Costs following claim being struck out: new case law
In the case of Citation Plc v Ellis Whittam Limited  EWHC 764 (QB) the Court had to make a decision as to which party should be liable for costs for the period both before the claim form was issued and after the claim form was issued in the case where the claim had been struck out.
This is a defamation case in which the Court had previously held that the Claimant had an arguable case of slander and malicious falsehood against the Defendant. However, the Court struck the Claimant’s claim out as an abuse of process because by the time the claim was served on the Defendant the Claimant had “achieved...all that it could achieve which would be of any value to it in vindicating its reputation”.
The argument then arose as to who should pay the costs of the action. The normal rule is that costs are paid by the unsuccessful party (in this case the Claimant) but the Court may make a different order. The Court should consider the conduct of the parties, including conduct before the proceedings and compliance with any Pre-Action Protocol. The Court rules also envisage a procedure for the Court to make a costs order where a claim form has not been issued but claims have been settled before the issue of the claim.
The Claimant argued the Defendant should pay the Claimant’s costs up to the date of the claim form and that after that there should be no order for costs, i.e. each party pays its own costs. The Defendant argued that the Claimant should pay the Defendant’s costs incidental to the proceedings, in the normal way and that these costs should include the costs of the correspondence exchanged prior to issuing the proceedings.
The Judge helpfully summarised previous case law in this area and stated that it took the law to be:
1. If no claim form is issued, then there is no litigation and so there are no costs of litigation...
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...
This case is helpful as it has summarised the position that some costs from prior to issue of proceedings may be recoverable. On the very specific facts of this case, the Court held that the Claimant’s should pay the Defendant’s costs of the action from the point of serving the claim but not the costs beforehand.
If you require any further information on this topic, please contact Emma Hayward.