Court awards indemnity costs after claim discontinued
The basic rule where a claim is discontinued is that the claimant will be liable for the costs incurred by the defendant up to the date on which the notice of discontinuance was served. The defendant's costs will usually be assessed on the standard basis, if not agreed, but indemnity costs can sometimes be ordered. This case is an example of indemnity costs being awarded.
Although Rose J held that there is no "Clutterbuck rule", the approach set out in Clutterbuck and Paton v HSBC [2016] was sound: "Where a claimant makes serious allegations of fraud, conspiracy and dishonesty and then abandons those allegations, thereby depriving the defendant of any opportunity to vindicate his reputation, an order for indemnity costs is likely to be the just result, unless some explanation can be given as to why the claimant has decided that the allegations are bound to fail". Here, allegations of fraud had been pursued over eight years and the proceedings were prosecuted vigorously up to a few hours before the claim was abandoned (without explanation), the afternoon before the trial. Accordingly, indemnity costs were awarded.
There was no need to show that the misconduct of the paying party had led to wasted costs. The judge also held that it would be inappropriate to take the defendants' refusal to mediate into account. She was satisfied that there was never any possibility of the parties making any progress in mediation (or even agreeing the identity of a mediator), and cases where allegations of fraud and serious wrongdoing have been made "are intrinsically unsuitable for mediation".
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
