Matthew Jahanfar considers how to assess ‘unreasonable behaviour’ on the SCT

Sep 15, 2026

How do we assess ‘unreasonable behaviour’ on the Small Claims Track (SCT)?
A reflection on the case of Steven Orton v Barclays Bank UK PLC [2026] EWCA Civ 1025.  

Overview

This article considers the Court of Appeal (CA) decision in Orton v Barclays Bank and how it helps us to understand what constitutes ‘unreasonable behaviour’. Specifically, this article:    

  1. Reviews the relevant CPR provisions;
  2. Discusses Orton’s procedural background;
  3. Analyses the CA’s decision;
  4. Outlines some of the key takeaways from Orton; and
  5. Considers what the case means for practitioners going forward.  

The Relevant CPR Provisions

To better understand the CA’s decision, it is worth reviewing the CPR provisions which were central to their judgment:

CPR 27.14(2)(g) provides the basis upon which costs for unreasonable behaviour on SCT can be recovered. This rule states that:   

(2) The court may not order a party to pay a sum to another party in respect of that other party’s costs, fees and expenses, including those relating to an appeal, except –

…

(g) such further costs as the court may assess by the summary procedure and order to be paid by a party who has behaved unreasonably.

CPR 27.14(3) explains that rejecting an offer will not automatically be construed as ‘unreasonable’ but can be considered when applying the unreasonableness test.

The CA was also interested in the costs consequences which did not apply to the SCT, namely those flowing from Part 36 offers and the discontinuance of a claim as per CPR 38.6[1]. As outlined below, the disapplication of these rules was at the forefront of the Court’s mind, when assessing ‘unreasonable behaviour’.

The Procedural Background of Orton

Orton concerned a Plevin claim for approximately £2,750. Pre-trial, the Defendant invited the Claimant to discontinue on several occasions. The last invitation was made on 22nd May 2024, where the Defendant gave the Claimant until 12:00PM on 31st May 2024, to discontinue their claim on a ‘drop hands basis’. Crucially, the Defendant never offered the Claimant any money.

The Claimant made numerous offers, before discontinuing their claim on 7th June 2024 (12 days before trial). This was said to be a ‘commercial decision’, made after reviewing the Defendant’s evidence and concluding that the costs of counsel would eat into any damages awarded. The Claimant felt a trial would waste money and time, when the Defendant was not making offers. The Defendant sought costs pursuant to CPR 27.14(2)(g) and CPR 38.6.  

A District Judge (DJ) found the Claimant behaved unreasonably and awarded the Defendant costs incurred after 31st May 2024. That judge suggested the basis for the Claimant’s ‘commercial decision’ would have been known throughout litigation and the Claimant was found to be unreasonable in all the circumstances. The DJ highlighted that the Claimant:  

  1. Ignored the Defendant’s final invitation to discontinue and completed trial preparation;
  2. Conducted a commercial assessment after the 31st May deadline/just before trial; and
  3. Made a decision to discontinue which was not prompted by evidence.

The DJ specifically held that the Claimant was unreasonable because they failed to accept the Defendant’s final drop hands offer on 22nd May 2024. In their view, the Claimant took too long to take their commercial decision and they should have discontinued earlier.  

An appeal was heard and dismissed by a Circuit Judge (CJ). The CJ said the Claimant’s failure to engage with the Defendant’s final correspondence was serious, significant and contrary to the overriding objective. They also felt the decision to discontinue should have been made earlier and was an abuse because it was not prompted by a material change. In obiter dicta, the CJ outlined a ‘useful framework’ when considering CPR 27.14(2)(g), which broadly reflected the Denton criteria.

Court of Appeal Decision

The CA allowed the Claimant’s appeal. At the outset, they stressed that the SCT is firmly committed to providing a costs neutral regime i.e. parties pay their own costs. They highlighted that the SCT:

  1. Limits costs which are recoverable;
  2. Disapplies parts of the CPR which attract cost consequences e.g. CPR 36 & 38; and   
  3. Is designed for represented and unrepresented parties.

Crucially, the CA said that unreasonable behaviour must not be construed widely.

The CA also said previous case law concerning unreasonable behaviour should be treated with caution, as it was fact sensitive and rarely related to the SCT’s costs neutral regime. The CA further stated that using the Denton criteria to assess unreasonableness was incorrect. At paragraph 90 of their judgment, the CA concluded that the safe guidance from previous authorities should be limited to the following:

  1. The process of evaluating whether a “party has behaved unreasonably” must be informed by all the facts. That includes the context of the Small Claims Track and the breadth of the costs neutrality regime which generally applies;
  • The burden of proof is on the party alleging unreasonableness to establish it.
  • The kinds of circumstances which will qualify are as set out in the “acid test” in Ridehalgh, namely circumstances which do not permit of a reasonable explanation.
  • Reference to previous cases is unlikely to be helpful, however:
  • Vexatious behaviour, such as issuing proceedings with no prospect of the claim being successful, will usually be unreasonable;
  • The withdrawal of a claim or unsuccessful pursuit of a claim should not itself be considered as unreasonable;
  • Judges exercising the discretion should also bear in mind the undesirability of deterring parties from using the Small Claims Track.

Orton further discussed how the factual background recorded by the DJ, did not reflect some key realities of the case. In particular, the CA highlighted that the Defendant’s invitations to discontinue were not offers. They said an offer, by its very nature, involves indicating a willingness to take less than they would get at trial. Hence the DJ wrongly proceeded on the basis that both parties made offers and that CPR 27.14(3) applied.

Moreover, the CA suggested the DJ erred by not making cost neutrality the starting point for analysis and mistakenly placed the burden on the Claimant to disprove unreasonableness. The CA departed from the DJ’s implicit suggestion that the commercial reason for discontinuance was nonsensical. The CA said that such a conclusion presumed the case was hopeless, that the Claimant knew from the outset what a barrister costs and that one needed to be instructed. In addition, the CA disagreed with the implication that the Claimant was unreasonable for missing the Defendant’s final deadline to discontinue (9 days after their invitation was made).  

Should you be in a similar position to the Claimant and wish to resist an unreasonable costs application, the following observations from the CA could prove useful. Indeed, the CA considered what would happen if a claimant could be deemed unreasonable for discontinuing an arguable case, because the other side did not want to settle and the benefit was marginal. This would mean:   

  1. A party could be worse off settling or discontinuing for commercial reasons than if they turned up at trial, as the default position would be no order as to costs;
  2. Parties could be subject to costs penalties for failing to settle in a short timeframe, even though Part 36 does not apply;
  3. Parties would be under an obligation to litigate in an optimal fashion, when no such rule applies and the SCT is designed for vulnerable litigants;
  4. It would mean well-resourced parties could correspond their way out of the costs neutral regime, by telling parties their claims are commercially unviable and that anything short of early discontinuance is unreasonable; and  
  5. Claimants could pressure defendants with repeated offers to settle containing deadlines and threats of costs applications if offers are not accepted swiftly.   

For litigators, it is also worth noting that the CA criticised the Defendant’s bellicose correspondence towards the Claimant. The CA pointed out that the Defendant ignored the allocation to the SCT and wrongly asserted the application of a costs regime in relation to discontinuance and costs generally.   

Key Takeaways

It would be sensible for practitioners to bear the following in mind when assessing unreasonable behaviour on the SCT:

  1. The starting point, which must be given real weight, is that the SCT is costs neutral;
  2. Unreasonable behaviour must not be construed widely;
  3. Invitations to discontinue are not offers;
  4. Reference to other authorities should be limited to the guidance at paragraph 90 in Orton (see the italicised text under the ‘Court of Appeal Decision’ heading); and
  5. Correspondence should not make assertions about rules which are inaccurate.

Looking Forward

Determining what is unreasonable behaviour on the SCT will be a fact sensitive exercise. Any assessment will have to take the SCT’s costs neutral regime as its starting point. The guidance at paragraph 90 of Orton shows that the Ridehalgh acid test remains significant. However, a Denton style interrogation of an explanation provided by the party denying unreasonableness, should be avoided. Remember, the burden will rest on the party seeking costs, to show that behaviour was unreasonable.   

What Orton makes clear is that discontinuance in and of itself is not unreasonable, and that seems to be rooted in the costs neutral regime and a need not to deter engagement with the SCT.

Thankfully, the CA has made clear that pursuit of claims which are doomed to fail at the outset will usually be unreasonable, which does offer defendants at least some protection.  

What is outlined is not legal advice and should not be construed as such. Should you want any legal advice or if you have any follow-up queries, please contact the clerking team at Cornwall Street Barristers.     

Law correct as of 14th September 2026.

[1] See CPR 38.6(3).