Costs News

18 November 2021
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Solicitors can be cross-examined as part of wasted costs applications, says CA

The Court of Appeal has overturned a decision to order the cross-examination of a solicitor facing a wasted costs order but said the step can be justified in exceptional circumstances.

Lord Justice Newey said it was clear from CPR 32.7 that the court had the power to direct cross-examination where a lawyer had filed a witness statement in response to an application for wasted costs.

But it must be “very much the exception rather than the rule”, he went on. In the 1994 case of Ridehalgh v Horsefield, the appeal court stressed that the procedure adopted in respect of a wasted costs application should be “as simple and summary as fairness permits”.

Newey LJ said this meant the court had to consider, for example, whether the lawyer’s client has waived privilege and whether the issues have been defined in advance by pleadings.

“The court must beware of requiring a lawyer to be cross-examined in a process lacking such safeguards. It can, in all the circumstances, only rarely be right to order cross-examination.

“For the same reasons, a judge minded to direct cross-examination should carefully consider its proper scope and whether and, if so, how the procedure can be kept both fair and relatively simple.”

A court should “beware of sanctioning a fishing expedition”, he added.

In Hunt v Annolight Ltd and Ors [2021] EWCA Civ 1663, Blackburn firm Walker Prestons represented John Hunt in a noise-induced hearing loss claim that was discontinued after he had falsely stated in his part 18 response that he had not been a director of one of the defendants at the material time – Mr Hunt said he did not sign the response, but the firm said he did.

The defendants sought to disapply qualified one-way costs shifting and/or for the wasted costs of the proceedings to be paid by Walker Prestons.

The firm had argued that there was no power to require the attendance of a legal representative in these circumstances, but His Honour Judge Godsmark QC in Nottingham – and upheld on first appeal by Mr Justice Saini – ordered Abid Sarwar, supervising partner and director of Walker Prestons, to attend the hearing of a number of wasted costs applications in order to be cross-examined.

Newey LJ expressed sympathy with HHJ Godsmark, who he said was “doubtless attempting to devise a way forward which would result in the issues raised by the defendants’ applications being resolved efficiently and without disproportionate cost”.

Further, Walker Prestons’ then-counsel did not object to Mr Sarwar’s cross-examination.

However, Newey LJ said it had not been “appropriate” for either judge to order cross-examination for several reasons, including that the allegations against Walker Prestons had not been adequately defined, there was not enough in Mr Sarwar’s witness statement to justify cross-examination, and issues as to legal professional privilege remained to be addressed.

Agreeing, Lord Justice Arnold noted how the case demonstrated “the need for careful case management of wasted costs applications, which must start with identifying the issues raised by the application”.

Lord Justice Warby added that he too had “some sympathy” with HHJ Godsmark. “As I read it, he was attempting to fashion a procedural regime to allow the defendants’ applications to be resolved without disproportionate cost.

“That said, this was an unusual, complex and sensitive situation. The issues were ill-defined, the evidence incomplete, and the question of whether privilege had been or would be waived was unresolved.

“The circumstances plainly did not justify the exceptional course of directing a solicitor to attend for cross-examination. It was also wrong in principle, I would add, to do this in the informal way adopted here.

“Any requirement for a solicitor to attend for cross-examination about the conduct of a case should be formulated with precision and reduced to writing in a formal order of the court.”

Robert Marven QC (instructed by Walker Prestons) for the appellant, Nikhil Arora (instructed by DAC Beachcroft Claims) for Annolight and Douglas Denton (instructed by BLM) for Paragon Trade Frames Limited. Double T Glass Limited did not appear and was not represented.

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