[2018] EWHC 2732 (Ch)
Judge holds defendant entitled to indemnity costs following 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 (see CPR r.38.6(1)). The defendant's costs will usually be assessed on the standard basis, if not agreed. However, indemnity costs can sometimes be ordered. In prior caselaw, it has generally been ordered either where it was clear beyond doubt that the claimant had no case or where a claimant made serious allegations of fraud the defendant has been deprived of any opportunity to vindicate his reputation (see eg PJSC Aeroflot v Russian Airlines ).
In this case, Hildyard J accepted that indemnity costs will be ordered only if the case is "out of the norm". The hallmark of such a case is where the proceedings have "been high risk, and apparently pursued, and usually publicised, to exert pressure in the hope of extracting a settlement, with frail evidential support and little regard to their prospects of success at trial or any real and realistic objective of securing vindication by adjudication". In such a case, the court is intentionally "being used as an anvil for settlement rather than as an adjudicator".
The judge awarded indemnity costs in this case, which was one in which litigation was aggressively pursued in multiple jurisdictions, with a view to obtaining a settlement. Relevant factors included "The pursuit to the doors of the Court, and four days beyond, of serious allegations of commercial impropriety, which were suddenly abandoned only when settlement talks failed, and then without explanation and without visible change in the forensic landscape", as well as the publicity attending the case.
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