Rybak & Ors v Langbar International Ltd

A wasted costs order requires proof that a legal representative acted improperly, unreasonably or negligently, that the conduct caused identifiable wasted costs, and that the court should exercise its discretion to order payment. Negligence is assessed non-technically, by reference to the competence reasonably expected of ordinary members of the profession. The burden remains substantial. An applicant for ex parte relief owes a heavy duty of full and frank disclosure, and the solicitor has a corresponding duty to the court. That duty does not impose a general obligation to investigate or verify every fact within the client’s direct knowledge where no sufficient basis for further inquiry exists. A failure to perform an alleged duty cannot be negligent if the duty is not owed.

Langbar International Ltd applied for a wasted costs order against Withers LLP, solicitors for the Rybak parties in related litigation. Langbar alleged that Withers had negligently failed to make full and frank disclosure on an ex parte application concerning the sale of an apartment, and had permitted misleading evidence to be used in later applications.

The underlying proceedings had not been determined after a trial on their merits. The central issues were whether Withers had breached a duty owed to the court, whether the alleged conduct fell within the wasted costs jurisdiction, and whether any breach had caused wasted costs.

1. Application dismissed. Langbar failed to establish conduct falling within the wasted costs jurisdiction.
2. The court applied the three-stage approach in Ridehalgh v Horsefield [1994] Ch 205: first, whether the representative acted improperly, unreasonably or negligently; second, whether that conduct caused identifiable wasted costs; and third, whether the court should exercise its discretion to make an order.
3. Negligence in this context is understood non-technically as failure to act with the competence reasonably expected of ordinary members of the profession. It does not require an actionable breach of duty to the client, but the party alleging negligence must still prove conduct falling below that standard.
4. An ex parte applicant must give full and frank disclosure, including investigating the cause of action, the facts relied upon and likely defences. The duty is continuing. The solicitor and other legal advisers also owe duties to the court, which may overlap with the applicant’s duty.
5. On the facts, Withers had not breached its disclosure duty. The relevant August email was remote from the matters central to the ex parte application. Withers had not acted for the client in the relevant sale negotiations, the solicitor handling the application did not recall the reference to two earlier offers, no alarm bell required further investigation, and the application was prepared under severe time pressure.
6. The court doubted that solicitors owe a general duty to check their files or independently verify facts within the client’s direct knowledge merely because those facts might conflict with a draft witness statement. If no such duty is owed, failure to perform it cannot constitute negligence.
7. Withers’ conduct concerning the later witness statements was also not culpable, incompetent or negligent. It was therefore unnecessary to decide the disputed causation issues. In any event, the court considered that the proposed claim that different conduct would have prevented the later action or produced an early merits victory presented substantial difficulties.