Galazi & Anor v Christoforou & Ors

Under Part 38 of the Civil Procedure Rules 1998, a claimant may discontinue an entire action, a claim against a defendant, or a cause of action against one or more defendants. A claim is more than a remedy but may be less than the whole claim against a party. Abandoning factual allegations within a cause of action is amendment, not discontinuance. A notice of discontinuance is ordinarily required, although the court may waive that requirement. The default costs rule is that a discontinuing claimant pays the relevant defendant’s costs. Departure requires a good reason and generally unreasonable conduct by the defendant directly related to the discontinuance. Indemnity costs may be ordered where the conduct or circumstances fall outside the norm; moral probity is unnecessary.

Two related High Court claims arose from a family dispute concerning property investments, company ownership and management arrangements. After Wellsford Securities Ltd and Abbee Ltd had been restored to the British Virgin Islands register, the claimants amended the original proceedings and pursued direct company claims in separate Companies Proceedings. The court had already permitted the amendments but had reserved the consequential costs issues.

The central questions were whether removing causes of action and claims against particular defendants amounted to whole or partial discontinuance under Part 38, and how the costs of discontinuance, amendment and earlier reserved applications should be allocated.

The court determined the discontinuance and costs issues as follows.

1. Notice and scope. Under Part 38 of the Civil Procedure Rules 1998, permission to discontinue, where required, is a preliminary step. Discontinuance ordinarily takes effect only when a notice is filed and served. The court accepted that the notice requirement could be waived and treated the application and the order of 12 October 2018 as sufficient for that purpose.
2. Meaning of claim. A claim is distinct from a remedy and may comprise one or more causes of action. A claimant may discontinue a cause of action against one defendant while retaining it against another. The court declined to follow the broader analysis in Kazakhstan Kagazy Plc v Zhunus [2016] EWHC 2363 (Comm), which treated “claim” as meaning the entire action or all causes of action against a particular defendant. However, ceasing merely to allege facts, or part of the case supporting a cause of action, requires amendment rather than partial discontinuance.
3. Costs of discontinuance. The court applied the principles in Brookes v HSBC Bank plc [2011] EWCA Civ 354 at [6], reinforced by Nelson’s Yard Management Co v Eziefula [2013] EWCA Civ 235; [2013] CP Rep 29 at [30]. The claimants had not shown a good reason to depart from the presumption that they should pay the defendants’ costs. They had contributed to the circumstances relied upon and could not identify unreasonable conduct by the defendants directly related to the discontinuance.
4. Orders on the amendments. The claims against Anglo and Northwest were wholly discontinued. Certain causes of action against the Christo Defendants were partly discontinued, while other factual material was removed by amendment. The costs of the discontinued claims were ordered to be assessed immediately. The claimants were also ordered to pay the costs of and occasioned by the amendments. Work undertaken in one action could not be carried across to a separate action merely because it might benefit that action.
5. Basis and reserved costs. Applying Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson (a firm) [2002] EWCA Civ 879 at [39] and Reid Minty (a firm) v Taylor [2011] EWCA Civ 1723 at [27], the relevant discontinuance and amendment costs were ordered on the indemnity basis. The reserved costs of the February 2017 application went to the Galazi Claimants on the standard basis; the litigation-friend application costs went to the Christo Defendants; the May 2018 application costs went to the Galazi Claimants; and the August 2018 consent application costs were costs in the case.