Whether previous costs orders against a defendant are overridden by discontinuance
Where a claim is discontinued, unless the parties have agreed otherwise, or the court orders otherwise, the normal position will be 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 issue in this case was whether that position overrides previous orders made in the case that the defendant should pay the claimant's costs.
In Safeway Stores v Twigger (see Weekly Update 01/11), Pill LJ considered that service of a notice of discontinuance has the legal consequences that costs orders already made in favour of the discontinuing party are automatically reversed without further order (unless that party is able to show that the defendant's conduct was abusive or vexatious). However, Longmore LJ and Lloyd LJ expressly left open this point.
In this case, Smith J said that he disagreed with Pill LJ's view. The general position is that interlocutory costs orders are not affected by other costs orders in the proceedings, and there is nothing in CPR r38.6 or elsewhere in the CPR to suggest that discontinuance reverses previous costs orders. Furthermore, "As a matter of policy it would be surprising if the CPR provides for harsher consequences on a litigant who discontinues a claim or part of a claim than are typically visited on one who pursues an invalid claim or arid litigation to the bitter end. Surely a litigant who comes to appreciate that there is no point in pursuing a claim or part of one is to be encouraged to discontinue it promptly".