Steven Orton v Barclays Bank UK PLC

In a small-claims case, the costs-neutral regime is the essential context for applying Civil Procedure Rules rule 27.14(2)(g). The party seeking costs bears the burden of showing conduct that is unambiguously unreasonable and admits of no reasonable explanation. A withdrawal, an unsuccessful claim, or rejection of an opponent’s purported offer does not itself satisfy that test.

Courts must not import the Denton relief-from-sanctions approach, including requirements of seriousness, significance or a detailed evidential explanation. A unilateral invitation to discontinue, backed by a short deadline and threatened costs, is not a settlement offer and cannot displace the small-claims costs regime. The jurisdiction must be applied so that parties are not deterred from discontinuing arguable claims or from using the small claims track.

The claimant brought a small-claims-track claim under the Consumer Credit Act 1974 concerning commission paid on a PPI policy. After the defendant rejected several settlement proposals, it sent invitations to discontinue on a drop-hands basis, backed by deadlines and warnings of costs consequences.

Twelve days before trial, the claimant discontinued. He explained that, after reviewing the defendant’s evidence, the modest value of the arguable claim no longer justified the cost of instructing counsel. District Judge Lindsay held that the late discontinuance was unreasonable and awarded the defendant £2,132.88. The Circuit Judge dismissed the claimant’s appeal in [2025] EWCC 12.

The central issue was whether the claimant’s conduct amounted to unreasonable behaviour for the purposes of CPR rule 27.14(2)(g), and whether the Circuit Judge’s four-stage guidance was lawful.

1. Appeal allowed. The District Judge’s costs order was set aside. The claimant’s discontinuance of an arguable small claim did not amount to unreasonable behaviour under Civil Procedure Rules rule 27.14(2)(g).

2. The small claims track is a deliberately costs-neutral regime. Its disapplication of ordinary discontinuance costs and Part 36 must have real weight when determining whether costs neutrality should exceptionally be displaced. The party seeking costs bears the burden of proving unreasonableness.

3. The court accepted the limited guidance from Dammermann v Lanyon Bowder LLP [2017] EWCA Civ 269 and the reasonable-explanation formulation in Ridehalgh v Horsefield [1994] Ch 205. The inquiry is fact-sensitive and must be conducted in the setting of the small-claims regime. Withdrawal or unsuccessful pursuit of a claim is not, without more, unreasonable. The court must avoid deterring litigants from using the track or making sensible concessions.

4. The courts below erred by treating the defendant’s invitations to discontinue as settlement offers and by effectively requiring the claimant to justify his decision within a short deadline. Those invitations offered the claimant no compromise. The claimant had made actual offers to settle. His commercial decision, after reviewing the evidence and facing unrecoverable counsel’s fees, was reasonably explicable.

5. The Denton relief-from-sanctions framework cannot be imported into rule 27.14(2)(g). There is no requirement to identify serious or significant conduct, nor any basis for a detailed interrogation of a party’s explanation as though the party were in default of a procedural obligation. The Circuit Judge’s four-stage guidance was therefore erroneous.

6. By agreement, and pursuant to rule 27.14(2), there was no order for the costs of the appeal.

• Court of Appeal (Civil Division): Allowed the claimant’s appeal, set aside the District Judge’s costs order, and made no order for appeal costs under Civil Procedure Rules rule 27.14(2).
• County Court at Middlesbrough (Circuit Judge): Dismissed the claimant’s appeal from the District Judge: [2025] EWCC 12.
• County Court at Middlesbrough (District Judge): Held that the claimant had behaved unreasonably on discontinuing shortly before trial and awarded the defendant £2,132.88 in costs.