When Can a Wasted Costs Order be Made

Hello. I'm Ben. Um Anwar on dime, A barrister at the 36 group practicing in commercial and public law. Thanks for choosing this webinar We're going to be looking at when wasted costs orders can be made in this weapon are the learning objectives are as follows. First of all, we want to learn about the definition off weeks, of course, orders and the types of conduct that justify making them. We're going to look at the three stage test for judges to follow in deciding whether to make a wasted console or not. Onda. We're going to do this by reference to some of the key principles that judges must consider as told in the key case in this area. So the definition off when a wasted costs order will be made then? Well, we got in this faras The courts and tribunals are concerned a statutory definition and that is contained in the Tribunals Courts and Enforcement Act 2007. Section 29 on that definition reads costs that are incurred as a result off any improper, unreasonable or negligent act or omission on the part off any legal or other representative or any employee off such a representative. So that's all well and good. That seems like a tidy enough definition to me. But the reality is that in practice, turns like unreasonable, improper and negligent are really rather broad on open Teoh argument. And so the courts have had to define what these words actually should mean when it comes to making a wasted costs order on. That's where we come to the key case Court of Appeal case off Rydell and Horsfield on another. That's the 1994 case IGBC a save 40. We're gonna jump right in to this incredibly long on complex case. Relics about 66 pages of dense sleet heights text. But I hope that by the end of this webinar, you'll walk away with the main points that stand out on the key guidance. You will know where to find on where to look in rival. Okay, so Reidel says it pays 232 paragraphs D to H. That's improper conduct covers but is not confined to conduct and, I quote, which would ordinarily be held to justify disbarment, striking off suspension from practice or other serious professional penalty. It covers any significant breach off a substantial duty imposed by a relevant code off professional conduct. But it is not, in our judgment limited to that conduct, which would be regarded as improper. According to the consensus off professional, including judicial opinion can be fairly stigmatized as such whether or not it violates the letter off a professional code. Unreasonable. What does that mean? I quit. Unreasonable aptly describes conduct, which is vexatious, designed to harass the other side rather than advance the resolution of the case. And it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other, more cautious legal representatives would have acted differently. The acid test is whether the conduct permits off a reasonable explanation. If so, the course adopted may be regarded as optimistic and reflecting on a practitioners judgment. But it is not unreasonable. Negligent should be understood in an UnTech nickel way to denote a failure to act with the competence, reasonably to be expected off ordinary members off the profession. So just standing back from those definitions, their about page 232 in Rydell. Looking at the 1st 1 improper conduct, It's fair to say that improper conduct is the most serious category set out in this scheme because it's the type of conduct which may well carry regulate ary implications. I justifying striking off or department negligent conduct. Although it's given what the court said it was a non technical meaning, it's still actually requires the party who's applying for the wasted costs order to prove actionable negligence. But what the court clarified in its discussion at Page 233 is judges aren't looking for you to prove that a solicitor or barrister has actually breached a duty of care which they owed to their late client. That's not what it's about the working definition, really, of what negligence is in this context of wasted costs. Orders is advice, and I quote advice, acts or omissions in the course of their professional work, which no member off the profession, who has reasonably well informed and competent, would have given or done or omitted to do so again. The basic ingredients the non technical ingredients that applicant has to prove on a wasted costs order application are that the conduct has fallen below that reasonably incompetently expected off a member off the legal profession. And the other thing to observe is that between these different categories of improper, negligent, on and unreasonable behaviour, they can overlap. So one course of conduct ca NBI unreasonable and negligent or it could be an improper andan. Reasonable. There's no sort of strict boundaries between these three different categories now. There's also some further highly relevant guidance in Rydell, which builds appalled and layers of these definitions. But before we get to that, the first thing to note is the three stage test. Every judge who hears an application for wasted costs must go through these three stages. First stage is, has the legal representative off whom complaint is made acted improperly, unreasonably or negligently so locking it back in to those terms, which would defined at Page T 32? If so, if you overcome that first hurdle, did such conduct cause the applicant to think her unnecessary legal costs so they must be causation? It's absolutely essential. There's no point in applying for wasted costs if although your opponent or lawyers are involved in the case acting for the other party have behaved disgracefully, Andi on have breached relevant professional codes, acted unreasonably acted improperly. There's no point applying for wasted costs unless those actions have actually led to and driven up because that your client has had to have to incur otherwise. There are no wasted costs you would have had to do but what you did anyway, regardless off how the other side behaved. So be aware that causation is an essential ingredient on the second part off the three stage test, the third stage is, if so, if you can establish unreasonable, improper or a negligent conduct on, you can establish causation, then is it in all the circumstances, just to order the legal representative to compensate the applicant for the whole or for part off the relevant costs? And if so, the the costs to be met must be specified by the judge and that this last requirement effectually reflects the fact that ultimately, although the court has power to make a wasted costs order, the judge has a discretion whether or not to make the order. So even if you can satisfy all of the requirements for the definition statue definition and the definition in rival on horse feld that wasted costs orders should should be made. The judge nevertheless has the final say on whether or not to make that order. And really, it's at this third stage that a person on the receiving end of a wasted costs order application will want to mitigate that. Want to be putting forward all of the reasons why they shouldn't be the subject off. The wasted costs order the reasons why the defaults or the conduct all the negligence occurred, explaining the wider context and trying to effectively beg for mercy. Because at this stage, that is effectively what they need to do. Courts should also be slow to make wasted costs orders off their own initiative. So this goes back to the idea that if a judge he's going to pick up the baton and say, I want to consider whether or no the conduct in this case is so bad that I want to make a wasted costs order against one of the parties, lawyers or several of the party's lawyers, then the judge really has that strong justification for doing so, and the reason for that is to avoid the judge looking into all of this and requiring arguments on whether or not in order should be made evidence to be heard. If ultimately the judge decides not to make the order, who's going to pay for all of that inquiry? It might require a further day a further hearing for the parties to turn up in tow. Argue about whether an order should be made so ordinarily, An application should come at the instance off a party rather than at the instance of a judge. And judges initiate a wasted costs order inquiry really at their own risk in terms of the possible wasted that could result if no order is ultimately made on. Finally, just around off on this, no orders should be made without first giving the person who's on the receiving end off the application on opportunity and a fair opportunity to respond to the application. And we call Vase in in the parliament showing cause a solicitor or about 2 may be required to show cause why the judge should not make a wasted costs order. I'm going to go through several further principles that it contains a ride along to be giving you paid references throughout, so you can go back and cross refer to the judgment, which is a very useful document, contains really everything that you need for a full analysis of all the various factors that are going to be in play on a wasted costs order application. The first principle I want to draw your attention to Is that the trigger? The underlying trigger for the making of a wasted costs order? Is that a lawyer? So this tour barrister has breached a duty to the court. That is an essential ingredient. If you don't have a breach of a duty to the court, then you don't have the pre requisite for the making off the wasted costs order. Now you might be sitting there thinking, Well, hang on a second. You've just been discussing where the circumstances in which a waiter consulate can be made have been talking about negligence. We've been talking about unreasonable conduct. We'll be talking about improper conduct. But not all of those would necessarily include a breach of a duty is to the core. Well, I'm afraid that the dynamics of the waste, of course jurisdiction are such that the common law still operates and still has suit significant sway. But in this area and the Court of Appeals, judgment in Rydell is good law. On what because people says at page 23 to 2 to 33 is that a lawyer must be in breach of a duty to the court before such an order is made. And so what? That is referring to things like the duty not to mislead the court, the duty to act in the interests off the administration of justice and to uphold that So they are relatively open textured duties, which you could probably find connections with under any of those separate heads of unreasonable, improper or negligent conduct. It's relatively easy to see how that type of conduct can undermine the administration of justice. But it is worth noting that the severity off the conduct has to be such that there has bean this type off breach and over the page and paid 234 because an appeal looks at this idea that it's not enough for a lawyer to defend a hopeless case or be acting in a case where the outcome is is pretty much written on the wall. It's a hopeless case that is doomed to fail. That, in and of itself does not constitute improper, unreasonable or negligent conduct. If if it did, then our justice system would be radically unfair. And so the Court of Appeal acknowledged that judges shouldn't assume that if a hopeless cases being litigated, it's being litigated on the advice off the lawyers who were actually bringing the case moving on, then to some specific guidance for barristers. Then on Africa, it's paint to 36 There's quite a revealing passage which talks about the role off barristers, and he says this. Any judge who was invited to make or contemplates making it an order of rising out of an advocates conduct a court proceedings must make full allowance for the fact that an advocate in court, like a commander in battle, often has to make decisions quickly and on the pressure in the folk off war and ignorant of developments on the other side of the hill. Mistakes will inevitably be made things done, which the outcome shows toe have bean unwise but advocacy. If is more an art than a science, it cannot be conducted according to formula. Individuals differ in their style and approach. It is only when, with all the allowances made on advocates, conduct of court proceedings is quite plainly, unjustifiably all that it can be appropriate to make a wasted costs order against him. Very useful passage if you're defending on application because clearly wanted highlights is it's self explanatory. It is reflecting. The fact that the judiciary ought to make full allowance is notice the strength of the language here for the limitations, inherent challenges that advocates in court have to face. So there is some understanding up there, and there is some leeway for judgment calls which go wrong solicitors. Then there's also some further guidance over the page. Again, a page 237 or Rydell Solicitors are entitled to rely on the advice off council off barristers, but they are expected not to blindly follow that advice. So if the advice is plainly wrong or plainly incompetent, solicitors have to apply them their professional mind and their legal skills and knowledge to the contents of that advice, they can't just hide behind the advice of counsel if that advice is transparently floored. However, there's a significant rider to this, and the Court of Appeal said that the more specialised the nature of the advice, the more reasonable it is likely to be for a solicitor to accept it and act on it. So if you're acting in some highly technical matters complex case in which the councils of Isis sort in effect to decode the complexity off the law and the facts, and to provide the way forward in extremely refined and difficult and technical area, then the likelihood is it may be reasonable for a solicitor to rely upon that advice. And of course, this is relevant to barristers acting in such refined on complex areas of law because they need to ensure that the competence of their advice is such that if this list to relies upon it, right, outcome will be secured. And then, of course, we called appeal set out that the owners or establishing that the criteria for a wasted costs order are met i e. Improper, unreasonable or negligent behavior, plus a breach conduct which reaches a duty to the courts. The person who has to prove that is the applicant, the respondent to an application doesn't actually have to prove anything, but of course would be wise to engage with it and defend to the extent that they can, and this brings us neatly onto the final factor on a very significant factor in his in wasted costs, orders. And that is the issue of legal professional privilege. Now this is a massive topic, but there's a relatively brief discussion off it in Rydell, which is actually succinct and incredibly helpful. And what it looks at is some of the inherent difficulties faced by lawyers who were trying to respond to and defend against an application for wasted costs. But who might be limited in their ability to do so by the operation off. Legal professional privilege. So legal professional privilege, obviously being the privilege off the lake client. So the lawyer's client to require confidentiality between in their communications with their lawyer and in the lawyers communications with them. Put simply, and that privilege doesn't belong to the lawyer. So the lawyer is not in charge of weather toe. Waive that privilege or not, whether to reveal the communications back and forth with the clients or whether not to disclose them and to maintain privilege. The choice is the clients. So what then happens if you are faced with a wasted costs order application. You have information which suggests that you told the client that this could all go disastrously wrong. On that, we may well face advert costs and wasted costs. I strongly advise that we amend the claim, withdraw the claim or don't bring the claim. But the choice is yours. And then you have an email back from the clients were elected back from clients and going head. I don't give a damn way. Just want to proceed with the claim. The lawyer can't reveal that information and cannot disclose those documents unless the client agrees to it on Let's say the client in this example, refuses to waive privilege and allow disclosure toe happen. What then? Well, this is a difficult scenario, Andi. Unfortunately, the respondents lawyers will simply have to weather that situation on will be limited as to what they can say, citing legal professional privilege as the reason for their inability to fully contest the application. But the Court of Appeal acknowledge face. They acknowledge that's the communications may be highly relevant in this situation. For example, instructions or advice, Andi, they will be likely to attract legal professional privilege. Andi, the fact is, that judges who are asked to make wasted costs orders must always make full allowances for the inability off respondents lawyers to provide the whole story. And I quote where there is room for doubt, the respondent lawyers are entitled to the benefits off it, and that's a page 2362 to 37 So that brings us to the end of a review of some of the key points in Rydell the Force Field, first of all, the definition of wasted costs when they can be made. Secondly, the guidance to the guidance is to when such factors are in play, the need to have a breach of a court duty to the court on the various technicalities around how wasted costs order applications ought to be considered by judges. The three stage test, plus guidance to barristers and guidance to solicitors on the final point on legal professional privilege. It's a lot to take in in a short amount of time, but I hope that you walk away from this webinar with an overview off this important case on with the tools at your disposal for either making or resisting the application by reference to these principles. Thank you very much for listening. I'm Veneman while from 36 Group and take care