Citation Plc v Ellis Whittam Ltd [2012] EWHC 764 (QB), [2012] All ER (D) 227 (Mar)
It was settled law that: (1) if no claim form was issued, then there was no litigation and so there were no costs of litigation, whatever costs might have been incurred in complying with a pre-action protocol; however (2) if a claim form was issued, the costs incurred in complying with a pre-action protocol might be recoverable as costs incidental to any subsequent proceedings.
The CPR provided a strong incentive to parties to engage in pre-action communications, with the risk to those who did not do that that they might not recover their costs, even if they brought an action in which they were the successful party.
The requirement that the parties engage in pre-action correspondence had deliberately been imposed at least in part with a view to extending the period during which each party would conduct its case on the basis that it had not been incurring a liability to pay the otherís costs if no action had been commenced.
