Mireskandari v The Law Society

A claimant who discontinues is ordinarily liable for the defendant’s costs. The court may order indemnity costs where the conduct or circumstances take the case out of the norm. A claim is particularly likely to justify indemnity costs where it is hopeless and pursued unreasonably through delay, shifting grounds or diversionary applications.

A solicitor acting for a regulator is not disqualified merely because independent counsel has screened potentially privileged material during an intervention, especially where the solicitor has never acted for the claimant and effective precautions were taken. An interim payment on account should normally be made where costs are ordered, even if the estimate is disputed.

The claimant discontinued a Part 8 claim challenging interventions into his solicitor’s practice by the Solicitors Regulation Authority, including the suspension of his practising certificate. The claim had been subject to extensive interlocutory proceedings, including a recusal application, adjournment applications and an application concerning access to allegedly privileged documents.

The court determined consequential matters arising from the discontinuance: whether the defendant’s solicitors were conflicted, whether the defendant’s conduct justified a reduction in costs, whether indemnity costs should be ordered, the costs of the recusal application, an interim payment, and public inspection of a witness statement.

1. The claimant’s claim had been discontinued. Under CPR 38.6(1), the ordinary consequence was liability for the defendant’s costs. The court had power to order indemnity costs.

2. The defendant’s solicitors were not disqualified from recovering costs. They had never acted for the claimant. The issue was whether confidential material had actually come into their possession or was at significant risk of doing so. Independent counsel and other precautions had prevented that risk. The reasoning in Bolkiah v KPMG [1999] 2 AC 222 did not impose an evidential burden on the solicitors in these circumstances.

3. The defendant’s conduct did not justify a percentage reduction. An isolated error concerning the amount of a client-account shortfall, together with minor complaints about files and submissions, did not amount to unreasonable conduct in the litigation.

4. Indemnity costs were justified under CPR 44.3 and CPR 44.4. The claim was hopeless from inception. The pleaded grounds did not properly challenge the statutory conditions for intervention, and the proposed reliance on a sabbatical and transfer of the practice could not realistically prevent intervention. The claimant’s repeated adjournment attempts, failure to comply with orders, shifting allegations and diversionary applications were unreasonable to a high degree. The approach in Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879 required conduct or circumstances taking the case out of the norm; that requirement was satisfied.

5. The recusal application costs were also payable by the claimant on the indemnity basis. The original grounds were hopeless, the defendant had acted neutrally and properly, and the application arose within proceedings already found to lack merit.

6. An interim payment of £300,000 was ordered. A disputed or high costs estimate was not a reason to refuse an interim payment. The court should make an order reflecting the minimum amount likely to be recovered on assessment, subject to the requirements of justice.

7. The claimant’s witness statement of 29 June was not to be open to public inspection under CPR 32.13(2). It substantially exceeded the permission given, contained irrelevant and scandalous material, and the interests of justice required exclusion of the whole statement rather than a redaction exercise.

The judgment records that the Court of Appeal dismissed the claimant’s appeal against refusal to extend time for compliance with an unless order. The present court then determined consequential matters following discontinuance of the claim.