Entering into litigation can be a scary prospect, whether it is because the outcome of the case is far from certain, or the size of the costs that will likely be incurred. A question often asked by claimants (the person bringing the claim) is “can I get out of this?” The short answer is yes, but there may be cost implications depending on what stage of the litigation process you are in.
Pre-Action
The period before any claim or application is made to Court is known as the “Pre-Action” stage. Subject to there being no agreement made between the claimant and the defendant regarding the payment of a party’s costs, as a claimant, you can step away from the litigation quite easily. The only costs you will be required to pay are your own legal representative’s fees, and any other expenses incurred.
Post-Issue
Once you have filed a claim at Court, and it has been stamped with the Court seal, the claim is “issued”. If after issue (and having incurred the issue fee), you change your mind and don’t serve the claim on the defendant, the same cost liability rules as in pre-action may apply. However, once you “serve” the claim on the defendant, usually by sending it to them in the post or if agreed beforehand, by email, the following will apply if the claim is opposed.
There are four options for a claimant to stop the litigation before a final hearing or trial:
- settling the claim with the defendant. There are several ways parties can settle a claim, for example through correspondence between the parties, or at a mediation. Generally, the parties will agree an Order to file with the Court setting out the terms of the settlement. The Order will also stay (or suspend) the proceedings to allow the parties to comply with the agreed settlement terms. The proceedings would only be resurrected if a party fails to fulfil their obligations and the other party needs to enforce them;
- an application to the Court to “strike out” the defendant’s defence. The judge may decide the defendant’s defence discloses no reasonable grounds for defending the claim and so it can make an order to strike out the defence – in essence, the defendant will not be able to rely on their defence. In some claims, this can mean obtaining default judgment, which is when the Court makes an Order against the defendant without considering any of the defendant’s evidence;
- an application seeking “Summary Judgment”. This application is usually made in combination with a strike-out application as Courts can be reluctant to order a strike-out. Summary Judgment can provide you with an opportunity to have your case considered at an early stage via a short hearing. The Court will grant Summary Judgment if the defendant has no real prospect of successfully defending the claim, and there is no other compelling reason why the case should go to trial. However, as with a strike-out application, if you are unsuccessful in your application (even if successful at a later final hearing or trial), there is a risk that you would be ordered to pay the defendant’s costs incurred in defending the application. It will also cause delays to the ongoing litigation; and
- you can discontinue the claim. This is achieved by filing a Notice of Discontinuance with the Court, and serving a copy of the Notice on the defendant. Whilst the Notice allows you to stop the litigation from the date it is served on the defendant, you will have to pay the defendant’s legal costs up to that date. The Court may be persuaded to deviate from this rule, but the burden is on the claimant to show a good reason why they should not pay the defendant’s costs. This is a very high bar to satisfy.
In the recent case of Trappit SA & Ors v GBT Travel Services UK Limited, the parties were in dispute as to the rights to intellectual property on software used to provide significant savings when booking flights. The claimants required the defendant to provide the source codes to ascertain whether the defendant’s software was based on the claimants’ similar software. The claim was issued on 09 April 2020.
On 08 August 2022, the defendant disclosed the source codes (at which point the claimants’ costs were c.£2.5million, and the defendant’s costs were c.£1.06 million). Further disclosure was provided in January and April 2023. The claimants’ expert was then able to provide a report on the source codes in June 2023. As a result of the report, the claimants decided that they would discontinue the claim as it would be likely to fail. A Notice of Discontinuance was served on the defendant.
It was the claimants’ positions that had the defendant provided the source codes earlier when first requested, they would have discontinued sooner. As a result of the defendant’s conduct, the claimants claimed that they should not be liable for the defendant’s costs. The Court held that this was not sufficient reason to depart from the rule that the defendant’s costs would be payable.
As in all litigation, no outcome is certain, and you should take legal advice before issuing a claim. The cost consequences of entering into litigation should, even if you are ultimately successful, encourage caution. Once a claim has been issued, whilst you can always abandon the claim, it can be at a very high price.