Crown Resources Ag v Sumitomo Corporation (Singapore)

A wasted costs order against a legal representative requires improper, unreasonable or negligent conduct which causes another party to incur unnecessary costs, together with a conclusion that compensation is just in all the circumstances. Unreasonable conduct requires more than mere negligence. The jurisdiction is exceptional and draconian, so the court must act sparingly and have regard to proportionality. A solicitor who misleads the court about a client’s instructions, causing an order to be revoked and fresh costs to be incurred, may properly be ordered to pay those wasted costs.

The defendants had obtained an interim order for payment on account of arbitration and High Court costs after the claimant failed to respond to repeated requests. The claimant’s solicitors then wrote asserting that their clients wished to make representations and complaining that the order should not have been made on paper. The order was revoked. It later emerged that the claimant had been declared bankrupt in Switzerland and that the solicitors had not contacted the client before writing. The issue was whether a wasted costs order should be made against the solicitors and, if so, in what amount.

1. The court’s power to make a wasted costs order is engaged where the legal representative has acted improperly, unreasonably or negligently, caused a party to incur unnecessary costs, and it is just in all the circumstances to order compensation. The court must also have regard to proportionality. The relevant procedure was found in Part 23 and the Practice Direction referred to as PD 53.3.
2. Unreasonable conduct for this purpose requires more than mere negligence. The jurisdiction is draconian, orders should be made only in a clear case and sparingly, and the court should take account of the professional standing of the representative.
3. Clyde & Co had no express instructions to write asserting that the claimant wished to make representations. Their letter conveyed that they had contacted the client and had been told that such representations were desired, when that had not occurred. The letter misled the court into revoking the original order, and the defendants incurred additional costs as a result.
4. General instructions concerning costs did not amount to instructions to make representations about the interim payment order. The contention that a further application would have been required in any event was rejected. A wasted costs order of £5,000 was just and proportionate, comprising £2,500 for the further interim costs hearing and £2,500 for the wasted costs application.