Cockell (t/a Cockell Building Services) v Holton

On discontinuance, the claimant ordinarily pays the defendant’s costs under Civil Procedure Rules 1998, rule 38.6(1). The claimant must show a good reason to depart from that presumption. A reassessment of the legal, commercial or evidential merits is insufficient. Ordinarily, there must be a change of circumstances after commencement which justifies discontinuance.

Where the claim was not viable when brought, later events cannot establish a good reason to avoid costs. A speculative disclosure exercise may justify indemnity costs, particularly where it produces no relevant material. Costs may be apportioned according to the conduct of each party and the nature of the costs incurred.

The claimant brought proceedings concerning payment for building works carried out at the defendant’s listed house. The defendant counterclaimed for defective work and joined the claimant’s father, alleging that father and son had traded in partnership and that the father was liable for the defective work.

The defendant later applied to discontinue the claim against the father. Discontinuance was not opposed, but the parties disputed who should bear the costs, including the costs of a specific disclosure application and the partnership issue. The central questions were whether there was good reason to disapply the ordinary costs consequence of discontinuance and whether indemnity costs were appropriate.

1. Discontinuance and costs. The application to discontinue was allowed. Under Civil Procedure Rules 1998, rule 38.6(1), the defendant who discontinues is ordinarily liable for the costs incurred by the defendant against whom the claim is discontinued. The principles summarised in Teasdale v HSBC Bank plc [2010] EWHC 612 (QB) were applied.
2. The claimant must show a good reason to depart from the presumption. A simple reassessment of the merits or commercial position is insufficient. A change of circumstances may constitute good reason, particularly where connected with defendant misconduct, but circumstances arising from the ordinary progress of litigation will generally not do so.
3. If the claim was never viable when brought, later changes cannot save the claimant from the usual costs liability. The partnership allegation had no sufficient evidential basis at the outset and remained unsupported after disclosure and witness evidence.
4. The specific disclosure application was a fishing expedition which produced no relevant document. Both defendants were therefore entitled to its costs on the indemnity basis. Keith Cockell’s costs of that application were assessed at £3,460.20; Simon Cockell’s costs were to be assessed separately.
5. Keith Cockell was entitled to the costs of the discontinued claim against him on the indemnity basis, subject to detailed assessment. Simon Cockell was entitled to the costs relating to the partnership issue, but only on the standard basis because his manner of conducting business and initial disclosure shortcomings complicated matters.
6. The confidentiality undertakings concerning documents disclosed under the earlier order were maintained. The documents and copies were to be returned or destroyed, subject to specified arrangements for any documents properly relevant to other issues.