The case of Citation plc v Ellis Whittam Ltd [2012] 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?
In short, to promote access to justice. If claimants faced legal bills to explore reasonable claims it could prohibit such claims being pursued.
A claimant is only allowed to make reasonable enquiries, if the enquiries made go beyoond what is reasonable then they should still face a bill
Obviously some holes in this now with ATE etc (which is going of course)
besides, what with the number of Defendant’s who advocated one way costs shifting owing to the “entirely excessive and unreasonably incurred at whatever stage” ATE premiums is this really an issue given that Defendant’s wont be getting there costs by operation of the general principle
This is a very interesting point. To interpret it entirely in the light of personal injury actions would be far too restrictive as it is of general application. Why should someone with no viable case put another person to what may be considerable legal expense without their being able to recoup it? As a matter of principle, it seems to me to be entirely unjust.