Marsh v Sofaer & Anor

A wasted costs order requires more than showing that the underlying claim was weak or ultimately discontinued. The question is whether no reasonably competent legal representative, knowing the relevant facts, could regard the proceedings as having realistic prospects of success. The assessment must respect the solicitor’s duties to the client and the limits imposed by legal professional privilege. Where the client insists on relying on evidence, continuing to act is not necessarily unreasonable or negligent merely because the evidence may not be believed. A case involving disputed mental capacity should not be treated as hopeless where substantial expert evidence supports incapacity, despite contrary evidence.

The claimant discontinued negligence proceedings against her former solicitors after the defendants applied to strike out or obtain summary judgment. The defendants then sought a wasted costs order against the claimant’s solicitors, alleging that the proceedings and particular issues had been pursued improperly, unreasonably or negligently.

The principal disputes concerned the claimant’s alleged mental incapacity, the limitation defence, the former solicitors’ knowledge of that incapacity, alleged negligent advice, and a proposed argument concerning disclosure of concerns about her mental health to solicitors acting in criminal proceedings. The court had to determine whether any of the defendants’ five grounds justified making the solicitors pay the defendants’ costs.

The application for a wasted costs order was dismissed. None of the five grounds advanced by the defendants was made out.

1. Under section 51 of the Supreme Court Act 1981, the relevant question where a legal representative is said to have pursued a hopeless case is whether no reasonably competent legal representative, knowing the relevant facts, would have continued with the proceedings. Unreasonableness and negligence overlap, but the assessment concerns professional judgment and is closely akin to abuse of process: [2003] EWCA Civ 1134.

2. The court must give proper weight to the solicitor’s duty to the client and to the inability, arising from legal professional privilege, to disclose the solicitor’s full instructions and advice. The legal representative must receive the benefit of the doubt where privileged material might justify the conduct or affect the discretion to make the order: [1994] Ch 205; [2003] 1 AC 120.

3. The claimant had a realistic prospect of establishing incapacity for limitation purposes. The issue was likely to depend materially on expert psychiatric evidence. Reports supporting incapacity provided a sufficient evidential basis, despite contrary evidence that the claimant had instructed several lawyers and had at one stage been considered capable of managing her affairs.

4. The issue-specific approach to capacity, namely capacity to understand the particular claim, advice and decisions in question, was accepted: [2003] 1 WLR 1511; [2005] Fam 326. Applying that approach, the claim that the former solicitors knew or ought to have known of the claimant’s incapacity was not hopeless because expert evidence supported it.

5. The privilege issue concerning communication of mental-health concerns to solicitors acting in criminal proceedings was not obviously hopeless, particularly as it was not covered by authority and had been advanced by counsel. The remaining criticisms of the pleaded loss and negligence allegations did not justify a wasted costs order.

First-instance decision. The judgment records an earlier strike-out decision by Sir Andrew Morritt V-C, [2003] EWHC 3334 (Ch), concerning part of the underlying claim. That decision was not under appeal in the present application.