The cost of discontinuing a claim: understanding the consequences

When a social landlord decides to bring legal proceedings, whether possession claims or injunctions, there may come a point when continuing legal action no longer feels appropriate. It might be that the tenants behaviour has significantly improved, circumstances may change, or internal priorities shift. At which point, filing a Notice of Discontinuance can seem like a quick and easy way to draw a line under the matter.

But for social landlords, especially where the defendant is legally represented,  discontinuing a claim carries cost consequences, which is regularly overlooked.  

What is a Notice of Discontinuance?

A Notice of Discontinuance is the formal court document used to withdraw part or all of a claim. Once filed and served, it brings the proceedings (or part of them) to an end. 

Under the Civil Procedure Rules (CPR 38.2) a Claimant may discontinue at any time, however permission of the court is required is there is an interim injunction in place or an undertaking has been given. Where the Claimant has received an interim payment, the Claimant will need either the courts permission to the Defendant who made the interim payment to consent in writing, and where there is more than one Claimant, all Claimants must consent in writing to discontinue, or the Claimant looking to discontinue must seek permission of the court. In terms of procedure, the Claimant must file a notice of discontinuance on all parties to proceedings (CPR 38.3).

It’s a useful procedural tool, but not without consequences, particularly in terms of legal costs.

The cost consequences: CPR 38.6

Under the Civil Procedure Rules (CPR 38.6), when a claimant discontinues a claim:

“Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant.”

In plain terms, if your tenant is legally represented and you discontinue the case, you will likely be liable to pay their legal costs regardless of the merits of the original claim, or reason for discontinuance. 

This is the default position, and it applies even if you feel the claim was justified when it was issued.

Common examples within social housing

This issue arises most frequently in:

• Possession claims - where the tenant pays off arrears and the landlord decides not to proceed
• Injunctions - if the conduct improves or becomes harder to evidence, where witnesses no longer support legal action or where an expert report indicates that a tenant lacks ‘’Wookey capacity''

Discontinuing the claim might feel like the sensible option but it must be weighed carefully against potential cost exposure.

Strategic considerations for social landlords

Before filing a Notice of Discontinuance, it is highly recommended to:

• Seek legal advice - especially if the defendant has legal representation
• Explore alternatives - consent orders or adjournments may avoid costs consequences
• Consider timing - if you’re close to a hearing, the other side’s costs may be significantly higher
• Evaluate settlement - a negotiated outcome may limit your liability or avoid cost orders
• Document reasons - keep a clear internal record of why the claim was discontinued

A further point to consider is whether it is likely that you will need to bring further action against the Defendant at a later stage, which may be difficult if you have discontinued previous action. CPR 38.7 notes that permission of the court is needed to bring another claim against the same Defendant if

(a) they discontinued the claim after the defendant filed a defence or, in a Part 8 claim, filed an acknowledgment of service or written evidence; and

(b) the other claim arises out of facts which are the same or substantially the same as those relating to the discontinued claim.

Discontinuance done right 

Filing a Notice of Discontinuance isn’t just an administrative step, it’s a tactical legal decision. For social housing providers operating within tight budgets, being aware of the cost implications is essential.

In some cases, discontinuance is absolutely the right option. But in others, pressing pause, seeking advice, or negotiating an alternative route could save you more than just legal fees. It could preserve your position and strengthen future enforcement if needed.

If you’re considering discontinuing a claim, or want to better understand the cost implications in your current case, please contact our housing management team.