BAE Systems Pension Funds Trustees Ltd v Bowmer & Kirkland Ltd

Under Civil Procedure Rules 1998 Part 38.6, a claimant who discontinues is presumed to pay the discontinued defendant’s costs. The court may depart from that position, including in an unusual case where one defendant has positively misled the claimant into suing another. The mere fact that commencing or pursuing the claim was reasonable does not displace the presumption. Guidance concerning Sanderson orders may assist, but it does not replace the Part 38.6 test. A claimant who issues proceedings near the limitation deadline accepts the risk that claims against some defendants may prove ill-judged, particularly where the claimant has information indicating that the defendant was not responsible.

The claimant commenced proceedings concerning alleged defects in a warehouse floor against several defendants shortly before expiry of the limitation period. It later discontinued against Geofirma Soils Engineering Ltd after information indicated that Geofirma had not carried out the relevant works. The claimant applied under Civil Procedure Rules 1998 Parts 38.6 and 44 for an order that Bowmer & Kirkland Ltd pay Geofirma’s costs, alleging that Bowmer & Kirkland had unreasonably failed to clarify Geofirma’s role sooner. The central issue was whether the ordinary costs consequence of discontinuance should be displaced.

1. Application dismissed. The normal costs position under Civil Procedure Rules 1998 Part 38.6 applied, so the claimant remained liable for Geofirma’s costs.
2. Part 38.6 creates a presumption that a claimant discontinuing against a defendant pays that defendant’s costs, unless the court orders otherwise. The court’s broad costs jurisdiction under Part 44 could, in an unusual case, support an order requiring one defendant to pay another defendant’s costs. An example might be where a claimant had been positively misled into suing the other defendant.
3. Sanderson-order authorities provided limited guidance. In particular, Irvine v Commissioner of Police for the Metropolis [2005] 3 Costs LR 380 emphasised the need for parties to assess carefully the basis for bringing claims against additional parties. That was not the test for displacing the Part 38.6 presumption, however. The mere reasonableness of commencing or pursuing proceedings was insufficient.
4. The claimant had issued proceedings close to expiry of the limitation period and had accepted the risk that claims against possible defendants might prove ill-judged. The information supplied by Geofirma, together with Bowmer & Kirkland’s position that no lime stabilisation works had been carried out, did not make Bowmer & Kirkland responsible for crystallising that risk. Bowmer & Kirkland had complied with the case-management order requiring it to clarify whether it would pursue a Part 20 claim or contribution notice. Its conduct did not justify displacing the default rule.