A defendant has been awarded indemnity costs because the claimant had failed more than once to provide a satisfactory draft of its proposed amended particulars of claim, which made allegations of fraud.
Further, according to a Lawtel report of Clutterbuck & Ors v HSBC plc & Ors, the claimant had issued a notice of discontinuance the day before the defendant’s application to strike out its claim was due to be heard.
The law report said that the claimant had brought a claim against defendants for damages in the tort of deceit and/or negligence. The claim alleged that the 11th defendant (D11) had been involved in obtaining representations in respect of third parties, which it knew to be false or should have known were false that a bank passed on to the claimant.
D11 issued an application to strike out the particulars of claim as they did not set out the relevant facts. The claimant was ordered to provide a draft amended particulars of claim and D11 was to state whether or not it consented. D11’s strike-out application was put on hold pending the outcome of this. C was ordered to pay D11’s costs of the hearing and make an interim payment.
D11 did not consent to the proposed amended particulars. At the hearing of D11’s strike-out application, the claimant accepted that its proposed amended particulars needed to be redrafted. The master adjourned the hearing, ordering a further interim payment and that the claimant pay D11’s costs of and up to that hearing.
The day before the return date, the claimant discussed with D11 removing its application from the list; D11 refused. The claimant then served on D11 a notice of discontinuance of the entire proceedings. D11 submitted that costs on the indemnity basis were appropriate.
Sitting in the Chancery Division, Mr Justice Richards acknowledged that the usual practice under part 38 for a notice of discontinuance was to order costs on the standard basis, but the court had a discretion to order otherwise.
Lawtel said: “Allegations of fraud were serious and if they failed at trial costs should be awarded on the indemnity basis. If a claimant served a notice of discontinuance where allegations of fraud had been made, it was appropriate for the court to proceed in the same way. D11 had incurred significant expense in defending the allegations and therefore the court considered that allegations of fraud, which had been discontinued, generally justified costs on the indemnity basis.”