THE HIGH COURT
[2005 Record No. 1050 P]
BETWEEN
TERENCE KENNEDY
PLAINTIFF
AND
KILLEEN CORRUGATED PRODUCTS LIMITED
DEFENDANT
AND
DOOR FIX IT LIMITED
THIRD PARTY
FURTHER DECISION of the Master of the High Court 2nd February, 2006.
This written decision concerns the jurisdiction of the High Court in regard to
the costs of litigation, not the liability of one party to the other (or the quantification
of that liability) but as to the issues concerning costs incurred unnecessarily. In this
case the defendant has appeared before the court to respond to a motion for
Interrogatories and has successfully resisted the application. The analysis of the
application and judgment in the matter is set out in a written decision of the Court
dated 4th November, 2005. As regards costs, the defendant’s costs of responding to
the motion must be paid by the plaintiff. There will be an order for the taxation of
these costs.
But other, quite separate, issues arise. The plaintiff has also incurred costs in
bringing the motion. These are his own legal costs and will have to be paid by
himself in addition to his liability to repay his opponent’s legal costs. Have these
-2costs been “wasted”? Does the Court have a role regarding the position as between
the plaintiff and his own solicitor? When and how should the Court record a finding
that costs have been “wasted” and who should pay them?
Circumstances involving, prima facie, the “wasting” of costs include when a
party has to apply to amend his court documents, or to add parties; applications to
renew an unserved summons or for extensions of a missed deadline; responding to an
opponent’s application to strike out proceedings because of your delay in prosecuting
same, or because of non compliance with an order of the Court, or because you have
refused a perfectly reasonable request for particulars or for voluntary discovery.
Consenting to an order for discovery of documents which is clearly unnecessary and
burdensome would be another candidate for the list. (Technically, if the Master does
not certify for counsel, the client should not have to pay for two lawyers representing
him in the Master’s Court or worse, pay the fees of four lawyers if he loses the
application!) And let’s not forget the costs of an application which fails because the
paperwork is defective, the costs “thrown away” when a matter has to be adjourned
because you are not ready to proceed, or perhaps more controversially, the costs
(discovery and/or trial) incurred directly because of a formal tactical denial of an
alleged fact which is not seriously in dispute, or the allegation, by a plaintiff, of a fact
which is not material.
A simple perusal of the above list prompts the following observation: though,
presumably, a client will hear eventually if an order for costs is made against him,
does the client know or have any means of knowing whether these costs could or
should have been avoided? Every time the case is in a court list costs are incurred.
Should the Court intervene between the solicitor and his own client if it is apparent
that costs have been “wasted”? An “on the spot” wasted costs order? Only one of
-3the two, the solicitor, is actually in Court to argue the matter and the client’s
arguments (rather, the arguments he might make if he were in Court) have to be
formulated, in effect, by the Court itself.
Order 99, r. 7 of the Rules of the Superior Courts provides:
“If in any case it shall appear to the Court that costs have been improperly or
without any reasonable cause incurred, or that by reason of any undue delay
in proceeding under any judgment or order, or of any misconduct or default of
the solicitor, any costs properly incurred have nevertheless proved fruitless to
the person incurring the same, the Court may call on the solicitor of the
person by whom such costs have been so incurred to show cause why such
costs should not be disallowed as between the solicitor and his client and also
(if the circumstances of the case shall require) why the solicitor should not
repay to his client any costs which the client may have been ordered to pay
any other person, and thereupon may make such order as the justice of the
case may require.”
This, then, is not about the usual argument on costs – how much should the
client pay his solicitor – but is instead about whether the solicitor should repay his
client if costs have been incurred wastefully.
In the present case, Counsel for the Solicitor submitted one and only one
argument, namely that while it might be open to the High Court to make the
threatened order, the Master of the High Court could not do so: a jurisdictional
argument. Counsel advanced no substantive arguments otherwise as to why the order
should not be made by the Court. The jurisdictional argument made is easily refuted.
The Master of the Court has all the jurisdiction of the High Court in those
interlocutory and other matters which the Court (by Rules) has conferred on him and
in dealing with these the Master has power to make all necessary and ancillary orders
including orders as to costs (O. 63 r. 6).
-4The confusion about the jurisdiction of the Master appears to me to have been
caused by the fact that neither I nor, I think, previous holders of this office has ever
made an Order (under O. 99 r. 7) of the sort now threatened. In this, Masters have
been merely replicating the approach of the judges who, historically, have also not felt
it appropriate to make such orders. If we find out why this mechanism has been
unused, it may help us determine when and where it should be used from now on.
Consequently, an explanation of the position is called for, and no lese majesty is
intended by my modest effort in this written decision to outline my understanding of
the position. It may be helpful to practitioners.
First of all, it must be appreciated that costs awards, of all sorts, are always at
the discretion of the Court. (The jurisdiction to make a costs award is presumably
part and parcel of the inherent jurisdiction of the Court to make such orders as will
effect a just outcome. There are, I believe, some jurisdictions in the Western World
where the Courts do not have the power to make cost orders as such: the damages
award itself must be considered as an adequate remedy. Not so in this jurisdiction).
There are Rules of Court concerning the exercise of the discretion but these, of
course, are not binding in any final sense: they are guidelines. One key guide is that,
all other things being equal, “costs follow the event”, that is to say, the losing party
must reimburse the winning party his litigation costs. It is a rule of thumb and no
more. Underlying it is what lawyers refer to as a “legal fiction”, namely that because
the outcome could have been predicted from day one (since the true facts and the
applicable law were “known”, at least in theory), the losing party has put the winning
party to wholly unnecessary expense, and did so knowingly and without justification
of any sort. It is black and white. No “ifs” or “but’s”.
-5This guideline applies to the awarding of costs orders after the trial, but also in
the preparatory stages of the litigation when parties bring applications to Court (by
Motion on notice to the opposing party) regarding the preparations for the trial. The
legal business transacted on foot of such motions is a growth industry, yet many
clients, one suspects, and most media commentators are unclear as to the legal
significance/insignificance of the temporary Court orders made: if you get an
(interlocutory) injunction you haven’t won the case (indeed, it may prove to be an
own goal ultimately) yet the media seize on the (temporary) outcome as a clear
indication of the way the judicial wind is blowing. The prevailing misconception as to
the nature of interlocutory (or “pre-trial”) orders probably explains why most
members of the public, and indeed many parties to litigation, could not explain if
asked why a case would be in a “Motions list”. The public’s image of the Courts is of
the drama of the trial, the jury, the cross-examination. They would be puzzled as to
why Monday’s legal diary contains over four hundred “Motions” listed and not a
client or a witness to be seen! I have perhaps over developed this point but for good
reason, namely, that on receipt of his own solicitor’s bill of costs, a client may be
completely at sea as to the items included therein which refer to Motions of various
sorts and consequently, to all intents and purposes, unable to query same effectively.
If the court has an obligation to oversee the fairness of the costs being borne by the
client, it may not be sufficient to leave the client to his own devices in instances
where the costs of a motion might be regarded (judicially) as “wasted”.
The costs of a motion are also discretionary. But there is enormous time
pressure on the judges hearing motion lists. It really is expecting the impossible to
ask that the Motions list judge weigh up where the liability for the costs of motions
should fall in each and every case. A formulaic approach is adopted which usually
-6produces a “just” result: the costs of the motion are “reserved”. That is to say, the
judge hearing the trial of the action will also, at the close, deal with issue of the costs
of the interlocutory motion and, usually, costs will “follow the event.”
At the conclusion of the trial, then, costs, including reserved costs, usually
“follow the event” and are awarded in gross to the winner. They are not itemised at
this stage. There are no figures mentioned. The bulk of the costs will of course
consist of the costs of the trial and the solicitor’s professional instructions fee.
Reserved costs of interlocutory motions are likely to be quite small by comparison
and it is perhaps for that reason that there is no pressing need to examine, at the
conclusion of the trial, whether such interlocutory costs previously reserved should
now be disallowed. In any event, the court will be conscious of the process of
scrutiny of the winner’s bill of costs which will occur (if the loser opts to request
same) in a process known as the “taxation of costs”. It may be conjectured that, since
it is known that someone else (the Taxing Master) will be scrutinising the bill item by
item, scrutiny of the reserve cost items by the trial judge at the conclusion of the
hearing is a task which he need not undertake: the Taxing Master will do it, if needs
be.
When the loser queries the winner’s bill, the “taxation” is referred to as a
“Party and Party” taxation. The Taxing Master reviews the papers and hears
submissions on behalf of both parties. The party seeking to reduce the bill will
usually focus his submissions on two elements in the bill. One, the professional fees
item, (the solicitor’s “instructions” fee) is or ought to be fixed by reference to a
market rate for such work, and comparators are cited: this is the somewhat imperfect
mechanism for introducing market place “objectivity” into the figures. The second
element will be such of the bill’s individual items as may be characterised as
-7unnecessary “luxuries”, expenses incurred through over enthusiasm, or caused by
carelessness. Insofar as the Taxing Master determines to disallow any portion of the
bill presented, the winning party will find that his entitlement to reimbursement of his
litigation costs is less than full. There will be a shortfall, and the winner will himself
have to make good that sum out of his own pocket when the time comes to settle up
with own solicitor when the “solicitor and client” bill is presented.
It follows that when the Party and Party taxation has been completed, the
matter of the client’s liability to his own solicitor may also need to be referred to the
Taxing Master for taxation on a “solicitor and client” basis, as it is known.
A parallel may be useful here. The taxing master’s function is similar to that
of a quantity surveyor or architect whose task is to certify the builder’s account for
payment. He must look at the contract, the specifications, the completed work, the
prime cost and bill of quantity rates, time sheets etc. etc. Where no contractual rates
are specified the work will be priced on a quantum merit basis by reference to
prevailing market rates for such work. But the solicitor’s bill is more like a design
and build contract account: the solicitor has designed the litigation, and his design
may have been inefficient or careless. More expense may have been incurred then
was necessary. Money may have been wasted. But there the parallel ends. The
Taxing Master is bound by the Rules of Court (and the provisions of the 1995 Act).
Although order 0.99 r. 37 (18) provides that
“no costs shall be allowed which appear to the Taxing Master to have
been incurred or increased through over-caution, negligence or mistake, or by
payment of special fees to counsel or special charges or expenses to witnesses
or other persons or by other unusual expenses,”
Order 99, r. 11 (3) states:
“On a taxation as between solicitor and own client, all costs incurred with the
express or implied approval of the client evidenced by writing shall be
-8conclusively presumed to have been reasonably incurred, and where the
amount thereof has been so expressly or impliedly approved by the client, to
have been reasonable in amount.”
This is an almost insurmountable hurdle for a client questioning value for
money. In “Taxation of costs” (Flynn and Halpin, 1999, 412) the authors comment
that “the paying party may adduce evidence that rebuts this presumption of
conclusive reasonability. However … this burden is virtually impossible to discharge
… The assent of the party chargeable might reasonably be assumed… the receiving
party will be given the benefit of the doubt.”
Consider the position of the losing party. He has lost the case. And he has
processed a taxation of the winning party’s bill. Now he must decide whether to
commence a taxation of the bill of his own solicitor, who has, it must be remembered,
acted on his side at all stages up to this point. To whom does the client turn? Does he
even now have anybody who might give him a preliminary view of whether a solicitor
and client taxation might be worthwhile (because, yes, there are the costs of the
taxation itself to be considered also!). Perhaps of most significance to this analysis of
the Court’s responsibility in regard to costs, there is really no-one who will be able to
assess individual items, such as the costs of an interlocutory motion, to check whether
it was justified or pointless, except someone who takes the trouble to familiarise
himself with the entire file. That the litigation would have to be reconstructed this
way from the file seems most unfortunate when a judicial ruling on that very point
could have been made at the time for motion was dealt with, and at no extra cost to
the litigants!
There is no reason (apart from pressure of work) why as between party and
party the costs of an interlocutory motion should not be awarded where it is
-9appropriate to do so when one party has “won” and the other has “lost” the motion,
and the Courts have in recent years been more disposed to dealing with these costs on
the merits, there and then, instead of “reserving” them. Indeed, the new Commercial
Court has a distinctive rule requiring the court to avoid making “costs reserved”
orders (O. 63A r. 30)
As night follows day, if a party is ordered to pay the costs of the other, the
next question may be whether the losing party’s application was so pointless an
exercise or so carelessly prosecuted (or necessitated only by reason of his solicitor’s
delays or other failings) that a costs order should be made such that the solicitor
himself should bear the wasted costs, and not his client. The Courts have not explored
that possibility in recent years but, curiously, the Rules of Court (at least as far back
as the post-Judicature Acts 1878 rules!) clearly provide for the making of such orders
at the stage of each interlocutory application. In short, there is no reason in law why
wasted costs orders should not be made at various stages even as between the solicitor
and his client, where the circumstances point to inexcusable professional failings on
the solicitor’s part.
Costs have been, and probably always will be, wasted in litigation. In general
it is probably true to say that the costs aspects of litigation can be a great irritant to
judges: it is the substantive issues of law and fact which exercise them and costs are
generally assumed to be a matter which the Taxing Masters will deal with. I think it
is only fair to record that lawyers have effectively subsidised the courts system
through their tolerance of long listing delays and long unproductive waiting for
judicial time, for which no extra fees are chargeable. If every incident of human error
or below par professional performance were to be the subject of inquiry and fault
finding by the Bench, that cooperation might be withheld. In times gone by solicitors
- 10 in particular acted as facilitators for courts on circuit up and down the country and
were the only form of legal aid available to litigants without the wherewithal to
litigate: an unofficial but effective form of costs subsidization. Costs wasted by one
party increase the fees of the lawyers on the other side.
But times change, and perhaps a less detached approach is needed. There are
positive legal reasons why costs orders should be made by the court at each stage
(rather than reserved or left to the determination of the Taxing Master). Anything that
happens in Court or in the course of litigation, if it offends the Court’s sense of
justice, cannot be tolerated by the Court. The Court cannot turn a blind eye. The
availability of the “reservation” formula, the limited jurisdiction of the Taxing Master
in the matter of overcharging and the further step of review of the taxation by the
Court are not in themselves a guarantee that justice in this matter will be done albeit at
some uncertain future date, because with each step the accuracy of the assessment is
less and less surefooted, and of course, the end result is further delayed. It all must
seem rather circuitous to the lay observer.
If the circuitous route was an effective deterrent against unacceptably low
professional standards, one would expect to see few if any motions before the courts
which are prompted by inexcusable delays, misconceptions of law, clear mistakes in
procedure and so forth. Instead, these motion lists grow term by term. Solicitors are
apparently not that worried about the possibility that errors on their part might cost
them. Perhaps that is because, in practice, it never gets to that point. This is, for the
Courts system, an uncomfortable conclusion.
If the professional bodies themselves had a clear role in adjudicating on
wasted costs matters in the context of complaints and disciplinary proceedings against
errant members (up to and including awards in compensation) the courts might be
- 11 forgiven for declining to be involved. But they don’t. Instead, they say that these
matters are matters for the courts. And they’ll certainly point to the non-making of
wasted costs orders as clear evidence that no unprofessional underperformance had
occurred in individual cases, if a client subsequently complains.
A stronger, more recent, basis for intervention by the Courts in regard to
wasted costs derives from the Human Rights Convention, and the need to ensure
access to justice for all. Does the court now have an obligation to be pro-active in the
interests of litigants generally when lawyers mishandle cases? Delays and ineffective
cost controls both impact on access. Delays caused by motions are a major factor in
overall delays in bringing cases to trial, and if motions’ lists were to shrink because of
the existence of effective and prompt wasted costs sanctions, hearing delays would
also shrink.
What is the legal basis for a solicitor’s liability to his client for costs wasted?
Is it the duty owed by the solicitor to the Court? Or is it the contractual duty (express
or implied) owed to the client? Is it necessary to insist that the client establish the
precise terms of the contract of professional engagement before judging whether or
not a breach thereof has occurred? The Court cannot simply leave the client to try and
put together a new case for damages against his former solicitor, if it has before it at
the hearing of the motion all material sufficient to assess the degree of culpability of
the solicitor by reference to standards generally thought to be enforceable as the
entitlement of any client from his solicitor. The Courts have a fast track method of
finding fault and dispensing justice in such cases. Perhaps no other profession could
resist a client’s claim for damages for breach of contract quite so doggedly and
effectively as the legal profession? For them, different rules are therefore not out of
place. They are “officers of the Court” and consequently accountable to the court.
- 12 The prima facie case against the solicitor is already clear at the conclusion of the
hearing of the motion. The Court can judge the issue after affording the solicitor an
adequate opportunity to respond to the apparent circumstances specified by the Court
as the basis for the threatened order. Order 99, r 7 is not the source of the jurisdiction
to make a wasted costs order. The order reflects the existence of the jurisdiction: it
does not create it.
Rules of Court for the U.K. Courts describe (at O. 62, r. 8) a similar
jurisdiction to the Irish Superior Courts O. 99, r. 7:“…where in any proceedings costs are incurred improperly or without
reasonable cause or are wasted by undue delay or by any other misconduct or
default the Court may make against any solicitor whom it considers to be
responsible orders (a) disallowing the costs as between the solicitor and his
client and (b) directing the solicitor to repay to his client costs which the client
has been ordered to pay to other parties to the proceedings: or (c) directing
the solicitor personally to indemnify such other parties against costs payable
by them.”
In Myers v. Elman [1940] A.C. 282, 302 (a case about the solicitor’s duty as
an officer of the Court to supervise the client’s compliance with an order for
discovery of documents) Lord Atkin said in the House of Lords:“From time immemorial judges have exercised over solicitors…a disciplinary
jurisdiction in cases of misconduct….. If the Court is deceived or the litigant
is improperly delayed or put to unnecessary expense, the solicitor on the
record will be held responsible and will be admonished or visited with such
pecuniary penalty as the Court thinks necessary in the circumstances of the
case.”
And Lord Wright in the same case at p. 317 ff-
- 13 “A solicitor was long ago held to be an officer of the Court on the Roll of
which he was entered and as such to be subject to the discipline of that Court.
The Court might strike him off or suspend him…
But alongside the jurisdiction to strike off the Roll or to suspend, there existed
in the Court the jurisdiction to punish a solicitor or attorney by ordering him
to pay costs, sometimes the costs of his own client, sometimes those of the
opposite party, sometimes, it may be, of both. The ground of such an order
was that the solicitor had been guilty of professional misconduct (as it is
generally called) not, however, of so serious a character as to justify striking
him off the Roll or suspending him.
The term ‘professional misconduct’ has often been used to describe the
ground on which the Court acts. It would perhaps be more accurate to
describe it as conduct which involves a failure on the part of a solicitor to
fulfil his duty to the Court and to realize his duty to aid in promoting in his
own sphere the cause of justice. This summary procedure may often be
invoked to save the expense of an action…the order is for payment of costs
thrown away or lost because of the conduct complained of.”
In Edwards v. Edwards [1958] P. 235 (per the headnote)“The action of the wife’s solicitors in requesting such voluminous copying of
documents amounted to a flagrant case of wasteful procedure and the solicitor
must pay the costs of the expenses thereby caused to the husband.”
Sach J. commented at p. 246ff“A more flagrant case of wasteful procedure is not easy to think of and it
serves to show how costs were run up without regard to propriety.
It is of course, axiomatic, but none the less something which in the present
case should be mentioned, that the mere fact that the litigation fails is no
reason for invoking the jurisdiction: nor is an error of judgment: nor even is
the mere fact that an error is of an order which constitutes or is equivalent to
negligence. There must be something that amounts, in the words of Lord
Maugham, to ‘a serious dereliction of duty,’ something which justifies,
according to other speeches in that case, the use of the word ‘gross’. It is not,
- 14 however, normally necessary to establish mala fides or other obliquity on the
part of the solicitors; though it may be that if mala fides is established that
might turn the scale in a particular case…unreasonably to initiate or continue
an action when it has no or substantially no chance of success may constitute
conduct attracting an exercise of the above jurisdiction.”
The Courts’ inherent jurisdiction was augmented and reformulated by the U.K
parliament in the Supreme Court Act, 1981, and Section 51 of that Act provides that:
“The court may disallow, or order the legal or other representative to meet,
the whole or part of any wasted costs. ‘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 unreasonable to expect that party
to pay.”
The U.K. Court of Appeal (in Ridehalgh v Horsefield and Other Cases [1994]
3 A.E.R. 848) explored the new statutory jurisdiction and stated that:“‘Improper’ covered, but is not confined to, conduct which would ordinarily
be held to justify disbarment, striking off, suspension from practice or other
serious professional penalty.
‘Unreasonable’ aptly described conduct which was vexatious, designed to
harass the other side, rather than advance the resolution of the case, and it
made no difference that the conduct was the product of excessive zeal and not
improper motive.
‘Negligence’ should be understood in an untechnical way to denote failure to
act with the competence reasonably expected of ordinary members of the
profession”.
adding that:
- 15 “A solicitor did not abdicate his professional responsibility when he
sought the advice of counsel. He has to apply his mind to the advice
received.”
Who could disagree with the Master of the Rolls (Bingham) when he puts on
record (at p. 855)
“The public interest in ensuring that litigants should not be financially
prejudiced by the unjustifiable conduct of litigation by their or their
opponents’ lawyers.”
The Master of the Rolls also commented (at p. 862) that:“We were invited to give the three adjectives (improper, unreasonable and
negligent) specific, self-contained meanings, so as to avoid overlap between
the three. We do not read these very familiar expressions in that way.
Conduct which is unreasonable may also be improper, and conduct which is
negligent will very frequently be (if it is not by definition) unreasonable. We
do not think any sharp differentiation between these expressions is useful or
necessary or intended.”
In considering an application for a wasted costs order“Demonstration of the causal link between the improper, unreasonable, or
negligent conduct and the waste of costs was essential. Where conduct was
proved but no waste of costs shown to have resulted the case might be referred
to the appropriate disciplinary body or the legal aid authorities. It was not a
matter for the exercise for the wasted costs jurisdiction.”
The fact that the U.K. legislated in this fashion is of interest especially because
it undermines the contentions of those who consider that the Taxation process route is
adequate to deal with the problem. In the U.K., not only did Parliament apparently
consider taxation to be ineffective in protecting affected persons against wasteful
litigation practices, it also chose to spell out the Court’s inherent “ad hoc” jurisdiction
and provide clear mechanisms for Court adjudication of claims without the need to
- 16 bring fresh proceedings. This is, it said, the way to deal with the “wasted” costs
problem in litigation.
There has been no legislation in this jurisdiction along the lines of the U.K.’s
wasted costs provisions. The casual observer is, however, forced to conclude that if
wasting of costs by solicitors in the U.K. warrants strong curative legislation, the
incidence of cost wasting in this jurisdiction is likely also to be quite extensive. There
is no need to await curative legislation. The Court’s inherent supervisory jurisdiction
referred to in O. 99, r. 7 is robust enough to deal with most instances of improperly or
unreasonably incurred costs, delays, or misconduct or default of the solicitor (Irish
test) and/or instances of improper, unreasonable or negligent acts or omissions (U.K.
legislative test).
The Master of the High Court is not a taxing master. He does not “tax” bills
of costs. The Master of the High Court is, in effect, “subcontracted” by the High
Court to do those parts of the work of the High Court as are listed in the “contract”
(the Rules of Court). He is not a judge, but he is a “virtual” judge and runs on the
same software as the judges of the High Court, exercising what amounts to a
concurrent jurisdiction in all these listed matters. As the Supreme Court (Geoghegan
J.) put it in Taylor v. Clonmel Healthcare unreported 11th February, 2004.
“Although with reference to the Master the word “jurisdiction” is included in
the index to the Rules of the Superior Courts it is not included in the body of
the rules and is, in my opinion, a misnomer. The Master has the powers and
duties conferred on him by the Rules of the Superior Courts. … But as I would
see it, it is not a conferring of jurisdiction on the Master. … The rules of court
simply regulate the jurisdiction already conferred. The rules do not
themselves confer a jurisdiction. Under the definition of “court” in the Rules
of the Superior Courts the Master is included when exercising his powers
under the rules.”
- 17 Practitioners sometimes mistakenly read the Rules as if Order 63, which lists
the functions “subcontracted” to the Master, sets out an entirely self-contained and
separate jurisdiction. But consider this: does the Master made a discovery order under
Order 63 and not under Order 31? Are all the provisions of Order 31 inapplicable
when it is the Master who is dealing with an application for discovery? No, indeed.
A discovery order is made under Order 31 by the Master exercising powers to do so
which are set out in Order 63. Likewise, the Master will make costs orders under
Order 99 (including the reservation of costs, awarding costs on the basis of costs
“following the event”, O. 99, r. 1(4), or even measuring costs O. 99, r. 5(2)(a))
because he has authority to do so conferred by O. 63. So, too, with a “wasted” costs
order of the sort envisaged in O. 99, r. 7.
There are no recorded Irish decisions under O. 99 r. 7. It may therefore be
helpful to look at the U.K. decisions under their 1981 Act, and six of them are to be
found collected together at Ridehalgh v. Horsefield and another and other appeals
1994 3 AER 860. One involved a difficult point of construction in Landlord and
Tenant legislation. Both solicitors agreed that the landlord would be entitled to an
order for possession if a particular notice had been served. Both were wrong in that
interpretation of the Statute. In the wasted costs application the issue was: were they
negligent in failing to understand the law correctly?
The second case was a hearing loss case which had been abandoned when the
plaintiff’s solicitor discovered that a line on a drawing of the workplace layout (which
he’d had on file for some time) represented a solid wall between the source of the
noise – a “decrater” – and his client’s workstation! The solicitor had not prepared for
the case, having taken only “an extremely skimpy statement” from his client over four
years’ earlier, having failed to investigate or obtain counsel’s opinion, etc., etc.
- 18 The third case turned on the plaintiff’s solicitor’s failure to notify his opposite
number that it was a legal aid case. Had he known, the defendant said he would have
settled earlier. The case settled, ultimately, for €2500 plus costs. There was statutory
requirement that the granting of a legal aid certificate be notified to the other side, and
the legally aided solicitors assumed that the court had sent out the notice. It hadn’t.
In the fourth case a creditor’s solicitor, fully aware that there was a genuine
dispute about the debt, advised his client to threaten liquidation of the debtor company
and issue a petition to that effect as “a vehicle to secure a compromise”. That was a
clear abuse of process, and the debtor’s costs of defending the petition had been
“wasted”.
The fifth case concerned the settlement terms agreed in a matrimonial case.
Although the terms had been announced to the court a difficulty arose subsequently in
the drafting of a deed of trust. The husband’s solicitor drew attention to this in a letter
to the wife’s solicitor, but the latter’s response was uncooperative, ultimately causing
the need to apply again to court to confirm that the terms of the draft trust were in line
with the terms of the settlement as announced.
In the sixth case, it was not the solicitor, but counsel, who wasted costs. She
was unfamiliar with the case, having been briefed on the Friday for a hearing due to
commence the following Monday, and not having had the benefit of a consultation.
On the Monday immediately before the hearing, her client handed her his own files.
The action was for damages against a former solicitor who had handled a purchase of
a block of flats but hadn’t spotted that there was no development potential (and also
missed a rent review deadline!). The hearing was something of a roller-coaster, by all
accounts. By the Wednesday, there were still disputes about particulars! The judge
proposed 10 am starts to speed things up and on the Thursday asked the parties to
- 19 prepare written submissions to help him. Counsel had to ask for extra time to
complete these, and an extra day’s costs (the Monday following) were incurred. It
was the costs of this day that the trial judge ordered counsel to pay because of her
delays, her unreasonable slowness in court, her perseverance with a part of the claim
(the “development potential”) which was unstateable but principally because
“for counsel to have accepted an “unseen” brief at such short notice was, on
any showing, “unreasonable” and was likely to and did give rise to
“improper” conduct on her part”
The Court of Appeal (comprising of the Master of the Rolls Sir Thonas
Bingham, and Judges Rose and Wette) reversed the wasted costs orders in all six
cases. Four were reversed on the particular facts, and having regard to the
explanations offered. (In the Landlord and Tenant case the Statute provisions were so
complex that the court could only decide the point after two day’s legal argument, so
the solicitors’ failure to grasp the point could hardly be regarded as negligent!) Two
were reversed on principle. In one of these, the last of the six about described,
counsel was adjudged to have acted as she was required to act under her professional
code of conduct with its well known “cab rank” rule. The court said
“she was not in our judgment entitled to refuse. She did not then know how
inadequate her instructions would be (and she tried to procure reasonable
instructions), but even if she had known she would not have been entitled to
refuse. By Friday the inadequacy of her instructions was only too plain, but
she would not even then have been entitled to refuse to act, unappetising
though the prospect was …There was no reason to think that anyone else
would be better placed to conduct the case then she. She was professionally
obliged to soldier on and do the best she could.”
The family law case is the closest to the matter I am dealing with today
because it was the solicitor’s alleged default in dealing with the snag when it was
identified by his opponent that necessitated an extra application to court. It was
- 20 submitted that had the solicitor dealt professionally with it, the costs of the application
would not have been incurred. The Master of the Rolls outlined it thus:
“The wife, on legal advice, had persisted in maintaining a technical
point of law which the court was later to find wholly conclusive against the
wife’s objections. (…The judge considered that…) a full and proper answer to
the letter would greatly have improved the prospects of the matter proceeding
by consent, and would thus have saved the expense of a contested hearing to
debate what turned out in the end to be an unarguable point. There had been
a failure properly to negotiate a clearly relevant matter which could then have
been dealt with without incurring the substantial costs that ultimately
followed.”
But the Court of Appeal saw it differently:
“The judge had ample justification for finding the wife’s solicitor’s
replies to the letter of 16 October too grudging, perfunctory, and generally
unhelpful to be accepted when judged according to the highest standards of
the profession. But those are not the standards which the court has to apply
when considering whether a solicitor’s conduct has been sufficiently
unreasonable to merit the making of a wasted costs order against him. When
the criterion which we have described in our statement of general principles
as the acid test is applied to the conduct of the wife’s solicitor in regard to the
answering of the letter, we regard it as conduct which, although undeserving
of praise, does nevertheless permit of a reasonable explanation…
The only effect of the letter of 16 October was to give this factor a
specific emphasis which it had not so far received in correspondence. Such
emphasis certainly required the wife’s solicitor to give it renewed and serious
consideration. It is difficult, however, to think of any way in which he could
have done that more effectively than by taking the step (which he did) of
passing the letter on to counsel for his further specific advice. Once counsel
had advised that his views were unchanged, the wife’s solicitor was entitled to
construe his duty to his client as leaving him with no alternative but to
- 21 continue his opposition to any proposal that Robert’s vested rights should be
cut down by agreement.”
Both courts were considering whether the wife’s solicitor’s conduct of the
litigation (bringing the matter back into court) was justifiable. The lower court
though he should have negotiated the point. The appeal court felt there was some
justification for his failure to engage in dialogue. The particular circumstances (terms
of settlement having already been agreed; wife’s contention regarding the loose and
being without merit) almost certainly influenced the lower court to a great extent.
The judge thought that what happened could have been avoided: it was a pure waste
of costs. But the Court of Appeal felt the point was not without difficulty: the wife’s
contention was stateable. That was justification enough. (I am conscious that I am
perhaps over simplifying but I do so in the interests of expedition). The underlying
ratio is that a clearly unanswerable point should be conceded. It follows that an
unwinnable application should never be brought! It is unjustifiable conduct of
litigation.
In Count Tolstoy v. Lord Aldington, 1996 2 AER, 556, the Court of Appeal
found the lower court’s leniency towards the plaintiff’s solicitors too forgiving. The
case was a second one between the parties, the plaintiff having lost the first and been
made bankrupt as a result: now he had found some new “evidence”! (The second
proceedings were struck out as “vexatious”). In the lower court, Collins J. concluded
that the solicitor’s conduct was surprising, an error of judgment and possibly due to
their inability to take an objective view. But as Count Tolstoy had not waived
solicitor client privilege to enable his solicitors to defend the wasted costs application,
the judge was not satisfied that there was no reasonable explanation. (In other words,
- 22 there might have been an explanation, but it could not be revealed). The Court of
Appeal, reversing Collins J., made the wasted costs order saying that
“if the circumstances clearly pointed to unreasonableness, such a
conclusion could not be avoided by the solicitors asserting that they were
acting properly.”
Roch L.J. said that:
“Considering the evidence and material that was placed before the
deputy judge on that occasion, in my judgment it must have been glaringly
obvious to any competent legal representative that there was no basis for this
second action and that the second action had no prospect of success; that to
commence these proceedings would be a clear case of an unjustifiable conduct
of litigation.”
Please note that in each of these cases the solicitor before the court had opened
his files and given his explanation for what had occurred. That did not happen in the
instant case before me. The solicitor concerned with today’s matter was on 4th
November, 2005, given five weeks to show cause and did not do so. That in itself
speaks volumes.
I was of the view, last November, that the interrogatories application
was pointless and misconceived. It did not need two days of legal argument to
convince me of that: it was “glaringly obvious”. I remain of that view. The solicitor
has not attempted to persuade me otherwise. Clearly, there is no suggestion here that
the solicitor has acted “improperly”, but I do not propose to rule on whether the
motion was “unreasonable” (in the sense of not permitting of a reasonable
explanation) or “negligent” (a failure to act with the competence reasonably expected
of ordinary members of the profession). I have a simpler test to apply. Employing
the language of O. 99 r. 7: were costs incurred “without any reasonable cause?”
- 23 I am of the view that the costs of this motion were incurred without any
reasonable cause and I will make an Order under O. 99 r. 7 requiring the solicitor to
reimburse his client for the costs the latter is liable to pay the respondent and
cancelling the solicitor’s entitlement to be paid by his client for the costs of the
application.
A final comment may not be out of place. The courts system is first and
foremost a Constitutional institution for dispute resolution. In both criminal and civil
spheres controversies and current issues impacting on society as a whole are tried.
These are the leading cases, the precedents for future behaviour. At the other end of
the scale, the courts perform the less glamorous function of state funded arbitrator. It
is small scale and often tedious, but it is important, sometimes vital, for the parties
involved. At the former end of the spectrum, justice may demand a money’s-noobject approach: the outcome is too important for the court to concern itself with
unimportant costs issues. Lawyers cannot litigate such cases with one eye on the size
of the bill for outlays. A justice-at-all-costs approach cannot be faulted.
But the same approach cannot be justified at the other end of the scale. If the
costs of civil litigation aren’t kept within reasonable limits, litigants will be
effectively denied access to the courts. It is precisely because lawyers feel themselves
unrestrained (and have in some instances, “benefited” from the court’s reluctance to
sanction for costs wasted) that the Oireachtas has felt it necessary to provide
alternative dispute resolution systems for particular categories of dispute including
Employment Appeals and the Personal Injuries Assessment Board. So it is in the long
term interests of the legal profession that courts should begin making wasted costs
orders. The lawyers probably won’t see it that way, though: it is the old problem of
- 24 “not being able to see the wood for the trees”! For solicitors, this decision should be a
“wake up” call.
Approved:
Master of the High Court