The Business and Property Courts’ decision in Stuart Allen & Ors v East Lindsey District Council [2026] EWHC 1863 (Ch) addresses when costs following discontinuance should be assessed on the indemnity rather than standard basis under CPR r 38.6, and how costs liability should be allocated in multi-party litigation where claimants pursue individual claims based on similar allegations.
Background
The claim arose from a dispute between the owners or former owners of caravans stationed at the Kingfisher Caravan Park in Ingoldmells, Skegness, and East Lindsey District Council, the freehold owner of the park. The council, through companies to which it had delegated the relevant functions, granted licences to caravan owners to keep their caravans on the site. Until 2017, those licences had been granted annually. Following events in the period after that, new licence terms were entered into in 2020, comprising a licence agreement and an extension agreement. The claimants challenged whether the council was entitled to impose those new terms.
The issues raised included whether the council had, through representations made on its behalf, estopped itself from imposing new terms. The claimants sought declaratory relief on that basis, and also advanced claims that the council had failed to comply with its public law duties and/or had breached their ECHR property rights. All claims were defended.
Proceedings were issued on 9 November 2021. The defendant initially applied to strike out, which Mr Ingham, appearing for the claimants, characterised as essentially an attempt to regularise the way in which the allegations were pleaded. That application was resolved by a consent order made by Deputy Master Marsh on 17 February 2022. Following that order, 89 claimants were identified as pursuing claims, as set out in the schedule to the order.
A costs and case management conference took place on 14 May 2024 before Master Brightwell. At that hearing, a direction was given that ten test claimants would be identified, with five to be selected by each side. The remaining claims were stayed in the meantime. Difficulties then arose in ascertaining the identity of those ten claimants, leading to a further application by the defendant, heard on 14 March 2025. At that hearing, the court varied the provisions for identifying the test claimants, allowed claimants to indicate they did not wish to continue if so advised, and made an unless order providing that non-compliance would result in automatic strike-out.
Following the March 2025 order, a trial date was fixed and the defendant proceeded to prepare for trial, including preparing its own evidence for exchange in accordance with the court’s directions. The claimants did not exchange any evidence. Shortly before the trial, which had been listed for November 2025, the remaining claims were discontinued on or around 22 September 2025. Deputy Master Arkush made an order on 29 September 2025 giving directions to enable the defendant to make a costs application. Master Brightwell extended time for compliance with that order, and the matter came before him on 13 May 2026.
It is worth noting that, by the time of the hearing, only the defendant had filed evidence and a skeleton argument. The claimants had instructed counsel late in the day, and no skeleton argument or evidence had been filed on their behalf.
Costs Issues Before the Court
The defendant, East Lindsey District Council, applied for costs orders in two distinct respects. The starting point was CPR r 38.6, which provides that a discontinuing party is liable to pay the defendant’s costs up to the date of discontinuance on the standard basis, unless the court orders otherwise. The defendant sought a different order in two respects.
The first issue concerned the basis of assessment. The defendant sought an order that costs be assessed on the indemnity basis rather than the standard basis, relying on the conduct of the claimants throughout the proceedings and, in particular, during the period leading up to discontinuance.
The second issue concerned the allocation of costs liability as between the 89 individual claimants. Because this was multi-party litigation in which each claimant pursued their own individual claim rather than a single common claim, the court was required to determine how costs liability should be apportioned across the claimant group. The defendant’s draft order divided the costs of the claim into seven distinct periods. For periods 4 and 6, which covered the phases immediately following the first CCMC and the second order respectively, and during which the bulk of the work was carried out in relation to test claims (ten test claimants having been identified in each case), the defendant proposed that costs be payable jointly and severally by the test claimants for the relevant period. For all other periods, the proposal was that costs be payable jointly and severally by all claimants who had not already discontinued at an earlier date.
A further issue arose following the substantive costs determination: whether the court should order a payment on account of costs, and if so, in what amount and on what basis, having regard to the different periods and the different bases of assessment applicable to each.
The Parties’ Positions
On the allocation of costs liability between the claimants, Mr Ingham was largely neutral. He recognised the potential for conflict between different classes of claimant, namely those who were test claimants at any given point and those who were not. He did not advance a positive case for a different order to that proposed by the defendant in paragraphs 1 to 7 of the draft order.
Mr Lees KC, for the defendant, submitted that on analysis there were, in this case, no individual costs; all costs for each of the identified periods were effectively common costs. He supported that submission in particular by reference to the fact that the claimants had never served any witness evidence, meaning that the allegations made by individual claimants had never been fully articulated and could not therefore have been individually addressed by the defendant. He submitted that the proposed seven-period structure, with joint and several liability limited to the test claimants for periods 4 and 6, was the fairest available order, given that the non-test claimants’ claims had been stayed during those periods.
On the question of indemnity costs, Mr Lees advanced three broad points. First, he relied on what he characterised as a general failure by the claimants to prosecute their claims properly, most notably in the final period when no evidence was exchanged and the claims were then discontinued without prior warning, shortly before trial. He did not rely on the fact of discontinuance itself, but on the timing of it and the context of earlier defaults. He also referred to the claimants’ initial objection to the defendant having any role in selecting test claimants, and the subsequent reluctance to proceed once the defendant’s nominated claimants had been identified. Second, he noted, with a light touch, that earlier costs orders made in the proceedings remained unpaid. Third, he submitted that the claim had been pleaded in a scattergun fashion, with a lack of specificity, and that because witness evidence had never been produced, the defendant had remained uncertain as to the precise case it had to meet.
Mr Ingham submitted that none of the factors identified by the defendant, individually or cumulatively, crossed the threshold required for an indemnity costs order. He argued that the fact of discontinuance was, if anything, a point in the claimants’ favour, and that public policy considerations militated against penalising claimants who discontinue by imposing indemnity costs.
On the question of a payment on account, Mr Lees sought payments calculated at 90 per cent of budgeted costs for periods falling within the costs budget, and 50 per cent for costs incurred in earlier periods before the budget was set. Mr Ingham raised concerns about the overall level of costs, particularly in relation to the costs of the application itself, but did not advance a specific alternative figure.
The Court’s Decision
Allocation of Costs Between Claimants
On the allocation of costs liability between the claimants, Master Brightwell accepted the general principles applicable to multi-party litigation, drawing on the Court of Appeal’s decision in Stumm v Dixon (1889) 22 QBD 529, as summarised in the recent decision of Nicklin J and Senior Master Cook in Lawrence v Associated Newspapers Ltd [2025] EWHC 3207 (KB). The principle derived from Stumm v Dixon is that each defendant is liable for all costs properly incurred by the plaintiff in maintaining the action, except as to costs caused solely by a separate defence available only to that defendant. The same principle applies, mutatis mutandis, to claimants.
The court also had regard to the analysis of Nugee J in Rowe v Ingenious Media Holdings plc [2020] EWHC 235 (Ch), which distinguished between cases where claimants have a true joint claim and cases where a number of claimants join forces to bring what is in effect a single claim or group of claims, and cases where each claimant has their own individual claim. As Nicklin J and Senior Master Cook observed in Lawrence, circumstances may range from large scale GLO or quasi-GLO claims involving hundreds or thousands of claimants, where each claimant is not connected and has their own individual claim, to cases where the claimants have effectively combined together to present claims based upon common allegations against a single defendant.
Master Brightwell found that this was not a true single claim where various claimants were entitled to pursue the same cause of action. After the 2022 order, 89 different claimants had each pursued their own claim in relation to their own caravan, or former caravan, albeit based upon similar allegations. It seemed inevitable that each claimant would have had their own case as to what was said to them and as to the nature of the representations that were made.
In principle, this was a claim where the common costs should be paid jointly and severally by the claimants as a whole or perhaps between the test claimants at any given time, and where any individual costs should be borne by the claimant to whom those costs related. Mr Lees submitted that in the circumstances of this case there were, on analysis, no individual costs; all of the costs for each of the given periods were common costs. That point was supported particularly by the submission that the claimants never served any evidence, so the allegations made by individual claimants did not fall to be addressed or simply could not be addressed by the defendant, they never having been fully set out.
Master Brightwell considered from the submissions that Mr Lees was probably correct that a very large proportion of the costs were common costs. However, the court did not have all of the information that passed between the parties, nor all of the information contained in any disclosure documents that were considered, and had not been taken to all aspects of the witness statements that were prepared on behalf of the defendant. In relation to the two periods which seemed to be the most significant periods, identified as periods 4 and 6, when there were test claims, he did not consider it appropriate to close off the possibility of claimants arguing that identifiable costs were individual to other claimants and therefore that they should not be jointly and severally liable for the whole.
With that modification, the court made the order sought by the defendant in paragraphs 1 to 7 of the draft order. In relation to periods 4 and 6, the costs liability would be limited to the test claimants. That was the order sought by the defendant and the claimants did not contend for a different order. Mr Lees fairly submitted, and the court accepted, that that was likely to be the fairest order to the claimants, for the simple reason that the claims for the non-test claimants were stayed during the material period. Master Brightwell accepted there would be cases where it would not be appropriate to make that order and where all of the claimants should remain liable for common costs. However, in circumstances where the claimants had not responded to the application with evidence or made any argument for such an order, it did not seem appropriate to consider making one.
Indemnity Costs
The court then turned to the principal argument, which was whether the costs should be ordered on the standard or on the indemnity basis. The court has a broad discretion which is to be guided by principle as to what order to make on costs. The test as to when indemnity costs may be ordered has been stated in broad terms as whether the conduct of the paying party is outside the norm or unreasonable to a high degree. Master Brightwell noted that there is no requirement that the paying party’s conduct is deserving of moral opprobrium or even exceptional. The purpose of an indemnity costs order is to compensate the receiving party for costs they have incurred as a result of the conduct of the paying party and not to punish. It follows from this that there must be some connection between the costs that have been incurred by the receiving party and the conduct of which complaint is made.
Master Brightwell considered it appropriate to stand back and consider both the proceedings as a whole and the conduct of the claimants in the individual periods that had been identified in the draft order.
Mr Lees’ submissions were divided essentially into three points. First, he relied in general terms on what he characterised as a general failure on the part of the claimants to prosecute their claims in any proper way, most particularly in the final period when, without prior warning, there was no provision of evidence on behalf of the claimants and the claims were then discontinued. He made clear that he did not rely on the fact of discontinuance itself but on the time at which that was done, shortly before the trial, and in light of the other defaults which had occurred previously. He referred to the fact that initially the claimants had objected to the defendant having any role in the selection of test claimants and that when claimants were put forward by the defendant there was then a lack of willingness to proceed with the claim.
Master Brightwell observed that this, to some extent, exemplified the difficulties which solicitors may have when acting on behalf of a large number of claimants who each themselves have what may be a moderately small claim but, when all the claims are put together, the claim is far more substantial. It also showed the difficulties that may be experienced when claimants who are pooling costs, and perhaps a relatively small amount of costs each, become aware of the burdens which will be placed on them personally in relation to the proceedings. However, if the claimants wished to rely on such points in order to explain their conduct during key periods of this litigation, they ought to have filed evidence in response to the costs application.
Master Brightwell accepted, having dealt with the case management of this claim since the beginning of 2023, that there had been repeated missed deadlines on the part of the claimants and it had clearly proved difficult for the defendant to pin down which claimants were pursuing claims and what each claimant’s case on the facts was or was going to be.
The second point Mr Lees made, as he indicated with a light touch, was that costs orders which had been made earlier in the proceedings had not been met. They remained unpaid. That itself might not be outside the norm, but it was a point that could be viewed together with the points made in relation to conduct.
The third general point made on behalf of the defendant related in broad terms to the merits of the claim and the way in which the claim had been presented. Mr Lees described the allegations made as being of a scattergun nature. He commented that there was a lack of specificity in the way in which the claim had been pleaded and, because witness evidence had not been produced, the defendant had remained unaware of the precise allegations it had to meet.
In relation to the period in which the defendant was preparing for trial, Master Brightwell considered there was some force in this third point, although he noted that an order was made for simultaneous exchange of evidence rather than provision for service of evidence on behalf of the claimants first (i.e. the defendant was also going to have to prepare its own evidence without sight of the claimants’ evidence). Furthermore, as far as the earlier applications made in these proceedings were concerned, costs orders had already been made dealing with them. The first application was resolved by consent. Whilst Mr Lees indicated that the defendant quite properly took into account the fact that it was using public money in defending the proceedings and therefore decided not to pursue further interim applications, the conventional way in which issues about the way in which the claim is presented are resolved is by interim applications. As far as the complaint of lack of specificity in the particulars of claim was concerned, it is open to a defendant to make a request and/or seek an order under Part 18 for further information.
As far as the final point was concerned, i.e. the complaint about the way in which the claim was pleaded or the merits of the claim, Master Brightwell did not consider that it had been established that the claimants behaved unreasonably to a high degree. That left the first point, to be considered together with the fact that outstanding costs orders had not been met.
Mr Ingham submitted that none of the factors identified by the defendant crossed the threshold for the imposition of indemnity costs and that the same was true when one viewed the factors as a whole. He suggested that the fact the claims were discontinued was in fact a point in the claimants’ favour rather than a point against them, and that for public policy reasons claimants who discontinue should not be penalised by the making of indemnity costs orders.
Master Brightwell considered the position more nuanced than that. A claimant who discontinues their claim in good time when they become aware of impediments to their claim should not generally be penalised through the making of an indemnity costs order. However, Mr Lees made clear that was not really the basis upon which the defendant made this application. It was the fact of discontinuance viewed through the lens of everything else that had occurred. It seemed to the court that, at least for a significant part of the latter period during which this claim had been proceeding, the conduct of the claimants had indeed been unreasonable to a high degree and outside the norm. The impression the court had was that there was no serious attempt to prepare the claim for trial, even though the defendant was preparing for trial, and the claimants had not sought in evidence to rebut that impression.
Taking into account to the extent possible the fact that a multi-party claim of this kind would present challenges and difficulties for the claimants’ solicitors, there had for a significant period been a failure properly to communicate, most notably in the final period, after the March 2025 order was made. That, in Master Brightwell’s judgment, led directly to the defendant incurring costs which would have been avoided if the claimants had through their solicitors properly considered the viability of the claims at an earlier stage.
With all of these points in mind, and standing back, Master Brightwell did not consider the claimants’ conduct was outside of the norm in the early periods, and in any event the fact the court had already made costs orders in relation to matters in those periods militated quite strongly in favour of a standard costs order governing the claim generally then. He accepted there would have been a period after the first CCMC when the parties were considering their position and identifying principal claimants. In that period it did not seem to him there should be an indemnity costs order either. The period where he did consider there should be such an order was period 6. It was clear that was when the bulk of the work was carried out by the defendant. For the reasons he had given, he considered that the costs incurred by the defendant in that period could be related to the conduct of the claimants which was outside of the norm and was subject to criticism accordingly.
Period 7 Master Brightwell considered to be in a different category. The mere fact that a party does not file any evidence, whilst he accepted it was of a piece with earlier conduct, did not itself mean that costs were incurred by the defendant other than costs which it would have to have incurred in any event in making the application. So the costs would be on the standard basis for period 7.
Payment on Account
When ordering costs be subject to detailed assessment the court is required to consider whether to direct that a payment be made on account of those costs. Master Brightwell’s concern about that order was the possibility that individual claimants might wish to pursue arguments that part of the costs were individual and not common costs. That was an issue which arose in relation to periods 4 and 6. That consideration, therefore, did not arise in relation to the other periods. As an order had been made that the claimants were to be liable jointly and severally, subject to identifying each element of costs with the relevant period, there was no reason not to order a payment on account.
As far as the periods other than 4 and 6 were concerned, Master Brightwell was satisfied the figures sought, which had been calculated on the basis essentially of 90 per cent of budgeted costs, where they fell within the budgeted costs, and 50 per cent for costs incurred previously, were in line with authority and appropriate. Whilst Mr Ingham had referred to the level of costs generally, particularly in relation to the costs of the application itself, there was no reason to suppose that those deductions were inappropriate in a case which had been costs managed.
As far as periods 4 and 6 were concerned, which were all budgeted costs, and where the figures currently in the draft order reflected 90 per cent of the budgeted costs incurred, Master Brightwell considered that a greater reduction was required. Following discussion with counsel on this point, he considered the sum for those payments should be 60 per cent of the budgeted costs, so 60 per cent of the sums attributable to those periods would be payable on account. That might be slightly overgenerous to the claimants, but in circumstances where he did not have clear sight on precisely what work was done by the defendant, it seemed appropriate to resolve the doubt in favour of the claimants and to leave further argument for detailed assessment.
Discontinuance Costs After Resisting Application
Indemnity Basis Costs Following Discontinuance
CPR 38.6: Discontinuance And Costs – The Legal Principles
CPR 38.6 | Post-Discontinuance Conduct Can Be Considered
Joint Several Costs Liability | Lawrence v ANL
Several Liability Security For Costs | Rowe v Ingenious [2020]
TMC Legal provides advice on indemnity costs and CPR Part 44 for solicitors across England and Wales.
