Mengiste & Anor v Endowment Fund for the Rehabilitation of Tigray & Ors

A wasted costs application is suitable for summary determination only where the applicant shows a strong prima facie case that the legal representative acted improperly, unreasonably or negligently, that the conduct caused avoidable costs, and that making the order would be fair, just and reasonable. Lawyers are not liable merely because they assist in presenting a weak case. More is required, such as continuing to participate in litigation despite plainly inadequate evidence or a hopeless case. The stage-one hearing determines whether the matter should proceed to a full stage-two hearing; it does not finally determine liability or the amount of costs.

The claimants’ substantive claim had been stayed after judgment on the merits. The defendants then applied for wasted costs against the claimants’ solicitors, Rylatt Chubb, alleging that they had continued to rely on exceptionally poor expert evidence and should have withdrawn from the litigation.

The solicitors argued that the application could not proceed because legal professional privilege prevented them from explaining how the expert reports had been prepared. The court rejected that as a fundamental misconception of the application’s basis. The issue at stage one was whether there was a strong prima facie case for requiring a response and a further hearing.

1. Application and threshold. The court held that the defendants had established a strong prima facie case that the solicitors’ conduct might justify an order requiring them to pay some or all of the defendants’ costs. The application therefore proceeded to stage two. No final finding was made at this stage.
2. Applicable test. Under Senior Courts Act 1981, section 51(6)–(7), and Civil Procedure Rules 1998, rule 48.7, the applicant must show conduct that was negligent, unreasonable or improper; costs resulting from that conduct which would otherwise have been avoided; and that it is fair, just and reasonable to exercise the discretion.
3. The summary procedure is a blunt instrument. It must be conducted without formal pleading, disclosure or cross-examination, proportionately and fairly. The burden remains on the applicant throughout. Allowing a legal representative to show cause does not reverse that burden.
4. The complaint was not that the solicitors had caused the expert reports to be written in a particular way, nor that they had to disclose privileged communications. It was that they continued to participate in the litigation while relying on reports and an expert whose inadequacy was, on the defendants’ case, apparent from the outset and became clearer during the proceedings.
5. The authorities, including Ridehalgh v Horsefield, Persaud v Persaud and Metcalf v Mardell, supported the applicable principles. The guidance concerning warnings to witnesses in Symphony Group v Hodgson and Philips v Symes concerned the opposing party’s position and did not determine what instructing solicitors should do.
6. Any privilege issue arising at stage two would have to be resolved in favour of the solicitors, but none was presently apparent on the case as formulated.

The judgment records that the substantive claim had previously been stayed after a merits judgment. It does not give that judgment’s citation. This judgment concerned the first stage of the defendants’ wasted costs application against the claimants’ solicitors.