Re Application for Wasted Costs

A wasted costs order requires proof that the legal representative acted improperly, unreasonably or negligently, that the conduct caused unnecessary costs, and that compensation is just in all the circumstances. The jurisdiction must be exercised fairly and summarily, with the allegations and costs clearly identified. A solicitor is not liable merely because a client advances a hopeless claim. Special care is required where the client receives Legal Aid, and solicitors may generally rely on specialised counsel’s advice unless they do so blindly. The court refused an order where negligence was not established and causation was not proved.

The defendant sought wasted costs against the claimant’s former solicitors after personal injury proceedings were dismissed following preliminary issues concerning psychiatric injury and disability. The application alleged negligent handling of medical evidence, causing the defendant to incur the costs of a trial that should allegedly have been avoided by withdrawal of Legal Aid or discontinuance.

The court considered the statutory jurisdiction, the Civil Procedure Rules and Practice Direction provisions, the fairness of the procedure, and whether the solicitors’ conduct caused recoverable loss.

1. Jurisdiction and test. Section 51 of the Supreme Court Act 1981, CPR 48 and CPR 48 PD53 govern wasted costs applications. The representative must have acted improperly, unreasonably or negligently; the conduct must have caused unnecessary costs; and it must be just to order compensation.
2. Procedure. The Practice Direction’s two-stage process is guidance rather than a rule of law. The court must ensure fairness and simplicity. The representative must be told clearly what conduct is alleged and what costs are claimed. The proceedings should remain summary and proportionate.
3. Professional conduct. Applying Ridehalgh v Horsefield [1994] Ch 205, the court held that acting for a client with a weak or apparently hopeless case does not itself constitute negligence or abuse of process. The right of a litigant to have the case decided by the court, rather than by the lawyer, remained important.
4. Legal Aid and counsel. Representatives acting for legally aided clients require particular protection from unusual personal risks. In a difficult specialist case, solicitors were entitled to rely heavily, though not blindly, on specialised counsel’s advice.
5. Application of the principles. The evidence did not establish that IBB acted negligently. Some delays or failings were possible, but they were not shown to fall below the standard of a reasonably competent solicitor. In any event, it was not proved that earlier disclosure or different preparation would have withdrawn Legal Aid, prevented the trial, or reduced the defendant’s costs. The defendant’s application was therefore rejected.