Rainer Hughes Solicitors v Liverpool Victoria Insurance Company Limited & Ors

A wasted costs application is a summary jurisdiction confined to cases that are sufficiently plain and obvious to be dealt with proportionately. The court should consider proportionality at an early stage and keep it under review, but there is no inflexible preliminary rule requiring dismissal before the merits are considered.

A judge may determine the application on documentary evidence where the solicitor’s evidence consists of unsupported assertions and the documents provide a clear picture. Negligent failure to comply with the requirements governing a witness’s own language may constitute both negligence and a breach of the legal representative’s duty to assist the court in achieving the overriding objective. An appellate court will rarely interfere with the first-instance exercise of the wasted costs discretion.

Rainer Hughes Solicitors appealed, with permission, against an order of HHJ Monty KC requiring them to pay £3,000 in wasted costs and the costs of the wasted costs application. The order followed the striking out of their client’s personal injury claim and defence to a Part 20 claim after it emerged at trial that the client, whose first language was Turkish, could not properly read the English pleadings and witness statement.

The appellant argued that the wasted costs application was procedurally unsuitable because of proportionality, that the factual issue concerning the client’s English proficiency could not fairly be decided summarily, and that the costs orders were unjustified. The central issues were whether the judge had properly exercised the wasted costs jurisdiction and whether the documentary evidence justified the findings of negligence and breach of duty to the court.

1. Appeal dismissed. The orders requiring Rainer Hughes to pay £3,000 in wasted costs, together with the costs awarded below, were upheld.
2. The wasted costs jurisdiction is confined to cases that are plain and obvious and capable of being dealt with summarily. Proportionality is relevant at the outset and throughout the application. The judge has a wide discretion, however, and no hard-and-fast rule requires proportionality to be determined as a separate preliminary issue before the merits. The appellant could have raised the point at the directions stage but did not do so.
3. HHJ Monty KC was entitled to make a show-cause order. On the facts then apparent, the failure to provide properly translated pleadings and witness evidence appeared clear. The appellate court will be very slow to interfere with the exercise of that discretion.
4. A summary determination is inappropriate where contested issues require oral evidence or a mini-trial. It was appropriate here to examine the documentary history. Unsupported assertions by a senior partner did not prevent the judge from testing their evidential foundation, particularly where the statement failed to identify the source of knowledge and was contradicted by contemporaneous documents.
5. The evidence justified the conclusion that the solicitors had negligently failed to deal with the client’s language needs. That failure breached the requirements of CPR 32 and Practice Direction 22, and breached the legal representative’s duty to assist the court in promoting the overriding objective under CPR 1. The failures caused costs to be wasted, including costs associated with the striking out and dealing with the language issue.
6. The indemnity costs order was within the judge’s discretion. The conduct of defending the application without evidence from the material fee earners, failing to produce relevant documents and ignoring the documentary case was sufficient to take the matter outside the norm. The separate costs awarded to the other respondents were also justified.
7. Where a show-cause order is made, the court should ordinarily require early identification of the alleged acts or omissions and the costs sought, reflecting paragraph 5.9 of Practice Direction 46. This enables an early and continuing assessment of proportionality.

• High Court (King's Bench Division): Appeal from the order of HHJ Monty KC dated 1 August 2023 dismissed. The wasted costs and consequential costs orders were upheld.