Rushbrooke UK Ltd v 4 Designs Concept Ltd
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 04 July 2022 |
| Neutral Citation | [2022] EWHC 1687 (Ch) |
| Docket Number | Case No: CR-2022-BRS-000042 |
| Court | Chancery Division |
| Year | 2022 |
[2022] EWHC 1687 (Ch)
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: CR-2022-BRS-000042
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
INSOLVENCY AND COMPANIES LIST (ChD)
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
Charlie Newington-Bridges (instructed by Neath Raisbeck Golding Law) for the Applicant
John Churchill (instructed by Temple Bright LLP) for the Respondent
Application dealt with on paper
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment will be handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 am on 4 July 2022.
Introduction
On 9 May 2022 I heard the claimant company's application (by notice dated 20 April 2022) for an injunction to restrain presentation of a winding-up petition. On 13 May 2022, I handed down judgment in this matter, giving my reasons for striking out the application. This was on the basis that one of the only two directors of the company, Mr Mark Steventon-Smith, had no authority on his own to make or give instructions to make the application on the company's behalf: see [2022] EWHC 1110 (Ch). I invited written submissions on consequential matters, and received those from both sides on 13 May 2022 (primary submissions) and 16 May 2022 (responsive submissions). As a result of those submissions, on 15 June 2022 I ordered that the applicant should pay the respondent's costs of and incidental to the application, and summarily assessed these in the sum of £7920 (including VAT): [2022] EWHC 1416 (Ch). At the same time I declined to order that Mr Steventon-Smith should be jointly liable with the company to the respondent for those costs.
However, a further primary submission from the respondent was that the applicant's solicitors, Neath Raisbeck Golding Law (“NRG”), should show cause why they should not be ordered to be jointly liable with the company (and Mr Steventon-Smith) for the wasted costs of the application of 20 April 2022. The responsive submission of the applicant suggested that the solicitors should file their evidence by the 30 May 2022, and that the respondent should file any evidence in answer by 7 June 2022. I therefore gave directions (albeit with slightly different dates), and duly received such written evidence, from David McAndrew of NRG on 27 May 2022, and on behalf of the respondent on 13 June 2022. Having considered that evidence, I decided that the most appropriate way to deal with the wasted costs issue was to invite written submissions from the parties and from NRG on that issue: the respondent by 4 PM on 17 June 2022, the applicant or NRG by 4 PM on 22 June 2022 and any reply from the respondent by 4 PM on 24 June 2022. I duly received those submissions, and have considered them.
Wasted costs order
The law
Originally, there was an inherent jurisdiction in the court to require a solicitor for one party to pay to another party costs which had been wasted by the solicitor's undue delay or misconduct: see Myers v Ellman [1940] AC 282, HL. This jurisdiction was given statutory recognition by the Solicitors Act 1957, section 50(2). It was however regulated by the procedural rules only in 1960. The relevant rule later became RSC 1965 Ord 62, rule 8(1), and then in 1986 RSC Ord 62, rule 11. There were periodic amendments to the relevant rule, and a number of cases were decided, among them the important decision in Ridehalgh v Horsefield [1994] Ch 205, CA, to which I refer below.
Nowadays, however, wasted costs orders are governed by the Senior Courts Act 1981, section 51(6), (7), CPR rule 46.8, and CPR Practice Direction 46, para 5. The first of these provisions reads:
“(6) In any proceedings mentioned in subsection (1), the court may disallow, or (as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of court.
(7) In subsection (6), “wasted costs” means any costs incurred by a party—
(a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or
(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay.”
CPR rule 46.8 reads:
“(1) This rule applies where the court is considering whether to make an order under section 51(6) of the Senior Courts Act 1981 (court's power to disallow or (as the case may be) order a legal representative to meet, ‘wasted costs’).
(2) 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.
(3) When the court makes a wasted costs order, it will –
(a) specify the amount to be disallowed or paid; or
(b) direct a costs judge or a district judge to decide the amount of costs to be disallowed or paid.
(4) The court may direct that notice must be given to the legal representative's client, in such manner as the court may direct –
(a) of any proceedings under this rule; or
(b) of any order made under it against his legal representative.”
CPR Practice Direction 46, para 5, reads:
“5.1 A wasted costs order is an order –
(a) that the legal representative pay a sum (either specified or to be assessed) in respect of costs to a party; or
(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.
5.4 A party may apply for a wasted costs order –
(a) by filing an application notice in accordance with Part 23; or
(b) by making an application orally in the course of any hearing.
5.5 It is appropriate for the court to make a wasted costs order against a legal representative, only if –
(a) the legal representative has acted improperly, unreasonably or negligently;
(b) the legal representative's conduct has caused a party to incur unnecessary costs, or has meant that costs incurred by a party prior to the improper, unreasonable or negligent act or omission have been wasted;
(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.
5.7 As a general rule the court will consider whether to make a wasted costs order in two stages –
(a) at the first stage the court must be satisfied –
(i) that it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and
(ii) the wasted costs proceedings are justified notwithstanding the likely costs involved;
(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.
5.9 On an application for a wasted costs order under Part 23 the application notice and any evidence in support must identify –
(a) what the legal representative is alleged to have done or failed to do; and
(b) the costs that the legal representative may be ordered to pay or which are sought against the legal representative.”
Breach of warranty of authority
In addition to the statutory wasted costs jurisdiction, the court also has an inherent jurisdiction over solicitors (as its officers) to require them summarily to compensate a person who suffers loss as a result of a breach of an implied warranty given by a solicitor that he or she was authorised by the party concerned to act on that party's behalf: see eg Yonge v Toynbee [1910] 1 KB 215; Re Sherlock Holmes International Society Ltd [2016] 4 WLR 173, [22]; Zoya Ltd v Ahmed [2016] 4 WLR 174, [28]–[41]. I refer to this jurisdiction briefly below.
The application for an order
The respondent invited me to treat the application made in the written submissions as if it were an application made orally in the course of a hearing, under para 5.4. In Thames Chambers Solicitors v Miah [2013] EWHC 1245 (QB), Tugendhat J said:
“47. In the circumstances of this case, it was not necessary that the Defendant issue a Part 23 application. The case against the Solicitors on whether they had acted improperly, unreasonably and negligently had been made sufficiently clear.”
In my judgment, the case is sufficiently clear in the present case too. Since the written submissions in the present case replace the oral hearing at which the question of costs would have been discussed, I have not required a Part 23 application. I did not however follow precisely the procedure set out in para 5.7 of the practice direction. The parties were agreed that the...
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