Keoghs Insight

Author

Lucy Steele

Costs orders for unreasonable behaviour in small claims

AWARE30/04/2014
Property Insurance Aware 3

In small claims, if a claim is unsuccessful, a claimant is unlikely to face an adverse costs order. Costs in small claims are provided for under Part 27 of the Civil Procedure Rules (‘CPR’). CPR 27 (2) confirms that “the court may not order a party to pay a sum to another party in respect of that other party’s costs, fees and expenses, including those relating to an appeal”.

However, there are exceptions to this rule. In this article, we consider circumstances where a court may order an unsuccessful claimant to pay some or all of the defendant’s costs.

Unreasonable behaviour

CPR 27(2)(g) details an exception that the court may order “such further costs as the court may assess by the summary procedure and order to be paid by a party who has behaved unreasonably”.

The CPR does not set out what constitutes unreasonable behaviour and there is very little case law on the subject to assist. In many cases, especially where the claimant is a litigant in person, the court has been reluctant to allow a defendant to recover costs for the claimant’s unreasonable behaviour.

We have, however, successfully persuaded the court on a number of occasions that claimants have acted unreasonably. In one example, the court ordered that the claimant was to pay a proportion of our costs on the basis that they had refused the defendant’s legitimate requests for documentation to support the sums claimed.

The court considered that the request for the claimant to provide documents in support of quantum was reasonable and their refusal to provide such documentation amounted to unreasonable behaviour as it prevented settlement of the claim.

Similarly, in another matter we were able to obtain expert evidence which supported the defendant’s defence and served the same on the claimant’s solicitors, inviting the claimant to discontinue her claim.

The claimant refused to discontinue a number of times and proceeded to a final hearing. The judge dismissed the claim and ordered the claimant to pay a proportion of our costs on the basis that her behaviour in pursuing a claim without merit was deemed unreasonable.

The claimant’s refusal to discontinue her claim had led to unnecessary costs being incurred by the defendant and the judge considered that our client was entitled to recover these costs.

In both of the above cases, the claimant had legal representation; however we have also successfully recovered costs against litigants in person. In one case, the claimant failed to plead a valid cause of action against our client in his particulars of claim.

Despite our defence addressing this, and subsequent letters to the claimant seeking that the claim be discontinued, the claimant pursued his claim.

The court set the matter for a preliminary hearing on the basis that the claimant did not appear to have a valid cause of action against the defendant. At the hearing, the judge agreed that the particulars of claim were poorly drafted and that our client had incurred costs based on the claimant’s poorly pleaded, vague and undetailed claim.

The judge considered that this amounted to unreasonable behaviour on the claimant’s part and ordered that they amend their particulars of claim. Our client was awarded the costs of the time incurred due to the claimant’s unreasonable behaviour.

In addition, there are publicised case authorities which shed light on situations where the court has considered a claimant has acted unreasonably. In Spearing v Jackson [2000] CLY 169 it was held that continuing with a claim which the claimant must have known had little prospect of success amounted to unreasonable behaviour.

In Bashir v Hanson [2001] CLY 172 the judge considered that a claim for personal injury following a road traffic collision brought by dishonesty, as the claimant wasn’t in the vehicle at the time, also amounted to unreasonable behaviour.

Conclusion

We have found that, whilst the courts can be reluctant, there are certain circumstances where they are willing to find a claimant has acted unreasonably and will award the defendant costs on that basis.

The likelihood of successfully persuading a court to award costs depends upon the facts of each case. However, a court may consider that a party has acted unreasonably in the following situations:

  • Pursuing a claim or defence without any real prospect of success;
  • A failure to provide adequate supporting documentation;
  • Exaggeration of a claim or dishonesty;

It is clear that more guidance is needed from the court in relation to costs in small claims, especially for unreasonable behaviour. However it is worth bearing in mind that, if a claimant is put on repeated notice that costs will be sought from them and they fail to address the issue, the courts are willing to make unreasonable costs orders against them.