Ridehalgh v Horsefield & Anor

A wasted costs order requires improper, unreasonable or negligent conduct by a legal representative, a causal link between that conduct and unnecessary costs, and a determination that compensation is just. Negligence means a failure to meet ordinary professional competence. An unsuccessful argument or an error of judgment does not alone establish liability. Representing a hopeless case is permissible; assisting an abuse of process is not.

Advocates' immunity from negligence actions does not exclude wasted costs liability. Courts must allow fully for the pressures of advocacy and restrictions imposed by the client's privilege. The conduct must, with those allowances, be plainly unjustifiable. Applications must be fair, simple and summary. An apparently strong prima facie case is required before a representative is called upon to answer, and the applicant retains the burden of establishing entitlement to an order.

The court considered six matters concerning personal liability for wasted costs. The Law Society and Bar Council intervened, and counsel instructed by the Attorney-General represented the public interest.

In Ridehalgh v Horsefield and Isherwood, solicitors for a landlord and his tenants had agreed an erroneous statutory basis for possession proceedings. After reversing the possession order, the Court of Appeal invited them to show cause against reimbursing the Legal Aid Fund. In Allen v Unigate Dairies Limited, solicitors challenged the remaining contested part of an order prohibiting legal aid taxation following the abandonment of a hearing-loss claim. In Roberts v Coverite (Asphalters) Limited, a solicitor challenged liability arising from failure to notify the defendant of his client's legal aid.

In Philex PLC v S Golban, solicitors appealed an order concerning alleged misuse of a threatened winding-up petition to secure settlement of a disputed debt. In Watson v Watson, a wife's solicitor appealed an order based on inadequate correspondence about trusts implementing a matrimonial settlement. In Antonelli and Others v Wade Gery Farr, counsel challenged an order concerning her acceptance and conduct of an inadequately prepared negligence action.

The common question was when a court should order one party's legal representative to compensate another party for wasted costs.

The outstanding appeals were allowed, Allen only to the extent remaining contested, and no wasted costs order was justified in Ridehalgh. Sir Thomas Bingham MR delivered the judgment of the court. Rose and Waite LJJ expressly concurred in every section.

1. Section 51(6) and (7) of the Supreme Court Act 1981 required three inquiries: whether the representative acted improperly, unreasonably or negligently; whether that conduct caused unnecessary costs; and whether compensation was just. The jurisdiction was compensatory and distinct from professional discipline. An order could cover only costs causally attributable to the misconduct.
2. Impropriety included substantial breaches of professional duties and conduct condemned by professional consensus. Unreasonableness depended on whether the conduct admitted a reasonable explanation. Negligence meant failure to meet ordinary professional competence, without requiring an actionable breach of duty to the client. The standard remained that of a reasonably well-informed and competent practitioner.
3. Acting on instructions in a hopeless case did not itself justify an order. Assisting dishonest proceedings or using procedure for an ulterior purpose could do so. Advocates' immunity afforded no exemption from wasted costs liability. Courts nevertheless had to allow fully for decisions made under pressure and for lawyers' inability to disclose privileged instructions. Doubts arising from those restrictions favoured the respondent lawyer.
4. A solicitor retained responsibility when consulting counsel, but specialist advice could reasonably be accepted. Proceedings had to be fair, simple and summary. The respondent must receive clear particulars of the complaint and claim. The applicant retained the burden of proof. Discretion operated both before requiring an answer and after misconduct and causation were established.
5. In Ridehalgh, misunderstanding difficult housing legislation was an error which a reasonably competent general practitioner could have made. The judge and experienced appellate counsel had also accepted the mistaken analysis. The conceded errors concerning the time limit did not cause the proceedings to take their mistaken course. Nor could all trial and appeal costs properly be treated as wasted.
6. In Allen, the solicitors reasonably relied on client instructions, expert reports and counsel. Nothing before trial required further investigation of the workplace discrepancy. Legal aid taxation was mandatory under the Civil Legal Aid (General) Regulations 1989; the appropriate remedy, where justified, was disallowance or reduction of costs on taxation. The prohibition on taxation was set aside.
7. In Roberts, reliance on the county court's established service practice did not establish culpable conduct. The subsequent settlement history also prevented proof that earlier notification of legal aid would probably have avoided the costs. The retrospective jurisdiction question was left undecided.
8. In Philex, the settlement letter unconditionally abandoned the winding-up procedure. There was no evidential basis for finding an abusive threat. Counsel had approved the letter, and the solicitor was not obliged abruptly to cease acting. In Watson, reliance on cogent specialist advice reasonably explained the solicitor's stance. Fuller correspondence was not shown to have avoided a contested hearing. Both orders were discharged.
9. In Antonelli, counsel's professional duties required her to continue despite inadequate instructions. The judge insufficiently allowed for her difficulties. The Monday hearing was justified, the weak development claim could be pursued on instructions, and exceptional appellate intervention concerning alleged slowness was warranted. The personal order was quashed, and the defendant solicitors were ordered to pay counsel's costs of the application.

• Court of Appeal (Civil Division): In this judgment, [1994] EWCA Civ 40 , the court rejected the proposed order in Ridehalgh, allowed Allen's remaining contested appeal, and set aside or discharged the orders in Roberts, Philex, Watson and Antonelli.
• Court of Appeal (Civil Division): In Ridehalgh, Purchas and Mann LJJ allowed the tenants' possession appeal in March 1992 and invited the solicitors who acted below to show cause against personal costs liability. A later appeal against a fresh possession order was dismissed in July 1993.
• High Court: Knox J in the Companies Court made the Philex wasted costs order on 30 June 1993. Booth J in the Family Division made the Watson order following the hearing on 7 April 1993. Turner J in the Queen's Bench Division made the Antonelli order in a judgment delivered on 27 November 1992.
• County courts: Judge Lachs at Liverpool made the Allen order on 10 May 1993; its first two parts were compromised before this judgment. Judge Tibber at Edmonton made the Roberts order on 14 April 1993. Judge Holt at Blackpool made the original Ridehalgh possession order on 17 October 1991. Judge Proctor subsequently made a fresh possession order in October 1992.