SERVICE, JURISDICTION AND WASTED COSTS: A CASE TO POINT

We looked earlier at the judgment of Master Cook in Jovicic & Ors v The Serbian Orthodox Church-Serbian Patriarchy [2020] EWHC 2229 (QB) in relation to late service of the claim form.  That judgment also considers the wasted costs application.

THE CASE

The claimants bring action against the defendant for events that allegedly happened in Croatia.   Proceedings were issued on the 8th January 2019. Service would have to take place before midnight on the 8th May 2019. Proceedings were served late and were thus ineffective.

WASTED COSTS: GENERAL PRINCIPLES

The Master set out the principles in relation to wasted costs.

Wasted Costs: General Principles

1. 1. The principles governing the making of a wasted costs order have been helpfully summarised by the Court of Appeal in Fletamentos Maritmos SA v Effjohn International BV [2003] Loyd’s Rep.P.N26

“The power to make a wasted costs order is to be found in s 51 of the Supreme Court Act 1981 as amended. Section 51(l) gives the court a wide general discretion over costs. Section 51(6) provides:

In any proceedings mentioned in ss 1 the court may disallow, or (as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of court.

Section 51(7) provides:

In ss 6, “wasted costs” means 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; or

(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreason- able to expect that party to pay.

The principles upon which these provisions are to be applied have been established by a trilogy of recent cases in this court: Ridehalgh v Horsefield [1994] Ch 205, Tolstoy-Miloslayskv v Aldington [1996] 1 WLR 736, and Wall v Lefever [1998] 1 FCR 605. Amongst them are these (and here I quote only the essence of principles elaborated in these authorities with very great care):

1. Improper conduct is that which would be so regarded “according to the consensus of professional (including judicial) opinion.” Unreasonable conduct “aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive…. The acid test is whether the conduct permits of a reasonable explanation.” Negligent conduct is to be understood “in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.” (all from Ridehalgh)

2. “Legal representatives will, of course, whether barristers or solicitors, advise clients of the perceived weakness of their case and of the risk of failure. But clients are free to reject their advice and insist that cases be litigated. It is rarely if ever safe for a court to assume that a hopeless case is being litigated on the advice of the lawyers involved…. It is, however, one thing for a legal representative to present, on instructions, a case which he regards as bound to fail; it is quite another to lend his assistance to proceedings which are in abuse of the process of the court…. It is not entirely easy to distinguish by definition between the hopeless case and the case which amounts to an abuse of the process, but in practice it is not hard to say which is which and if there is doubt the legal representative is entitled to the benefit of it.” (all from Ridehalgh)

3. “A solicitor does not abdicate his professional responsibility when he seeks the advice of counsel.” (Ridehalgh) The role which leading and junior counsel played in Tolstoy in putting their signatures to the statement of claim “did not exonerate the solicitors from their obligation to exercise their own independent judgment to consider whether the claim could properly be pursued; they were not entitled to follow counsel blindly.”

4. “The jurisdiction to make a wasted costs order must be exercised with care and only in a clear case.” (Tolstoy) “It should not be used to create subordinate or satellite litigation, which is as expensive and as complicated as the original litigation. It must be used as a remedy in cases where the need for a wasted costs order is reasonably obvious. It is a summary remedy which is to be used in circumstances where there is a clear picture which indicates that a professional adviser has been negligent etc.” (Wall v Lefever)”

1. 1. The notes to the White Book (46.8.3) suggest that when a wasted costs order is contemplated a three-stage test should be applied:

a) Had the legal representative of whom complaint is made acted improperly unreasonably or negligently?

b) If so did such conduct cause the application to incur unnecessary costs?

c) If so, was it, in all the circumstances, just to order the legal representative to compensate the applicant for the whole or part of the relevant costs?

WASTED COSTS

The Master found that the proceedings were ineffective due to being served late.  He also found that the court had no jurisdiction to deal with the matter and that should have been apparent to the claimant’s solicitor from the outset.

1. 1. I accept Mr Friston’s submission that in circumstances where privilege has not been waived it is necessary to proceed with extreme care and that I must be satisfied that the decision to bring proceedings in this jurisdiction was quite plainly unjustifiable.

   2. There were three core strands to the Defendant’s application, in my judgment all well made. First, The Defendant, the Serbian Orthodox Church Serbian Patriarchy (“the Serbian Patriarchy”) is domiciled in Serbia, and has not been, and cannot be, personally served in England & Wales in accordance with any of the required service provisions set out in the table in CPR 6.9(2). Second, The Claimant did not seek, and could not obtain, the permission of the English Court to serve these claims out of the jurisdiction on the Defendant in Serbia under CPR 6.36, 6.37 and PD 6B. This is because (at the very least) none of the Claimants have a good arguable case that their claims fall within any of the jurisdictional gateways in paragraph 3.1 of PD6B. Third, Mr Kesar’s claims in correspondence and in the Particulars of Claim that the English court has jurisdiction as a “forum of necessity” or in “the interests of justice”, were woefully misconceived.

   3. As I observe at 24 (ii) above Mr Kesar had set out his case on jurisdiction and signed up his clients to Conditional Fee Agreements many months before taking any advice from counsel. In this respect the correspondence speaks for itself. Mr Kesar repeatedly stated that the Claimants were proceeding “in accordance with common law principles” and the “UK court is the Claimant’s forum of necessity.” In my extempore judgment I accepted Mr McParland QC’s characterisation of Mr Kesar’s argument as set out in his letter of 23 May 2018 as “irresponsible and nonsensical”. I remain of the view, that the principle of “forum of necessity” does not exist in English law, and, unlike the position in some civil jurisdictions, there is no provision in English law for the exercise of “universal jurisdiction” by the English courts. The absence of both those concepts in English law was highlighted in the judgments of the European Court of Human Rights in the case of Nait-Liman Switzerland (51357/07) ECHR (second Section (21 June 2016, and ECHR (Grand Chamber) (15 March 2018), [2018] 3 WLUK 861).

   4. One then comes to the jurisdictional grounds relied upon in the particulars of claim as set out at paragraph 24 (xx) above. The first and most obvious point to note is the statement “This claim is served in the UK against the Defendant in the form of the eparchy/diocese of Great Britain and Scandinavia“. I accept Mr McParland QC’s submission that any reasonably competent solicitor should have realised that such a case was nonsensical. First, the Claimants were not suing the eparchy/diocese of Great Britain and Scandinavia for anything. Second, Mr Kesar chose not to apply to amend the claim forms. Third, the eparchy is domiciled in Sweden not London. If this did represent Counsel’s advice then it was not advice which Mr Kesar was entitled to blindly follow.

   5. Once the part 11 applications had been served by the Defendant it is clear that Kesar & Co did not seek further advice from counsel. It is clear at this point that counsel’s involvement was limited to appearing at the hearing and drafting a short skeleton argument. Mr Kesar prepared his own witness statement without input from counsel and its contents can only have reflected his own opinion. In that witness statement at paragraph 8 ,Mr Kesar erroneously contended that the court had jurisdiction by confusing the standard to be applied when considering whether the court has jurisdiction under a permitted gateway, with arguments as to the substantive merits of the case;

“8. I believe that the jurisdiction point should be considered with reference to the particulars of claim but also by using the approach in the recent case Tugushev v Orlov & Ors [2019] EWHC 645 (Comm) (27 March 2019) where the court gave priority to consideration whether the claimants had a good arguable case. This is relevant both in respect of consideration of the common law approach, forum non conveniens or even Rome II as the Claimants must satisfy the Court that England is clearly and distinctly the appropriate forum to try the claim”

At paragraph 25 of his witness statement Mr Kesar reasserted the approach to jurisdiction set out in his early correspondence;

“The Claimants have already indicated that they invited the court to consider these claims in accordance with the forum non convenience doctrine and rely on the approach adopted by the court in Connelly v RTZ Group (No. 2) [1998] AC 854.”

1. 1. Mr Friston spent some time developing the submission that the case Mr Kesar intended to develop was that the Serbian Orthodox Church had a legal persona capable of being sued and that church could be sued in this jurisdiction under CPR 6.9(2) on the basis that it was carrying out its activities here. The factual basis for this submission was set out in Mr Kesar’s second witness statement at paragraphs 18 and 25:

“18. I was also aware that the London Parish and all other Parishes in England and Wales were UK charities and benevolent trusts, but for the reasons set out below I took the view that was, at the very least, arguable that they were also integral parts of the Serbian Orthodox Church and under its control, and the church was carrying on its activites in this jurisdiction.”

“25. So in view of the above, I took the view that the Serbian Orthodox Church had at least a degree of control over the clergy in this jurisdiction and to that extent at least was carrying on its activities in this jurisdiction.”

1. 1. The difficulty with this submission is that Kesar & Co never claimed in the contemporaneous correspondence or in submissions to the court that they were entitled to serve the London Parish under the provisions of CPR 6.9(2) paragraph 7. Further such a stance is contrary to the position taken by Mr Kesar in his first witness statement where Mr Kesar claimed, at paragraph 38, that he had attempted service on the London Parish as “an alternative place” under CPR 6.15:

“…The Claimants believe that it was therefore correct to effect service using an alternative method, since the Defendant does not have a representative authorised for service, and at the alternative address, which is one of their parishes in the UK (Part 6.5 CPR). Given the exceptional circumstances of this case, and in the alternative the Court is invited to apply Part 16.6 (sic) and dispense with this requirement.”

1. However CPR 6.15 can only apply where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part . Both CPR 6.15 and 6.16 require applications to be made to the Court which are supported by evidence. No such applications were made and as Mr McParland QC observes, the issue was not even mentioned in counsel’s skeleton argument.

2. In the circumstances I accept Mr McParland QC’s submission that this is an entirely new case put forward to suggest that Mr Kesar was not acting improperly, unreasonably or negligently in issuing and purporting to serve six actions in England & Wales, in respect of which the court had no jurisdiction over the Defendant or indeed any defendant who could arguably be responsible for the matters complained of.

3. I make full allowance for the inability of Mr Kesar to refer to his instructions or to the advice he received from counsel. The relevant principles governing service of the proceedings and jurisdiction require a solicitor to have regard to the criteria set out in CPR 6 and PD 6B. These are essentially legal issues and it is inconceivable that Mr Kesar’s clients would have anything useful to say on these issues. Indeed, such evidence as there is suggests that Kesar & Co were given power of attorney by at least one client to conduct the proceedings as they saw fit. In the circumstances I consider that making full allowance for anything that might have been said to Kesar & Co by their clients or in the advices from counsel it was wholly unreasonable and negligent to issue these claims in this jurisdiction. DWF did all that was in their power to alert Mr Kesar to the correct jurisdictional position, however in my judgment he chose to proceed with a wholly unarguable position through to the hearing of the strike out application. In the circumstances the first stage of the test is made out in relation to the issue of jurisdiction.

4. Did the unreasonable conduct I have found at paragraphs 29 and 39 above cause the Defendant to incur unnecessary costs? In my judgment the answer to this question must be yes. The Defendant (the Serbian Patriarchy) incurred the costs of issuing the Part 11 application and attending the hearing. I reject Mr Friston’s submission that the fact the claim forms were served without having obtained an extension did not cause costs or any significant costs to be wasted or incurred as the solicitors would have simply issued new proceedings as they were entitled to do. These costs would still have been incurred even if new proceedings were issued as Mr Kesar continued to resist the application. He did not even apply to amend the claim forms to reflect the Defendant named in the particulars of claim. I also find Mr Friston’s causation point to be without merit. Whilst it is true that the court was asked to deal with the jurisdiction issue on the basis that further claims had been threatened following its observation quite early in the hearing that the claim forms had expired. It is clear from the notice of application that the jurisdictional issues were raised in the context of this case and provided an alternative basis for striking out the claim. In my view no extra costs were incurred because the court went on to determine the jurisdictional issues, these costs had to be incurred in any event. Therefore in my view all costs incurred after 27 December 2018 when the Defendant instructed DWF were caused by the negligent and unreasonable conduct of Kesar & Co.

5. Having regard to the above is it just in all the circumstances to order Kesar & Co to compensate the Defendant for the whole or part of the relevant costs?

6. The Defendant has been forced to come to this jurisdiction to deal with issues that I have taken the view no responsible solicitor could have continued to pursue. This is not a situation where the qualified one-way costs (“QOCS”) provisions are relevant, they only apply to a claimant and do not operate to protect a legal representative, however it is clear that the Defendant has no realistic prospect of recovering its costs from any other party.

7. In the circumstances, this being in my view a clear and obvious case, I consider that it is just in all the circumstances for Kesar & Co to pay the entirety of the costs incurred by the Defendant on the indemnity basis from 27 December 2018