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The case of Citation plc v Ellis Whittam Ltd  EWHC 764 (QB) raises an interesting issue as to pre-proceedings costs. Summarising the law, Tugendhat J held:
“In summary I take the law to be: (1) if no claim form is issued, then there is no litigation and so there are no costs of litigation, whatever costs may have been incurred in complying with a Pre-Action Protocol; but (2) if a claim form is issued, the costs incurred in complying with a Pre-Action Protocol may be recoverable as costs ‘incidental to’ any subsequent proceedings.”
So far, so uncontroversial.
Slightly more questionable is the view that:
“The CPR provides a strong incentive to parties to engage in pre-action communications, with the risk to those who do not do this that they may not recover their costs, even if they bring an action in which they are the successful party.”
(A successful claimant who has failed to comply with a Pre-Action Protocol may have some of their costs disallowed but I cannot immediately recall a case where their costs were disallowed in their entirety for this reason alone.)
In concluding that the Claimant should not have issued proceeding (the claim being struck out as an abuse of process), Tugendhat J ordered the Claimant to pay the Defendant’s costs from the date of service of the claim form. However:
“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.”
This part of the judgment is more problematic. It is not unusual for both parties to incur legal costs pre-proceedings in their attempts to settle the matter without proceedings. It is well established that a successful claimant will be able to recover their pre-proceedings costs as being costs ‘incidental to’ the subsequent proceedings. Why should successful defendants not be in the same position?