SOLICITOR SHOULD NOT HAVE BEEN COMPELLED TO ATTEND COURT TO GIVE EVIDENCE IN A WASTED COSTS APPLICATION

In Hunt v Annolight Ltd & Ors [2021] EWCA Civ 1663 the Court of Appeal overturned a decision that a solicitor should be compelled to attend court to give evidence in a wasted costs application.

“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.”

 

THE CASE

The case was considered in detail in an earlier post. 

The claimant brought an action for industrial deafness. During the course of the proceedings replies were sent to Part 18 questions posed by the Defendant.   Shortly before the trial was due to start the claimant’s counsel informed the judge that the claimant had not, in fact, signed the Part 18 response.  Further part of the replies was clearly incorrect.

The claimant discontinued the case. The defendant made an oral application for QOCS to be disapplied and for a wasted costs order against the claimant’s solicitors.

The Circuit Judge ordered that the claimant’s solicitor attend to give evidence. That decision was upheld by the High Court Judge.

 

THE DECISION OF THE COURT OF APPEAL

The Court of Appeal held that a court does have power, in some circumstances, to order a respondent to a wasted costs application to give evidence. It was not appropriate in this case.

THE JUDGMENT

    1. Mr Marven did not go so far as to suggest that the Court has no jurisdiction to order a lawyer facing a wasted costs application to attend for cross-examination. He was right not to do so. CPR 32.7 provides:
“Where, at a hearing other than the trial, evidence is given in writing, any party may apply to the court for permission to cross-examine the person giving the evidence.”
Where, therefore, a lawyer against whom a wasted costs order is sought has filed a witness statement, the Court must have power to direct cross-examination.
    1. Nor do I accept that it is a jurisdiction which should never be exercised in the context of a wasted costs application. Underhill J may well have been right that the Court of Appeal had paper interrogatories in mind when it said in Ridehalgh v Horsefield that it could not imagine circumstances in which an applicant should be permitted to interrogate a respondent lawyer. After all, the Court of Appeal had referred in its previous sentence to “discovery” and, under the Rules of the Supreme Court, interrogatories supplemented documentary disclosure; in fact, the heading to O.26 r.1 of the Rules of the Supreme Court was “Discovery by interrogatories”. Be that as it may, however, I agree with Underhill J that there is no absolute rule barring cross-examination in a wasted costs case. Stokoe does not suggest otherwise, since the focus there was on the danger that “cross-examination on the affidavit would pre-empt cross-examination at trial”. By the time a wasted costs application such as the present one is heard, there will be no future trial in prospect.
    1. On the other hand, cross-examination must, I think, be very much the exception rather than the rule. In Ridehalgh v Horsefield, the Court of Appeal stressed that the procedure adopted in respect of a wasted costs application should be “as simple and summary as fairness permits” and warned against such applications becoming “a new and costly form of satellite litigation”. The fact that the lawyer’s client may not have waived legal professional privilege may well also militate against cross-examination. So too will the need to be fair to the lawyer. He will be accused of “improper, unreasonable or negligent” conduct. Were an allegation of comparable seriousness being made in an ordinary negligence claim, the issues should have been defined by pleadings, and relevant unprivileged documentation disclosed, in advance of the lawyer going into the witness box. 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.
    1. 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. If a respondent to a wasted costs application elects not to make a witness statement, CPR 32.7 will not apply and there can be no question of cross-examination. Where a respondent makes a statement, the extent of any cross-examination may be limited by its subject matter: it is unlikely to be appropriate to permit cross-examination on topics which the statement has not addressed. Again, a Court should beware of sanctioning a fishing expedition, where cross-examination would be directed at creating a case against the lawyer rather than supporting a pre-existing one. A linked point is that, before cross-examination is sanctioned, special care should be taken to ensure that the lawyer knows the case he has to meet. In Ridehalgh v Horsefield, the Court of Appeal said that the lawyer “should be very clearly told what he is said to have done wrong and what is claimed”, a point reflected now in PD 46’s requirement that the materials supporting a wasted costs application must identify “what the legal representative is alleged to have done or failed to do” and the costs which are sought. It is of particular importance that the lawyer should know precisely what is alleged if there is to be cross-examination. A Judge authorising cross-examination should also consider how any issues as to legal professional privilege are to be handled and whether cross-examination can take place satisfactorily without any disclosure of documents. The extent, if any, to which the lawyer is constrained in what he might say by privilege will probably be best settled before the effective hearing. As for disclosure, a hearing in which a witness refers in cross-examination to undisclosed documents and, perhaps, the cross-examiner then requests to see them is not likely to be satisfactory.
The present case
    1. As Saini J noted, counsel then appearing for Walker Prestons did not attempt to dissuade Judge Godsmark QC from ordering cross-examination at the hearing on 22 April 2020. To the contrary, he spoke of “at least Mr Hunt, … or possibly Mr Sarwar as well,” being “required to give oral evidence in any event”. On the other hand, it could be that Walker Prestons’ counsel was taken somewhat unawares and so, as Mr Marven suggested, was “really thinking aloud” and, while now contending for Mr Sarwar’s cross-examination, Mr Arora was himself at that stage “prepared to deal with this without [Mr Sarwar] being present”. In any case, Saini J addressed the question whether Mr Sarwar should be cross-examined on its merits, and no one has filed a respondent’s notice seeking to uphold Saini J’s decision on the alternative basis that Walker Prestons’ counsel had not originally objected to such cross-examination. In the circumstances, it seems to me that we, too, must consider the merits of ordering Mr Sarwar’s cross-examination.
    1. There may be some doubt as to whether Judge Godsmark QC in truth intended that to be the effect of his order. The relevant order provides for “oral evidence”, but it does not explicitly say that Mr Sarwar is obliged to attend for cross-examination, let alone specify the extent of any cross-examination. It would have been better if the parties had taken steps to clarify the order. However, the parties have taken it that Mr Sarwar was being required to attend for cross-examination, and that that was what was intended is borne out by the transcript of the hearing. It appears from the transcript that Judge Godsmark QC was envisaging that Mr Sarwar would be asked about points raised by Paragon’s application which he had not addressed in his witness statement.
    1. Judge Godsmark QC 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, and the fact that Walker Prestons’ then counsel did not voice objections to Mr Sarwar’s cross-examination of course makes it the more understandable that that should have been directed. However, it seems to me that it was not in fact appropriate for either Judge Godsmark QC or Saini J to order cross-examination.
    1. In the first place, the allegations against Walker Prestons had not been adequately defined. It was not clear from their application notices and evidence whether the defendants were claiming that the 9 May 2019 Part 18 replies had been signed by Walker Prestons rather than Mr Hunt without his authority. Nor was it apparent which (if any) other parts of Mr Mitchell’s witness statement Paragon was relying on, whether either the matters of which Mr Mitchell spoke or the trial bundle deficiency to which Mr West referred was said to have caused Paragon loss or even quite what criticism of Walker Prestons was advanced in respect of inconsistencies as to the provision of hearing protection.
    1. That leads to a second point. Had the cases against Walker Prestons been properly spelled out, it would presumably have emerged that neither Annolight nor Paragon was making any complaint about the signature on the 9 May 2019 Part 18 replies. On that basis, there could have been no justification for cross-examination on that “issue”.
    1. Thirdly, Mr Sarwar’s witness statement contains nothing else justifying his cross-examination in relation to Annolight’s application for wasted costs. Mr Arora drew attention to paragraph 10 of the statement, in which Mr Sarwar said that there was “no evidence as to whether [Walker Prestons] did, or did not, take instructions from [Mr Hunt] as to whether he held a directorship at [Annolight]”. However, that assertion is of no evidential significance. If and to the extent that at the final hearing there is evidence as to whether Walker Prestons took instructions from Mr Hunt on whether he was a director of Annolight, Annolight will be able to rely on it without cross-examining Mr Sarwar.
    1. Fourthly, there was no sufficient basis for permitting Mr Sarwar to be cross-examined on matters raised only by Paragon’s application. Mr Sarwar had stated in terms that his witness statement was limited to dealing with Annolight’s application and he had said nothing about, for example, the provision of hearing protection by Paragon. Judge Godsmark QC appears to have seen Mr Sarwar’s silence on such issues as a reason for ordering cross-examination, but to my mind it weighed heavily against permitting cross-examination on them. More than that, it seems to me that, as things stood (and stand), cross-examination related to things said in Mr West’s witness statement would have been likely to represent a fishing expedition designed to find evidence for allegations against Walker Prestons rather than to support pre-existing allegations for which there was already evidence. Mr West did not sufficiently identify the particular respects in which Walker Prestons’ conduct was said to have been “improper, unreasonable or negligent” and thereby caused Paragon to incur unnecessary costs.
    1. Fifthly, issues as to legal professional privilege and what, if any, disclosure might be required remained to be addressed. Although Mr Hunt has apparently waived privilege on a blanket basis now, he had not done so when Judge Godsmark QC made his order and there was still room for argument as to how far, if at all, privilege had been waived when the matter was before Saini J. The extent to which Mr Sarwar could speak to communications between his firm and Mr Hunt remained unclear, therefore. Supposing, however, that he was entitled to speak of some or all of them, it could be anticipated that there would be documents relating to them to which Mr Sarwar might refer but which had not been disclosed before the hearing and which the cross-examiner might then want to see. In the absence of directions providing a mechanism for the resolution of privilege issues and, potentially, consideration of some disclosure, the hearing stood to be very unsatisfactory.
    1. Sixthly, Saini J was, I think, mistaken in thinking that Mr Sarwar and Mr Hunt had given “radically different accounts … as to the facts which are central to certain of the issues to be determined by the judge on the hearing of the defendants’ applications”. Mr Sarwar’s evidence was to the effect that Mr Hunt had signed the 9 May 2019 Part 18 replies and, as I have said, I do not understand Mr Hunt to have disagreed in his letter, albeit that at the 12 December 2019 hearing his counsel had understood him to have denied signing the replies. For his part, Mr Hunt referred in his letter to discussions as to whether (and, if so, in what circumstances) he signed a document recording his appointment as a director of Annolight, a subject about which Mr Sarwar has said nothing.
Conclusion
    1. I would allow the appeal. In my view, Judge Godsmark QC and Saini J were not justified in directing that Mr Sarwar attend for cross-examination. For completeness, however, I should record that I am not intending to preclude the possibility of an order for such cross-examination becoming appropriate in the future, depending on the circumstances at the time.
    1. I would add that Judge Godsmark QC’s direction in his order of 12 November 2019 for Walker Prestons to file witness statements in response to the wasted costs applications by 24 January 2020 must be understood to have meant that any evidence on which Walker Prestons wished to rely was to be filed by the specified date. Judge Godsmark QC cannot have been intending to bar Walker Prestons from resisting the wasted costs applications on the strength of arguments for which no evidence was required. CPR 46.8(2) provides for a lawyer facing a wasted costs application to have “a reasonable opportunity to make written submissions or, if the legal representative prefers, to attend a hearing”. Even where there is a hearing, the lawyer must be entitled to advance submissions which have not been foreshadowed in evidence and, in fact, to file no evidence at all.
Lord Justice Arnold:
    1. I agree. I would only add that this case demonstrates the need for careful case management of wasted costs applications, which must start with identifying the issues raised by the application.
Lord Justice Warby:
  1. I agree with both judgments. I have 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.