Medcalf v Weatherill and Another

A court may order an opposing party’s barrister to pay wasted costs. The jurisdiction covers preparatory work directly connected with advocacy, as well as conduct in court.

Counsel may plead fraud at the preparatory stage without possessing evidence already in admissible form. Counsel must nevertheless have reasonably credible material which objectively establishes a prima facie case. At the hearing, the allegation must be supported by admissible evidence or be withdrawn.

Where legal professional privilege prevents a practitioner from giving a complete answer to a wasted costs application, the court must proceed with extreme care. An order is permissible only if nothing the practitioner could say would resist it and the order is fair in all the circumstances. Any material doubt must be resolved in the practitioner’s favour.

Two barristers appealed against a wasted costs order made after they advanced allegations of fraud and other impropriety while representing defendants in civil appellate proceedings. The allegations appeared in a proposed amended notice of appeal and supporting skeleton argument. The Court of Appeal rejected the proposed grounds and later ordered the barristers to meet costs incurred in investigating and answering them.

By a majority of two to one, the Court of Appeal held that the barristers had acted improperly under paragraph 606 of the Bar’s Code of Conduct. Its decision is reported as Medcalf v Mardell [2001] Lloyd's Rep PN 146. The barristers could not disclose their instructions and supporting material because their former clients had not waived legal professional privilege.

The appeal concerned the scope of section 51 of the Supreme Court Act 1981, the material required before counsel may allege fraud, and whether a wasted costs order could fairly be made when privilege prevented counsel from presenting a complete defence.

1. Appeal allowed unanimously. Lord Bingham delivered the leading speech. Lord Steyn gave concurring reasons, Lord Hoffmann agreed with both, and Lord Rodger agreed with Lords Bingham and Steyn. The wasted costs order was quashed.

2. Per Lord Bingham, section 51(6), (7) and (13) of the Supreme Court Act 1981 permits a wasted costs order in favour of one party against the legal representative of an opposing party. The provision places barristers and solicitors performing advocacy functions in the same position. It also covers preparatory conduct immediately relevant to the exercise of a right of audience, including drafting a notice of appeal and skeleton argument. Liability is not confined to oral advocacy.

3. Per Lord Bingham, counsel instructed to allege fraud must exercise independent and objective professional judgment. At the preparatory stage, paragraph 606 of the Bar’s Code of Conduct does not require evidence already in admissible form. It requires reasonably credible material which would lead responsible counsel to conclude that a prima facie case may properly be alleged. At the hearing, counsel may not make or persist in an allegation unsupported by admissible evidence.

4. Per Lord Bingham, strengthening the guidance in Ridehalgh v Horsefield [1994] Ch 205, a court must proceed with extreme care where privilege prevents the practitioner from explaining the instructions and material received. It must not make an order unless satisfied both that nothing the practitioner could say, if unconstrained, could resist the order and that an order would be fair in all the circumstances. Only exceptionally will those conditions be met.

5. Lord Steyn reasoned that the applicant retained the burden of proving that the material on which the barristers relied could not objectively justify their conduct. The Court of Appeal could not fairly determine that issue by inference while the relevant material remained unknown. Lawyers were entitled to procedural justice.

6. Lord Bingham remained in doubt whether the barristers lacked material capable of justifying the allegations when the documents were prepared. That doubt had to be resolved in their favour. It was also unfair to condemn them without knowing the circumstances relevant to the discretionary decision.

7. Lord Hobhouse considered that the transcript allegation breached paragraph 606 because the fresh evidence relied upon had to be disclosed with the appellate application and disclosed no prima facie fraud. He nevertheless concurred in the final order because he could not be confident that this allegation alone would have justified a wasted costs order after the relevant discretion was exercised.

8. The Court of Appeal’s wasted costs order was quashed. The barristers received their costs of the wasted costs proceedings, subject to the stated restriction concerning periods when the respondent was legally aided.

1. House of Lords: Allowed the barristers’ appeal unanimously and quashed the wasted costs order.

2. Court of Appeal: By a majority of two to one, made a wasted costs order against the barristers: Medcalf v Mardell [2001] Lloyd's Rep PN 146. In the underlying appeal, the court had refused the relevant amendments alleging impropriety and dismissed the defendants’ substantive appeal.

3. High Court: Lloyd J found for the claimant on partnership and breach of confidence, ordered an account of profits and required an interim payment. No neutral or report citation is stated.