Wakefield (t/a Wills Probate and Trusts of Weybridge) v Ford & Anor

Following discontinuance, costs ordinarily fall on the standard basis. Indemnity costs are justified where conduct of the litigation or the circumstances take the case out of the norm. The relevant conduct must involve high-degree unreasonableness, rather than merely error or misguided judgment. Persisting with an untenable allegation of malice, ignoring compelling advice on its weakness, rejecting reasonable settlement proposals, and seeking vindication on an unsustainable basis may together justify indemnity costs. Conduct before proceedings may be relevant insofar as it demonstrates the unreasonableness of commencing or continuing the claim, but the order is not punishment for pre-action misconduct.

The claimant brought defamation proceedings concerning a solicitor’s letter alleging that he had been negligent and that the negligence had been admitted. The Master had ruled that the publication was protected by qualified privilege, leaving malice as the principal route to liability. The claimant continued the action, rejected settlement proposals, and later sought to accept an alleged outstanding offer after deciding not to proceed to trial.

The court rejected the claimant’s construction of the alleged settlement offer and considered the appropriate costs consequences of the anticipated discontinuance. The central issue was whether the claimant’s conduct was sufficiently unreasonable to justify costs on the indemnity basis.

1. The claimant’s construction of the defendants’ settlement correspondence failed. The offer was not open indefinitely and the parties were not ad idem as to its terms, including the treatment of earlier costs orders and the wording of the apology.
2. Under Civil Procedure Rules 1998, rule 38.6(1), costs following discontinuance would ordinarily be payable on the standard basis. The court applied the question stated in Excelsior Commercial and Industrial Holdings v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879: whether something in the conduct of the action or circumstances took the case out of the norm so as to justify indemnity costs.
3. The threshold required high-degree unreasonableness, not merely conduct that was wrong or misguided. The claimant’s continued reliance on malice was unreasonable. The weakness of that case had been compellingly explained after the qualified-privilege ruling, yet the claimant persisted and used the allegation as a negotiating threat.
4. The rejection of sensible settlement proposals was relevant. The court also relied on the approach discussed in McKenna v MGN Ltd, namely that unreasonable reliance on a plea of malice may properly affect the costs decision where it causes delay and expense without realistic utility.
5. The claimant’s conduct concerning the allegedly negligent drafting and his attempt to blame an innocent client reinforced the conclusion that continuing the claim and seeking vindication were unreasonable. That conduct was considered as evidence bearing on the litigation conduct, rather than as punishment for pre-action behaviour.
6. Indemnity costs were ordered throughout. The claimant was ordered to pay £45,000 on account of costs by 13 March 2009.