Source: https://kerryunderwood.wordpress.com/2015/04/
Timestamp: 2019-04-25 12:48:58+00:00

Document:
If you can answer most of these questions then there is no need to book for Kerry on Tour; if you can’t then click here.
Q1 Is the scheme confined to neck and associated injuries?
Q2 If the claim exits, or falls outside the portal do these whiplash/MedCo rules still apply?
Q3 Is use of MedCo compulsory?
Q4 Have pre-medical offers been banned?
Q5 What is the timescale for expert accreditation?
Q6 Can the report be prepared by someone who has treated the claimant?
Q7 When did fixed costs soft tissue medical reports come in?
Q8 When did the requirement to use MedCo in such cases come in?
Q9 What happens if I instructed an expert before 6 April 2015 but the CNF until on or after 6 April 2015?
Q10 Do the fixed costs medical report rules apply throughout the Fixed Recoverable Costs Scheme as well as the portal?
Q11 Does the Accreditation Scheme apply to FRC as well as the portals?
Q12 Does MedCo apply to EL (Employers Liability) and PL (Public Liability) matters?
Q13 Do the fixed medical report costs provisions apply to EL and PL claims?
Q14 Is a motorcyclist “an occupant of a motor vehicle” for the purposes of the definition of a soft tissue injury claim under the RTA Protocol?
Q15 What about a person in a side-car?
Q16 In EL/PL portal claims do you need to nominate a medical expert?
Q17 Is there any guidance as to appropriate fees for medical reports in cases where medical report fees are not fixed?
Q18 When does the requirement to provide previous claims history apply?
Q19 Do the claimants’ previous claims history provisions apply to EL and PL claims?
Q20 Is it compulsory to use the portals?
Q21 Can a claim which exits the portal re-enter it?
Q22 Does the portal cover protected parties?
Q23 Does it cover cases where personal representatives are involved?
Q24 Does it cover children?
Q25 Does it cover bankrupts?
Q26 Is £25,000 the true upper limit of the portal?
Q27 What are vehicle related damages?
Q28 Does it cover MIB untraced driver claims?
Q29 Does it cover MIB uninsured drivers claims?
Q30 What happens if the claim becomes worth more than the limit?
Q31 What happens if the CNF is sent to the wrong defendant?
Q32 What happens if the claimant reasonably believes the claim is worth at least £1,000, and thus is above the small claims limit, but it then becomes clear that it is worth less than £1,000?
Q33 If an insurer does not respond to the CNF and the matter exits the portal can you issue proceedings without the need for a letter of claim?
Q34 Is there any case law on what constitutes complexity for the purposes of justifying taking the matter out of the portals?
Q35 Where personal injury damages are under £25,000 but the claim far exceeds that level because of the vehicle related damages which do not come into play for the upper limit the matter will be commenced in the portal. If it falls out for any reason what costs regime applies?
Q36 What happens if the claimants are considering applying for a Group Litigation Order?
Q37 What if there are complex issues of fact or law?
Q38 In a dog bite case against individual defendants what protocol and what costs regime applies?
Q39 Can a claim that never entered a portal go to Fixed Recoverable Costs?
Q40 What fees do I get in relation to advice on an Infant Approval Settlement?
Q41 If the settlement monies and costs are not paid by the insurance company within 10 days can I exit the portal and issue proceedings?
Q42 If the defendant insurers fail to pay the medical fee with the Stage 1 costs on a soft tissue matter can I drop the claim out of the portal?
Q43 I recently completed an NI claim form for an RTA cases and in years gone by I would simply put “to be assessed” in the box where it asks for solicitors costs. It no longer lets you type that in so I just put a fairly conservative figure down based on fixed recoverable costs. The form was returned back to me saying they can’t issue the claim because my costs are too high. I don’t understand this at all. Even under Fixed Recoverable Costs there is a table and the costs recoverable depend on what stage you get to and is also linked to the settlement account. The figure I put down was comfortably below the maximum costs recoverable, so in summary what figure am I supposed to put in that box?
Q44 I want to settle a claim that has fallen out of the portal without proceedings being issued. The level of costs is thus fixed by CPR 45.29C. The insurers have offered to pay agreed damages but there is no reference to costs.
Do I still need agreement to pay costs?
Q45 If a case drops out of the portal after Stage 1 costs have been paid and Part 7 proceedings are issued does credit have to be given for those Stage 1 costs against FRC?
Q46 Is a Pre-Action Disclosure Application in a claim that has exited the portal as interim application for costs purposes?
Q47 What fee do I get?
Q48 What is the position with multi-claimant matters? Do you get just one fee or one for each claimant?
Q49 How is the advocacy fee calculated if you are representing more than one claimant?
Q50 Is counsel’s fee for drafting pleadings every recoverable in an FRC case?
Q51 Is counsel’s fee for a conference every recoverable in an FRC case?
Q52 If I instruct counsel to conduct the advocacy in an FRC case and it settles is any fee recoverable in respect of counsel?
Q53 Is counsel’s fee recoverable from an interim application?
Q54 Does the advocacy fee vary depending on who undertakes the advocacy?
Q55 Can I ever recover an extra fee for counsel in the portal?
Q56 Is there any definition of “reasonably required”?
Q57 Can I recover the costs of counsel advising in liability in the portal?
Q58 How much is that fee?
Q59 Can I instruct another firm of solicitors instead?
Q60 Can I instruct a specialist solicitor in my own firm and get the entire fee?
Q61 I signed my client up to a CFA before 1 April 2013 but have only just issued the CNF. Can I recover the success fee?
Q62 I have a child’s RTA claim from 2007. Does this go into the portal?
Q63 Does the 12.5% London uplift apply in the portals?
Q64 I have a claim where there are two claimants and one claim is valued at £4,000 and one is valued at £9,000. How do I calculate the court issue fee?
Q65 Does QOCS apply to portal claims?
Q66 Does QOCS apply to FRC claims?
Q67 Does QOCs apply to Pre-Action Disclosure applications?
Q68 Does QOCS apply to other interim applications?
Q69 Does section 57 Criminal Justice and Courts Act 2015 apply to portal claims?
Q70 Does section 57 apply to FRC claims?
Q71 I have a small claims track case that has ended up in the Court of Appeal. Are costs payable/recoverable?
Q72 Is a Noise Induced Hearing Loss claim covered by the EL/PL portal?
Q73 If it exits the portal does it go to FRC?
Q74 What is your authority for stating that NIHL claims are disease claims?
Q75 Are members of the Armed Forces employees for the purposes of the EL/PL portal?
Q76 What happens to such claims?
The issues raised in this blog are dealt with in Kerry’s course Qualified One Way Costs Shifting and Jackson Update – book here.
The current Qualified One Way Costs Shifting scheme covers all personal injury work without exception, but nothing else. All relevant cases, irrespective of the parties’ financial circumstances, are covered.
but does not apply to applications pursuant to section 33 of the Senior Courts Act 1981 or section 52 of the County Courts Act 1984 (applications for pre-action disclosure), or where rule 44.17 applies.
(2) In this Section, “claimant” means a person bringing a claim to which this section applies or an estate on behalf of which such a claim is brought, and includes a person making a counterclaim or an additional claim”.
Personal injury is not defined in the Civil Procedure Rules dealing with Qualified One Way Costs Shifting but CPR 2.3(1) provides that “a claim for personal injuries” means proceedings in which there is a claim for damages in respect of personal injuries to the claimant or any other person or in respect of a person’s death, and “personal injuries” includes any disease and any impairment of a person’s physical or mental condition.
Employment Tribunals have the power to award damages for actual personal injury arising out of discrimination, including physical, but more typically psychological, injuries, see for example Vento v Chief Constable of West Yorkshire Police (No 2)  IRLR 102 Court of Appeal. The ordinary civil courts have the same power in relation to discrimination in non-employment fields, such as the provision of services. Actual injury cases in the Employment Tribunal and in civil court discrimination cases would appear to be covered both by QOCS and Section 57 insofar as relevant, but in fact is it is not as simple as that.
In the civil courts the matter appears relatively straightforward – actual injury claims will be covered.
However the position in Employment Tribunals is less clear. There are generally no costs in Employment Tribunals and therefore nothing to shift. They are governed by entirely different costs rules and the Civil Procedure Rules dealing with QOCS – CPR 44.13 to CPR 44.17 – have no application.
Thus I am satisfied that QOCS does not apply to Employment Tribunal cases involving actual injury, let alone injury to feelings.
However on the face of it Employment Tribunal proceedings are capable of coming within section 57(1)……”proceedings on a claim for damages in respect of personal injury…..”.
As we have seen the duty under section 57(2) to dismiss the claim “includes the dismissal of any element of the primary claim in respect of which the claimant has not been dishonest”. (Section 57(3)).
So, exaggerate your client’s future loss of earnings claim and the safest case will be dismissed in its entirety if there is a personal injury element.
Is a safe unfair dismissal claim lost because of exaggeration of future loss if there is a personal injury claim for discrimination included, even though there is no exaggeration in relation to the personal injury element? The answer appears to be yes, just as an ordinary personal injury claim is lost in its entirety if, for example, the credit hire claim is exaggerated.
Is injury to feeling s species of personal injury? Does it involve impairment of a person’s mental condition?
Make less effective or weaker; devalue, damage, injure.
Become less effective or weaker; deteriorate, suffer injury or loss.
One that has been impaired.
Of the driver of a vehicle or driving; adversely affected by alcohol or narcotics.
Employment Tribunals have the power to award damages for actual personal injuries arising out of the discrimination, including physical, but more typically, psychological injuries. These are generally awarded under the “injury to feelings” ahead of damages. The appellate courts have frequently said that there is no fine line between actual psychological injuries and injuries to feelings.
In Vento v Chief Constable of West Yorkshire Police (No 2) IRLR 102 the Court of Appeal said that tribunals should have “……regard…..to the overall magnitude of the sum total of the award for compensation for non-pecuniary loss made under the various headings of injury to feelings, psychiatric damage and aggravated damages” such that “in particular, double recovery should be avoided by taking appropriate account of the overlap between the individual heads of damage”.
In HM Prison Service v Salmon  IRLR 425 the Employment Appeal Tribunal said that it is “necessary to stand back and consider the non-pecuniary award as a whole”.
The Employment Appeal Tribunal said that the reasoning of the Employment Appeal Tribunal in the case of Orthet Ltd v Vince-Cain  IRLR 857 EAT was persuasive and was preferable to a decision in the First Tier Tribunal (Tax Chamber) in Moorthy v Commissioners for HM Revenue and Customs  IRLR 4 UKFTT which had held that awards for injury to feelings were taxable.
QOCS protection is of no relevance in Employment Tribunals, neither in relation to actual injury or injury to feelings.
Applies to actual injury cases in civil courts arising out of discrimination.
May apply to injury to feelings cases in civil courts arising out of discrimination. – see the discussion of what is “injury” in Timothy James Consulting Ltd v Wilton  IRLR 368 EAT.
Appears to apply to actual injury cases in Employment Tribunals arising out of discrimination.
May apply to injury to feelings cases in Employment Tribunals – see the discussion what is injury in Timothy James Consulting Ltd v Wilton  IRLR 368 EAT.
Logically, in relation to injury to feelings awards, either both section 57 and QOCS apply in the civil courts or neither do. The Simmons v Castle  EWCA Civ 1039 10% uplift is subject to different reasoning, which I now consider.
Actual injury awards in the civil courts attract the Simmons v Castle  EWCA Civ 1039 10% uplift.
The situation in relation to injury to feelings awards in the civil courts is unclear, “general damages” awards attract the uplift and that is obviously a wider definition than “personal injury”. My view is that injury to feelings awards being “general damages” do attract the 10% uplift in the civil courts. That does not throw any light on the issue of whether injury to feelings is a species of personal injury.
In Employment Tribunals the position is even more complicated.
There remains the issue of whether injury to feelings awards in Employment Tribunals attract the 10% uplift. Let us assume, as must be the case, that such awards are general damages and thus, on the face of it, attract the uplift. Why is there any doubt?
the Employment Appeal Tribunal held that the 10% uplift under Simmons v Castle  EWCA Civ 1039 did not apply to injury to feelings awards nor actual personal injury awards in Employment Tribunal cases as the rationale does not apply as successful claimants do not generally recover their costs in Employment Tribunal cases.
Here the EAT points out that Employment Tribunal claims are not included on the list of specific types of litigation dealt with in the report.
In Ozog the point was conceded but the EAT said that the concession was rightly made. In The Sash Window neither of the advocates nor the judge appeared to have a clue as to what the Simmons v Castle uplift was about, with references to inflation, the inflation uprating in Da’ Bell v NSPCC  IRLR 19 EAT and that Simmons v Castle was decided because the level of general damages was generally low. The Judge herself refers to the Da’ Bell v NSPCC inflation uplift as being 4 years old at the time of the hearing here.
The discussion and judgment on this point in The Sash Window are woeful.
Chawla is a much better reasoned decision and in my view is correct.
Leave to appeal to the Court of Appeal has been given in Pereira.
Personal injury Employment Tribunal claims no yes ?
Injury to feelings Employment Tribunal claims no yes ?
Previously four courts have reached four different conclusions in cases where the wrong defendant has been named in a conditional fee agreement; what all four decisions have in common is that each states that there is never any need to name a defendant and doing so risks all costs being lost.
the Senior Court Costs Office held that if the wrong defendant was named in a Conditional Fee Agreement then there was no valid retainer and thus the indemnity principle meant that no costs could be recovered.
However the court held that disbursements could be recovered as these were payable by the claimant in any event, win or lose.
I do not pretend to understand the logic of this decision. The claimant won and therefore there must have been an implied term that he would pay his lawyers in the circumstances. Either the retainer is invalid in which case nothing is recoverable, or it is valid, in which case disbursements and costs were both recoverable.
There can be no logic in holding the retainer valid in relation to disbursements but not valid in relation to costs. If there was no retainer because there was no successful action against the driver of the motorcycle then clearly disbursements in relation to a completely different matter, which the court found this was, against the insurer could not be covered by that retainer.
Here the accident had occurred in France and thus the action, under French and apparently European Union Law, was against the insurer and not the driver of the motorcycle; the Conditional Fee Agreement wrongly named the driver rather than the insurance company and that part of the claim had been struck out.
Nevertheless it was the same accident which occurred on the same date.
He also said that the intention of the parties was obvious and that there was only ever one claim and therefore he held that the Conditional Fee Agreement was binding and the claimant was bound to pay his own solicitors under that agreement which meant that he could recover those costs from the defendant.
That decision is far better reasoned and clearly gives intention to the will of Parliament.
Simon Gibbs appeared for the defendant in each case and in Brierley v Prescott Simon Gibbs conceded that if the agreement had been expressed to cover “your claim for damages for personal injury suffered on 7 January 2000” without identifying the opponent, he would have no argument.
The key lesson to be drawn from these cases is that the defendant should never be mentioned in a Conditional Fee Agreement, but rather simply the date of the accident, and possibly the rough location, so that “the particular proceedings” are specified.
the court also said that there was no requirement to name a defendant. There, Liverpool City Council were named as the defendant but in fact the property concerned, where the injury took place, had been transferred to Berrybridge Housing Association just two months before the accident. They were not named in the Conditional Fee Agreement. There the court held that there was a retainer, allowing the claimant to recover base costs but that there was no valid Conditional Fee Agreement, as the claim was not against Liverpool City Council, and therefore no success fee could be recovered.
“In my judgment, when it became apparent that the second defendant needed to be added the claimant and the solicitor should have considered the point and if it was the intention of both of them to have a CFA as well as a retainer covering the second defendant then a fresh CFA agreement should have been entered into or the existing one properly varied in writing and signed. This should have been effected.” (Paragraph 22).
“Your claim against Exeter City Council for damages for personal injury suffered in an accident at work on or about 19 May 2006”.
In fact the true defendants were DC Leisure Management Ltd and Technogym UK Ltd.
In that case the court upheld the decision of Master Gordon-Saker sitting in the Senior Courts Costs Office that no costs would be recovered.
All costs can be recovered (Brierley v Prescott).
Base costs, but no success fee can be recovered (Law v Liverpool City Council).
Disbursements only can be recovered (Hailey v Assurance Mutuelle Des Motards).
Nothing can be recovered (Brookes v DC Leisure Management Ltd).
That is four different possibilities on the same facts. The ingenuity of the courts knows no bounds. I wonder how many further variations they can come up with.
For the sake of completion in the case of Scott v Transport for London (2009) Hastings County Court 23 December 2009 unreported the court allowed an appeal against the decision of the District Judge who had refused to allow any costs in relation to a Conditional Fee Agreement referred to “your claim against Lambeth Council” when in fact the defendant was Transport for London. Thus the County Court allowed costs in full as did the court in Brierley v Prescott.
Insofar as anything is clear from these decisions it is that you should never name a defendant in a Conditional Fee Agreement.
None of these problems are avoided by the fact that the Conditional Fee Agreement is a post 31 March 2013 one where the success fee is not recoverable from the other side. The central point in all of the above cases is that the retainer was invalid, in full or in part, and thus the claimant, that is the person entering into the Conditional Fee Agreement, was not liable to pay their own solicitors because of the defective retainer and therefore because of the indemnity principle those costs could not be recovered from the other side.
Exactly the same principle applies where the success fee is not recoverable, that is that if the claimant is not liable to pay it to the solicitor then obviously the solicitor cannot charge the success fee to the client. As we have seen above there is also the risk that the defendant will be off the hook in relation to base costs as the only retainer is the potentially defective Conditional Fee Agreement.
Sections 58 to 61 of the Criminal Justice and Courts Act 2015 introduce rules against inducements to bring personal injury claims. These are largely uncontroversial and came into effect on 13 April 2015, by virtue of The Criminal Justice and Courts Act 2015 (Commencement No. 1, Saving and Transitional Provisions) Order 2015 (SI 2015 no. 778).
Section 58 applies to regulated persons, which includes solicitors, and makes it unlawful to offer an inducement to make a personal injury claim, but not if the benefit is related to the provision of legal services in connection with a claim.
Thus offering a discount, or a no win no fee agreement, or offering to pay disbursements or cover adverse costs etc. does not amount to an inducement. An inducement is an offer of a benefit that is intended to encourage the person to make a claim or to seek advice about making a claim or which is likely to have that effect (section 58(2)).
A benefit may be an inducement regardless of when or how the offer is made, when it is received, whether it is subject to conditions or whether it is to be received by a third party (section 58(3)).
Section 58(4) provides that if a person other than the regulated person offers a benefit in accordance with arrangements made by or on behalf of the regulated person then the regulated person is to be treated as having offered that benefit.
(c) insurance to cover legal costs and expenses in connection with the claim.
Section 59(4) provides that breach of section 58 does not make a person guilty of a criminal offence and does not give rise to a right of action for breach of statutory duty.
Section 59 also provides that the appropriate regulator, the Solicitors Regulation Authority in the case of solicitors, must ensure that it has in place appropriate arrangements for monitoring and enforcing the restriction in section 58 and empowers the regulator to make rules and allows those rules to provide for any penalty that the regulator could impose for any other breach of another restriction.
The effect of this is that the SRA can make offering an inducement a disciplinary offence resulting in a solicitor being struck off the roll. Sections 59(5) and (6) allow the regulator to make rules which reverse the burden of proof, which means that if the regulator considers that there is an offer of an inducement, then it is for the solicitor to show that it was for some other reason, or that it was a benefit related to the provision of legal services in connection with the claim.
Section 60 is an interpretation section and section 60(1)(c) wrongly refers to the Law Society as the regulator for solicitors. It is in fact the Solicitors Regulation Authority.
Section 61 provides that regulations under section 58 or 60 are to be made by statutory instrument. The only regulations made to date are the ones commencing these provisions with effect from 13 April 2015 and they are the Criminal Justice and Courts Act 2015 (Commencement No. 1, Saving and Transitional Provisions) Order 2015.
Between them the sections are an all embracing prohibition on inducements in personal injury cases.
The Court of Appeal has said that exaggerating injuries for financial gain is fraud. This is a very important decision that suggests that the fundamentally dishonest threshold will be very much lower than most people thought. This is of key relevance in relation to the whole claim being dismissed under Section 57 of the Criminal Justice and Courts Act 2015 and to defeat Qualified One Way Costs Shifting protection.
the Court of Appeal overturned a first instance decision that a claimant should repay a large part of a personal injury award from an earlier settled action.
It will now be very difficult for the settled cases to be reopened.
Here the claimant had been injured at work and liability was admitted and shortly before trial the action was settled for £134,973.11, the insurer having argued that the claim was exaggerated. It settled for around one third of the sum claimed.
After settlement the insurers were informed that the claim had been inflated and they successfully sued the claimant for fraudulent misrepresentation in claimed rescission of the agreement. The judge held that the true value of the claim was £14,720.00 and ordered the claimant to repay the balance.
On appeal it was argued that the insurer had settled the original action on the basis that it was overstated and fraudulent and thus should not be allowed to reopen the case simply because it now had better evidence to establish one of the factors that it had taken into account when deciding to settle. To allow the insurer to reopen the case would make settlements difficult, if not impossible.
Gilbert v Endean  9 Ch D 259 or Dietz v Lennig Chemicals  1 AC 170.
Consequently the defendant could not now have the agreement set aside simply because he could now show that the statements put forward by the claimant had been wrong.
“In deciding to settle the defendant takes the risk that those statements are in fact untrue (or, to put it more accurately, would not be proved at trial) and pays a sum commensurate with his assessment of that risk. He could have taken the case to trial in order to disprove the statements in question; but by settling he agrees to forego that opportunity and he cannot reserve the right to come back later for another attempt. If it were otherwise no settlement would be final.” (Paragraph 16 of the Judgment).
By entering into the settlement the defendant implicitly agrees not to seek to have it aside on the basis that the statements made in support of the claim were faults.
“If it is in any case sufficiently apparent that the defendant intended to settle notwithstanding the possibility that the claim was fraudulently advanced, either generally or in some particular respect – the paradigm being where he has previously so asserted – there can be no reason in principle why he should not be held to his agreement even if the fraud subsequently becomes demonstrable.” (Paragraph 19 of the Judgment).
The Court of Appeal said that it cannot be right that a defendant who has made an allegation of fraud against the claimant but decided not to have it tested in the court should be allowed, whenever he chooses, to revive that allegation as a basis for setting aside the settlement.
Parties who settle claims with their eyes wide open should not be entitled to revive them only because better evidence comes along later. Here Zurich had alleged fraud from the outset and what happened afterwards was that better evidence of that fraud came to light after the settlement contract had been made.
This case would have been decided differently had the new section 57 of the Criminal Justice and Courts Act 2015 been in force at the time.
The court clearly found fundamental dishonesty, indeed fraud, and therefore there could have been no question of any part of the claim being allowed to stand; the whole claim would have had to have been dismissed, even though the Defendant was liable for part of the damages.
The case is potentially significant in relation to the definition of fundamental dishonesty, both in relation to section 57 and also in relation to Qualified One-Way Costs Shifting.
Working on the basis that anything that constitutes fraud has also passed the fundamental dishonesty test, that is assuming that fundamental dishonestly is in fact a step short of fraud, then any exaggeration for financial gain will constitute fundamental dishonesty and thus trigger the loss of Qualified One-Way Costs Shifting protection and also the loss of the whole claim which otherwise would have been successful.
There was no direct reference to fraud or dishonesty.
Indeed the whole point of the second action was that they had now discovered that the claimant had acted fraudulently and they had not taken that into account when setting the first action.
Later at paragraph 26 another judge of the Court of Appeal referred to “the grossly inflated amount which he received upon the settlement of his fraudulently exaggerated claim”.
The power of the court to award Wasted Costs against a legal representative arises from the Courts and Legal Services Act 1990, Section 4(1), which enacted a new section 51 of the Supreme Court (now Senior Courts) Act 1981 (“SCA 1991”), which relates to both the High Court and County Court, as well as the Court of Appeal. The power to make a non-party costs order also derives from section 51. Wasted costs orders can only be made against representatives; non-party costs orders can be made against anyone.
“51 Costs in civil division of Court of Appeal, High Court and County Courts.
any county court,shall be in the discretion of the court.
Section 51(6) deals with wasted costs orders.
The concept of wasted costs includes both disallowing costs and also ordering actual payment of costs.
A party can succeed in an application for a wasted costs order against its own lawyer, or against the other side’s lawyer (Medcalf v Mardell  UKHL 27 ).
It is anticipated that the introduction of Qualified One-Way Costs Shifting, and consequent non-liability of a losing claimant in a personal injury matter to pay costs, will lead to an increase in applications by defendants for wasted costs orders against solicitors for claimants. The wasted costs jurisdiction is not affected by Qualified One-Way Costs Shifting.
Although the system has been in place since 1 April 2013 it only applies to cases where there is no recoverable additional liability, that is a success fee or After-the-Event insurance premium, and thus there is a long tail of pre 1 April 2013 cases. Furthermore the issue of whether a case attracts Qualified One-Way Costs Shifting or not cannot be made until the end of the case, and therefore there needs to be either a trial or a disposal hearing. Consequently few cases have yet reached that stage and we do not yet know how successful defendants who would be unable to recover costs from the actual claimant, will use the wasted costs jurisdiction.
Non-party costs orders are bound to increase as a result of Qualified One-Way Costs Shifting as the CPR gives specific power for such orders to be made against the recipients of special damages, subject to exceptions.
A solicitor representing a party in an action can be made the subject of a non-party costs order, which involves a lower threshold for a wasted costs order.
The SCA 1981, section 51(7) defines the concept of “wasted costs” as being costs incurred by a party resulting from the improper, unreasonable or negligent act or omission of any legal or other representative or anyone employed by the representative, or costs which, in the light of any such act or omission occurring after the costs are incurred, the court considers it is unreasonable to expect that party to pay.
A wasted costs order always involves criticism of the party against whom it is made. Consequently such orders are likely to be on the indemnity basis, although the court is free to make a wasted costs order on the standard basis.
A lawyer is not allowed to charge her or his own client those costs. So if, for example, a wasted costs order is made at the suit of the other party the lawyer cannot pass that charge on to the client.
This rule applies where the court is considering whether to make an order under section 51(6) of the Senior Courts Act 19813 (court’s power to disallow or (as the case may be) order a legal representative to meet, ‘wasted costs’).
The court will give the legal representative a reasonable opportunity to make written submissions or, if the legal representative prefers, to attend a hearing before it makes such an order.
(b)direct a costs judge or a district judge to decide the amount of costs to be disallowed or paid.
(b) for costs relating to a specified sum or items of work to be disallowed.
5.2 Rule 46.8 deals with wasted costs orders against legal representatives. Such orders can be made at any stage in the proceedings up to and including the detailed assessment proceedings. In general, applications for wasted costs are best left until after the end of the trial.
5.3 The court may make a wasted costs order against a legal representative on its own initiative.
(b)by making an application orally in the course of any hearing.
(c) it is just in all the circumstances to order the legal representative to compensate that party for the whole or part of those costs.
5.6 The court will give directions about the procedure to be followed in each case in order to ensure that the issues are dealt with in a way which is fair and as simple and summary as the circumstances permit.
(b) at the second stage, the court will consider, after giving the legal representative an opportunity to make representations in writing or at a hearing, whether it is appropriate to make a wasted costs order in accordance with paragraph 5.5 above.
5.8 The court may proceed to the second stage described in paragraph 5.7 without first adjourning the hearing if it is satisfied that the legal representative has already had a reasonable opportunity to make representations.
Section 67 of the Criminal Justice and Courts Act 2015 requires a court to report to the appropriate regulatory body any lawyer who is made the subject of a wasted costs order.
Section 51 of the Senior Courts Act 1981 (costs in civil division of Court of Appeal, High Court, family court and county court) is amended as follows.
It is the court that makes the order for wasted costs not a costs judge. In the normal course of events it is the trial judge who should make the order. In Re P (a Barrister), (wasted costs order)  EWCA Crim 1728,  1 Cr App Rep 207, (2001) Times, 31 July, the Court of Appeal held that in almost all wasted costs applications the trial judge should be the judge to deal with the matter. The court concluded that the jurisdiction was a summary jurisdiction to be exercised by the court which had ‘tried the case in the course of which the misconduct was committed’. Although the trial judge could decline to consider an application in respect of costs, it would only be in ‘exceptional circumstances’ that it would be appropriate to pass the matter to another judge.
As we have seen usually the trial judge will hear the wasted costs application.
the Court of Appeal held that this was an exceptional case where apparent bias had been shown by the judge and the Court of Appeal concluded that the judge should have recused himself.
the repetition of his criticisms of the solicitors.
Once a judge does deal with the wasted costs order it is difficult to overturn that decision, as in Persaud v Persaud  EWCA Civ 394, 147 Sol Jo LB 301 where the Court of Appeal held that it was not right to interfere with the judge’s discretion.
The leading authority and guide to wasted costs is Ridehalgh v Horsefield  Ch 205,  3 All ER 848, CA, where in appeals backed by the Bar Council, the Law Society and the Solicitors Indemnity Fund, the Court of Appeal set aside wasted costs orders against two solicitors and a barrister and in the lead case declined to make an order in a case referred to them by a different division of the Court of Appeal. In delivering the judgment of the court the Master of the Rolls said, at Page 38 LTL, that while judges must not reject the weapon which Parliament intended to be used for the protection of those injured by the unjustifiable conduct of the other side’s lawyers, they must be astute to control what threatened to become a new and costly form of satellite litigation.
Lord Bingham reiterated this view in Medcalf v Mardell  UKHL 27  approving the approach of the Privy Council in a New Zealand case that wasted costs orders should be confined to questions which are apt for summary disposal by the court, such as failures to appear; conduct which leads to an otherwise avoidable step in the proceedings; the prolongation of a hearing by gross repetition or extreme slowness in the presentation of evidence or argument. Such matters can be dealt with summarily on agreed facts or after a brief enquiry. Any hearing to investigate the conduct of a complex action is itself likely to be expensive and time-consuming. Compensating litigating parties who have been put to unnecessary expense is only one of the public interests to be considered.
In Jackson v Cambridgeshire County Council UK EAT/0402/09, the Employment Appeal Tribunal (EAT) made the point that where an application cannot be fairly resolved without disproportionate investigation it can be dismissed on that basis alone.
In future, anyone considering applying for a wasted costs order should think twice.
The Practice Direction supplementing rule 46.8 helpfully embodies the major findings of the Court of Appeal in Ridehalgh. Because wasted costs orders are made under the statute, and rule 46.8 and its supplementary Practice Direction govern merely the practice and procedure, not the principles, this is an area in which decisions made prior to 26 April 1999 are still of relevance and assistance.
In Harrison v Harrison  EWHC 428 QB, the High Court held that wasted costs were neither a punitive nor a regulatory jurisdiction, but rather a compensatory one and thus as a prerequisite an applicant had to show that the conduct complained of had caused them loss – see Ridehalgh.
In addition even where ‘improper, unreasonable and negligent’ conduct was shown, an order was within the court’s discretion.
Here the applicant applied for a wasted costs order against junior counsel who had acted for the respondent in a without notice application. Costs had been agreed at £205,000 of which all but £20,000 had been paid by the time of the application and the applicant conceded that the respondent was likely to pay the balance.
The applicant contended that the without notice application had been settled and argued by counsel without any or sufficient regard to her duty to bring to the attention of the court facts or arguments which were adverse to her client’s case and thus her conduct had been ‘improper, unreasonable and negligent’ in terms of section 51(7) of the SCA 1981.
The court held that on the balance of probabilities the applicant had failed to prove loss even if all of the allegations were proved, and thus no order should be made.
Has there been an improper, unreasonable or negligent act or omission?
As a result, had any costs been incurred by a party?
Should the court exercise its discretion to order the lawyer to meet the whole or any part of the relevant costs?
“Improper” covered, but was not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It also covered conduct which according to the consensus of professional, including judicial, opinion could be fairly stigmatised as being improper whether it violated the letter of a professional code or not (Page 23 Judgment, Ridehalgh v Horsefield  Ch 205,  3 All ER 848, CA).
“Unreasonable” included conduct which was vexatious, designed to harass the other side rather than advance the resolution of the case: it made no real difference that the conduct was the product of excessive zeal and not improper motive.
Legal representatives should not lend assistance to proceedings which were an abuse of process and they were not entitled to use litigious procedures for purposes for which they were not intended, as by issuing or pursuing proceedings for purposes unconnected with success in the litigation, or pursuing a case known to be dishonest. Nor were they entitled to evade rules intended to safeguard the interests of justice, as by, knowingly failing to make full disclosure on a without notice application or knowingly conniving in incomplete disclosure of documents. However, conduct was not unreasonable simply because it led to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test was whether the conduct permitted a reasonable explanation. It is not unreasonable to be optimistic.
“Negligent” did not mean conduct which was actionable as a breach of the legal representative’s duty to his own client. There is of course no duty of care to the other party. Negligence should be understood in an untechnical way to denote failure to act with competence reasonably expected of ordinary members of the profession. However, the court firmly rejected any suggestion that an applicant for a wasted costs order needed to prove under the negligence head anything less than he would have had to prove in an action for negligence. It adopted the test in Saif Ali v Sydney Mitchell & Co  AC 198,  All ER 1033, HL, ‘advice, acts or omissions in the course of their professional work which no member of the profession who is reasonably well-informed and competent would have given or done or omitted to do’; an error ‘such as no reasonably well-informed and competent member of that profession could have made’.
In Persaud v Persaud  EWCA Civ 394, 147 Sol Jo LB 301, the Court of Appeal held that there had to be something more than negligence, more akin to abuse of process or breach of duty to the court, to make a legal representative subject to jurisdiction for a wasted costs order.
However, in Dempsey v Johnstone  EWCA Civ 1134,  PNLR 2,  1 Costs LR 41 the Court of Appeal held that negligence alone would justify the making of a wasted costs order, and the correct test was whether no reasonably competent legal representative would have continued with the action when there was a hopeless case.
that litigants should not be financially prejudiced by the unjustifiable conduct of litigation by their or their opponents’ lawyers.
In Wall v Lefever  1 FCR 605, (1997) Times, 1 August, CA, Lord Woolf warned that appeals against wasted costs orders or the refusal thereof should not be used to create subordinate or satellite litigation which was as complex and expensive as the original litigation.
In Gill v Humanware Europe plc  EWCA Civ 799,  ICR 1343,  IRLR 877, the Court of Appeal reviewed existing case law, in the context of an appeal from a decision of the Employment Appeal Tribunal (“EAT”).
“ (1) The Appeal Tribunal may make a wasted costs order against a party’s representative.
(b) which, in the light of any such act or omission occurring after they were incurred, the Appeal Tribunal considers it reasonable to expect that party to pay.
Here there was a dispute about the facts of the alleged improper conduct of the respondent’s barrister at the employment tribunal hearing and the EAT made a wasted costs order against her, without giving her the chance to make oral submissions.
The Court of Appeal allowed her appeal and held that the jurisdiction in a wasted costs application should only be exercised in a reasonably plain and obvious case. Courts should think carefully before hearing a wasted costs application in a case in which there is a conflict of evidence to be resolved.
Here a better course would have been to report the matter to the Bar Standards Board, which could have investigated the alleged misconduct properly and, if appropriate, referred it to a hearing before a disciplinary tribunal, which had the power to order compensation.
the Employment Tribunal allowed an appeal against a wasted costs order made by an Employment Tribunal Judge under Rule 48 of the Employment Tribunals Rules of Procedure 2004 where the Judge had failed to specify the amount, as required by Rule 48(7), but instead had ordered the costs to be assessed by the county court.
The EAT also held that the Employment Judge had failed to apply the correct test as set out in Ridehalgh v Horsefield, in particular by failing to address whether the representative’s conduct had caused the other party to incur unnecessary costs and whether it was just to order him to compensate the respondent for the whole or part of the costs.
As there was no express provision in Rule 48 for county court assessment, in contrast to Rule 41(1)(c), there was no power to refer a wasted costs order to a county court for assessment.
In Re Wiseman Lee (Solicitors) (Wasted Costs Order) (No 5 of 2000)  EWCA Civ 799,  ICR 1343,  IRLR 877 the court made a wasted costs order against the defendant solicitors in their absence with permission to make representations against the order by a given date. When no representations were received, the order was drawn up. The solicitors’ appeal was allowed on the ground that a legal representative must be allowed to make representations before a wasted costs order is made under CPR 48.7(2). Although this was a criminal matter the principle applies equally to civil matters.
In Gill v Humanware Europe plc  EWCA Civ 799,  ICR 1343,  IRLR 877 the Court of Appeal said that on the facts of that case the EAT should have referred the matter to the Bar Standards Board, rather than make a wasted costs order, and pointed out that the appropriate disciplinary body had power to order compensation.
The threat of a wasted costs order should not be used as a means of intimidation. However, if one side considered that the conduct of the other was improper, unreasonable or negligent and likely to cause a waste of costs it was not objectionable to alert the other side to that view. There appears to be a fine line between ‘threatening’ and ‘alerting’.
Although the legislation intended to encroach on the traditional immunity of the advocate by subjecting him or her to wasted costs jurisdiction, full allowance must be made for the fact that an advocate in court often had to make decisions quickly and under pressure. Mistakes would inevitably be made, things done which the outcome showed to have been unwise. Advocacy was more an art than a science; it could not be conducted according to formulae. It was only when, with all allowances made, an advocate’s conduct of court proceedings was quite plainly unjustifiable that it could be appropriate to make a wasted costs order against him.
In Robinson and another (appellants) v Hall Gregory Recruitment Ltd  IRLR 761 EAT, the Employment Appeal Tribunal reminded itself that the wasted costs jurisdiction should be approached with caution, bearing in mind the constitutional position of the advocate and the fact that from their point of view the jurisdiction was penal.
difficult and embarrassing issues on costs could arise if an order was not made. The costs of the enquiry would have to be borne by someone and it would not be the court.
In Gill v Humanware Europe plc  EWCA Civ 799,  ICR 1343,  IRLR 877, the Court of Appeal held that the procedure to be adopted should depend upon the circumstances. Sometimes the application will be made at the end of a substantive hearing, sometimes not. Sometimes the person against whom it is to be made will have been present throughout that hearing, sometimes he or she will not.
If the application is made at the end of a hearing at which the respondent has been present, it may be possible to deal fairly with the whole application there and then. On the other hand it may be necessary to allow an adjournment for the respondent to make representations or even to call evidence from witnesses not then present.
In particular, there is no invariable requirement for a two-stage process, at which the court considers first whether there is a strong prima facie case for the making of a wasted costs order and then at a second stage decides whether it is appropriate to make one.
If the respondent has not been present at the hearing at which his or her conduct has been considered, there will have to be an adjournment. Whether or not there will then have to be an oral hearing will depend upon the nature of the issues in question and the way in which they will have to be resolved.
A relevant issue is the amount of money at stake. If it is small then it may be sensible, fair and proportionate to decide matters without an oral hearing. If the sum is large, or if a reputation is at stake, or issues of fact have to be decided, then an oral hearing will be necessary.
If no oral hearing is to be held then the respondent to the wasted costs application should be asked if he or she wishes to amplify their written submissions in the light of that decision.
In Ridehalgh v Horsefield  Ch 205,  3 All ER 848, CA, the Court of Appeal considered some situations where it would be appropriate for the judge to initiate a wasted costs enquiry. These included a failure to appear at court, lateness and negligence leading to an otherwise avoidable adjournment, gross repetition or extreme slowness.
Judges should not make lawyers ‘show cause’ where the issue went to the merits. This should be left to the parties. An example of a case where the court did intervene was R v Secretary of State for the Home Department, ex p Abbassi (1992) Times, 6 April, CA.
On an application under CPR Pt 23, the court may proceed to the second of the two-stage process without adjourning the hearing if it is satisfied that the legal representative has already had a reasonable opportunity to give reasons why the court should not make a wasted costs order; in other cases the court will adjourn the hearing before proceeding to the second stage (See para 53.7 of the Practice Direction about costs supplementing CPR Pts 43–48).
The court should determine the procedure to be followed to meet the requirements of the individual case. The overriding requirements are that any procedure has to be fair and as simple and summary as the circumstances permit. Elaborate pleadings should in general be avoided. No formal process of discovery or interrogatories would be appropriate. The court could not imagine any circumstances in which the applicant should be permitted to interrogate the respondent lawyer (Ridehalgh v Horsefield  Ch 205, CA, p 38).
In Godfrey Morgan Solicitors Ltd v Cobalt Systems Ltd (UKEAT/0608/10/LA)  ICR 305, 155 Sol Jo (no 34) 31, EAT, the EAT held that in this context ‘interrogate’ meant to serve written interrogatories and did not prevent the cross-examination of the lawyer on the subject of the application.
On the other hand, the respondent must be entitled to present a full defence and must be informed of the conduct complained of, the amount claimed and the alleged causal link between the two. Hearings should be measured in hours, not days or weeks.
It was impossible to determine the issues fairly and the wasted costs order had to be quashed.
“The answer given therefore was not to treat the existence of privileged material as an absolute bar to any claim by an opposing party for a wasted costs order but to require the court to take into account the possibility of the existence of such material and to give the lawyers the benefit of every reasonably conceivable doubt that it might raise.
The Court of Appeal followed this approach in Dempsey v Johnstone  EWCA Civ 1134,  All ER (D) 515 (Jul) where a costs order was made against the defendant solicitors for pursuing a hopeless case. It was held that in the absence of privileged material it is not possible to reach a conclusion adverse to the defendant on the question of whether no reasonably competent legal adviser would have evaluated the chance of success as justifying continuation of the proceedings. Without any waiver of privilege in relation to counsel’s advice, it was impermissible to infer from the continuance of legal aid that the claimant’s legal representatives were asserting good prospects of success.
that it is in all the circumstances fair to make the order.
In this case, the court concluded it was impossible to determine the issues fairly as they were unaware of the nature of the documents before the barristers and consequently quashed the wasted costs order.
Mr Justice Tugendhat, sitting in the High Court, held that a judge had been correct to make a wasted costs order against solicitors who had acted for a bankrupt client for two and a half years. Any competent solicitor would have known that the assets of a bankrupt vest in his trustees and that proceedings to enforce a claim can only be pursued with the trustee’s consent, which had not been forthcoming. The solicitors had acted improperly, negligently and unreasonably and so would pay the wasted costs of the defendant.
In Nelson v Nelson (7 February 1996, unreported), CA, a firm of solicitors instituted proceedings, including obtaining a Mareva Injunction, on behalf of a client whom they were unaware was an undischarged bankrupt. A bankrupt was not entitled to bring an action relating to his property, the cause of action having vested in his trustee in bankruptcy. Nevertheless, he had the capacity and authority to retain solicitors, and solicitors acting for him without knowledge of his bankruptcy were saying no more than that they had a client and that the client had authorised the proceedings. The solicitors did not represent that a client had a good cause of action, and in commencing the proceedings warranted no more than they had authority from the client to do so. In those circumstances there had been no breach by them of their duty to the court, nor had they been negligent, and thus the court should exercise its discretion in their favour when considering an application for costs against them personally by a defendant.
There is no power in the court to make a wasted costs order in favour of, or (by parity of reasoning) against, a person who elected to oppose an ex parte application for leave to apply for judicial review. In R v Camden London Borough Council, ex p Martin  1 All ER 307,  1 WLR 359, such a person was not a party for present purposes. The modern practice of the court in regularly hearing and sometimes inviting the participation of such persons could not make it otherwise; only legislation or a rule change could make it so.
If a case is settled and stayed by way of consent order, it is still possible for a party to make an application for a wasted costs order. In Wagstaff v Colls  EWCA Civ 469, (2003) Times, 17 April, 147 Sol Jo LB 419, the Court of Appeal reversed a judgment that disallowed a party’s application to lift a stay so an application for wasted costs could be made. The court held it to be unnecessary to require the stay to be lifted for the purpose of bringing a wholly different claim which might be connected with the stayed proceedings but where the connection was wholly tangible. There was thus nothing to prevent an application for a wasted costs order being made and entertained after a final order had been made, and perfected, entering judgment for or against the claimant.
the proceedings had never been served on S.
S then applied for an order that R pay all his costs lost, wasted or thrown away on an indemnity basis. A and B made a similar application on their own behalf. The judge found that it was obvious that R had had no authority to act as they had, and considered that the issue as to whether R should be liable for wasted costs should be investigated. R contended that the judge had erred in his decision because he had not received the required quantification of the costs sought to decide whether they were likely to be awarded, or whether a separate hearing would be proportionate. A and B submitted that, if R had not acknowledged service on S’s behalf, they would have served him another way, so that their pre-trial costs had been wasted. S submitted that, as a result of R’s conduct, he had incurred costs in trying to extricate himself from the action.
The referral to the second stage of the issue as to whether wasted costs should be awarded was only sensible if the scope of the costs sought was narrow and clear. In the instant case, there had been insufficient material for the judge to make that determination. S, A and B were all litigants in person and their recoverable costs would, in any event, be limited. Further, both A and B had, in any event, incurred costs in pursuing the action against P, and their wasted costs in respect of the claim against S were likely to be modest. Moreover, so far as S was entitled to recover his costs in applying for the claim to be struck out, the parties liable for those costs were A and B, as in the light of S’s status as an undischarged bankrupt, no claim against him should have been made in any event. The judge’s order for assessment of wasted costs was, accordingly, set aside.
In Chief Constable of British Transport Policy v Soods Solicitors Ltd (2012) 156 Sol Jo (29) 31,  All ER (D) 163 (Jul), DC, the Divisional Court dismissed the appeal by way of case stated against the District Judge’s refusal to award wasted costs against the respondent firm of solicitors. The claimant chief constable applied for the forfeiture, pursuant to s 298 of the Proceeds of Crime Act 2002 (‘PCA 2002’), of money which had been seized from an individual H. Shortly before the hearing, the respondent firm of solicitors came on the record purporting to act for a Ugandan company, SFK, which applied to be joined to the action pursuant to s 301 of the PCA 2002. That application was refused and the matter was adjourned.
It subsequently became clear that SFK was not a real company and that documents that had been provided by it had been forged. The forfeiture proceedings then proceeded unopposed and, following the conclusion of those proceedings, the claimant applied for wasted costs from the respondent, pursuant to s 145A(1) of the Magistrates’ Court Act 1980.
In May 2011, a district judge refused that application on the basis that, although the respondent should have exercised greater caution in its dealings with SFK, the claimant’s costs would have been incurred in any event as SFK would have made the application as an unrepresented party if necessary. The appellant appealed by case stated.
The principal question posed for the consideration of the court was whether, in the circumstances, the judge had applied the correct test for causation for wasted costs. He had. The appeal would be dismissed.
In the instant case, the appellant’s argument was fatally flawed as no wasted costs order could be made unless there had been a finding of fault against the respondent. The judge had not made a finding of fault against the respondent and there was no question before the court as to whether the judge had been correct or incorrect in so finding. Accordingly, the appeal would be dismissed as the real point had not been stated in the case and had not been for decision at the instant hearing.
In Tolstoy-Miloslavsky v Aldington  1WLR 736 the Claimant sought to set aside a libel judgment on the basis that it had been obtained by fraud; the application was struck out as an abusive process.
The successful party applied for a non-party costs order against both solicitor and counsel for the unsuccessful applicant.
The judge ordered the solicitors to pay 60% of the defendant’s costs on the ground that they have put themselves in the position of third party funders of the litigation.
In Medcalf v Mardell  UKHL 27,  1 AC 120,  3 All ER 721, the House of Lords had to consider whether s 51(6) of the SCA 1981 conferred a right on a party to seek an order against the legal representative of the other party. The court upheld an earlier decision of Brown v Bennett (No 2)  2 All ER 273,  1 WLR 713 where Mr Justice Neuberger concluded that s 51(6) should be construed on a wide basis to cover the legal representative of any party to the proceedings. The House of Lords affirmed that judgment. Wasted costs orders are likely to become more common.
If the application is unsuccessful it is clear that the unsuccessful applicant can expect to pay the costs. In Bellamy v Central Sheffield University NHS Trust  All ER (D) 50 (Jul), CA, the Court of Appeal upheld the principle that an unsuccessful applicant should normally pay the costs to the respondent. Denial of a successful party’s costs of success had to be explained. Some idea of the costs that can be incurred in a wasted costs application can be gathered by the estimates in Chief Constable of North Yorkshire v Audsley  Lloyd’s Rep PN 675. The costs of the wasted costs application were estimated to be £130,000 when the amount in dispute was £169,000. Unsurprisingly the judge declined to issue a Notice to Show Cause on the grounds that the costs of the application were likely to be disproportionate.
In Hallam-Peel & Co v Southwark London Borough Council  EWCA Civ 1120,  All ER (D) 200 (Oct), the Court of Appeal held that a wasted costs order should not have been against solicitors who raised a new point in possession proceedings which led to further adjournments.
The judgment points out that different lawyers will look at the same case in different ways and have thoughts and ideas about them that others will or may not have. The same lawyer may also see it differently six months on and consider investigating an angle which had not previously occurred to him or her.
Here it meant that the solicitor should not be penalised by a wasted costs order when their counsel thought of a new point which they had not previously considered.
even a binding authority fatal, or almost fatal, to the client’s case might not justify a wasted costs order.
The power to make a wasted costs order is discretionary. In R (on the application of Hide) v Staffordshire County Council  EWHC 241 (Admin),  All ER (D) 402 (Oct), the claimant’s advocate had engaged in behaviour which could properly be regarded as improper, unreasonable and/or negligent. The proceedings were entirely unnecessary and were doomed to failure and a reasonably competent solicitor would have known that. Nevertheless, the judge concluded that no wasted costs order should be made against the solicitor as it was likely to result in the solicitor’s bankruptcy and that would be a disproportionate consequence.
assessment as to the whole or a specified part of the costs incurred by the receiving person, if not agreed.
Following an order for assessment, the paying person or the receiving person may apply to the High Court in the Upper Tribunal and to the county court in the First-Tier Tribunal for a detailed assessment of costs in accordance with the Civil Procedure Rules 1998 on the standard basis or, if specified in the order, on the indemnity basis.
order the party at fault or his legal representative to pay costs which he has caused any other party to incur.However, unlike s 51 of the SCA 1981, CPR 44.14 contains no provision preventing the solicitor from rendering a charge to his or her client in respect of any between-the-parties costs which have been disallowed. This is the case even though CPR 44.14(3) requires the solicitor to notify the client in writing of any order based upon his misconduct no later than seven days after the solicitor receives notice of the order if the party is not present when the order is made. One possible remedy is for the court to ask the solicitor to undertake not to render a charge to the client as an alternative to the court initiating an investigation under s 51 of the SCA 1981.
Employment tribunals have a significant personal injury jurisdiction in their own right but decisions on wasted costs are also relevant to cases conducted in the ordinary courts. Indeed, many recent decisions are those of the Employment Appeal Tribunal (“EAT”).
the Employment Appeal Tribunal dealt with the issue of costs orders and wasted costs.
Here a 17 year old girl brought various Employment Tribunal claims and lost all of them except one in respect of notice pay of £285.00.
It ordered her to pay £5,025.00 costs and made a wasted costs order of £10,050.00 against the solicitor.
The Employment Appeal Tribunal overturned both orders. In relation to the Claimant it held that the Employment Tribunal had omitted an important stage in the process of deciding to make a costs order, namely that of considering whether it had been appropriate to have done so as required by Rule 40(2) of the 2004 Rules of Procedure.
The claimant had been 17 years old and, on its finding in relation to the solicitor Mr Ojo, had not been properly advised. The tribunal did not appear to have had regard to those matters. It should have been obvious that, particularly given her age, her means were likely to have been of relevance both in deciding whether to make an order and as to how much it should be. The tribunal ought not to have made findings against her in relation to her means without having given her an opportunity to make representations or present evidence and thus the appeal against the costs order would be allowed.
“(2) A tribunal… shall consider making a costs order against a paying party where, in the opinion of the tribunal…, any of the circumstances in paragraph (3) apply. Having so considered, the tribunal… may make a costs order against the paying party if it… considers it appropriate to do so.
In relation to the wasted costs order the EAT reminded itself that an Employment Tribunal had to approach that jurisdiction with caution, bearing in mind the constitutional position of the advocate and the fact that from their point of view the jurisdiction was penal.
The tribunal had to consider the possibility that issues of privilege might prevent a representative mounting a proper defence and that they should be given the benefit of any doubt.
A representative could (and indeed had to) argue a case which they considered hopeless and for which they had been advised was hopeless if those were the instructions of the client. There was a clear distinction between that situation and that of a representative lending assistance to proceedings which were an abuse of process.
Even if proper advice had been given it was possible that the Claimant would have insisted that the case continue and the solicitor would have been obliged to carry on.
“(1) A tribunal… may make a wasted costs order against a party’s representative.
(b) which, in the light of any such act or omission occurring after they were incurred, the tribunal considers it unreasonable to expect that party to pay.
(4) In this rule “representative” means a party’s legal or other representative or any employee of such representative, but it does not include a representative who is not acting in pursuit of profit with regard to those proceedings. A person is considered to be acting in pursuit of profit if he is acting on a Conditional Fee Agreement.
Note that under clause 58(3) of the Criminal Justice and Courts Bill, currently before Parliament, a court which makes a wasted costs order under section 51(6) of the Senior Courts Act 1981 must report the matter to the approved regulator, that is the Solicitors Regulation Authority in the case of a solicitor. Presumably Employment Tribunals would take the same action if a wasted costs order is made under Rule 48.
It should also be noted that although there is reference to a Conditional Fee Agreement it is illegal to act under such an agreement in Employment Tribunal matters – see Regulation 1(4) and 1(6) of the Damages-Based Agreements Regulations 2013.
In Godfrey Morgan Solicitors Ltd v Cobalt Systems Ltd (UKEAT/0608/10/LA)  ICR 305, 155 Sol Jo (no 34) 31, EAT, the EAT gave guidelines on the proper approach to applications for wasted costs orders.
The appellant solicitors, Godfrey Morgan Solicitors, appealed against a wasted costs order made against them by an employment tribunal. They had been acting under a contingency fee agreement for an employee, Mr Willimott, in an unfair dismissal claim against the respondent employer Cobalt Systems Ltd.
The claim was listed for a two-day hearing. When the solicitors told C that he would have pay for counsel, Mr Willimott stated that he had understood that he would not have to pay anything upfront and that he could not afford to proceed with the claim.
The solicitors did not inform Cobalt’s solicitors that the claim had been withdrawn until a few days before the hearing. Cobalt’s solicitors applied for a wasted costs order against Godfrey Morgan Solicitors. The tribunal found that Godfrey Morgan Solicitors had wanted a settlement but when that was not available, they had failed promptly to advise Mr Willimott about his position and had failed to implement Mr Willimott’s instruction to withdraw the claim.
The tribunal ordered Godfrey Morgan Solicitors to pay the costs incurred by Cobalt’s solicitors from the date at which it became clear that the case would not settle. Godfrey Morgan Solicitors submitted that the judge had (1) erred in refusing to allow them to produce documents which cast doubt on criticisms made about their advice to Mr Willimott; and (2) acted contrary to the rule laid down in Ratcliffe Duce & Gammer v Binns (t/a Parc Ferme) UKEAT/0100/08/CEA, by allowing Cobalt to cross-examine them and to make submissions on the wasted costs issue.
The correspondence and attendance notes Godfrey Morgan Solicitors sought to produce showed them in a less bad light. However, the judge’s decision not to allow those documents in so late in the day was within his discretion.
There was no general rule as Elias J. appeared to propound in Ratcliffe. His observations were on any view obiter and were made in the context of a very different procedural situation. As regards the making of submissions, it was standard practice in the context of other kinds of issue for one party to be able to comment on the other party’s submissions; there was nothing different about a wasted costs application. As for cross-examination of the representative against whom costs were sought, it was a fair and proportionate way of helping the tribunal get the right result in the instant case.
Save in straightforward cases tribunals should be reminded not only of the terms of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 SI 2004/1861, Sch 1, para 48, but also of the Court of Appeal’s guidance in Ridehalgh v Horsefield  Ch 205, CA (Civ Div) at pp.226–239, and to refer to the relevant aspects of that guidance in its reasons.
The statement in Ridehalgh that the court could not imagine any circumstances in which the applicant should be permitted to interrogate the respondent lawyer referred to written interrogatories and did not prohibit cross-examination.
It was always wise to follow the approach outlined in Ridehalgh at p.231 F–G. As emphasised in Ridehalgh, the right procedure for determining claims for wasted costs would depend on the circumstances of the particular case. Proportionality was an important consideration. The only essential requirement was that the representative had a reasonable opportunity to make representations as to whether an order should be made. That could mean that an application for wasted costs could not be dealt with in the substantive hearing.
Tribunals would often understandably wish to deal with such applications there and then in the interests of economy. However, sometimes that would simply not be fair, and the representative would be entitled to more time to make representations.
As the Court of Appeal said in Ridehalgh, although the procedure had to be as simple and summary as possible, that could only be so far as fairness permitted.
Applications for wasted costs orders would often involve not only quite large sums but also what might be very serious criticisms of the representative’s competence or conduct which might have serious repercussions. Judges had to resist the temptation to treat wasted costs issues as matters of ancillary significance.
In any case where privilege had not been waived the tribunal had to give full weight to the warnings in Ridehalgh and ought to make it clear that it had done so. However, it would not always be necessary for a tribunal to consider privileged material in order to decide whether a representative was at fault.
The amount of detail required in written reasons in relation to a wasted costs order would vary enormously. The issues would sometimes be important and would not always be straightforward. In such cases, thorough treatment would be required.
Wasted costs orders were also disproportionately likely to generate appeals, so the EAT would need to have a clear account of the tribunal’s reasoning: Ridehalgh applied (para 36). Appeal dismissed.
In Fisher Meredith v JH and PH (Financial Remedy: Appeal: Wasted Costs)  EWHC 408 (Fam),  2 FCR 241, the High Court revisited all of the authorities in relation to wasted costs and reaffirmed their relevance in a rapidly changing costs environment. Costs do not now follow the event in family matters, but the court here held that that made no difference to the principles in relation to applications for wasted costs. This is significant as the trend in all civil litigation is moving away from costs following the event.
In personal injury matters there has been no date announced for any increase in the small claims limit but since 1 April 2013 there has been a system of Qualified One Way Costs Shifting whereby claimants will, in general, not liable for defendants’ costs in the event of defeat. Clearly parties and their lawyers are likely to look more closely at making wasted costs applications if ordinary costs are not available. It is equally clear that there will be no lowering of the significant threshold to be overcome to succeed in such an application.
In Flatman and Germany v Weddall and Barchester Health Care Limited  EWCA Civ 278 the Court of Appeal held that solicitors who help their clients by funding the cost of disbursements should not be liable for costs if the case fails even if no After-the-Event insurance is in place.
Although both appeals related to pre-Jackson cases the Court of Appeal recognised that the situation was likely to become much more common post-Jackson with the abolition of legal aid for all but a small number of clinical negligence cases and with the abolition of recoverability of After-the-Event insurance premiums.
The issue of solicitors being able to fund disbursements without being at risk of an adverse costs order is regarded as one of access to justice and the Court of Appeal allowed the Law Society to intervene. The Court of Appeal specifically approved the funding of disbursements generally with the client repaying the solicitor at the end and also the solicitor paying disbursements on a contingency basis, that is without recovering them from the client if the case is lost. Although not necessary for the judgment in these two cases by extension it allows solicitors to agree only to charge the client for disbursements actually recovered from the other side.
The point here is that, contrary to popular belief, costs orders against claimants are made for the full sum, but may only be enforced beyond the level of damages with permission of the court.
Shortly afterwards the Court of Appeal came to the same conclusion in another case.
In Heron v TNT (UK) Limited and Mackrell Turner Garrett (a firm)  EWCA Civ 469 the Court of Appeal dismissed an attempt by the employers’ insurers to obtain an order for costs against solicitors who had been acting for the employee until they withdrew from the case.
“36. Based on the facts as found by the judge and with which I would not interfere, the application has to be put on the basis that the failure by MTG to obtain ATE insurance (and the subsequent failure to admit that fact to Mr Heron) is itself sufficient not only to give rise to a breach of duty to him but, in addition, to demonstrate that MTG had become a ‘real party’ to the litigation, the person ‘with the principal interest’ in its outcome, or that it was acting ‘primarily for his own sake’. If that was so, as I have said, every act of negligence by a solicitor in the conduct of litigation (thereby giving rise to a conflict) which means that an opposing party incurs costs which might not otherwise have been incurred would be sufficient. When pressed by Beatson LJ during the course of argument, Mr Bacon was unable to identify a principled way of drawing the line so as to avoid this consequence.
I do not accept that the law goes anything like that far. A solicitor is entitled to act on a CFA for an impecunious client who they know or suspect will not be able to pay own (or other side’s costs) if unsuccessful (see Sibthorpe v Southwark BL  1 WLR 2111 at para. 50; Awwad v Geraghty  QB 570 at 588; Dolphin Key v Mills  1 WLR 1829 at para. 75). As far as the other side is concerned, whether the solicitor has negligently failed to obtain ATE insurance to protect his client (as opposed to not being able to obtain such insurance) does not impact on the costs they will incur unless it is demonstrably provable that the costs would not have been incurred (as in Adris). That is not the case here.
Few others share this view and in any event almost no damages-based agreements have been signed, except in employment matters where there is generally no costs-shifting in any event.
In the 15th Century a litigant who had wasted the court’s time, for example by failing to attend a hearing or to comply with an interim order, could be amerced by being ordered to pay compensation to the Crown. Indeed both parties could be amerced if, say, they had settled the matter but not let the court know thus leaving the judge with nothing to do. Given that the court service is now required to be a profiteering sector, some would say racketeering given the astronomical court fees and poor service, it is surprising that the revival of amercing has not found its way on to the statute book.
shall be in the discretion of the court.
Non-Party Costs Orders are also known as Third Party Costs Orders.
The principles, law and practice in relation to Non-Party Costs Orders have very recently been thoroughly reviewed by Mr Justice Akenhead in Weatherford Global Products Ltd v Hydropath Holdings Ltd  EWHC 3243 (TCC). The case creates no law but it is a very useful examination of the law.
Deutsche Bank AG v Sebastian Holdings Inc and Another  4 Costs LR 711.
The fact that the court is considering making a Wasted Costs Order against a lawyer does not prevent it also considering a Non-Party Costs Order against that lawyer, or indeed anyone else. (See Excalibur Ventures and Others v Psari Holdings and Others  EWHC 3436.
The breadth of the court’s discretion has often been stressed and successful appeals will be rare; the appellant court should not interfere with the discretion of the trial judge unless he has plainly erred – see Alan Phillips Associates Ltd v Dowling (t/a the Joseph Dowling Partnership)  EWCA Civ 64,  BLR 51.
This has recently been confirmed by the Court of Appeal in Systemcare (UK) Ltd v Services Design Technology Ltd  EWCA Civ 546.
Wasted Costs Orders can only be made against legal representatives, including solicitors and barristers and such orders are made under section 51(6) of the Senior Courts Act 1981 and are dealt with in my piece above – Wasted Costs Orders.
However where a court declines to make a Wasted Costs Order it can still make a costs order against a solicitor, or other lawyer, under the general, and very wide power to make a Non-Party Costs Order under sections 51(1) and (3) of the Senior Courts Act 1981, set out above.
the Court of Appeal held that there was no jurisdiction under sections 51(1) and (3) to make an order for costs against legal representatives acting purely as legal representatives; in such cases an order could only be made under the Wasted Costs Orders Provisions of section 51(6).
if the solicitor acts outside the role of solicitor, for example in a private capacity or as a true third party funder for someone else.
The mere fact of acting under a Conditional Fee Agreement is not a factor which points in favour of imposing a non-party costs order, even though there is a financial interest in winning which is not present under a normal retainer: Hodgson v Imperial Tobacco  1 WLR 1056.
In Hodgson a large number of plaintiffs brought actions against three tobacco companies, claiming damages for personal injuries by reason of cancer caused by smoking cigarettes manufactured by the defendants. The plaintiffs had conditional fee agreements with their legal representatives under section 58 of the Courts and Legal Services Act 1990.
The defendants requested the disclosure of the agreements, indicating that in due course the might, if so advised, wish to seek an order for costs against the plaintiff’s legal advisers personally. The plaintiffs refused to disclose the agreements and applied for an order debarring the defendants from seeking costs against the plaintiff’s legal representatives other than by way of a wasted costs order. At a hearing for directions in chambers the judge refused to make a pre-emptive order relating to costs and, further, ordered that the parties and their legal advisors should not make any comment to the media about the litigation without leave of the court.
The existence of a conditional fee agreement did not entitle a legal adviser to come to any additional or collateral arrangement with his client which would not be permissible without such an agreement.
Therefore, a legal adviser acting a under a conditional fee agreement which complied with section 58 of the Act of 1990 was no more at risk of being made personally liable for the costs of a party other than his client than one who was not acting under such an agreement.
In any event, any pre-emptive order would have to be so qualified that in practice it would not provide the plaintiff’s lawyers with any legal protection.
Accordingly, in the circumstances it would not be appropriate to make such an order.
In Myatt the Court of Appeal had upheld the lower court’s decision that the Conditional Fee Agreements were unenforceable and went on to hold that a non-party costs order could be made against solicitors on the record. Here the court did make such an order as the appeal proceedings had been launched so as to protect the solicitors claim for costs.
The court of appeal specifically confined its decision to cases where litigation was funded by a Conditional Fee Agreement and where the issue was the enforceability of that agreement.
In such cases parties considering applying for an order should warn the solicitor at risk at an early stage, so as to give the solicitor a reasonable opportunity to decide whether to continue with the proceedings.
the Family Court made a Wasted Costs Order against the mother’s solicitors in respect of a directions hearing which was necessary because of the failure of the solicitors to seek the leave of the court to extend the time for compliance with the directions order given at an earlier hearing and their failure to comply with those directions.
The court said that it was satisfied that the conduct of the solicitors was so serious and so inexcusable that it amounted to improper and unreasonable conduct and it caused the father to incur unnecessary costs.
It thus satisfied the provisions of CPR 46.8 and the three stage test set out by the Court of Appeal in Ridehalgh v Horsefield  Ch 205.
The court ordered the costs to be paid on an indemnity basis.
The conduct included incorrectly addressing two letters to the court, sending letters to the father’s solicitors and not to the court and failing to give any idea as to when the steps required by the earlier directions order would be complied with.
The mother was legally aided. The father was privately funded.
In Globe Equities v Globe Legal Services Ltd, an order under the SCA 1981, s 51 was made against a firm of solicitors who had created a limited liability company through which to lease their office premises. The company litigated with the freeholder and lost. The court held that the solicitors were the real defendants and the actions were continued for their benefit which enabled them to remain in the premises for over two years without paying rent; furthermore that the defences and counterclaims in the actions were hopeless. The Court of Appeal having analysed the authorities came to the firm conclusion that pure funders with no personal interest in the litigation, who do not stand to benefit from it, are not funding as a matter of business and do not seek to control its course, are immune from an order for costs under the SCA 1981, s 51.
Simon Brown LJ concluded that nothing in the facts of this case took it out of the general principle that pure funders generally are exempt from the SCA 1981, s 51 liability for costs.
In Flatman and Germany v Weddall and Barchester Health Care Limited  EWCA Civ 278, the Court of Appeal held that solicitors who help their clients by funding the cost of disbursements should not be liable for costs if the case fails even if no After-the-Event insurance is in place.
In Heron v TNT (UK) Limited and Mackrell Turner Garrett (a firm)  EWCA Civ 469, the Court of Appeal dismissed an attempt by the employers’ insurers to obtain an order for costs against solicitors who had been acting for the employee until they withdrew from the case.
the solicitor took on claims under the Consumer Credit Act 1974 on the basis that it was cost free to the claimants whose cases had been referred by a claims management company. Here the solicitor’s literature had represented that “your solicitor will purchase, at their cost, a legal expenses insurance policy” [i.e. ATE insurance] but had failed to do so.
However the solicitors failed to obtain after-the-event insurance and failed to explain to the claimants that they would have to pay the other side’s costs if the claims were lost.
The High Court held that this was a “gross breach of duty” towards the clients and that the solicitors were effectively acting without instructions as the clients were “prevented from giving instructions on anything like an informed view of the case” and said “it is obvious that if the clients had been told of the true position they are likely to have instructed (the law firm) not to progress the claims”.
The solicitors were made the subject of a non-party costs order upon the application of the defendant.
the High Court upheld a Costs Order against a non-party, and commented on the nature of such orders and the duties of solicitors when litigating personally.
The High Court rejected the first instance judge’s finding that it was appropriate to apply the same standards to Mr Virdi’s conduct of his personal affairs as would have applied to his professional conduct.
Consequently Mr Virdi could be regarded as the “real party” and thus could properly be made the subject of a non-party costs order.

References: EWCA 
 EWCA 
 EWCA 
 UKHL 
 EWCA 
 EWCA 
 UKHL 
 EWCA 
 EWCA 
 EWCA 
 EWCA 
 EWCA 
 EWCA 
 EWCA 
 EWCA 
 UKHL 
 EWCA 
 EWCA 
 EWCA 
 EWCA 
 EWCA 
 EWCA 
 EWCA