A recent County Court ruling shows that the Court will order costs against a Claimant if their conduct is unreasonable in the course of litigation.
The facts can be swiftly summarised as follows:
Consumer goes into a shop to make a purchase, gets declined on a credit check, so goes to check the credit report and finds a County Court judgment which they had no idea about.
Consumer carries out checks, finds out that a claim was issued on their old address which they moved from years ago. Consumer also finds out it relates to a bank account, which the consumer had never had any dealings with nor had ever banked with.
Consumer speaks to bank, bank confirms bank account was opened fraudulently and was closed due to a fraud investigation.
Now then, at this point you would probably think, clear cut, easy to deal with, clear fraud so must be set aside? Well you would be wrong. And heres why
The bank had sold the debt to a third party, one Hoist Portfolio Holding 2 Limited. They resisted the consumers attempt at setting aside the Judgment, they opposed at every step, even when they were placed on notice of the fact that the bank had confirmed the account was fraudulent they failed to make the enquiries they should have made. Even when clear evidence showing the consumer wasn’t even in the area where the account was opened and could prove beyond reasonable doubt that the consumer had travelled hundreds of miles away, they would not accept the account wasn’t the consumers.
Only when clear evidence from the bank was put forward confirming the account was opened due to fraud, did the Claimant wake up and smell the coffee and discontinue. However, to get to that point the consumer incurred considerable costs. They had to carry the burden of proving their innocence.
So, when the discontinuance arrived, a letter requesting costs was sent, and ignored, so a formal application for costs per CPR 27.14(2)(g) was lodged with the Court.
Unsurprisingly, the Claimant tried to resist costs, i wont go into detail about what the Claimant tried to argue, but its clear they didn’t appraise themselves of their file before submitting their evidence. On our side, a 180 page bundle of correspondence showed their arguments were seriously holed below the waterline.
The judge was alive to the issues, and had no issue making a cost order on the basis the Claimants conduct was outrageously unreasonable. The Judge accepted the Claimant had failed to carry out the investigations which it ought to have undertaken once being placed on notice of the issues, and had the Claimant done so, it would have mitigated the costs incurred.
Indeed, the Claimant ought to have carried out its due diligence before it even issued a claim form in this matter, if it had done so it would have undoubtedly discovered the system notes from the bank showing the fraud investigation and the banks conclusions, and arguably wouldnt have issued without further investigations. Sadly, stupidly, they chose to issue the Claim without any further checks.
The judge assessed costs at £1000 plus VAT to be paid within 21 days. Lets hope they do or High Court enforcement will be getting a new file for action.
This case shows that even the small claims court can bite you if you behave unreasonably.