|
| Mr Justice TURNER:
|
|
| Introduction
|
| 1.
| There is an application before the court issued by the
Defendants in the action which is brought under Section
51 of the Supreme Court Act 1981ActsActs (as amended) and CPR 48.7. The notice dated 28 February 2002
arises out of the terms upon which the Claimant's claim was discontinued
by order dated 29 November 2001. (The claimant is hereafter referred to as
'B'). Where relevant the terms of settlement provided:
|
|
|
| 3.
| The Claimant is to pay the Defendant's costs of this
action to be determined by detailed assessment, such costs not to be
enforced without permission of the court nor prior to the
determination by the court of the amount (if any) which it is
reasonable for the Claimant to pay under s. 11(1) of the Access to
Justice Act 1999.
|
| 4.
| Any application for an order for wasted costs against
the Claimant's solicitors ... to be issued before 4pm on the date
which is 3 months from the date this order is sealed. [i.e. 28
February 2002]. |
|
| 2.
| The proceedings so discontinued had been commenced for the
purposes of obtaining an injunction to prevent the defendants publishing
any article concerning the personal life of B based on information of a
confidential nature imparted by her to the first defendant between August
and December 1996. By order dated 22 December 1996, following an ex
parte hearing the injunction was granted until further order.
|
| 3.
| The defendants never applied to the court to have the
injunction discharged.
|
| 4.
| On 10 January 1997 the defendants wrote to B's solicitors
"without prejudice" that they were "quite prepared to leave the injunction
unopposed ... provided (the claimant) withdrew the rest of her claim and
this action is withdrawn".
|
| 5.
| It is unclear what claims for damages had initially been
made in the action brought against the second defendants, since the date
upon which the Statement of Claim was served does not appear from the
papers now before the court. There were, however, included in the original
Statement of Claim some limited losses pleaded which related to B's
professional life. It is plain, that in response to that without prejudice
letter and with the benefit of Legal Aid funding the claimant's solicitors
sought to claim damages as "compensation ... for the very considerable
distress that (the defendants) have caused". In a further "without
prejudice" letter dated 10 February, B's solicitors some what elliptically
wrote
|
|
|
| 2.1
| We have been explicitly authorised (via the writer)
via the Legal Aid Board to obtain financial compensation for our
client. Since that has not been accepted we will now obtain
authorisation to serve our Statement of Claim and proceed
accordingly. |
|
|
| Until three weeks before the trial date of the action in
December 2000, and throughout the proceedings, B had been in receipt of
legal aid. The certificate was then discharged. It was only after this
event that B sought, and obtained by consent, the order of discontinuance.
|
| 6.
| On 9 June 1999 the court ordered that an amended and
consolidated Statement of Claim be served. The need for this was due to
the fact that there were proceedings against the separate defendants,
those in which the second defendants had been sued (1996 B No 2219) and
those against the first defendant (1997 B No 1929). The amended Statement
of Claim in the consolidated action was apparently served on 19 March
before the order had been made. What was and is of considerable
importance, however, is that in addition to amending the narrative
sections of the pleading and the unparticularised claims for damages for
breach of contract and breach of the duty of confidence there was now a
claim for damages in respect of harm "wilfully or negligently done ...
calculated to cause (B) physical harm and/or serious mental damage".
Special damages were claimed in respect of past and continuing medical
treatment and "for general loss of earnings"; see paragraph 12.3. By Order
sealed on 29 September 2000, B was ordered to provide discovery in
relation to her financial position from 1st January 1992 including
accounting records (Schedule B) and documents to support the loss of
earnings claim which had been advanced by way of an accountant's report
dated 10 May 2000 (Schedule C). The claim so particularised included
|
|
|
| 7.1.1
| Alleged loss arising from invested time and
expenditure on the Project to be in the range of £92,000 and
£180,000.
|
| 7.1.2
| Alleged loss arising in the period 18 December 1996
to 31 December 1999 the sum of £168,000.
|
| 7.1.5
| Alleged further professional loss over a 5 - year
period from 1 January 2000 to 31 December to be in the range of
£206,000 and £257,000. |
|
|
| together with future losses based on the annual
multiplicand of £48,000. The total claimed was valued at £1 to £1.5
million.
|
| 7.
| In the applicants' skeleton argument before this court, the
basis of the claim was expressed as
|
|
|
| 3.4
| The Claimant was and is without financial means. The
litigation was pursued with the benefit of a Legal Aid Certificate.
The defendants were put to great expense in investigating the
financial claim - the litigation cost them some £325,000 and, the
defendant believes, probably cost public funds rather more than
that.
|
| 3.5
| Three weeks before the proposed trial it emerged that
the claimant had, since the early 1990's, been almost wholly
unemployed and in receipt of unemployment and DSS benefits. The
claim was discontinued and the defendants obtained an order for
costs against the claimant which is to all intents and purposes
worthless.
|
| 3.6
| The defendant contended that this situation could not
have happened without improper conduct on the part of the claimant's
solicitor: he knew or ought to have known, had he made those
enquiries that he should have made, that the quantum of the claim
was totally unrealistic, that the manner of its presentation was
grossly misleading having regard to the underlying realities and
that considerable cost would be incurred by the defendant in
investigating it. |
|
| 8.
| There is no scope for avoiding the applicants' implicit, if
not explicit, proposition that the claimant's solicitor has been not only
negligent but also dishonest in his conduct of B's affairs.
|
|
| Submissions
|
| 9.
| In his skeleton opening, counsel for the applicants sought
to detail the case which he sought to make against the solicitors in order
to persuade the court that this was a proper case for the solicitor to be
ordered to show cause why a wasted costs order should not be made. These
were
|
|
|
| 1.
| The failure of the solicitor to take proper
instructions from B as to the 'without prejudice' offer of the
defendants dated 10th January 1997. Had these been taken, the
proceedings would have been settled at that stage and almost no
legal costs would have been incurred on either side.
|
| 2.
| The obstructiveness of the solicitor to the proposals
for mediation during the early part of 1999.
|
| 3.
| The presentation of the exaggerated claim in the
amended Statement of Claim.
|
|
| It is submitted that there is a connection between
the allegations. The failure to accept the without prejudice offer
led to the need to institute proceedings. This required legal aid
funding. The longer the litigation continued, the greater the need
there was for a substantial financial claim to justify the
continuation of funding. |
|
|
| It can readily be seen that the scope of any enquiry
necessary to assess these claims would be extensive. After observations
from the court on this point, counsel for the applicants in his reply
sought to limit the issues by the omission of serial 2 (mediation issue)
above.
|
| 10.
| To such a case, the respondent solicitor submits that the
true basis for the making of a wasted costs order is that the legal
representative has been in breach of some duty towards the court, in
contradistinction to his opposite number. The nature of the remedy is
summary and those cases alone which are capable of summary disposal will
be considered appropriate for the making of the relevant order. The
converse of this proposition is that if detailed evidence, including oral
evidence and cross-examination, is required in order to dispose of the
application the court should not make the order to show cause. The
rationale underlying this approach is that wasted costs orders should not
be made in cases otherwise than in those in which the process of assessing
whether to make such an order can be carried out summarily and without
risk of injustice or such that they would amount to satellite litigation.
|
| 11.
| In the present case substantial costs have already been
incurred by both parties to the application which, as will emerge later,
is still far from ready for determination. When opening the applicant's
case, counsel sought to introduce fresh evidence, principally in the form
of a statement made by B to the applicants' solicitors. The principal
content of her evidence is to the effect that she had now waived
privilege. If allowed into the proceedings at this stage, this waiver
would enable the applicants to controvert some of the evidence already
provided by the solicitor and to make good those parts of his evidence
which were deficient because he was still bound by the privilege of his
former client. Such evidence, if admitted, would arguably permit the
solicitor fully to defend himself unhampered as he now is because of the
existence of privilege.
|
| 12.
| The appearance of the fresh evidence followed an agreement
made between B and the second defendant's on 23 May 2002, days only before
the hearing of this application. Under that agreement the applicants
indicated that on the condition that B waived privilege as between herself
and the solicitor they would not seek to recover from her the costs
incurred by them in defending her original claim. This agreement is
subject to the proviso that the court which comes to determine the wasted
costs application makes "no finding ... that her evidence was not only
untrue but was dishonestly given". Quite clearly negotiations must have
taken place between the applicants and B, but it is far from clear what if
any, legal advice she took or was given over what might be the
consequences to her of the waiver of privilege. It is manifestly the case
that the applicants contemplate a hearing based on contested evidence in
which the credibility of the solicitors and B will be central to the
resolution of the issue.
|
| 13.
| The solicitor objects that this fresh evidence should not
be admitted, since
|
|
|
| 1.
| There is no provision in the Rules for the admission
of fresh evidence.
|
| 2.
| If the fresh evidence were to be admitted, it would
inevitably mean that the present hearing would have to be adjourned
so that solicitors could meet the thrust of this new evidence.
|
| 3.
| The consequence of admitting the evidence would be
that the solicitors would be required to (re)familiarise himself (as
would his legal advisers) with what was said to be a total of 100
files or so. The context of this submission that to date costs
incurred on the solicitors' behalf are said to amount to some
£80,000.
|
|
| In addition
|
|
|
| a.
| a. The solicitor would have to be free to reply
to the privileged material as well as
|
| b.
| be able to rebut it
|
| c.
| much of the material goes to credibility
|
| d.
| evidential conflict between the solicitor and
his former client (B) will be inevitable
|
| e.
| given that the application was made only days
before the hearing was due to take place, it is too late and
that as a matter of discretion the court should not therefore
admit the fresh evidence. | |
|
|
| Decision on Fresh Evidence
|
| 14.
| For reasons which will shortly appear, having also had the
advantage of reading it, I have decided that the fresh evidence should be
admitted at this stage in order best to determine whether, and if so on
what basis, this application should proceed.
|
| 15.
| By way of introduction, it is to be noted that the hearing
of the present application to show cause has occupied two full court
working days. The nature of the proceedings foreshadowed by the documents
submitted by both parties is that, if not controlled by the court using
its case management powers, the issues arising on the application will be
more akin to a negligence action with live evidence and extensive
disclosure. If the court does exercise its case management functions, and
limits the issues and or alternatively the evidence which may be given the
possibility, amounting to a near certainty, is that an injustice will be
done to one or other if not both of the principal protagonists, both of
whose credibility will be under challenge. It will not escape attention
that B, as one of them, will be challenging evidence given by her former
solicitor, who is being charged with fraudulent and not just negligent
conduct. B will not be legally represented, except by the applicants who
will, in effect, be acting as her surrogate.
|
| 16.
| The decision to admit fresh evidence has been influenced by
the need to expose the true nature of what is proposed by the applicants
in order to assess the appropriateness of the process. It is clear that
the proceedings would be unwieldy and, given the apparent conflict of
evidence, would also have great potential for unfairness if curtailed in
terms of issues or evidence. But this is to anticipate.
|
|
| The jurisprudence
|
| 17.
| The starting point can usefully be taken from the judgment
of Sir Thomas Bingham MR (as he then was) in Ridehalgh v Horsefield [[1994] Ch
205]. Having referred to the need for safeguards if the
adversarial system of litigation adopted in our common law jurisdiction
was to "function fairly and effectively" (p224) he said at p225
|
|
|
| (5)
| Solicitors and barristers may in certain
circumstances be ordered to compensate a party to litigation other
than the client for whom they act for costs incurred by that party
as a result of acts done or omitted by the solicitors or barristers
in their conduct of the litigation.
|
|
| It is the scope and effect of this last safeguard,
and its relation with the others briefly mentioned, which are in
issue in these appeals. We shall hereafter refer to this
jurisdiction, not quite accurately, as "the wasted costs
jurisdiction" and to orders made under it as "wasted costs orders".
These appeals are not concerned with the jurisdiction to order legal
representatives to compensate their own client. The questions raised
are by no means academic. Material has been placed before the court
which shows that the number and value of wasted costs orders applied
for, and the costs of litigating them, have risen sharply. We were
told of one case in which the original hearing had lasted five days;
the wasted costs application had (when we were told of it) lasted
seven days; it was estimated to be about half-way through; at that
stage one side had incurred costs of over £40,000. |
|
|
| and at p226
|
|
|
|
| The argument we have heard discloses a tension
between two important public interests. One is that lawyers should
not be deterred from pursuing their client's interests by fear of
incurring a personal liability to their clients' opponents; that
they should not be penalised by orders to pay costs without a fair
opportunity to defend themselves; that wasted costs orders should
not become the back-door means of recovering costs not otherwise
recoverable against a legally-aided or impoverished litigant; and
that the remedy should not grow unchecked to become more damaging
than the disease. The other public interest, recently and clearly
affirmed by Act of Parliament, is that litigants should not be
financially prejudiced by the unjustifiable conduct of litigation by
their or their opponents' lawyers. The reconciliation of these
public interests is our task in these appeals. Full weight must be
given to the first of these public interests, but the wasted costs
jurisdiction must not be emasculated. |
|
|
| Later Sir Thomas Bingham adverted to particular issues
which may arise in proceedings of the kind now contemplated. Thus at p236,
he said
|
|
|
|
| Privilege
|
|
| Where an applicant seeks a wasted costs order against
the lawyers on the other side, legal professional privilege may be
relevant both as between the applicant and his lawyers and as
between the respondent lawyers and their client. In either case it
is the client's privilege, which he alone can waive.
|
|
| The first of these situations can cause little
difficulty. If the applicant's privileged communications are germane
to an issue in the application, to show what he would or would not
have done had the other side not acted in the manner complained of,
he can waive his privilege; if he declines to do so adverse
inferences can be drawn.
|
|
| The respondent lawyers are in a different position.
The privilege is not theirs to waive. In the usual case where a
waiver would not benefit their client they will be slow to advise
the client to waive his privilege, and they may well feel bound to
advise that the client should take independent advice before doing
so. The client may be unwilling to do that, and may be unwilling to
waive if he does. So the respondent lawyers may find themselves at a
grave disadvantage in defending their conduct of proceedings, unable
to reveal what advice and warnings they gave, what instructions they
received. In some cases this potential source of injustice may be
mitigated by reference to the taxing master, where different rules
apply, but only in a small minority of cases can this procedure be
appropriate. Judges who are invited to make or contemplate making a
wasted costs order must make full allowance for the inability of
respondent lawyers to tell the whole story. Where there is room for
doubt, the respondent lawyers are entitled to the benefit of it. It
is again only when, with all allowances made, a lawyer's conduct of
proceedings is quite plainly unjustifiable that it can be
appropriate to make a wasted costs order. |
|
|
| At p239, Sir Thomas Bingham added
|
|
|
|
| The procedure to be followed in determining
applications for wasted costs must be laid down by courts so as to
meet the requirements of the individual case before them. The
overriding requirements are that any procedure must be fair and that
it must be as simple and summary as fairness permits. Fairness
requires that any respondent lawyer should be very clearly told what
he is said to have done wrong and what is claimed. But the
requirement of simplicity and summariness means that elaborate
pleadings should in general be avoided. No formal process of
discovery will be appropriate. We cannot imagine circumstances in
which the applicant should be permitted to interrogate the
respondent lawyer, or vise versa. Hearings should be measured in
hours, and not in days or weeks. Judges must not reject a weapon
which Parliament has intended to be used for the protection of those
injured by the unjustifiable conduct of the other side's lawyers,
but they must be astute to control what threatens to become a new
and costly form of satellite litigation.
|
|
| "Show cause"
|
|
| Although Ord.65, r. 11(4) in its present form
requires that in the ordinary way the court should not make a wasted
costs order without giving the legal representative "a reasonable
opportunity to appear and show cause why an order should not be
made," this should not be understood to mean that the burden is on
the legal representative to exculpate himself. A wasted costs order
should not be made unless the applicant satisfies the court, or the
court itself is satisfied, that an order should be made. The
representative is not obliged to prove that it should not. But the
rule clearly envisages that the representative will not be called on
to reply unless an apparently strong prima facie case has been made
against him and the language of the rule recognises a shift in the
evidential burden.
|
|
| Discretion
|
|
| It was submitted, in our view correctly, that the
jurisdiction to make a wasted costs order is dependent at two stages
on the discretion of the court. The first is at the stage of initial
application, when the court is invited to give the legal
representative an opportunity to show cause. This is not something
to be done automatically or without careful appraisal of the
relevant circumstances. The costs of the inquiry as compared with
the costs claimed will always be one relevant consideration. This is
a discretion, like any other, to be exercised judicially, but judges
may not infrequently decide that further proceedings are not likely
to be justified. The second discretion arises at the final stage.
Even if the court is satisfied that a legal representative has acted
improperly, unreasonably or negligently and that such conduct has
caused the other side to incur an identifiable sum of wasted costs,
it is not bound to make an order, but in that situation it would of
course have to give sustainable reasons for exercising its
discretion against making an order. |
|
| 18.
| Since Ridehalgh
(above) there has been a number of cases in which the question has been
whether, and if so upon what terms, the wasted costs procedure should be
involved. In this context, it is apposite to note the provisions of CPR PD 53.6 which makes provision for the
determination whether a wasted costs order should be made or not. PD
Section 53 provides
|
|
|
| 53.4
| It is appropriate for the court to make a wasted
costs order against a legal representative, only if -
|
|
|
| (1)
| the legal representative has acted improperly,
unreasonably, or negligently;
|
| (2)
| his conduct has caused a party to incur
unnecessary costs, and
|
| (3)
| it is just in all the circumstances to order
him to compensate that party for the whole or part of the
costs. |
|
| 53.5
| The court will give directions about the procedure
... to ensure that the issues are dealt with in a way which is fair
and as simple and summary as the circumstances will permit.
|
| 53.6
| As a general rule the court will consider whether to
make a wasted costs order in two stages -
|
|
|
| (1)
| in the first stage, the court must be satisfied
-
|
|
|
| (a)
| that it has before it evidence or other
material which, if unanswered, would be likely to lead
to a wasted costs order being made; and
|
| (b)
| (b) the wasted costs proceedings are
justified notwithstanding the costs involved.
|
|
| (2)
| at the second stage ... the court will
consider, after giving the legal representative an opportunity
to give reasons why the court should not make a wasted costs
order ... . | |
|
| 19.
| It is evident that the process and procedure envisaged in
the Practice Directions is not readily to be equated with what is involved
on a trial of issues. The phrases "simple and summary as the circumstances
will permit" (PD 53.5) and "after giving the legal
representative an opportunity to give reasons" (PD 53.6 (2)) do not lend themselves as
appropriate to a disputed trial involving consideration and resolution of
complex and disputed evidence. More especially will this be the case if
allegations of fraud are bound up with the case to be made against the
solicitor. The Practice Direction correctly, in my view, reflects the
jurisprudence of the courts as it had developed prior to the CPR coming
into force.
|
| 20.
| In Manzanilla v Certon Property
& Investments[ (transcript 23 April 1997)]
Lord Woolf MR (as he then was) said
|
|
|
|
| This is a directions hearing in a troubling matter.
The Court of Appeal decided it was appropriate that there should be
an investigation as to whether a wasted costs order should be made
against solicitors and counsel who were involved in proceedings
bought by Manzanilla in which a firm of solicitors, Halliwell
Landau, who had previously acted for Manzanilla, became a party. As
this is only a directions hearing, I propose to restrict what I have
to say. I should however explain why the directions which I am
giving are nowhere near as extensive as those which Mr Pollock, on
behalf of Halliwell Landau, would like the court to make.
|
|
| The ability of the court to make a wasted costs order
can have advantages, but it will be of no advantage if it is going
to result in complex proceedings which involve detailed
investigation of facts, and indeed actions of dishonesty, then it
may well be that the wasted costs procedure is largely inappropriate
to cover the situation, except in what would be an exceptional case.
|
|
| Mr Pollock submits that this is such an exceptional
case. However I do not so regard it. It seems to me that having read
the judgments of the Court of Appeal, both in relation to the merits
of the appeal which was before them and as to whether or not this
was a case where there , as cause shown, which justified
investigation as to whether a wasted costs order should be made, the
case is an unusual one but not one which should be dealt with other
than in a summary way. If this limits the ability of someone in the
position of Halliwell Landau to obtain a wasted costs order, then in
my judgment that is a restriction inherent in the nature of the
remedy which they are seeking to receive. It would destroy that
remedy if the court did not, except in an exceptional case, insist
upon the matter being dealt with summarily. |
|
| 21.
| There is further authority for the proposition that the
procedure is of limited scope in cases of disputed fact. In a case which
went before the Privy Council on appeal from New Zealand and which
concerned the duty of counsel against whom a costs order was sought. In
New Zealand there is no statutory power to make such an order, the power
is part of the inherent jurisdiction of the court. In Harley v McDonald[ [2001] 2AC 678 at p
703] Lord Hope of Craighead when delivering the
judgment of the Board said
|
|
|
| 50
| As a general rule allegations of breach of duty
relating to the conduct of the case by a barrister or solicitor with
a view to the making of a costs order should be confined to
questions which are apt for summary disposal at court. Failures to
appear, conduct which leads to an otherwise avoidable step in the
proceedings or the prolongation of a hearing by gross repetition or
extreme slowness in the presentation of evidence or argument are
typical examples. The factual basis for the exercise of the
jurisdiction in such circumstances is likely to be found in facts
which are within judicial knowledge because the relevant events took
place in court or are facts that can easily be verified. Wasting the
time of the court or an abuse of its processes which results in
excessive or unnecessary cost to litigants can thus be dealt with
summarily on agreed facts or after a brief inquiry if the facts are
not all agreed. Scope for the making of a costs order that will
compensate as well as penalise is then is likely to be found in
making an order against the practitioner that will indemnify the
opposing litigant against costs incurred as a result of the breach
of duty that would otherwise not be recoverable.
|
| 51
| Circumstances which involve serious breaches of the
practitioner's duty to the court may however raise questions about
his duty to the client which involve allegations of professional
misconduct. They may also raise questions as to whether the
practitioner is liable in damages to the client for negligence. But
it is not appropriate when considering whether or not to make a
costs order for the court to rule upon whether, in addition to a
breach of the duty to the court, there has been a breach of the
rules of professional conduct. This is a matter which will
ordinarily be dealt with by way of complaint under the disciplinary
procedures of the 1982 Act. Nor is it appropriate for the court in
exercising its summary jurisdiction to make a costs order to say
whether the client has a cause of action against his barrister or
solicitor for negligence. This is a matter which ought to be dealt
with in separate proceedings, in which the issues of fact and law
between the client and the practitioner are clearly focused and the
practitioner is given a full and fair opportunity to respond to the
client's claim.
|
| 52
| All this may seem to be elementary. But the
distinction which must always be observed between these different
processes is fundamental to a proper understanding of the limits of
the inherent summary jurisdiction of the court. The court's only
concern when it is exercising this jurisdiction is to serve the
public interest in the administration of justice.
|
| 53
| Their Lordships do not say that the court had no
jurisdiction to make a costs order in favour of the client against
his own barrister or solicitor. But in cases where an order to that
effect is contemplated the court must take great care to confine its
attention to the facts which are clearly before it or to facts
relating to the conduct of the case that are immediately and easily
verifiable. Allegations that may raise questions about duties owed
to the client by the barrister or solicitor and the conduct of the
case outside the courtroom are unlikely to be of that character.
They are likely therefore to fall outside the proper scope of that
inquiry. The court must bear in mind that it is not its function, in
the exercise of this jurisdiction, to adjudicate on the position as
between the client and his barrister or solicitor.
|
| 54
| The court must have particular regard in cases of
this kind to the factual basis upon which the jurisdiction is to be
exercised. It cannot rely on its own knowledge when it is faced with
issues about the nature or scope of the instructions which the
client has given about the conduct of the litigation or the advice
that may have been tendered to the client by his barrister or
solicitor. Fairness to the barrister or solicitor requires that
notice should be given of allegations about breaches of duty which
raise these issues and that an opportunity should be given to them
to challenge the allegations, if so advised, by cross-examining
witnesses and leading evidence. These procedures are inconsistent
with the summary nature of the jurisdiction. Bearing in mind the
extra cost which an investigation of that kind may involve, and the
overriding requirement of fairness to those who are at risk of being
penalised, the court may well conclude that further investigation
under this procedure is not appropriate. This need not be seen as a
surrender by the court of its responsibility. The client may have
other remedies. A complaint may be made to the Law Society leading
to disciplinary sanctions against the barristers' or solicitor, or a
claim may be made by the client against the solicitor in damages for
negligence. |
|
|
| Discussion
|
| 22.
| The limitations on the scope of the wasted costs
jurisdiction which are necessarily imposed by the manner in which the
jurisdiction has developed have been clearly recognised. See by way of
illustration Lord Woolf in Manzanilla (above) and Lord Hope in particular
at paragraph 54 in Harley (above).
|
| 23.
| As against the cases referred to in paragraphs 20 and 21
above is the case of Medcalf v Mardell
[[2001] Lloyds Law Reports 146] upon which the applicants
placed substantial reliance. In fairness, it should be said that it was
one paragraph of the judgment of Peter Gibson LJ to which reference was
made. At paragraph 65, he said
|
|
|
|
| We add a footnote. We are uncomfortably aware that
this ancillary litigation has occupied the court for a full day at
the final stage, that the material put before us has been voluminous
and that this judgment is a lengthy one. All this might seem a far
cry from the summary procedure envisaged in Ridehalgh v Horsefield. But it cannot be
right that a legal representative can escape the consequences of the
wasted costs jurisdiction by the mere fact that the litigation in
which his conduct is challenged is complex. As we have pointed out,
the guidance given in Ridehalgh v
Horsefield is that the over-riding requirement is for
the procedure to be as simple and summary as fairness permits. We
are extremely grateful to counsel appearing before us for assisting
us to that end. |
|
|
| It has to be noted that the decision in the case went
against the barristers who had signed draft amended grounds of appeal but
in their submissions before the Court of Appeal had not sought to justify
many of those new grounds. In reality, it was possible in those
circumstances for the court, sitting on the wasted costs application, to
determine those matters on a summary basis, and this notwithstanding the
complexity of the underlying action. Peter Gibson LJ's observation in
paragraph 65 of his judgment must be read in that context. So read, they
do not, in my judgment, qualify or relax the already established limits of
the jurisdiction now in issue.
|
|
| Conclusion
|
| 24.
| In the present case, there is the added practical
difficulty represented by the fact that no court has yet pronounced any
decision in relation to the underlying facts of the case between B and the
applicants. This feature may represent no more than a factual distinction
between the present and the earlier cases. On the other hand it may point
towards the conclusion that in a case in which there has been no
adjudication of the primary facts the court should be even more resistant
to the notion that it should enquire into a state of affairs in which it
has no solid foundation from which the process of analysis essential to
the wasted costs procedure can proceed. For the reasons which follow, I
incline to this view.
|
| 25.
| It is axiomatic that a solicitor is bound by the
instructions of his client. He is not obliged to act as a filter between
the instructions provided by the client and the opposing party. Quite
simply, a solicitor owes no duty to the opposing party although he does,
of course, owe such a duty to the court. These propositions were clearly
recognised, if not decided, in the case of Orchard v Southeastern Electricity Board[ [1987]
QB 565] in which the holding in the headnote reads
|
|
|
|
| Although solicitors owed a duty to the court to
conduct litigation with due propriety, it was doubtful whether they
owed any such duty to the opposing party; that the jurisdiction to
order a solicitor to pay costs of the opposing party under R.S.C.,
Ord, 62 r.8 could be exercised only where it was clear that he was
guilty of a serious dereliction of duty or serious misconduct, and
should be exercised with care and discretion; that, although a
solicitor should not assist a litigant where prosecution of a claim
amounted to an abuse of process it was not his duty to attempt to
assess the result of a conflict of evidence or to impose a pretrial
screen on a litigant's claim or defence; that such a charge of
misconduct against a solicitor ought not to depend on inference
without direct evidence and that, in the circumstances, since the
plaintiff's claim had been supported by independent witnesses and
expert evidence it was impossible to assail the judge's conclusion
that legal aid had been properly granted and that the solicitors and
counsel had acted properly (post pp. 571D-F, 572C-G, 577D-G, 579G -
580C, 581C-D). |
|
|
| At page 229 in Ridehalgh Sir Thomas Bingham cited from page
572 in Orchard with approval. The
passage reads
|
|
|
|
| That said this is a jurisdiction which falls to be
exercised with care and discretion and only in clear cases. In the
context of a complaint that litigation was initiated or continued in
circumstances in which to do so constituted serious misconduct, it
must never be forgotten that it is not for counsel to impose a
pre-trial screen through a litigant must pass before he can put his
complaint or defence before the court. On the other hand, no
solicitor or counsel should lend his assistance to a litigant if he
is satisfied that the initiation or further prosecution of a claim
is mala fide or for ulterior purpose or, to put it more broadly, if
the proceedings would be, or have become, an abuse of the process of
the court or unjustifiably oppressive. |
|
|
| I am content to assume, but without deciding, that the
allegations which the applicants seek to make against B's former
solicitor are true although this is, of course far from being established
as the probable result, it is strikingly obvious that there is a
formidable challenge to the accuracy, as well as the significance of those
allegations if proved, which make it wholly inappropriate to resolve those
issues in proceedings which must be as summary as the circumstances will
allow. The fact that impropriety and fraud are inextricably bound up with
those allegations make the case against making an order to show cause one
which would be both wrong in principle and lead the court to a wrong
exercise of discretion, even at the first stage; see PD 53.5 and 53.6, above.
|
| 26.
| At one stage, it had occurred to me that it would not be
expedient to deliver this judgment before their Lordships' House had
pronounced judgment in Mardell
(above) because on one reading of paragraph 65, Peter Gibson LJ might be
seen to have departed from the reasons for decision in Ridehalgh Manzanilla and Hartley (above). But on a full reading of his
decision, I respectfully do not think that it does. He was able to reach
his decision in that litigation in the way and for the reasons he
expressed because of the exceptional features which enabled both him and
Schieman LJ summarily to reach conclusions about the barristers conduct
without having to perform a complex investigation of facts which had not
been determined.
|
| 27.
| For the reasons given, I am satisfied that it would be
quite wrong if the court were to allow this application to proceed any
further whether to the first or second stage envisaged in PD 53.6. In reaching this conclusion, I am not
insensible to the apparent paradox (conundrum as it was expressed in
submission) that in a complex case in which there are complex areas of
disputed fact and possible fraud which would call for decision, the legal
representative may appear to be in a more comfortable position than is the
case in a simpler, and almost certainly less expensive, situation where,
as here the costs of deciding the issue will be reflected in some hundreds
of thousands of pounds if a fair and just result is to be had, if it can,
for both parties. In case that should be thought to be an anomalous
result, I would say that it is in the 'nature of the beast' as has been
recognised in the earlier cases.
|
| 28.
| Let it not be thought that this result signifies approval
or disapproval of anything which the solicitor has done or omitted to do
in the conduct of the original litigation. There are matters of grave
concern, but which may be capable of yielding to innocent explanations,
which would be worthy of preliminary investigation by the appropriate
professional body. These matters relate to the circumstances in which the
'without prejudice' offer was handled, as well as those in which the claim
for substantial professional losses came to be included in the claim,
their particularisation and disclosure in relation thereto. But these are
matters which it may be for others to decide.
|
