Wrath of the Court
Hard-nosed litigators tend not to have nightmares apart from when there is a serious mishap in proceedings and the wrath of the Court on costs is directed, not at the clients but to their legal representatives resulting in a subsequent application for Wasted Costs Order (“WCO”). There have been three contrasting reported decisions on WCO recently.
The starting point on any such application is s51 of the Senior Courts Act 1981 where costs have been incurred by a party because of any improper, unreasonable or negligent act or omission on the part of the legal representatives and the leading decisions in Ridehalgh v Horsfield and Medcalf v Mardell. It is a summary procedure and not appropriate for hotly contested factual disputes such as a professional negligence claim.
In Ayinde, R v the London Brough of Haringey, the Court made a WCO against both the solicitors and Counsel for relying on fake cases in Court which may have been generated by AI and the solicitors unwisely sought to justify this as merely cosmetic errors. Moreover, both the solicitors and Counsel have been referred to their respective regulatory bodies by the Judge for deliberately misleading the Court. In Serra v Harvey, the solicitors were ordered to pay indemnity costs following a trial adjournment caused by delays in the preparation of inadequate trial bundles which were described as haphazard, and which fell below reasonable standards.
Both decisions appear to be clear cut as to the perceived shortcomings on the part of the legal representatives. In contrast, in Kirsty Williams-Henry v Associated British Ports a WCO failed against a law firm acting on a CFA following the dismissal of a complex personal injury claim due to fundamental dishonesty on the part of their client at trial. The insurers then targeted the solicitors on the following two grounds, failure to (1) properly investigate and appreciate the nature of disclosed documents demonstrating that their client had exaggerated her injuries and (2) to advise their client to settle the claim. The Courts rejected the WCO application, and the following points were empasised in the detailed judgment as follows:
- There is a high hurdle in obtaining WCO and it is not intended to punish errors of judgment or incompetence by legal representatives.
- The lawyers can rely upon legal professional privilege and the Court will not draw inferences where the lawyers facing such applications are unable to fully defend their conduct without disclosing privileged correspondence with their client.
- The importance of causation is essential to demonstrate that the wasted costs sought were actually caused by the actions of the solicitors rather than those of the client who may have been unwilling to settle.
- The existence of a CFA does not automatically lead to improper conduct because solicitors have a financial stake in the outcome of the proceedings as their fees are only recoverable if their client wins.
- The Court still has a wide discretion in deciding whether to make a WCO even if there has been improper conduct and causation, only making a WCO where it is just to do so.
Kirsty Williams does provide some assurances to litigators and the underlying arguments available when facing WCO threats by their opponents.
