Bank of Scotland v Qutb

A person who conducts proceedings on behalf of another represents that he has authority to do so. If that authority is absent or has ceased, he may be personally liable in damages for breach of the implied warranty of authority. The opposing party’s recoverable loss may include costs incurred after the authority ended. That liability is not confined to solicitors or to the court’s summary jurisdiction over officers of the court. Separately, the court may order a non-party personally to pay costs under section 51(3) of the Senior Courts Act 1981 and rule 48.2 of the Civil Procedure Rules 1998 where his conduct makes such an order just. Gross misconduct, personal benefit, deception and false representations concerning authority justified an indemnity costs order.

The Bank of Scotland applied for an order that Azam Qutb pay personally, on the indemnity basis, costs of proceedings conducted in his mother’s name, together with a payment on account. The application followed an earlier Court of Appeal judgment, [2012] EWCA Civ 264, which set aside permission to appeal and struck out the appeal after it emerged that Mrs Mona Qutb had died before trial and that Mr Qutb had continued to represent that he was acting as her litigation friend.

The underlying proceedings had been before Newey J in the High Court. Mr Qutb was not otherwise a party in his personal capacity. The central questions were whether his conduct gave rise to personal liability for breach of an implied warranty of authority and whether the court should exercise its statutory costs discretion against him personally.

1. The Bank’s application was granted. Mr Qutb was ordered to pay the claimed costs on the indemnity basis, both personally and in his capacity as administrator of his mother’s estate, with assessment if not agreed.
2. A person who, by words or conduct, represents that he has actual authority to act for another impliedly warrants that the representation is true. If the representation is false, he is liable in damages for loss caused to the opposing party by the breach, even if he acted in good faith under a mistaken belief that he had authority.
3. The principle is not confined to solicitors or to the summary jurisdiction exercised over solicitors as officers of the court. It applies to any person who conducts proceedings on behalf of another while representing that he has authority. The death of the principal may terminate the authority without the representative’s knowledge, but the representative may remain liable for the opposing party’s wasted costs after that point.
4. The court also had power under section 51(3) of the Senior Courts Act 1981 and rule 48.2 of the Civil Procedure Rules 1998 to make a personal costs order against a non-party. It was just to do so because Mr Qutb had managed the litigation and obtained permission to appeal for his own benefit, had deceived the Bank as to his authority, and had made false representations that his mother remained alive.
5. The Bank was entitled to recover the relevant shortfall in costs not recoverable from the security over the property. The Bank’s representatives were directed to draft the order for approval by the Civil Appeals Office.

• Court of Appeal (Civil Division): In the earlier related judgment [2012] EWCA Civ 264, the court set aside permission to appeal and struck out Mr Qutb’s appeal after finding that he had acted as litigation friend for his mother after her death.
• Court of Appeal (Civil Division): On the present costs application, the court ordered Mr Qutb to pay the Bank’s costs on the indemnity basis personally and as administrator of the estate.