what MW's position was and that it wished to contest its liability for the claim. The claimant made his decision to discontinue notwithstanding this and in the knowledge that the settlement with LMA made no provision for the payment of MW's costs against the claimant as opposed to those of the third party proceedings. By doing so Mr Messih removed the ability of MW to establish its defence and left the court in the position of being unable to determine what the outcome of the trial is likely to have been. The circumstances were therefore the quite usual consequences of a decision to discontinue and I can see nothing in them to justify the order which the Recorder made.
32. Had separate proceedings been taken against MW, it is difficult to see how the claimant could have avoided paying their costs on a discontinuance. If the claimant chooses to join as defendants in the same action two separate firms of solicitors against whom he pleads separate causes of action based on different breaches of their respective retainers the costs consequences of a discontinuance against one of them ought in principle to be the same.
33. The claimant's natural desire to settle his claim against LMA on terms that they paid the claim in full should not be allowed, in my judgment, to override the entitlement of MW to be paid their costs when the claimant chose no longer to pursue them. . . ."
Brookes v HSBC Bank
Jemitus v Bank of Scotland
Lady Justice Arden:
Lord Justice Ward: