Shadi Al Tarboush v Yusuf Cassam

A wasted costs order is compensatory. The applicant must show that improper, unreasonable or negligent conduct by a legal representative caused the applicant to incur identifiable unnecessary costs, and that it is just to order compensation.

A liability to pay an opponent’s costs is not, without more, costs incurred by the applicant for the purposes of the wasted costs jurisdiction. The summary procedure is unsuitable for a prolonged inquiry into disputed facts, causation, blame or the solicitor-client relationship. A professional negligence claim may provide the appropriate remedy.

The claimant’s personal injury action had been struck out following repeated failures by his former solicitors, Hegarty LLP, to comply with court orders. The defendant obtained costs orders and separately settled its wasted costs application against Hegarty.

The claimant then sought a wasted costs order against Hegarty to protect himself and his litigation friend from liability for the defendant’s remaining costs. The issues were whether Hegarty’s conduct caused the claimant to incur unnecessary costs and, alternatively, whether a wasted costs order was just and suitable for summary determination.

1. Application dismissed. The claimant’s application for a wasted costs order was dismissed.
2. The court applied the three-stage test in Ridehalgh v Horsefield [1994] Ch 205: whether the legal representative acted improperly, unreasonably or negligently; whether that conduct caused the applicant to incur unnecessary costs; and whether it was just to order compensation.
3. The first stage was satisfied, or capable of being satisfied. Hegarty’s repeated failures to comply with directions, including leaving the claimant unrepresented at the strike-out hearing, were reprehensible and capable of amounting to improper, unreasonable or negligent conduct.
4. The second stage was not satisfied. The wasted costs jurisdiction is compensatory. Although Hegarty’s conduct caused the defendant to incur at least some unnecessary costs, the claimant had not shown that he incurred unnecessary costs or identified what those costs were. A liability to pay the defendant’s costs was not equivalent to costs incurred by the claimant, and the jurisdiction under section 51 of the Senior Courts Act 1981 was not designed to provide the claimed indemnity.
5. In any event, the third stage was not satisfied. The dispute required investigation of why procedural steps had been missed, the effect of surveillance evidence and possible dishonesty. Such issues were unsuitable for the summary wasted costs procedure. Consistently with Harley v McDonald [2001] 2 AC 678 and the other authorities considered, a professional negligence claim was the more appropriate route.
6. Even if the first two stages had been met, fairness required any apportionment of blame to be determined after a proper inquiry rather than summarily. The court invited the parties to agree an appropriate order.