R G Carter

In the recent case of R. G. Carter Projects Limited v CUA Property Limited [2020] EWHC 3417 (TCC), R G Carter, in its original particulars of claim, sought damages for misrepresentation, a final account value and three extensions of time. However, once a defence and reply had been filed with the court, R G Carter instructed a new law firm.

After a review of the case by the new firm, R G Carter sought leave to amend its claim. In particular it:

(i) abandoned the misrepresentation claim; and

(ii) significantly reduced the final account claim.

A question arose as to whether the abandonment of the misrepresentation claim was an amendment or amounted to discontinuance of part of the claim.

The court found that the abandonment of the misrepresentation claim was more than a mere amendment. It amounted to a discontinuance of part of the claim, albeit R G Carter had not issued a notice of discontinuance.

Why the difference between amendment and discontinuance is important

It is expected that a party which discontinues or amends its claim will end up paying its opponent’s costs. However, the types of costs that are payable in the two situations are different. In the case of an amendment Practice Direction 17 to the Civil Procedure Rules states:

"A party applying for an amendment will usually be responsible for the costs of and arising from the amendment."

Pursuant to paragraph 4.2 of Practice Direction 44, this could include:

"… preparing for and attending the application and the costs of any consequential amendment to his own statement of case."

In contrast, where a party discontinues, Civil Procedure Rule 38.6 provides:

"(1) Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant."

This applies equally to any part of a claim which is discontinued. The costs payable on discontinuance are, therefore, greater.

The line between amendment and discontinuance

Whether a change to a claim is an amendment or a discontinuance is not always clear. In some cases, while a legal argument is dropped, other legal arguments relying on the same facts may remain or be inserted. In such a case the amendment may be considered as putting a new label on the pleaded facts (see for example Begum v Birmingham City Council [2015] EWCA Civ 386).

The test would appear to be whether or not the costs incurred have been wasted. As Pepperall J set out (R G Carter paragraph 11):

“Yet in other cases, the cause of action is simply abandoned and substantial costs will have been wasted. An award of costs on the conventional basis would, in such cases, cover the defendant's costs of amending his Defence to delete the now redundant answer to the abandoned plea, but would not recompense such defendant for the costs of investigating the original case or of pleading the first Defence. On such facts, the usual order would not be just and the appropriate order will often be to award the defendant not just the costs of and caused by the amendment, but also the costs in respect of the abandoned cause of action.”

Costs awarded to the other side when one party discontinues are intended to deal with costs that party has wasted in dealing with the discontinued claim. If the facts are still pleaded, albeit with a different interpretation, then the costs may not be entirely wasted.

Conclusion

The R G Carter case presents a clear warning to claimants. A case must be properly thought through, assessed and understood before it is pleaded. Otherwise the claimant puts itself at risk of having to amend its case, or even change tack entirely. At best this will mean paying the defendant’s costs of dealing with the amendment. At worst the court could decide that the amended claim is in fact an entirely new claim and that the original claim has been discontinued. In the latter case two very significant issues will arise.

First, where a party discontinues a claim the court will, generally, order the discontinuing party to pay a substantial part of the other side’s costs. If a Defence has been pleaded, these costs could be significant. In the R G Carter case, the actual amount of costs to be paid was not determined in the judgment. However, R G Carter will probably end up paying a significant sum in costs.

Second and possibly more significant, if the amendment presents a new case this may be time-barred if the claimant was close to expiry of the limitation period when it issued its original claim. In such a situation, where a claimant is discontinuing its original claim outside of limitation, it may not be possible to raise a claim at all. While this was not an issue in the R G Carter case, it is nonetheless an important point that claimants should consider.