In Webb Resolutions Limited v Countrywide Surveyors Limited (2016) WL 02641889 Chancery Division Deputy Master Nurse held a claimant liable for a defendant's costs of and incidental to an abandoned professional negligence claim even though the claim form had not been served.
Facts of the case
In 2011 the claimant, Webb Resolutions Limited ("Webb Resolutions"), sent a Letter of Claim to the defendant, Countywide Surveyors Limited ("Countrywide"), claiming breach of contractual and tortious duties arising out of Countrywide's valuation of a property in 2007. It was alleged by Webb Resolutions that Countrywide overvalued the property by around £24,500 and that this overvaluation caused Webb Resolution to suffer loss. Countrywide responded denying liability and argued (amongst other things) that Webb Resolutions' expert evidence was flawed.
Extensive correspondence followed between the parties for a period of approximately 2 years although Countrywide's position did not change during this period and it made no offers of settlement.
In 2013, Webb Resolutions issued a claim form against Countrywide to protect its position in regard to primary limitation, but it did not serve the proceedings on Countrywide. It appears that Webb Resolutions did, however, inform Countrywide of the existence of the proceedings. After the claim form was issued there was some further limited correspondence between the parties before Webb Resolutions decided that due to the low value of the claim it would be disproportionate in terms of costs to proceed with the litigation. It appears that instead of notifying Countrywide of its decision not to proceed, Webb Resolutions simply allowed the service period (some four months after issue of a claim form) to lapse without serving the court document. One year later, Countrywide wrote to Webb Resolution to say that as the claim had effectively been discontinued Webb Resolutions should pay Countrywide's costs of and incidental to the proceedings. Webb Resolution disagreed. Countrywide issued an application seeking an order that Webb Resolution pay its costs of and incidental to the proceedings.
Deputy Master Nurse found (uncontroversially) that he had a discretion to award costs under Section 51(1) Senior Courts Act 1981, which provides "the costs of and incidental to all proceedings in… the High Court… shall be at the discretion of the court" and that "proceedings" are started when the claimant issues (rather than serves) a claim form (CPR 7.2(1)).
What is perhaps of greater interest is the way in which the Deputy Master applied his discretion. Taking into account:
- the expense incurred by Countrywide in dealing with the claim;
- the fact that Webb Resolutions was aware of the disproportionate expense of pursuing the claim (its costs being in excess of £60,000 when it issued proceedings); and
- the clear distinction in law between pre-issue and post-issue costs, the Master concluded that Web Resolutions should pay Countrywide's costs of and incidental to the proceedings (to include its pre-action costs) to be assessed if not agreed.
This is an important decision as it is one of the few occasions where a professional negligence defendant has sought to recover its costs from a claimant when proceedings had not been served. The decision may lead claimants to think twice before issuing proceedings when limitation becomes an issue. However, the sting in the tail for defendant may well be this: where a claimant might previously have chosen not to serve on a good low-value claim in these circumstances, now it may consider doing so, if only to protect its position on costs.