Hallam-Peel & Co v London Borough of Southwark

A wasted costs order against a legal representative requires more than hindsight criticism of case preparation. Where unreasonableness is the only alleged ground, the conduct must involve a breach of duty to the court, cause the costs claimed, and make an order just. A solicitor is not necessarily unreasonable for failing to seek a document that was irrelevant to the live issues and gave no obvious reason to suspect an irregularity. The solicitor need not anticipate a new argument later identified by counsel. A court should examine the basis for alleging unreasonable conduct before making a show-cause order. Supporting a client’s amendment to advance a potentially meritorious point is not, without more, unreasonable.

Hallam-Peel & Co acted for Mr Dubois in possession proceedings brought by Southwark. Shortly before an adjourned hearing, counsel obtained sight of the landlord’s request for a possession warrant and raised a new argument that the request was defective. The resulting adjournment led to a wasted costs application against the solicitors.

District Judge Jacey ordered Hallam-Peel to pay the wasted costs under the Supreme Court Act 1981. His Honour Judge Welchman dismissed the appeal on 17 August 2007. The central issue on the second appeal was whether the solicitors’ failure to seek the document earlier was unreasonable conduct involving a breach of duty to the court sufficient to justify the order.

Appeal allowed. Rimer LJ gave the judgment of the court, with Thorpe LJ agreeing.

1. Statutory threshold. The jurisdiction under sections 51(1), 51(2) and 51(7) of the Supreme Court Act 1981 requires: an improper, unreasonable or negligent act or omission by a legal representative; costs incurred as a result; and a conclusion that it is just to order the representative to meet all or part of those costs. Abuse of the court’s process need not be shown. Where unreasonableness alone is alleged, it must involve a breach of duty to the court.
2. Assessment of conduct. The solicitors had no reason to suspect that the request for the warrant was irregular. The document had ceased to be relevant once the timing point had been resolved, and it was not part of the issues in the amended application. Their failure to request it earlier therefore could not properly be characterised as unreasonable conduct sufficient to support a wasted costs order. They had been penalised for failing to anticipate counsel’s later thought process.
3. Errors below. Judge Eastman should have considered why it was arguable that the solicitors ought to have sought production of the request before making a show-cause order. Judge Jacey failed to explain why the omission was unreasonable and was also wrong to criticise the solicitors for participating in an amendment that enabled their client to advance a potentially successful point. Judge Welchman failed to correct those errors.
4. Orders. No wasted costs order should have been sought or made. The appeal was allowed, paragraph 1 of Judge Jacey’s order was set aside, and the dismissal of the appeal by Judge Welchman was also set aside. Further written submissions were invited on any replacement costs orders and the costs of the appeal.

• Lambeth County Court: District Judge Jacey ordered Hallam-Peel & Co to pay the wasted costs of the adjourned hearing and the wasted costs application on 20 January 2006.
• Lambeth County Court on appeal: His Honour Judge Welchman dismissed Hallam-Peel & Co’s appeal on 17 August 2007.
• Court of Appeal (Civil Division): On 22 October 2008, in [2008] EWCA Civ 1120, the court allowed the second appeal and set aside the relevant orders.