Court provides clarity over procedure for discontinuing claims

Litigation expert Michael Pulford of Pinsent Masons, the law firm behind Out-Law.com, said the decision of Chief Master Marsh showed the need to be clear and precise when dropping, or partially dropping, a claim.

“The decision shows that the court places great stock in ensuring clarity regarding claims being discontinued. As a result, if any part of a claim is being discontinued, a claimant should always file and serve a notice of discontinuance, drafted with precision to give the defendant clarity,” Pulford said.

“Even if this is not done, however, a claimant cannot side-step the default position on costs which flows from discontinuance, namely that the claimant must pay the defendant’s costs, by arguing that he is only amending his claim, if in fact what he is doing is more fundamental than that,” Pulford said.

The case was brought by mother and daughter Maria and Iphegenia Galazi against defendants including Maria Galazi’s brother, a property management agency owned by him, and a firm of solicitors which acted for the agency. The case concerned investment properties in London, and there were related proceedings issued by two British Virgin Islands companies set up by the brother, which the properties were registered to.

In October 2018 the Galazis applied to amend their claim form and the particulars of the claim. They said they were trying to reduce duplication between the proceedings as well as moving evidential matters into disclosure and witness documents, instead of in the particulars of the claim.

The chief master had to consider whether, by doing this, the Galazis had discontinued all or part of their claim, so that they should be liable for the defendants’ costs. He decided that they had done so, and the court was entitled to impose an adverse costs order as a result of the discontinuance.

Pinsent Masons acted for the Christo defendants in the claim at the time of this application but did not act at the time the statements of case were settled.

The judge also noted that the original particulars of claim, drafted by a different team than the one which appeared for the Galazis most recently, were overly long and “impenetrable”.

Pulford said the case showed why claimants and their lawyers should craft their arguments carefully.

“The immediate indemnity costs order which the judge here made against the claimants at an interim stage illustrates why it is so important for claims to be carefully constructed from the outset. Pleading a raft of claims which later have to be abandoned rarely serves a claimant well and may, as here, lead to significant adverse costs consequences,” Pulford said.

“The courts are becoming increasingly strict about the length of statements of case and other court documents, and about parties focusing on the nub of their case. Particular care, and specialist advice, needs to be taken before putting forward claims based on fraud,” Pulford said.