R.G. Carter Projects Ltd v CUA Property Ltd

Where an amendment effectively abandons a distinct cause of action, the court may order the amending party to pay both the costs of and caused by the amendment and the costs incurred in defending the abandoned claim. Such costs are ordinarily payable on the standard basis. Indemnity costs require conduct unreasonable to a high degree. A claimant’s proper decision to discontinue a weak claim does not, without more, justify indemnity costs, although fraud allegations and abusive or hopeless claims may warrant that order. Costs relating to abandoned issues should ordinarily be assessed at the conclusion of the proceedings. Where liability cannot be summarily assessed, the court should generally order a reasonable payment on account.

The claimant sought substantial damages for alleged misrepresentations arising from a hotel redevelopment contract, together with extensions of time and declaratory relief concerning the final account. Before the first case management conference, it applied to amend its Particulars of Claim. The amendments abandoned the misrepresentation claim and one extension-of-time claim and substantially reduced the final-account claim.

The parties agreed that the amendment should be permitted but disputed the consequential costs order. The defendant sought the costs of the abandoned issues, indemnity costs, immediate detailed assessment and a substantial payment on account. The central issues were whether the amendments were in substance a partial discontinuance, the proper basis and scope of the costs order, and the timing and amount of any payment on account.

1. Nature of the amendments. The deletion of the discrete misrepresentation cause of action was, in substance, a partial discontinuance of part of the claim, although effected by amendment under Part 17 rather than by notice under Part 38. The analogy was less complete where other remedies or causes of action continued on overlapping facts.
2. Costs payable. The usual order for the costs of and caused by an amendment will not always do justice. Where a distinct cause of action is abandoned and substantial costs of investigating and defending it have been wasted, the appropriate order may include those abandoned-issue costs. The claimant was therefore ordered to pay the costs of and caused by the amendments and the costs of the abandoned misrepresentation and roof-height extension-of-time claims.
3. Basis of assessment. The costs were ordered on the standard basis. Indemnity costs require conduct unreasonable to a high degree. A weak claim does not ordinarily justify indemnity costs if it was arguable. A proper decision to discontinue a claim, without fraud or abusive conduct, should not be penalised merely because the claim later appears weak. The fact that the claim was withdrawn early and its weaknesses had been raised before issue did not establish abuse or a hopeless claim warranting indemnity costs.
4. Assessment and payment on account. The court declined to fix a percentage because it lacked a proper evidential basis and a percentage order would have been guesswork. The issue-based costs order was to be determined by detailed assessment at the conclusion of the proceedings, consistent with the usual rule against multiple assessments. A payment on account was nevertheless appropriate under rule 44.2(8), and £100,000 was ordered on account.

First-instance decision of the High Court (Technology and Construction Court). No appellate history was stated in the judgment.