D & D v S M H

A wasted costs order is compensatory and punitive. It requires proof that the legal representative acted improperly, unreasonably or negligently, that the conduct caused identifiable unnecessary costs, and that an order is just. A causal link between the conduct and wasted costs is essential. Where a litigant waives or compromises an order for costs against the opposing party without preserving a wasted costs claim against that party’s solicitors, the litigant may be unable to show continuing loss. The court must guard against double recovery and may refuse relief even where the underlying costs are identifiable.

The appellants, solicitors acting for the respondent’s former wife, appealed against a wasted costs order made by District Judge Greene. The order concerned costs incurred by the respondent in resisting an adjournment application. Three days after obtaining an order that his wife pay those costs, the respondent settled her ancillary relief claim, agreed to pay her a lump sum, and agreed that all costs orders against her would be set aside.

The appeal concerned whether the wasted costs order against the solicitors survived that settlement and waiver, and whether the respondent could establish continuing loss.

1. Procedural course. Where a judge fails to address a relevant point later relied upon on appeal, the prospective appellant should promptly draw the omission to the judge’s attention and invite an additional judgment. This applies even where the sum in issue is small. In the circumstances, the judge heard the argument afresh rather than remitting the matter.
2. Wasted costs test. Under Part 48.7 of the Civil Procedure Rules 1998, and following Ridehalgh v Horsefield (1994) Ch 205, a wasted costs order requires consideration of: whether the legal representative acted improperly, unreasonably or negligently; whether that conduct caused unnecessary costs; and whether it is just to order compensation. The causal link is essential.
3. The wasted costs jurisdiction enables recovery of costs not otherwise recoverable because of a legal representative’s improper conduct. It does not permit recovery where the same costs have already been recovered, or effectively accounted for, through an arrangement with the opposing party.
4. The respondent had waived his right to enforce against his wife the costs order relating to the adjournment application. He had not ring-fenced any claim against the solicitors in the consent order. Consequently, he could not show that he retained a loss caused by the solicitors’ conduct. The waiver might also result in double recovery if the wasted costs order were enforced.
5. Even if an identifiable sum of wasted costs had been established, the court would have refused to make an order in the exercise of its discretion. The appeal therefore succeeded and the wasted costs order was set aside. Costs were reserved.

• High Court (Family Division): allowed the appeal against the wasted costs order made by District Judge Greene and set that order aside.