(1) Maria Galazi (2) Iphegenia Galazis (Claimants) v (1) Christopher Christoforou & 5 Ors (Defendants) & Wellsford Securities Ltd (Third Party) & Ors
The court construed the words "claim" and "proceedings" in CPR Pt 38 when determining that substantial amendments made by the claimants to their particulars of claim effectively amounted to discontinuance so that they were subject to the default position under r.38.6(1) that a discontinuing party was liable to pay the other parties' costs. It considered the correct approach to the absence of a notice of discontinuance and examined the costs consequences of discontinuance and amendment.
In a family dispute comprising two sets of proceedings, the court was required to determine whether substantial amendments to the particulars of claim in one set of proceedings (the Galazi proceedings) effectively meant that the claimant had discontinued the whole or part of their claim.
The Galazi proceedings had initially been very poorly pleaded and defended, with the result that the claim was unnecessarily wide in comparison to the relief sought. Each side's statements of case were long and verbose. In September 2018, after negotiating a freezing order and costs having been reserved, the Galazi claimants served a "pleadings review" indicating elements of their claim that they wished to remove. In October 2018, the court directed that the two sets of proceedings be case managed and tried together. The Galazi claimants amended their particulars, which included removing important claims.
The core issue was whether the Galazi claimants had discontinued (or were to be treated as having discontinued) their "claim" and whether the default position under CPR r.38.6(1) that the discontinuing party was liable to pay the other party's costs, therefore prevailed.
Meaning of "claim" in r.38 - The rule appeared to use the word "claim" in r.38.1, r.38.3 and r.38.4 and the word "proceedings" as a synonym for "claim" in r.38.5(2). If "proceedings" was not construed that way in r.38.5(2), the rule did not otherwise make sense. Rule 38.5(3) then used "proceedings" in a different way, meaning future steps in the claim. There was no obvious reason for the switch in terminology. A literal reading of r.38.5(2), which provided that "the proceedings" were brought to an end by service of a notice of discontinuance, supported the notion that it was only possible to discontinue the entire claim or proceedings. However, the provision had to be understood in light of the earlier part of the rule, which contemplated a partial discontinuance of a claim against one of several defendants. Contrary to the obiter opinion of Leggatt J in Kazakhstan Kagazy Plc v Zhunus  EWHC 2363 (Comm)considered, it was clear that abandoning one remedy where there were other remedies did not amount to a discontinuance, although the abandonment of an entire cause of action might amount to a partial discontinuance. The analysis in Kazakhstan had not considered r.38 as a whole and did not give sufficient weight to r.38.2(1) or r.38.2(3) (see paras 42-45, 51 of judgment).
Absence of notice of discontinuance - The best approach was to treat the requirement for serving notice as having been waived. The October 2018 order could be treated as having implicitly approved the waiver so that a discontinuance arose from the permission to amend that took effect on the date of that order. However, there was a residual difficulty with such an approach: a very important function of the notice of discontinuance was to clearly describe what the claimant was seeking to do. Defendants had to know precisely what was being discontinued, and the parties and the costs judge had to be able to work out the costs consequences. A claimant merely seeking to cease alleging certain facts should, instead, seek permission to amend. A partial discontinuance would require an amendment to the claim, but if amendment was merely a consequence of the discontinuance, the costs assumption in r.38 would still apply (paras 49, 53).
Application of r.38 to this case - The effect of the amendments by the Galazi claimants to their particulars of claim had been to discontinue their entire claims against the fourth and fifth defendants and partly discontinue claims against the other defendants. They could show no good reason for departing from the default position that they bear the costs of the discontinuance. They had chosen to bring a wide-ranging claim in the form that it took. That choice had led to a need for amendment to remove unnecessary factual assertions and unnecessary verbiage. They could not identify any unreasonable conduct by the defendants which was directly related to the need to discontinue (paras 50, 54, 62, 66, 68).
Costs consequences of discontinuance and amendment - The only difference between discontinuance and partial discontinuance was that, in the latter situation, the costs would not be assessed until the end of the proceedings unless the court ordered otherwise. Wherever possible, the court should avoid burdening trial judges with such decisions. Any familiarity trial judges had with the case would be familiarity only with the form in which it eventually reached trial, not with any aspects that had earlier been discontinued. Here, all costs resulting from discontinuance would be subject to detailed assessment immediately. Dealing with them later would be highly unsatisfactory and would result in added expense. Even if the court were not applying the default position under r.38, it would have exercised its discretion to require the Galazi claimants to pay the costs resulting from the amendments. Costs would be on the indemnity basis (paras 55-57, 69, 74, 76).
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26 Mar 2019
Chief Master Marsh
LTL 27/3/2019 :  3 WLUK 460
Thomas Grant QC