Anthony Douglas King & Ors. v Barry Stiefel & Ors.

This is a Stage 1 ruling on two wasted costs applications brought by defendants/applicants after a detailed reverse summary judgment/strike-out judgment by Cockerill J and consequential orders. The court applied the two-stage framework for wasted costs claims under CPR Practice Direction (PD) 46 (paragraph 5.7) and the statutory power in s.51 of the Senior Courts Act 1981. It held that wasted costs claims are a summary remedy and should ordinarily be capable of resolution in hours rather than days; they should not be used to generate satellite litigation.

The judge concluded the applications should not proceed to Stage 2 because (i) the wasted costs cases were unduly complex and more akin to a substantive professional negligence/accountability action, (ii) there was no realistic prospect that the court, without access to privileged material, could safely conclude that a wasted costs order was more likely than not, and (iii) proportionality and case-management considerations did not justify a prolonged Stage 2 hearing given the significant additional costs involved. Important subsidiary findings included that parts of the underlying commercial claim (notably the asserted "costs conspiracy") were at least weakly pleadable and that the absence of waiver of privilege required giving the respondents the benefit of doubt, consistent with Medcalf v Mardell and Ridehalgh v Horsefield.

The applicants (the Primekings Parties and the Teacher Stern parties) sought wasted costs orders against the Kings' former counsel and solicitors (Mr Newman and Metis Law) following a successful reverse summary judgment/strike-out application by the defendants in a claim for unlawful means conspiracy. The substantive claim had been struck out by Cockerill J ([2021] EWHC 1045 (Comm)) and certified as "totally without merit", and permission to appeal had been refused. The applicants argued that the claim had been pursued improperly, unreasonably or negligently and that the respondents should therefore be ordered to pay the defendants' costs.

Nature of the application: applications for wasted costs orders (Stage 1 threshold hearing to determine whether the matter should proceed to Stage 2 and whether there was evidence which, if unanswered, would likely lead to a wasted costs order and whether the proceedings were proportionate).

Issues framed and determined:

• Whether the wasted costs applications were suitable for summary determination (Stage 1) or whether they were too complex and disproportionate to proceed to Stage 2.
• Whether, on the material before the court, it was more likely than not that a wasted costs order would be made against the respondents in respect of the various grounds advanced (no pleaded/pleadable cause of action, costs abuse, CPR 38.7/abuse of process, alleged threats/intimidation, failure to comply with pre-action protocol, and the general case against Metis Law).

Court's reasoning (concise):

• The court emphasised established authorities (Ridehalgh; Medcalf) that wasted costs is a summary remedy and should normally be capable of disposal in a short, proportionate hearing; hearings should be measured in hours not days. Complex, multi-stranded allegations which resemble a professional negligence action are generally unsuitable.
• The applications filed were lengthy, with numerous alternative cases, heavy documentary material and complex causation and knowledge issues that would require extensive inquiry. The applicants’ own estimate of time was understated and the hearing would likely take at least several days.
• Because legal professional privilege had not been waived by the Kings, the court must give the respondents the benefit of any reasonably conceivable doubt about what privileged material might show (Medcalf). That made it unlikely, on the existing material, that the court could safely conclude that a wasted costs order was ‘likely’ (i.e. more likely than not).
• Cockerill J’s earlier findings were neither binding as res judicata on the respondents nor an obstacle to them defending the wasted costs applications by arguing that their conduct was reasonably arguable. The prior judgment was persuasive but did not preclude the respondents from saying the underlying arguments were fairly arguable.
• On the merits the judge identified significant weaknesses in the applicants’ case on causation and knowledge. Crucially, aspects of the underlying costs-conspiracy case were at least weakly pleadable and might properly have been left to trial; that undermined any neat causal link necessary for a wasted costs order. The court therefore concluded it was not satisfied that the existing materials would, if unanswered, be likely to lead to a wasted costs order.

The judge dismissed the applications at Stage 1 and directed that they should not proceed to Stage 2.

The court dismissed the wasted costs applications at Stage 1. Jacobs J held that the applications were unsuitable for summary determination because they raised complex, multi-stranded factual and legal issues (including causation and alleged misconduct) which would require disproportionate inquiry; privilege had not been waived so the respondents were entitled to the benefit of doubt; and on the materials available it was not more likely than not that a wasted costs order would be made. Consequently the court exercised its case management discretion against ordering a Stage 2 hearing and dismissed both applications against both respondents.