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Wasted costs Orders– a last resort?

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In contested litigation, litigants are sometimes unhappy at the conduct not only of their opponent, but of their opponent’s solicitors.  Improper conduct by a party or its solicitors can result in an Order against them to pay the costs which have been wasted by their improper conduct.  The ability of the Court to make such Orders was recently examined by the High Court in the case of CMCS Common Market Commercial Services AVV v Taylor [2011] EWHC 324 (Ch).

The Facts

The Claimant, Ms Taylor obtained an indemnity costs Order in proceedings against CMCS Common Market Commercial Services AVV (“CMCS”) and a Mr Jakober after they failed to contest the trial.  Neither CMCS nor Mr Jakober paid anything on account of that costs Order and Ms Taylor decided to try to seek recovery of her costs from Mr Jakober’s solicitors.  The essence of her case was that Mr Jakober’s conduct in relation to disclosure of documents in the proceedings was such that the solicitors were obliged as a matter of professional conduct to cease acting for him and Mr Jakober would, as a result, have abandoned his case sooner and at less cost to Ms Taylor.

The Decision

The instructions which a client gives his solicitor are normally privileged from disclosure to third parties. Mr Jakober declined to waive his privilege which meant that the solicitors could not defend themselves by disclosing what had happened between themselves and Mr Jakober.  The Court takes this difficulty into account in such cases and gives the solicitor “the benefit of the doubt”.  The Court concluded that there were possible explanations for why the solicitors acted as they did, although there was still some criticism of them.  The Court also concluded that the solicitors had not caused Ms Taylor’s loss because Ms Taylor and her legal team were aware of the inadequacy of the disclosure and mounted a legal challenge as soon as Ms Taylor had arranged funding.  It was not at any stage suggested that the solicitor knowingly assisted Mr Jakober in concealing material damaging to his case or that he was even reckless as to the possibility that Mr Jakober had concealed relevant details.

Conclusion

It is not straightforward to obtain a wasted costs Order in litigation.  In particular, the Court noted that where there is an available remedy against the party itself which has behaved improperly (which in this case was not promptly pursued) the wasted costs jurisdiction is to be treated as a last resort.

If you have any questions about litigation costs or funding solutions, please do not hesitate to contact John Mackle who is a senior associate in the commercial dispute resolution department on 0113 336 3336 or john.mackle@clarionsolicitors.com.

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