Ridehalgh v Horsefield; Watson v Watson (Wasted Costs Orders)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeTHE MASTER OF THE ROLLS,or
Judgment Date26 Jan 1994
Judgment citation (vLex)[1994] EWCA Civ J0126-2
Docket NumberCCRTF 91/1411/E

[1994] EWCA Civ J0126-2

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE BLACKPOOL COUNTY COURT

Her Honour Judge Holt

Before: The Master Of The Rolls (Sir Thomas Bingham) Lord Justice Rose and Lord Justice Waite

His Honour Judge Lachs

His Honour Judge Tibber

Mr. Justice Knox

Mrs. Justice Booth

Mr. Justice Turner

CCRTF 91/1411/E

CCRTF 93/0800/C

CCRTF 93/0677C

CHANF 93/1100/B

FAFMI 93/0678/F

QBENF 93/0195/C

Bevan Ridehalgh
Plaintiff
and
Neil Horsefield and Christine Isherwood
Defendants
Patrick Francis Allen
Plaintiff
and
Unigate Dairies Limited
Defendant
Ronald Roberts
Plaintiff
and
Coverite (Asphalters) Limited
Defendants
PHILEX PLC
Applicant
and
Shahrdad Golban (Trading as Capital Estates)
Respondent
Frank Merrick Watson
Petitioner
and
Brenda Teresa Sweeney Watson
Respondent
Samuel Thomas Antonelli (and Others)
Plaintiffs
and
Wade Gery Farr (A Firm)
Defendants

MR. D. MATHESON Q.C. and MR. G. MANSFIELD (instructed by Messrs. Barlow Lyde and Gilbert, London EC3) appeared on behalf of the Law Society.

MR. R. JACKSON Q.C. and MR. D. HODGE (instructed by Ms. J. Bye) appeared on behalf of the Bar Council.

MR. I. BURNETT and MR. J. LAUGHLAND (instructed by the Treasury Solicitor, London SW1) appeared as Amici Curiae.

MR. BENET HYTNER Q.C (instructed by Messrs. Weightman Rutherfords, Liverpool) appeared on behalf of the solicitors.

MR. F. NANCE (instructed by Messrs. Rawsthorn Edelstons, Preston) appeared on behalf of the appellant solicitors.

MR. D. MATHESON Q.C. and MR. G. MANSFIELD (instructed by Messrs. Barlow Lyde & Gilbert, London EC3) appeared on behalf of the Solicitors and on behalf of the Law Society.

MR. R. JACKSON Q.C. and MR. D. HODGE (instructed by Ms. J. Bye) appeared on behalf of the Bar Council.

MR. I. BURNETT and MR. J. LAUGHLAND (instructed by The Treasury Solicitor, London SW1) appeared as Amici Curiae.

MR. D. MATHESON Q.C. and MR. G. MANSFIELD (instructed by Messrs. Barlow Lyde & Gilbert, London EC3) appeared on behalf of the appellant solicitors.

MR. G. WEDDELL (instructed by Messrs. Colin Bishop & Co, Finchley) appeared on behalf of the Defendants.

MR. D. MATHESON Q.C. and MR. G. MANSFIELD (instructed by Messrs. Barlow Lyde & Gilbert, London EC3) appeared on behalf of the appellant solicitors.

MR. T. OTTY (instructed by Messrs. Iliffes, Chesham) appeared on behalf of the Applicant.

MR. D. MATHESON Q.C. and MR. G. MANSFIELD (instructed by Messrs. Barlow Lyde & Gilbert, London EC3) appeared on behalf of the appellant solicitors.

MR. M. POINTER (instructed by Messrs. Penningtons, Finsbury Square) appeared on behalf of the Petitioner.

MR. R. JACKSON Q.C. and MR. D. HODGE (instructed by Messrs. Richards Butler, London City) appeared on behalf of the appellant counsel.

MR. G. CHAMBERS (instructed by Messrs. Weightman Rutherfords, Liverpool) appeared on behalf of the Defendants.

1

(As approved)

2

Wednesday 26th January 1994.

THE MASTER OF THE ROLLS
3

THE MASTER OF THE ROLLSThis is the judgment of the Court. Different sections of the judgment have been written by different members. Each of us concurs fully in all sections.

4

There are six appeals before the Court. All of them (save one, in which this issue has been compromised) raise the same question : in what circumstances should the court make a wasted costs order in favour of one party to litigation against the legal representative (counsel or solicitor) of the other? It is a question of great and growing significance. It is desirable that this Court should give such guidance as it can.

5

Two of the cases before us come on appeal from the county court. Three come on appeal from the High Court, one from each division. In all of these cases wasted costs orders were made and the legal representatives who were the subject of the orders appeal. In the remaining case, the issue first arose in this Court : on allowing an appeal against the decision of a county court, the Court invited the solicitors who had acted for the parties in the court below to show cause why they should not be ordered personally to pay the costs thrown away. The solicitors have appeared by counsel in this Court in response to that invitation.

6

Since the question raised by these appeals is of general concern to their members, both the Law Society and the General Council of the Bar sought and were granted leave to make submissions to the Court. Since the question is also of concern to the public, we offered the Attorney-General a similar opportunity of which he took advantage, and counsel were accordingly instructed to represent the wider public interest. All the parties to the six appeals were also represented, save for one party in the compromised appeal. We gratefully acknowledge the help we have had from all solicitors and counsel involved in mounting and presenting these cases.

7

Our legal system, developed over many centuries, rests on the principle that the interests of justice are on the whole best served if parties in dispute, each represented by solicitors and counsel, take cases incapable of compromise to court for decision by an independent and neutral judge, before whom their relationship is essentially antagonistic : each is determined to win, and prepares and presents his case so as to defeat his opponent and achieve a favourable result. By the clash of competing evidence and argument, it is believed, the judge is best enabled to decide what happened, to formulate the relevant principles of law and to apply those principles to the facts of the case before him as he has found them.

8

Experience has shown that certain safeguards are needed if this system is to function fairly and effectively in the interests of parties to litigation and of the public at large. None of these safeguards is entirely straightforward, and only some of them need be mentioned here :

9

(1) Parties must be free to unburden themselves to their legal advisers without fearing that what they say may provide ammunition for their opponent. To this end a cloak of confidence is thrown over communications between client and lawyer, usually removable only with the consent of the client.

10

(2) The party who substantially loses the case is ordinarily obliged to pay the legal costs necessarily incurred by the winner. Thus hopeless claims and defences are discouraged, a willingness to compromise is induced and the winner keeps most of the fruits of victory. But the position is different where one or both parties to the case are legally-aided: section 17 of the Legal Aid Act 1988 and Part XIII of the Civil Legal Aid (General) Regulations 1989 restrict the liability of legally-assisted parties to pay costs if they lose. And sometimes the losing party is impoverished and cannot pay.

11

(3) The law imposes a duty on lawyers to exercise reasonable care and skill in conducting their clients' affairs. This is a duty owed to and enforceable by the client, to protect him against loss caused by his lawyer's default. But it is not an absolute duty. Considerations of public policy have been held to require, and statute now confirms, that in relation to proceedings in court and work closely related to proceedings in court advocates should be accorded immunity from claims for negligence by their clients : Rondel v Worsley [1969] 1 AC 191; Saif Ali v Sydney Mitchell & Co [1980] AC 198; section 62, Courts and Legal Services Act 1990.

12

(4) If solicitors or barristers fail to observe the standards of conduct required by the Law Society or the General Council of the Bar (as the case may be) they become liable to disciplinary proceedings at the suit of their professional body and to a range of penalties which include fines, suspension from practice and expulsion from their profession. Procedures have changed over the years. The role of the courts (in the case of solicitors) and the Inns of Court (in the case of barristers) has in large measure been assumed by the professional bodies themselves. But the sanctions remain, not to compensate those who have suffered loss but to compel observance of prescribed standards of professional conduct. Additional powers exist to order barristers, solicitors and those in receipt of Legal Aid to forgo fees or remuneration otherwise earned.

13

(5) Solicitors and barristers may in certain circumstances be ordered to compensate a party to litigation other than the client for whom they act for costs incurred by that party as a result of acts done or omitted by the solicitors or barristers in their conduct of the litigation.

14

It is the scope and effect of this last safeguard, and its relation with the others briefly mentioned, which are in issue in these appeals. We shall hereafter refer to this jurisdiction, not quite accurately, as "the wasted costs jurisdiction" and to orders made under it as "wasted costs orders". These appeals are not concerned with the jurisdiction to order legal representatives to compensate their own client. The questions raised are by no means academic. Material has been placed before the Court which shows that the number and value of wasted costs orders applied for, and the costs of litigating them, have risen sharply. We were told of one case in which the original hearing had lasted five days; the wasted costs application had (when we were told of it) lasted seven days; it was estimated to be about half-way through; at that stage one side had incurred costs of over £40,000. It almost appears that a new branch of legal activity is emerging, calling to mind Dickens' searing observation in Bleak House:

"The one great principle of English law is, to make business for itself ……...

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