Persaud & Anor v Persaud & Ors

A wasted costs order against a legal representative requires a breach of duty to the court. Negligence alone, however serious, does not suffice. The conduct must involve something akin to an abuse of process.

Presenting an apparently hopeless case on instructions is distinct from knowingly assisting an abuse of the court’s process. A wasted costs order is a remedy of last resort, particularly at the initial show-cause stage. Any material doubt should be resolved in favour of the representative.

The fact that the represented party receives legal aid may be relevant if it improperly influences the conduct of the litigation. It does not independently justify personal liability for the opposing party’s irrecoverable costs.

Two claimants unsuccessfully sued their father and his company upon alleged promises that they would receive houses, shares and directorships in return for working without salaries. His Honour Judge Simpson rejected their account, dismissed their claims and awarded indemnity costs against them.

The successful defendants sought a wasted costs order against the claimants’ barrister. The judge dismissed the application at the initial stage without requiring the barrister to show cause. He relied on the defendants’ abandonment of an earlier striking-out application, the limited waiver of privilege and the absence of the barrister’s instructions and conference notes.

The defendants renewed their application for permission to appeal. The central questions were whether the barrister’s assessment and pursuit of the claims breached his duty to the court and whether the appellate court should interfere with the judge’s discretion.

1. Permission to appeal was granted, but the appeal was unanimously dismissed. Lord Justice Peter Gibson delivered the judgment, with which Lord Justice Mummery and Mr Justice Blackburne agreed.

2. A legal representative may be ordered to pay wasted costs only where there has been a breach of duty to the court. The meanings of improper, unreasonable and negligent conduct under section 51(7) of the Supreme Court Act 1981 must be understood through the guidance in Ridehalgh v Horsefield [1994] Ch 205 and Medcalf v Mardell [2002] 3 WLR 172.

3. A failure to comply adequately with the Bar Council’s Legal Aid Guidelines fell well below the serious impropriety required. Improper conduct embraces a significant breach of a substantial professional duty and conduct capable of attracting a serious professional penalty. The alleged shortcomings did not reach that threshold.

4. Negligence alone was insufficient. There must be something more, akin to an abuse of process. Presenting a case which appears bound to fail is different from knowingly pursuing dishonest proceedings, using litigation for an improper purpose, evading safeguards of justice or otherwise lending assistance to an abuse. A litigant remains entitled to have an arguable case heard.

5. The barrister’s factual assessment had proved wrong, but the claimants’ evidence was not bound to fail. There was no suggestion that he encouraged or procured false evidence. Nor were the principal legal claims so plainly untenable that pursuing them amounted to abuse. A promise to provide a house of a specified value was arguably sufficiently certain, equitable relief was preserved by section 2(5) of the Law of Property (Miscellaneous Provisions) Act 1989, and the father might arguably have assumed personal responsibility.

6. Legal aid did not materially alter the result. Abuse could arise if a representative allowed the client’s immunity from ordinary costs exposure to influence the conduct of proceedings improperly. No such conduct was established here.

7. A wasted costs order is a remedy of last resort. The abandoned striking-out application, the defendants’ earlier acceptance that the claim was arguable and the incomplete privileged material were all relevant. Doubt had to be resolved in the barrister’s favour. This was not the exceptional case in which an appellate court should interfere with a trial judge’s refusal to initiate the wasted costs procedure.

• Court of Appeal (Civil Division): Permission to appeal was granted, but the appeal was unanimously dismissed: [2003] EWCA Civ 394.
• County court: His Honour Judge Simpson dismissed the wasted costs application at the initial stage without requiring the barrister to show cause.
• Underlying proceedings: His Honour Judge Simpson dismissed the sons’ substantive action after trial and ordered indemnity costs against them.