Thames Chambers Solicitors v Miah (Rev 1)

A wasted costs order may be made against solicitors who conduct proceedings for a bankrupt without first obtaining the trustee in bankruptcy’s consent where the cause of action is vested in the trustee. The court must apply the two-stage procedure in para 53.6 of the Costs Practice Direction, but an oral application may suffice where the case and costs claimed are sufficiently clear. The legal representative must have a reasonable opportunity to respond. Causation is established where the representative’s improper, unreasonable or negligent conduct caused unnecessary costs; speculation that the claimant might have conducted the litigation personally does not defeat that link.

The claimant in the underlying action had been declared bankrupt and the proceedings concerned a cause of action vested in his trustee in bankruptcy. The respondent applied to strike out the claim. The trustee assigned the cause of action to the claimant but gave no consent to continuation of the proceedings. The claim was subsequently struck out.

The claimant’s solicitors, who knew of the bankruptcy, were ordered to pay the respondent’s wasted costs incurred after their instruction. They appealed, challenging the procedure, causation, the period covered by the order and compliance with CPR r.48.7.

1. Appeal dismissed. The solicitors had a reasonable opportunity, on more than one occasion, to explain why a wasted costs order should not be made.
2. The court was entitled to find that the solicitors had acted improperly, unreasonably and negligently. A competent solicitor should know that a bankrupt’s assets vest in the trustee and that proceedings to enforce a claim vested in the trustee require the trustee’s consent. The solicitors knew of the bankruptcy but misunderstood the legal requirement.
3. An assignment of the cause of action was not equivalent to the trustee’s consent to continuation of the proceedings. The order requiring consent therefore remained effective, and the underlying claim was liable to be struck out.
4. A Part 23 application was unnecessary. Under para 53.3(2) of the Costs Practice Direction an oral application was permissible, and the case against the solicitors had been made sufficiently clear.
5. The causal link required for wasted costs was established. The court rejected speculation that, without the solicitors, the claimant would have pursued the claim personally. The claim was liable to be struck out because the claimant lacked the relevant interest, and it could not be assumed that the costs would otherwise have been incurred.
6. The order directing the solicitors to pay costs subject to detailed assessment was properly made under CPR r.48.7(4)(b).

High Court (Queen’s Bench Division): Appeal by the solicitors, by leave of Leggatt J, against the wasted costs order made by HHJ Collender QC on 14 December 2012. The appeal was dismissed.