Effect of wasted costs order

R (on the application of Hide and others) v Staffordshire County Council [2007] EWHC 2441 (Admin); All ER (D) 402 (Oct); NLJ 2 November

Section 51(7) of the Supreme Court Act 1981 defines wasted costs as ‘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 ….’ The claimant’s solicitor advocate had engaged in behaviour which could properly be regarded as improper, unreasonable and/or negligent. The proceedings were completely unnecessary. They were doomed to failure and a reasonably competent solicitor should have known as much. Nevertheless, the judge reached the conclusion that he should not make an order against the solicitor. The reason for that conclusion related to the difficult financial circumstances in which the solicitor advocate found herself. The explanatory notes in the White Book under CPR rule 48.7, which was the rule that laid down appropriate procedures in relation to an application for wasted costs suggested that a three-stage test should be applied: (i) whether the legal representative had acted improperly, unreasonably or negligently; (ii) if so, whether such conduct had caused the applicant to incur unnecessary costs; and (iii) if so, whether it was just in all the circumstances to order the legal representative to compensate the applicant with the whole or part of the relevant cost. The third stage seemed to permit a consideration of the effect of the order on the person against whom it was sought. In this case, the evidence was that an order for wasted costs would carry a significant risk of causing the solicitor to become bankrupt. That would be a disproportionate consequence of her unreasonable and negligent conduct in the litigation. On that discrete basis, a wasted costs order would not be made.