Medcalf v Weatherill & Anor

The House allowed the appeal by two barristers against a wasted costs order made by the Court of Appeal and quashed that order. The key legal principles were:

• Jurisdiction under section 51 of the Supreme Court Act 1981 (as substituted by section 4 of the Courts and Legal Services Act 1990) permits the court to make wasted costs orders against advocates for improper, unreasonable or negligent acts or omissions; the provision is to be read so as to cover advocates acting for other parties.
• Professional duty under paragraph 606 of the Code of Conduct: when drafting allegations of fraud counsel must have instructions and reasonably credible material which, at the preparatory stage, need not be in admissible form but must be such as to justify a prima facie case; at hearing stage allegations unsupported by admissible evidence should not be advanced.
• Legal professional privilege can prevent a respondent advocate from disclosing the material on which he relied; where privilege prevents the advocate from answering, the court must proceed with great caution and give the advocate the benefit of any doubt. A wasted costs order should not be made unless the court is satisfied (a) that nothing the practitioner could say, if unconstrained, could resist the order and (b) that it is fair in all the circumstances to make the order.

Background and parties: this was an appeal by two barristers, Mr Bernard Weatherill QC and Ms Josephine Hayes, against a wasted costs order made by the Court of Appeal in proceedings brought by Mr Roger Medcalf arising out of the development and exploitation of a snooker-based television quiz. Mr Medcalf had obtained a judgment at first instance (Lloyd J) and the defendants (including Mr Mardell and his company) appealed. The defendants sought to amend their notice of appeal to include allegations of fraud and other improprieties against Mr Medcalf; those allegations were signed by the barristers and advanced in draft pleadings and skeletons.

Nature of the application: after the Court of Appeal rejected the proposed amendments and dismissed the substantive appeal, Mr Medcalf applied for a wasted costs order against the barristers to recover the costs of investigating and rebutting the alleged improprieties.

Procedural history: the matter was heard in the Court of Appeal (reported at [2001] Lloyd's Rep PN 146) where a majority found that some of the allegations lacked reasonably credible material and made a wasted costs order against the barristers. The barristers appealed to the House of Lords.

Issues framed: (i) whether the court had jurisdiction under s.51 to make a wasted costs order against advocates acting for an opposing party; (ii) the correct construction and application of paragraph 606 of the Bar Code of Conduct concerning allegations of fraud; and (iii) how legal professional privilege should be treated in wasted costs proceedings when the advocate is prevented from disclosing the material relied upon.

Court's reasoning and conclusion: the House held that s.51 permits wasted costs orders against advocates acting for any party and that paragraph 606 requires counsel to have reasonably credible material which at the preparatory stage need not be in admissible form but must disclose a prima facie case. However, where privilege prevents an advocate from explaining the instructions and material he had, the court must be slow to conclude there is no relevant material and must give the advocate the benefit of any doubt. Only in the clearest cases, and after satisfying itself that nothing the advocate could say (if unconstrained) would affect the outcome and that it is fair to make the order, should the court make a wasted costs order against an advocate who cannot answer because of privilege. Applying these principles the House concluded that, on the material before it, the barristers were entitled to the benefit of doubt and the wasted costs order should be quashed.

Appeal allowed. The House held that (1) section 51 of the Supreme Court Act 1981 (as substituted by section 4 of the Courts and Legal Services Act 1990) does permit wasted costs orders against advocates for opposing parties; (2) paragraph 606 of the Code of Conduct requires counsel to have reasonably credible material justifying allegations of fraud, and at the preparatory stage such material need not be admissible but must support a prima facie case; and (3) where legal professional privilege prevents an advocate from answering, the court must give the advocate the benefit of any doubt and should not make a wasted costs order unless it is satisfied there is nothing the advocate could say, if unconstrained, to resist the order and that it is fair to make the order. On those grounds the wasted costs order was quashed.

Trial and judgment before Lloyd J (May 1998); appeal to the Court of Appeal (hearing 14-15 February 2000; reported at [2001] Lloyd's Rep PN 146), which dismissed the appeal and (by majority) made a wasted costs order against the appellants; appeal to the House of Lords [2002] UKHL 27, which allowed the appeal and quashed the wasted costs order.