Stenio Aladim defeats application for costs made by defendant arguing unreasonable behaviour

Stenio was instructed by the Claimant to oppose an application made by the Defendant, a major UK financial institution, for costs pursuant to the ‘unreasonable behaviour’ provisions of CPR 27.14(2(g). 

The Claimant entered into a credit card agreement in June 2004 and, in addition, opted to take out a policy of Payment Protection Insurance (“PPI”). Following the Supreme Court decision in Plevin v Paragon Personal Finance [2014] UKSC 61 concerning hidden PPI commissions paid to financial institutions, the Claimant instructed solicitors to act on her behalf in bringing a claim against the Defendant for redress under the unfair relationship provisions of the Consumer Credit Act 1974.

The Claimant’s Letter of Claim sent in accordance with the relevant pre-action protocol requested disclosure of further information related to her claim including “confirmation that the account of [the Claimant] is still active, or if not, the date the account was closed”. The Defendant failed to respond to the letter of claim and as a result proceedings were issued. When responding to proceedings, the Defendant filed its defence and within it stated that the Claimant’s PPI policy ended in July 2005. Accordingly, it was the Defendant’s case that the case was bound to fail because of the credit agreement falling outside of the scope of the unfair relationship provisions. As a result of the defence put forward by the Defendant the Claimant discontinued the proceedings.

It was the Defendant’s case that the Claimant had acted unreasonably in issuing proceedings and as result it should have its wasted costs paid by the Claimant. The Defendant submitted that the Claimant had allowed the Defendant to incur costs for defending a claim with no prospects of success.

In opposing the application, Stenio submitted that had the Defendant opted to investigate the Claimant’s claim when in receipt of the letter of claim including the request for further information, rather than only when it was necessary for the purposes of filing a defence, the completion date of the agreement would have come to light much earlier and the Claimant would not have issued proceedings. Accordingly, he submitted that the costs incurred by both sides could have been avoided had the Defendant been more proactive and there was nothing “unreasonable”, within the meaning of section 27.14(2)(g), in how the Claimant had conducted herself.

After hearing submissions from both parties, the court held that it was not reasonable to expect the Claimant to remember, after more than 15 years, the date that her credit card agreement had come to an end. The judge found nothing in the case to warrant a finding of unreasonable behaviour pursuant to CPR 27.14(2)(g), in circumstances where the absence of information crucial to the Claimant’s assessment of merits was due to a failure by the Defendant to reply to pre-action correspondence. No order for costs was made.