Wagstaff v Colls

A consent order staying a compromised action does not terminate the proceedings. They remain technically in being, and a wasted costs application against legal representatives is separate satellite litigation that does not require the stay to be lifted. If lifting were necessary, the ordinary first-stage wasted-costs threshold applies; no exceptional case is required. The procedure must remain fair, simple and summary. Complexity, factual disputes or possible dishonesty do not automatically defeat it. The court must assess the prospects of the complaint and balance compensation for unnecessary costs against fairness and proportionality for the legal representatives.

Partnership proceedings between Mr Wagstaff, Mrs Colls and Mr Brewer were compromised by a consent order staying the claim on agreed terms. After receiving further deeds, Mr Wagstaff sought a wasted costs order against Mrs Colls’s solicitors, alleging that they had withheld documents and caused unnecessary costs.

The Nottingham County Court held that the proceedings were no longer extant and that the stay had to be lifted before the application could be heard. It then refused to lift the stay and dismissed the application because of its complexity and evidential difficulties. The appeal concerned the continuing existence of the proceedings, the need to lift the stay, the applicable test, the court’s discretion and the appropriate directions.

Appeals allowed. The orders of 27 June and 20 July 2001 were set aside, and the matter was remitted to the County Court for rehearing. The respondents’ cross-appeal concerning further evidence was also allowed.

1. Continuing proceedings. A stay imposed under a Tomlin order is not equivalent to dismissal or discontinuance. The action remains technically in being, although it cannot resume its active life without an order. For the purposes of section 51(6) of the Supreme Court Act 1981, proceedings means proceedings in connection with or in relation to the relevant action. The judge therefore had jurisdiction to entertain the wasted costs application.
2. No need to lift the stay. The compromise settled the parties’ rights and the wasted costs application concerned the conduct of legal representatives, not the defendants’ rights. It was a free-standing process. The stay did not have to be lifted before the application could proceed.
3. Alternative threshold. If lifting the stay had been necessary, the relevant test would have been the first-stage test in the wasted costs practice direction: material which, if unanswered, would be likely to lead to an order, and justification for the proceedings despite their likely cost. No exceptional or especially strong case was required. The judge applied too high a threshold.
4. Summary procedure. The procedure must be fair, simple and summary as fairness permits. The court must weigh the prospects of the complaint and the public interest in compensating unnecessary costs against fairness and the additional costs faced by the legal representatives. Complexity and allegations of dishonesty may require robust case management, written evidence or refusal of the summary procedure, but they do not automatically justify refusal.
5. Rehearing. The appellate court should not determine disputed merits which had not been tried. The solicitors fell within the statutory concept of legal representatives because they had conduct of the litigation, although the trial judge had to determine when any relevant duty arose. The rehearing should clarify whether fraud was alleged, consider the relevance of the undisclosed deeds and manage the case proportionately. Mediation was strongly recommended.

• Court of Appeal (Civil Division): allowed the appeals, allowed the respondents’ cross-appeal, set aside the County Court orders and remitted the matter for rehearing.
• Nottingham County Court: declared that no proceedings were extant for a wasted costs application unless the stay was lifted; refused to lift the stay and dismissed the application.