Wasted cost order

Dempsey v Johnstone [2003] EWCA Civ 1134

The defendant, who was a publicly funded bankrupt, had his claim dismissed at the trial on the grounds that he had no arguable prospect of success. The defendant sought and obtained a wasted costs order against the claimant’s solicitors on the grounds that no reasonably competent legal representative would have continued with the action. The Court of Appeal held that the judge had applied the right test but had come to the wrong conclusion because he took the view that the facts pleaded could not support the claim made as a matter of law. The statement of claim settled by leading counsel was capable of supporting the claim, it was a matter for evidence. The question the judge should have asked was whether no reasonably competent legal adviser would have evaluated the chance of success as being such as to justify continuing with the proceedings. In determining that question, the judge could only come to a conclusion adverse to the solicitors if he had the opportunity of seeing counsel’s advice which was privileged. In the absence of waiver of privilege, it could not be inferred that the evaluation of the claim was negligent in the relevant sense within s51 of the Supreme Court Act 1981.