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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Clutterbuck & Anor v HSBCc Plc & Ors [2015] EWHC 3233 (Ch) (02 October 2015) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2015/3233.html Cite as: [2015] EWHC 3233 (Ch), [2016] 1 Costs LR 13

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		The Rolls Building Fetter Lane London EC4A 1NL
		2 October 2015

MR JUSTICE DAVID RICHARDS:

1. The application which is before the court today is for an order that the claimants pay the costs of the 11^th defendant to these proceedings on an indemnity basis.
2. The proceedings were issued in September 2014. The claim form, which named 15 defendants, states that the claim against the 1^st, 4^th and 11^th to 13^th defendants is for damages in tort for deceit and/or negligence.
3. It was claimed against the 11^th defendant that he had been involved in procuring the provision of representations by a bank to the claimants in relation to third parties which he knew to be false or, alternatively, which he should have known were false and that he owed a duty of care to the claimants in that respect.
4. The lengthy Particulars of Claim, dated 29 December 2014, run to 220 or so paragraphs. On 18 February 2015 the 11^th defendant served a Defence. On 20 April 2015 the 11^th defendant issued an application to strike out the claim, on the basis that the Particulars of Claim disclosed no reasonable grounds for bringing the claim and/or that it was an abuse of the court's process. It was said, amongst other things, that the Particulars of Claim were prolix and failed concisely to set out the relevant facts and nature of the case against the 11^th defendant.
5. The claimants responded with an application to amend the Particulars of Claim, issued on 1 June 2015. At a hearing on 11 June 2015 Deputy Master Arkush made orders by consent vacating the hearing, directing the claimants to serve on the 11^th defendant draft Amended Particulars of Claim by 17 June 2015 and requiring the 11^th defendant by 26 June to indicate whether he consented to the draft amendments and/or whether he would pursue his strike out application. The application to strike out was, pending that decision, adjourned generally to be re-listed. In addition by consent it was ordered that the claimants pay the 11^th defendant's costs of his strike-out application down to 8 June 2015 and the additional costs of the hearing thrown away, such costs to be assessed on the standard basis if not agreed, with an interim payment of £19,000 by 25 June 2015. On 17 June draft Amended Particulars of Claim were provided, but they did not indicate either the deletions from the un-amended Particulars of Claim or the new additions to them. On 25 June 2015 draft particulars were provided which showed those amendments.
6. The 11^th defendant did not consent to the amendments and on 22 July issued an application to seek a debarring order, I take it on the grounds that the order for costs had not been met at that stage. Costs of £19,000 were paid by the claimants on 21 August.
7. There was a hearing before Master Teverson on 28 August of the 11^th defendant's application, to strike out the Particulars of Claim and the claimants' application to amend in the terms of the draft which had been supplied. It was a substantial hearing in the course of which counsel for the claimants accepted that the proposed Amended Particulars of Claim needed redrafting before it would be appropriate to consider granting permission to amend. On that basis the Master adjourned the applications to be heard by a judge with a time estimate of one day and he requested that the hearing be expedited. It was not suggested that it needed to be heard as vacation business. It would not come on for hearing before 1 October, thereby giving the claimants time (if they chose) to provide further draft Amended Particulars of Claim to the 11^th defendant.
8. The Master also ordered the claimants to pay the 11^th defendant's costs of two applications up to and including the hearing on 28 August 2015 on the standard basis and ordered an interim payment of £15,000 to be paid by 18 September. Those interim costs were paid by the claimants on 14 September 2015.
9. There was an appointment before the Listing Officer on 4 September. The solicitor for the claimants made clear that he personally would be unable to attend the hearing on 1 October because of other professional engagements; nonetheless the Listing Officer directed that the application should float from 1 October. No application was made to a Judge to change that listing direction. In any event, Mr Ilyas (counsel for the claimants) was available for the hearing on 1 October and has appeared before me today. I mention this because complaint has been made by the claimants' solicitor that the matter was in the event listed for hearing today, notwithstanding the information which he had previously given to the Listing Officer. If the claimants' solicitor felt concerned about a hearing on 1 October, it was open to her to apply to a Judge, but as I have said that course was not taken. No legitimate complaint can be made by the claimants or their solicitor that this matter was listed for hearing today.
10. No further amended draft particulars of claim have been provided to the 11^th defendant since the hearing before Master Teverson. The 11^th defendant and his solicitors and counsel prepared fully for today's hearing, including the provision by counsel of a full skeleton dealing with the applications.
11. There were in the course of yesterday communications by the claimants' solicitor to the court requesting the applications to be taken out of the list for today. Quite correctly in the circumstances the court refused to do so, following which (again yesterday) the claimants served on the 11^th defendant notice of discontinuance of the entire proceedings. As I understand it, the proceedings have already been discontinued against most of the other defendants. No skeleton argument for today's hearing was provided by counsel for the claimants. I can only surmise that counsel was not instructed to resist the substantive application, otherwise I feel sure that a skeleton would have been lodged, but obviously following notice of discontinuance it became irrelevant to file a skeleton dealing with the substantive matters.
12. The effect of the notice of discontinuance under CPR 38 is that unless the court otherwise orders the claimants must pay the 11^th defendant's costs of the proceedings on the standard basis. There is however jurisdiction for the court to order otherwise, including an order that those costs be assessed and paid on the indemnity basis. That is, as I mentioned earlier, the application that is made on behalf of the 11^th defendant today.
13. There was objection taken in correspondence from the claimants' solicitors that, the case having been discontinued, there was no basis on which today's application could proceed and that if the 11^th defendant wished to seek costs on the indemnity basis he would have to issue and have listed a separate application. Mr Ilyas, in my view sensibly, has not pursued that point which I would have regarded as completely ill-founded.
14. The application for an order for indemnity costs is made principally on the basis that the case made against the 11^th defendant was a case in deceit. As Mr Ramsden on behalf of the 11^th defendant has observed, those allegations have now been withdrawn, without explanation and without apology. He submits that the discontinuance of a claim based on fraud is itself sufficient to take this case out of the ordinary and to make it an appropriate case in which to order costs on the indemnity basis. He relies additionally on the recent conduct of the proceedings on behalf of the claimants. He draws attention to the fact that the draft Amended Particulars of Claim provided in June were accepted before the Master as requiring amendment. The adjournment by the Master of the applications to the judge in effect provided the claimants with one final chance to amend their Particulars of Claim and they did not take that chance. As I say, no further draft was provided.
15. Mr Ramsden draws attention also to the sequence of events yesterday; the attempt to take this application out of the list having failed, within a very short period indeed the notice of discontinuance was served. It has all the appearance (and it has not been denied) that a decision had already been taken to discontinue proceedings if the attempt to take the applications out of the list failed.
16. Mr Ilyas on behalf of the claimants submits that an allegation of fraud being made in the proceedings which are then discontinued is not of itself reason to order indemnity costs. The general provision in relation to cases in which allegations of fraud are made is that, if they proceed to trial and if the case fails, then in the ordinary course of events the claimants will be ordered to pay costs on an indemnity basis. Of course the court retains a complete discretion in the matter and there may well be factors which indicate that notwithstanding the failure of the claim in fraud indemnity costs are not appropriate, but the general approach of the court is to adopt the course that I have indicated.
17. The underlying rationale of that approach is that the seriousness of allegations of fraud are such that where they fail they should be marked with an order for indemnity costs because, in effect, the defendant has no choice but to come to court to defend his position.
18. In circumstances where, instead of the matter proceeding to trial and failing, the claimant serves a notice of discontinuance, thereby abandoning the case in fraud, it is in my judgment appropriate for the court to approach the question of costs in the same way.
19. The defendant has been put in this case to considerable expense in defending to date the allegations made. As I mentioned earlier a Defence was served, applications were made to strike out the Particulars of Claim and the applications to amend were resisted in circumstances where the amendments would maintain the allegations of fraud.
20. I therefore consider that allegations of fraud will in general justify the court in ordering costs upon an indemnity basis where the claimant serves notice of discontinuance. In a case to which I drew the attention of counsel, Jarvis plc v PricewaterhouseCoopers [2000] 2 ECLC 368, Lightman J took the same view.
21. I therefore hold that on that ground alone it is appropriate to order the claimants to pay the 11th defendant's costs of these proceedings on the indemnity basis and to order an assessment on that basis if the costs are not agreed.
22. The other matters to which Mr Ramsden has drawn attention in relation to the recent conduct of these proceedings certainly do not provide any grounds for deviating from that approach and, if anything, underpin the conclusion that this is an appropriate case for an award of indemnity costs.
23. In those circumstances that is the order which I shall make.