Citation Plc v Ellis Whittam Ltd

Factual and Procedural Background

This judgment concerns the order for costs following the handing down of a prior judgment delivered on 14 March 2012. The court had earlier held that the Plaintiff had an arguable case that defamatory words, complained of as slander and malicious falsehood, were published by an employee of the Defendant to more than one recipient. However, the action was struck out as an abuse of process because the Plaintiff had effectively achieved all that could be of value to vindicate its reputation by the time it issued and served its claim form in October 2011.

Legal Issues Presented

1. Whether the costs incurred before the issue of the claim form, including those pursuant to the Defamation Pre-Action Protocol, are recoverable as costs incidental to the proceedings.
2. Whether the Plaintiff or the Defendant should bear the costs of the proceedings given the striking out of the claim as an abuse of process.
3. The proper application of the Civil Procedure Rules (CPR) concerning costs orders, particularly in relation to pre-action conduct and costs incurred before litigation formally commenced.

Arguments of the Parties

Defendant's Arguments

• Costs should follow the event, meaning the Plaintiff should pay the Defendant's costs of and incidental to the struck-out proceedings.
• Costs should include those of correspondence exchanged pursuant to the Defamation Pre-Action Protocol.
• It would be wrong in principle to make an order for costs adverse to the Defendant since it did not admit any slander, malicious falsehood, or liability.

Plaintiff's Arguments

• The Defendant should pay the Plaintiff's costs up to the date of the claim form, but no order should be made for costs of the action itself.
• If the Plaintiff had pursued its claim for damages, the action would not have been struck out at this stage and could have proceeded to disclosure.
• Ordering the Plaintiff to pay all costs would penalise it for reasonably not pursuing damages, potentially creating a perverse incentive for future litigants.
• The Plaintiff had not been offered all substantive relief it was entitled to, as the Defendant did not admit the factual basis of the claim nor offer an acceptable undertaking.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
McGlinn v Waltham Contractors Ltd [2005] EWHC 1419 (TCC)	Costs incurred in complying with Pre-Action Protocols may be recoverable as costs incidental to subsequent proceedings.	Supported the court's view that pre-action costs can be included in costs orders following issuance of claim form.
In re Gibson's Settlement Trusts [1981] Ch 179	Costs incurred before proceedings commenced are not disallowed solely on that basis if they are incidental to the proceedings.	Confirmed that costs "incidental to" proceedings may include pre-action costs.
Callery v Gray [2001] 1 WLR 2112	Costs reasonably incurred before action started, such as complying with Pre-Action Protocols, may be awarded if proceedings are commenced.	Reinforced the principle that pre-action costs can be recoverable if litigation ensues.
Jameel v Dow Jones & Co Inc [2005] QB 946	Defamation proceedings that do not serve the legitimate purpose of protecting reputation constitute an abuse of process.	Underpinned the striking out of the Plaintiff's claim as an abuse of process for lack of substantive purpose.
Lait v Evening Standard Limited [2011] EWCA Civ 859	Summarised the principle from Jameel regarding balancing freedom of expression and reputation protection.	Applied to confirm that proceedings must have a legitimate purpose to avoid abuse of process.
Khader v Aziz [2010] EWCA Civ 716	Confirmed minimal damages claims at great expense may justify striking out as abuse of process.	Supported the court's approach to limiting unmeritorious defamation claims.
Roundstone Nurseries Ltd v Stephenson Holdings Ltd [2009] EWHC 1431 (TCC)	Reiterated principles on costs discretion under Section 51 of the Supreme Court Act 1981.	Used to clarify jurisdiction over costs orders including pre-action costs.

Court's Reasoning and Analysis

The court began by considering the statutory framework governing costs orders under the Civil Procedure Rules (CPR), particularly CPR Part 44.3 and Part 44.12A, and the discretion afforded by Section 51 of the Supreme Court Act 1981. It acknowledged that while costs incurred before proceedings commence are not automatically recoverable, where a claim form is issued, pre-action costs may be recoverable as incidental to the proceedings.

The court analysed the facts and submissions, noting that the Plaintiff had an arguable case but the action was struck out as an abuse of process because the Plaintiff had already achieved the practical value of vindicating its reputation by the time proceedings were issued. The court accepted that pursuing damages might have avoided striking out but recognised the risks and costs involved.

Importantly, the court held that no order for costs against the Defendant could be made in the absence of an admission of liability or an acceptable undertaking. It also reasoned that the Plaintiff should not be liable for costs incurred before the claim form was served because if the Plaintiff had not commenced proceedings, the Defendant would not have been entitled to recover those costs.

The court thus distinguished between costs incurred before and after the issuance of the claim form, ordering the Plaintiff to pay the Defendant's costs from the date the claim form was served but not for the pre-action protocol correspondence costs.

Holding and Implications

The court's final decision is that the Claimant is ordered to pay the Defendant's costs from the date the claim form was served. These costs include those of the costs argument hearing but exclude costs of correspondence under the Defamation Pre-Action Protocol.

The direct effect is that the Plaintiff bears the costs incurred after commencement of proceedings, reflecting the court's view that the claim was rightly struck out as an abuse of process. The court refrained from awarding costs for the pre-action period, maintaining fairness by not penalising the Plaintiff for incurring costs before litigation formally began. No new precedent was established beyond the application of existing principles on costs and abuse of process in defamation claims.