Citation Plc v Ellis Whittam Ltd

Where no claim form is issued, there is no litigation and therefore no order for the costs of litigation, including pre-action protocol costs. Once proceedings are issued, costs incurred in complying with a pre-action protocol may be recoverable as costs incidental to the proceedings. The general rule that costs follow the event remains subject to all the circumstances, including the parties’ conduct and partial success. Where a claim is struck out as an abuse because the claimant has already obtained all worthwhile vindication, costs may be ordered from service of the claim form. However, absent an admission of liability, a finding of liability, or an acceptable undertaking, the defendant cannot be ordered to pay costs merely because the claimant had grounds to investigate the claim before issue.

The judgment concerned the costs consequences of an earlier decision in Citation Plc v Ellis Whittam Ltd, [2012] EWHC 549 (QB). The claimant had brought claims in slander and malicious falsehood. The court found that publication by the defendant’s employee and publication to more than one person were arguable, but struck out the action as an abuse of process because, by the time proceedings were issued and served, the claimant had achieved all that could usefully vindicate its reputation.

The issue was whether the defendant should receive its costs, including pre-action protocol costs, and, if so, from what date.

1. Costs incurred before proceedings. The court accepted the principle stated in McGlinn v Waltham Contractors Ltd, [2005] EWHC 1419 (TCC), that costs incurred in complying with a pre-action protocol are capable of being costs incidental to proceedings subsequently commenced. That principle was supported by In re Gibson’s Settlement Trusts, [1981] Ch 179, and Callery v Gray, [2001] 1 WLR 2112.
2. If no claim form is issued, there is no litigation and therefore no costs of litigation, whatever pre-action costs have been incurred. CPR Part 44.12A did not apply because the parties had not agreed all issues, including liability for costs.
3. The claimant had not been offered all the substantive relief to which it was entitled. The defendant had not admitted that its employee spoke the words complained of, and its proposed undertaking did not match the injunction sought. The defendant had instead established that there was no real risk of future publication.
4. The court considered the abuse-of-process principle in Jameel v Dow Jones & Co Inc, [2005] QB 946, as summarised in Lait v Evening Standard Ltd, [2011] EWCA Civ 859. A defamation claim may properly continue where an injunction serves the legitimate purpose of protecting reputation, but the claimant’s decision not actively to pursue damages was reasonable in light of the risks and limited value of further proceedings.
5. In the absence of a finding or admission of liability, or an undertaking in the terms sought, the defendant could not receive an order for its pre-service costs. The claimant was ordered to pay the defendant’s costs from service of the claim form on 28 October 2011, including the costs of the costs argument on 12 March, but not the pre-action protocol correspondence. No order was made for costs incurred before service.

The judgment followed the court’s earlier merits decision in Citation Plc v Ellis Whittam Ltd, [2012] EWHC 549 (QB), in which the action was struck out as an abuse of process.