Discontinuance, costs, and multiple Defendants: BAE Systems Pension Funds Trustees Ltd v Bowmer & Kirkland Ltd [2018] EWHC 1222 (TCC)

This case is a reminder, if any were needed, of the difficulties facing Claimants in deciding whether or not to pursue multiple Defendants.

BAE Systems Pension Funds Trustees Ltd v Bowmer & Kirkland Ltd [2018] EWHC 1222 (TCC) is a case concerning a construction dispute. The comments therein on costs and discontinuance are of general application (with, in the case of PI claims, the added complication of QOCS).

In short, BAE issued proceedings against both the Bowmer and Kirkland Ltd (D1) and Geofirma Soils Engineering Ltd (D2) arising out of the design and construction of a warehouse, “Unit 2”. D1 were the design and build contractors of Unit 2, with D2 as their subcontractors. Shortly before the end of the applicable limitation period, BAE issued protective proceedings. Jefford J observed:

“In those circumstances, [the Claimant] could not be criticised for having commenced proceedings against all possible defendants. That is the sensible approach where a limitation period is about to expire and a claimant may be unclear about the financial or insurance position of potential defendants. However, it does seem to me, in principle, that the claimant then takes the risk that the proceedings against one or more of those defendants may transpire to be ill-judged or inappropriate, and also, as Ms Sinclair QC has submitted on behalf of [D1], the claimant takes the risk that the defendants will not have all documentation and information at their fingertips in relation to a stale claim.”

In due course it became apparent that D2 had had no involvement with the “lime stabilisation” works that were the subject of the action. The Claimant accordingly discontinued the proceedings against D2. Civil Procedure Rule 38.6(1) therefore applied:

“(1) Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant.”

Rule 38.6(1) envisages that a court can depart from the usual order. The Claimant sought an order that D1 should pay D2’s costs. The basis for that application, in broad terms, was that D1 was said to have failed earlier to provide the information which led to the Claimant discontinuing against D2. It was said, by the Claimant, that D1, as the employer, ought to have been able to explain the scope of D2’s works, and that had they done so then the Claimant would not have pursued D2.

The suggestion that D1 should have prioritised the Claimant’s queries in respect of D2 was held to be “unfair and overstated”. The claim was brought several years after the works in question, and in those circumstances “any party could expect a reasonable time in which to ascertain its position and that of the other parties”. It was clear that there was a discrepancy between some of the relevant documents, and the Claimant “anticipated that something might turn up that explained the position and justified a claim against [D2], and they did not wish to take the risk of discontinuing on the basis of the information that they currently had.” Jefford J went on:

“That does not seem to me to have been an unreasonable position. But, at the same time, it did not place [D1] under an obligation to do any more at that stage to crystallise the extent of the risk to [the Claimant]. In any case, when [the Claimant] served their Particulars of Claim on 27th April 2017, as Ms Sinclair QC has pointed out, the Particulars of Claim contained a positive averment that [D2’s] works did include lime stabilisation to Unit 2 and a series of allegations of breach in respect of those works. That seems to me to evidence the fact that [the Claimant] was taking the risk of making such allegations, which might, certainly on the evidence that it had before it at the time, turn out to be unfounded.

Jefford J turned to the application itself. It was refused. Although there is no express statement to this effect, the fact that the order being sought by the Claimant involved a departure from the usual order on discontinuance would suggest that the burden is on the party seeking that departure. Although there is no authority in which, on discontinuance, a costs order has been made against another Defendant to proceedings, Jefford J accepted that there was a jurisdiction to make such an order. She rejected D1’s submission that the Claimant was in effect seeking a Sandersonorder which would be available only on the conclusion of the proceedings.

“I am not persuaded, as I have already indicated, that that is right and that there are no circumstances in which a court could order a defendant to pay the costs of another defendant against whom proceedings have been discontinued. I say that given the wide jurisdiction of the court and the possibility of envisaging unusual circumstances, for example, where a claimant had been positively misled by one defendant into suing another, where such an order might then be appropriate. But that is not this case, and the absence of any authority in which such an order has been made seems to me to be some indication, at least, of how unusual such a case would be.”

The reasonableness or otherwise of bringing a claim against a Defendant is not the test for determining whether the usual rule on discontinuance should apply. Jefford J explicitly recognised that it was in fact reasonable for the Claimant to have issued against both Defendants. Accordingly, Claimant solicitors should be aware that even a reasonable decision to issue against a Defendant will not preclude a costs order on discontinuance. Something more – such as a positively misleading approach from the other Defendant – is required.

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