Pre-action misconduct

Groupama Insurance Co Ltd v Overseas Partners Re Ltd [2003] EWCA Civ 1846

CPR rule 44.3(4)(a) requires the court to take account of ‘the conduct of the parties’. The introduction of the CPR did not affect the pre-existing law, which entitled a judge to consider any relevant aspect of the conduct of the parties including their conduct in relation to the matters which gave rise to the litigation. Although the practice of the Commercial Court set out in Hall v Rover Financial Services (GB) Ltd [2002] EWCA Civ 1514 (21/ LL p117) was not to disallow a successful party his or her costs simply because of anterior dishonest conduct which, while it was part of the transaction giving rise to the proceedings, could not be characterised as misconduct in relation to the proceedings themselves, that was no more than a matter of practice. On their proper construction, rules 44.3(4)(a) and 44.3(5)(a) do not contain any limitation such as would shut out reliance in an appropriate case on misconduct in and about the matters which triggered the litigation. The trial judge should have structured his judgment on costs round these provisions and was wrong to have ordered a party who had altered a fax negligently and without authority to pay their own costs. It was nevertheless appropriate to reduce their costs by 10% because of their pre-action conduct during the transaction itself.