MA Lloyd & Son Ltd v PPC International Ld (t/a Professional Powercraft)

A wasted costs order requires a three-stage inquiry: whether the legal representative acted improperly, unreasonably or negligently; whether that conduct caused unnecessary costs; and whether it is just to order compensation. The jurisdiction applies only to a person who conducted litigation or performed an ancillary litigation function. A client’s signature or general commitment to a claim does not by itself exculpate a solicitor where the solicitor-led conduct was improper or unreasonable. The court may determine the application summarily, using the available evidence while ensuring fairness. Causation remains essential: costs inherently arising from a client’s decision to commence proceedings will not be attributed to the solicitor without evidence that the solicitor caused them.

PPC applied for a wasted costs order against Mr Roderick McCarthy in proceedings brought by MA Lloyd & Son Ltd concerning alleged breach of confidentiality, passing off, fraud and conspiracy. The underlying proceedings involved repeated applications, appeals and failures to comply with costs orders. Mr McCarthy was a qualified solicitor associated with Charles Henry and disputed responsibility for the litigation, relying on the involvement of the client and other representatives. The central issues were whether he conducted or supervised the litigation, whether the relevant conduct was improper or unreasonable, whether it caused PPC’s costs, and whether an order was just.

1. Jurisdiction and governing test. The court applied the three-stage test stated in Ridehalgh v Horsfield [1994] Ch 205: improper, unreasonable or negligent conduct; causation of unnecessary costs; and whether a compensatory order is just. The jurisdiction under section 51(6) of the Senior Courts Act 1981 extended to a person who conducted litigation or performed an ancillary litigation function.
2. Meaning and procedure. Improper conduct includes a significant breach of professional duty. Unreasonable conduct includes vexatious conduct or conduct designed to harass rather than advance resolution, but an unsuccessful result alone is insufficient. Negligence retains the ordinary professional competence standard. The application was summary and did not require a document-by-document trial, although fairness to both parties remained essential.
3. Responsibility. Mr McCarthy’s signatures, attendance, communications and acknowledged supervisory role established that he was conducting or supervising the litigation from 2012, at least from 18 March 2013 to 7 July 2014, and thereafter until administration. His failure to provide evidence justified adverse inferences on his role, responsibility and causation. A client’s signature did not exculpate a solicitor where the client was uninformed or the litigation was solicitor-led.
4. Application. The repeated hopeless applications, appeals, delays and attempts to avoid existing costs orders were improper and unreasonable. Mr McCarthy caused PPC’s costs in specified proceedings and applications. However, the court was not satisfied that he caused costs inherently arising from the issue of the Third Proceedings or certain matters driven by the client’s own moral and factual commitment.
5. Order. A wasted costs order was made against Mr McCarthy for £101,058. No order was made for the remaining £22,255.50. Consequential matters were reserved for further written or oral submissions.