In Hoist UK Ltd v Reid Lifting Ltd [2010] EWHC 1922 (Ch), the High Court considered whether it had jurisdiction to hear an application by a claimant under CPR 38.6 for an order that there be no order as to costs following the claimant’s discontinuance of the action.

CPR 38.5 provides that proceedings are brought to an end against a defendant on the date of service of a notice of discontinuance. Further, CPR 38.5(3) provides that proceedings dealing with costs are not affected by discontinuance. CPR 38.6 provides that a claimant who discontinues proceedings is liable for the costs which the defendant incurred before that date, unless the court orders otherwise.

The Claimant’s application that there be no order as to costswas made over a month after the claimant had discontinued proceedings. The Defendant argued that as a result there were no proceedings in which the application could be made, and so the court lacked jurisdiction. It submitted that an application under CPR 38.6 should be made either before or at the same time as service of the notice of discontinuance. The Defendant further argued that CPR 38.5(3) should be interpreted to mean that only costs proceedings which are already commenced at the date of discontinuance are not affected. This had to be the correct interpretation, it argued, because any application to set aside a notice of discontinuance must be made within 28 days of service of that notice. To permit costs applications to be made after such service would be unfair, because the defendant would be required to apply to set aside without knowing whether the claimant intended to apply for a costs order.

The court rejected the Defendant’s arguments and held that it did have jurisdiction to hear the application. Applications by the defendant to set aside the notice of discontinuance and applications relating to costs are entirely unrelated. CPR 38.5(3) should be interpreted to allow an application to deal with costs whether or not such application has been made at the time of discontinuance.

This case confirms that costs proceedings can be commenced after the underlying proceedings have been discontinued. However, it should be noted that orders in a CPR 38.6 application are made at the court’s discretion, and a factor which the court will need to take into account is the amount of time between the discontinuance of the action and the issuing of the application.