Hunt v Hunt

A claimant who discontinues is ordinarily liable for the defendant’s costs under Civil Procedure Rules 1998, rule 38.6. The burden lies on the claimant to justify departure from that rule. In exercising the discretion, the court may give significant weight to the parties’ reasonableness, the information available before proceedings were issued, and whether earlier disclosure would have avoided the litigation. In family litigation, the costs of proceedings and any proposed payment from an estate may need to be considered together. The court may therefore decline to order payment of the defendant’s costs while also refusing to allow the claimant’s costs to be paid from the estate.

Michael Hunt, administrator of Joseph Hunt’s intestate estate, brought proceedings against David Hunt seeking to set aside a 1986 partnership agreement and related transactions on grounds including lack of capacity, undue influence and unconscionable bargain.

After further disclosure revealed material concerning the circumstances in which the agreement had been made, Michael sought permission to withdraw the proceedings without paying David’s costs. The central issue was how the court should exercise its discretion on costs following discontinuance, including whether Michael’s costs could be taken from the estate.

1. Discontinuance and costs. Under Civil Procedure Rules 1998, rule 38.6, the ordinary rule is that a claimant who discontinues is liable for the defendant’s costs incurred before notice of discontinuance. The burden of showing why that rule should not apply rests on the claimant.
2. Relevant circumstances. The court considered the claimant’s conduct reasonable up to service of the Defence. The defendant had failed to provide earlier information that would probably have prevented the proceedings or led to their earlier withdrawal. Both sides were criticised to some extent for failing to make reasonable enquiries of the accountants and solicitors who might hold relevant documents.
3. Costs and the estate. The discretion had to be exercised in the context of hostile family litigation involving an estate in which the defendant was a beneficiary. It would be inappropriate to require Michael to pay David’s costs while also allowing Michael to recover his own costs from the estate, thereby imposing part of that burden on David. The two questions therefore had to be treated as a package.
4. Order. Michael was permitted to withdraw the proceedings. He was not ordered to pay David’s costs, David was not ordered to pay Michael’s costs, and Michael was not permitted to take his costs from Joseph’s estate.