The Dekagram: 30th September 2024

The big news from last week was the alteration of the discount rates in Scotland and Northern Ireland, both now standing at +0.5%. The Scottish rate was increased from -0.75%, and the Northern Irish rate from -1.5%. The results of the reviews undertaken in different parts of the UK are the strongest indicator yet that the review being undertaken in England and Wales is likely to lead to a reduction in damages awards within this jurisdiction also; the increases reflect assumptions that claimants are likely to enjoy greater investment returns than previously, and this is likely to be assumed to be the case within this jurisdiction as well. Personal injury practitioners should therefore consider carefully their options for claims settlement in the next few months – those representing defendants should revise their offer parameters downwards, whilst those representing claimants should consider, where appropriate, whether periodical payments may be more advantageous in respect of large items of future loss.

Meanwhile, two judgments this week have examined the position of solicitors thought by other parties to have behaved suboptimally – not something our readers could ever be accused of, we know, but still possibly of some academic interest. 

Are solicitors liable for wasted costs if they do not disclose their client’s social media accounts?  Williams-Henry v Associated British Ports (Re: Wasted Costs Order) [2024] EWHC 2415 (KB)

Introduction

A wasted costs order can be a devastating tool against a legal representative. It is ordered where (i) a legal representative has acted “improperly, unreasonably or negligently”, (ii) the legal representative’s conduct has caused a party to incur unnecessary costs or that costs prior to the conduct have been wasted, and (iii) it is just in all of the circumstances to order the legal representative to pay costs (CPR PD46 paragraph 5.5).

The introduction of qualified one-way costs shifting (“QOCS”) has removed recovery of costs from Defendants in most cases. In certain cases, however, the protection afforded by QOCS can be removed by a court, and the Defendant can enforce its costs against a claimant. The difficulty with this is that often such claimants are impecunious or do not have sufficient assets in which to meet the costs burden. In light of this, a wasted costs order against a legal representative can present an alternative in the right circumstances.

This article examines an application for wasted costs order in personal injury litigation, the principles governing wasted costs, the judgment, and commentary.

Background

A detailed background into the underlying judgment is detailed here. For present purposes, the Claimant suffered a moderately severe brain injury from a fall off Aberavon Pier in 2018. She sued the Defendant who owned or occupied the pier. The Defendant admitted partial liability for the fall, and then fought quantum and asserted fundamental dishonesty. In April 2024 Mr. Justice Ritchie held that the Claimant had been fundamentally dishonest in relation to the claim and dismissed it with costs against the Claimant.

The Defendant was unable to recover costs against the Claimant. They applied for a Stage 1 Notice to Show Cause that the Claimant’s solicitors:

1. Failed to provide standard disclosure of social media accounts.
2. Had overlooked, failed to read or failed to understand key evidence which was in stark contrast to the Claimant’s own evidence. Witness statements were drafted and contained assertions that the Claimant’s solicitors knew or ought to have known were inaccurate in relation to holidays abroad and other capabilities.
3. Drafted a witness statement in answer to the surveillance videos which either could not claim it had properly reflected on the Claimant’s evidence compared with the disclosure, but if it had, could not properly maintain the pleaded cases or assert that the Claimant had realistic prospects of success.
4. Failed to negotiate properly after videos were served, or failed to respond properly to “walk away” offers.
5. Failed to collect and analyse relevant documents which were in the Claimant’s possession and showed that she was dishonest.
6. Failed to make reasonable attempts to settle it and failed to terminate the retainer when the pleaded case was “hopeless”.

Wasted Costs Jurisprudence

Mr. Justice Ritchie examined the governing jurisprudence, and identified ten key principles for such orders:

1. Summary Jurisdiction. The Wasted Costs Order jurisdiction is a summary jurisdiction, generally dealt with at the end of a case. It could arise on the court’s own motion or by application. It was not intended or allowed to become satellite litigation prolonging or overshadowing the pre-action conduct, trial or hearings. It had to be fair and simple.
2. The Two Stages. At the initial accusatory stage, the applicant had to establish a prima facie case which if unanswered would on the balance of probabilities lead to a WCO. At the secondary stage, after the respondent had made submissions, the court determined whether the relevant thresholds had been satisfied and, if so, whether it was just to impose the WCO. The two stages could be rolled-up in appropriate cases.
3. Sufficient Particularity. The Applicant was required to set out the allegations of improper, unreasonable or negligent conduct, and to identify the alleged wasted costs which were purportedly caused by that conduct and the sums involved.
4. Improper Conduct. This covered conduct which would ordinarily be held to justify the respondent’s disbarment, striking off, suspension from practice or other serious professional penalty. It included any significant breach of a substantial duty imposed by a relevant code of professional conduct and conduct regarded as improper, according to the consensus of professional (including judicial) opinion whether or not it violated the letter of a professional code.
5. Unreasonable Conduct. This encompassed conduct which was vexatious or designed to harass the other side rather than advance the resolution of the case, and it made no difference that it was the product of excessive zeal or gross naivety. Conduct was not unreasonable simply because it resulted in an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test was whether the conduct permitted of a reasonable explanation. If so, the course adopted might be regarded as reflecting poorly on a practitioner’s judgement, but it was not unreasonable.
6. Negligent conduct. The conduct might involve duty, breach, causation and damage, so an actionable breach of the legal representative’s duty to his own client, but it also went wider than that. The applicant’s right to a WCO against a legal representative depended on showing that the latter was in breach of duty to the court, so negligent conduct was not limited to professional negligence in relation to the lawyer’s clients. It denoted failure to act with the competence reasonably to be expected of ordinary members of the profession, or acting in a way in which no reasonable body of the profession would have acted.
7. Proof and Privilege. When considering the conduct, the court had to take into account the disadvantage to the respondent lawyer where clients did not waive privilege in response to the allegations. The court would generally assume that the lawyer had acted on instructions and the advice given was not improperly, unreasonably or negligently given. In any event, it was not unreasonable or negligent to pursue a hopeless claim or hopeless defence for a client who wished to do so.
8. The Hopeless Case Principle. Lawyers were not to be held to have acted improperly, unreasonably or negligently simply because they had acted for a party who pursued a claim/defence which was doomed to fail.
9. Causation. The applicant had to identify the costs which it had incurred and prove on the balance of probabilities that the respondent’s improper/unreasonable/negligent conduct caused those costs such that they were “wasted” and should never have been incurred.
10. Was the order just? After all the other thresholds were satisfied, the court had to determine whether in all the circumstances it was just to make a WCO. It was permitted a wide ranging judicial discretion, provided that relevant matters were taken into account and all irrelevant matters were excluded.

Judgment

The application was dismissed.

Failure to provide standard disclosure. It was alleged that the Respondent had failed to provide proper disclosure in relation to the Claimant’s social media accounts. This was dismissed on the basis that:

1. No adequate evidence was put before the judge that social media accounts are generally considered relevant for standard disclosure in moderately severe brain injury claims.
2. Solicitors are not expected to spend days trawling through social media accounts. Masters are very unlikely to allow recovery of the same in costs budgets.
3. In any event, the Respondent complied with disclosure requests “faithfully and professionally”.

Handling of ADR. There was no evidence that the Claimant or her mother were negligently advised or that the rejection was made without instructions. No wasted costs was made against Claimant’s Counsel. The mere fact that the Claimant’s offers were too high was not sufficient to warrant a wasted costs order. Given that the Claimant refused to waive privilege, it could only be assumed that the solicitors acted on instructions.

Running a hopeless case. A lawyer is not liable for running a hopeless case on instruction. The evidence could not prove that the Respondent negligently advised the Claimant of the risks. While the Claimant had a “slim chance” on fundamental dishonesty, she had a real argument to run on substantial injustice. Her “honest damages” in quantum was higher than the Defendant’s case.

Drafting a witness statement which the Claimant is alleged to have lied. This issue was finely balanced. The Claimant asserted in her witness statement that she never went abroad (this was a lie). There was no evidence that the solicitor who drafted the statement was aware or alive to conflict between the statement and the facts. However, the Claimant had told various experts that she had a wide range of disabilities preventing her from socialising, travelling, walking far etc. Privilege would need to be waived to deal with this issue, which had been refused.

While the Applicant had passed the Stage One Threshold, they were unable to show that it caused any wasted costs. All it did was provide ammunition for Defendant’s counsel to pursue allegations of fundamental dishonesty.

Particularity. The allegations raised by the Applicant were wide-ranging and unspecific. They lacked the particularity in which to make the application. This went to the issue of the justice of the making of a wasted costs order.

Unreasonable Conduct. The drafting of the Claimant’s witness statement in October 2022 was deemed prima facie unreasonable or negligent. This statement was critical in the finding of fundamental dishonesty. However, it was not unreasonable or negligent to represent the Applicant at trial when she asserted she was seriously injured (and was). In any event, the Defendant was making offers to settle.

The decision to terminate is a human and commercial one for the firm, not a matter for the Court or the Applicant. It was speculative to suggest another firm would have stopped the claim. There was not requirement in law, justice, reasonableness or professional standards that a Respondent “should” have terminated the CFA with the Claimant. The duty of the solicitors is to be careful not to mislead the court in the face of clear documentary evidence which the Claimant contradicted.

Just. In the circumstances, it was not just to make the order. The broad negligence arguments did not fit within the wasted costs order. Taking into account (a) the lack of evidence, (b) the abandonment of impropriety allegations, (c) the privilege retained by the Claimant, (d) the lack of particularity of the allegations, (e) the lack of identification of a data range of the wasted costs and the sums of those costs, (f) the disproportionality of the costs of proceedings, (g) the lack of any clear evidence of causation, a Stage 1 order against the solicitors was not evidentially supported, appropriate, or just.

Comment

There are two points to draw from this judgment. First, while the Respondent’s solicitors evaded a wasted costs order, the accusations levelled at the firm provide a stark warning in relation to all litigation. It is poor practice to draft a witness statement without cross-checking it against all the other material. A failure to do this may not only lead to a fundamental dishonesty finding, but puts the legal representative at risk of a wasted costs.

Second, to answer the question in my title, solicitors will normally not be liable if they do not disclose social media evidence in catastrophic injury litigation. The matter may be different in low-value cases. For example, in travel sickness litigation, social media posts are expressly referenced in the pre-action protocol as an example of disclosure. Further, once fundamental dishonesty has been alleged the ambit of standard disclosure would no doubt extend to disclosure and inspection of social media records. However, in the ordinary run of cases, it is not relevant to standard disclosure. If it were, it would result in a significant increase in costs which insurers would have to pay. Nevertheless, it is critical for solicitors to closely examine the Claimant’s social media and cross-check it with the evidence given by the Claimant in order to withstand charges of inconsistency and fundamental dishonesty.

About the Author

Anirudh Mandagere has a broad practice across all areas of chambers’ specialisms, acting for both claimants and defendants, and is an enthusiastic and valued member of the travel team. Before joining Deka Anirudh worked as a judicial assistant at the Court of Appeal and taught law at the London School of Economics.

What happens when you forget to go to court? Deng v Zhang [2024] EWHC 2392 (KB)

Amongst the author’s most oft-repeated Aphorisms For The Education Of Pupils And Other Young Persons (along with ‘just because they’ve been badly injured doesn’t mean they’re telling the truth’ and ‘never say “I think” in submissions’) is The First Step Is Turning Up. You can’t win an argument if you’re not there. For this reason punctuality is a much more important personal strength than is usually acknowledged. The judiciary in particular seem to be extraordinarily keen on it.

And so one must have some sympathy for the appellant in Deng v Zhang [2024] EWHC 2392 (KB), who had as his unenviable task the challenge of attempting to persuade Hill J that being unaware of an appeal hearing because an email notification from the court was overlooked due to his workload was a good reason for not attending a hearing.

The Facts

The facts do not really reflect well on the legal profession.

The underlying claim was for damages for breach of the claimant’s data protection rights, breach of confidence, misuse of private information and malicious falsehood by the defendants in respect of personal data he provided for the purposes of obtaining a mortgage in relation to a property in Birmingham. On 22^nd May 2023 Master Yoxall was de-retired to deal with a CCMC in the claim, and in doing so granted the claimant relief from sanctions so that he could rely on his costs budget, and then dispensed with budgeting. The defendants appealed these aspects of the order, contending that the claimant had:

(i) sought to rely on a costs budget dated 2^nd May 2023 that had not been filed or served, but simply inserted into the CCMC bundle without notice to the other parties, after the 1^st May 2023 deadline for service of costs budgets;

(ii) only made an application for relief from sanctions in respect of the costs budget 34 minutes before the CCMC; and

(iii) misled the Master into thinking that the 2^nd May 2023 budget had been filed and served when it had not been. 

All very unsatisfactory, if made out.

The appeal proceeded in the usual way – the defendants served a witness statement and provided an appeal bundle to the claimant’s solicitors, permission to appeal was granted, and on 22^nd December 2023 the court emailed the parties a notice of hearing indicating that the appeal would be heard on 20^th March 2024. The claimant was not represented at that hearing, and the appeal duly succeeded, with the effect that he would be treated as having filed a costs budget claiming only the applicable court fees.

The claimant duly appealed this order on the basis that it had been made in the absence of his representatives, and his solicitor filed and served a witness statement to the effect that he had not been given notice of the hearing. This was inaccurate, however, given that the court had emailed the claimant’s solicitor at his correct address; he subsequently accepted that he had received the email but due to overwork had not read it. His overwork had affected his conduct of the litigation in the past, and was to do so again – he prepared neither the bundle for the CCMC nor the bundle for the appeal hearing, nor the bundle for his application hearing, and produced a witness statement the day before the application hearing – as the defendants were to point out to Hill J in due course.

The Legal Framework

The judgment contains (at paragraphs 29 to 36) a useful reminder of the legal principles applicable where a party seeks to set aside an order granted in his or her absence. Suffice to say that it is a power to be exercised sparingly, and in accordance with the overriding objective. The considerations applicable to relief from sanctions apply.

The Outcome

Hill J concluded that although the application to set aside the order made at the hearing had been made promptly, there was no good reason for the claimant’s solicitor not to have been at the hearing. He could and should have read the email notifying him of the hearing, which he ought to have been expecting. Moreover, his firm had no robust system in place for checking emails. Overwork alone was not a good nor sufficient excuse for failing to read his emails or to have in place a safety net in case he did not do so. Furthermore, the conduct of the litigation generally indicated that the claimant’s solicitor’s workload was such that he was unable to progress the claim timeously or properly. All of these factors meant that the order should not be set aside as requested by the claimant.

Hill J concluded:

“…regard must be had to the overriding objective and the need, where reasonably practicable, to allot any given case an appropriate share of the court’s resources. The issue of the First Respondent’s costs budget has already, in my judgment, comfortably exceeded the allocation of court resources that it deserves, in light of the procedural history set out above…”

It is difficult to disagree.

About the Author

Called to the Bar in 1997, Sarah Prager KC has been listed in the legal directories as a Band 1 practitioner in travel law for many years, and, more recently, listed in aviation as well. Together with her colleagues at Deka Chambers, Matthew Chapman KC, Jack Harding, Dominique Smith, Tom Yarrow and Henk Soede, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.