We are looking again (and not for the last time) at the judgment of Mr Justice Martin Spencer in Rainer Hughes Solicitors v Liverpool Victoria Insurance Company Ltd & Ors (Rev1) [2024] EWHC 585 (KB).   The decision to make a wasted costs order against solicitors was upheld on appeal.  Some important observations as to procedure were made.



The claimant brought an action for damages for personal injury.  Although liability was initially admitted the defendant was allowed to resile from that admission and to plead fraud and bring a counterclaim.  The claimant made a witness statement in Turkish, which was translated.


The claimant then served a second witness statement.  This statement was written in English and not translated.  This second statement attempted to explain matters that had been asserted in the first statement, in particular in relation to impecuniosity.  A Turkish translation of the second statement was never produced. At the pre-trial review an order was made that “Rainer Hughes take instructions and clarify in writing that the Claimants’ witness statements were compliant with CPR 32 and that the Statements of Truth complied with CPR 22. They should also indicate the level of the Claimant’s grasp of English”.  The solicitors filed evidence that the claimant’s level of English was proficient. At trial, however, it became clear that the claimant was unable to properly read her witness statement or the pleadings that were in English.  The case was struck out (the claimant having failed to pay the trial fee in any event).  The defence to the counterclaim was also struck out.


The trial judge made a Notice to Show cause and, after a hearing, a wasted costs order of £3,000 was made.


The appeal against the wasted costs order was dismissed.  Mr Justice Martin Spencer made some important observations about procedure in the judgment.


    1. The issues on this Appeal cover both procedure and substance. It is alleged that the learned Judge erred procedurally in failing to consider proportionality as a preliminary issue before going on to consider the merits of the application for wasted costs. It is further said that, had the learned Judge done so, he would or should have concluded that this was not a case suitable for the summary jurisdiction represented by an application for wasted costs. Strong reliance is placed on the decision of Mackay J in Harrison -v- Harrison [2009] EWHC 428 (QB) who, having referred to the authorities which established that the jurisdiction will only be exercised in cases which are ‘plain and obvious’ and that it is a summary remedy which should be capable of being dealt with in “hours rather than days” went on to say:


“25. Therefore, even where impropriety etc is shown, there exists a discretion in the court as to whether any order should be made and the lack of proportionality of the remedy may, dependant on the facts of the case, disentitle the applicant to relief (see Chief Constable of North Yorkshire -v- Boardsley [2000] Lloyd’s Rep PN 675). This is so even at what is sometimes referred to as Stage 1 of a wasted costs order application, where the question is whether the Respondent should even be required to show cause at all. The present hearing in this case is ill defined but capable of being either Stage 1 or Stage 2, as I think was acknowledged. I will return to that.”

    1. Then, having considered the figures involved in that case, Mackay J went on to say:


“28. In any event if I am wrong about that the numbers in this case and the scale of these proceedings are entirely out of proportion, the one against the other, and the proceedings are therefore disproportionate to any benefit they could possibly bring. The court was given about 800 pages of documents and witness statements, 2 bundles of authorities and skeleton arguments of 110 paragraphs from the Applicant and 76 from the Respondent, with a half-day pre-reading suggestion (which happily through fortunate events I was able to spend on the case). But much more to the point than this, the Applicant’s statement of his costs for this application are that they are £57,784. The Respondent’s estimate, and bearing in mind that new solicitors and counsel had to be instructed and had to read into the case, is higher and is estimated at £85,000. Even if it were the case, which I do not think it is, that some discernible 4-figure or 5-figure claim can be extracted from the wreckage of these figures, I have no hesitation in declining to exercise my discretion to grant the relief sought.”

    1. Clearly, in my Judgment, and as I return to in paragraph 50 below, there is merit, whenever an application for a wasted costs order is sought, for the Judge to consider proportionality and whether, on the information available, he or she should exercise their discretion to decline allowing the application to proceed. However, as Mr Curtis submitted, this is very much in the Judge’s discretion. No hard and fast rule can be laid down because the circumstances in which a wasted costs application may be made are infinitely varied. There may be cases where the issues of impropriety are so complicated or clearly contestable that a Judge can foresee that the costs will far outweigh the sums at stake that such a hearing is disproportionate. However, there will be other cases where the Judge considers that the case is so clear-cut and obvious that it is very unlikely that the wasted costs application will be contested and will be straightforward. However, there will be cases which fall into a middle ground and where the discretion of the Judge very much comes into play. The ambit of the discretion is wide and will not be lightly interfered with by an Appeal Court. This is just such a case: on the basis of the facts as they appeared to Judge Monty in December 2022 when he refused relief from sanction, it appeared to be a clear case of a solicitor having failed to comply with the rules and practice direction and have the witness statement and pleadings drafted in the Claimant’s “own language” which was Turkish. In my Judgment it cannot properly be suggested that Judge Monty erred in making a “show cause” order at that stage. Thereafter, the learned Judge rightly made provision for a Directions Hearing which took place on paper on 2 March 2023. It seems to me that it was then that an application on the part of Rainer Hughes that the matter should not proceed on grounds of proportionality should have been made if such an application was appropriate at all. However, no such application was made and the matter proceeded to the full hearing in July 2023. By that time the costs had been incurred. Of course, the court retained the right to exercise its discretion not to make a wasted costs order but again, there appears to be no suggestion that an application was made to Judge Monty that he should dismiss the application “in limine“. It is true that, in his skeleton argument for that hearing, Mr Timson submitted:


“17. This issue has now been ongoing for some 7 months. There are bundles of over 200 pages said to be relevant to this issue alone, plus no doubt detailed skeleton arguments and voluminous authorities bundles. The costs are already no doubt disproportionate, and the matter is already well outside what is a summary procedure.”

    1. However, the suggestion that proportionality should have been dealt with first and the application dismissed without consideration of the merits only appears to have arisen first on this appeal.


    1. In the circumstances, I reject the suggestion that the learned Judge erred procedurally.


    1. I also reject the submission that the learned Judge erred substantively in failing to exercise his discretion to dismiss the application on grounds of proportionality. First, as I have stated, the discretion of the Judge is a wide one. I refer to paragraph 85 of the Judgment (see paragraph 29 above) where the learned Judge dealt with the proportionality point. I can see no basis upon which it could be submitted that Judge Monty misdirected himself. He was entitled to take into account the fact that, on his assessment, the costs were greater than they should have been because of the unreasonable approach taken by Rainer Hughes to the application. Judge Monty stated:


“I have taken the level of costs into account, when comparing them to the wasted costs sought, and I have decided in the exercise of my discretion, at the third stage of the test, that it is just in all the circumstances to order Rainer Hughes to compensate the Defendant.”

    1. In my Judgment it cannot properly be argued that the learned Judge was wrong so to decide. A further point is this, though: Mr Timson sought to rely upon the fact that the wasted costs were, in the event, only ordered in the sum of £3,000. However, this was, in part, because he was successful in arguing down the claim for wasted costs as a matter of quantum on the basis of causation arguments, and in particular because he successfully persuaded the learned Judge to disallow the costs claimed in relation to the consideration of the documents on the basis that such consideration would always have been required. At the earliest stages of these proceedings, it may well reasonably have been thought that the wasted costs were significantly higher than the sum eventually awarded and the retrospectoscope cannot be used to imbue the court at the earlier stages with the knowledge that the award would only be £3,000. Even then, though, it is by no means clear that the wasted costs application would have been deemed disproportionate. Again, it depends upon the approach taken and whether this leads to the costs of dealing with the application being larger than they should have been.


    1. Finally, there is, as it seems to me, a public interest in costs which have been wasted as a result of a solicitor’s negligence or misconduct in the proceedings being visited on the solicitor in the form of a wasted costs order. Firstly, this encourages lawyers to comply with the rules of the court. Secondly, it immediately relieves the costs burden from the solicitor’s client who would otherwise potentially need to take negligence proceedings against the solicitors with all the additional costs that would incur. For these reasons, an Appeal Court will be very slow to find that a Judge misapplied his discretion in allowing a wasted costs order to proceed. In that regard, I fully endorse the dictum of Clarke LJ in Royal Institute of Chartered Surveyors -v- Wiseman Marshall [2000] PNLR 649 at page 659B where he said:


“”…it will only be in a very rare case that this court would interfere with a decision by the judge as to whether or not to make a wasted costs order. It must be rarer still that this court will be willing to interfere with a decision of the judge at the first stage.”

    1. So far as grounds 1 and 2 of this appeal are concerned, it is convenient to deal with them together. The starting point is that, in my Judgment, Judge Monty was wholly entitled to proceed to an adjudication on the basis of the evidence that was before him, Of course, there may be cases where the issues are contested in such a way that it is apparent to the court that they cannot be resolved without hearing oral evidence and without conducting what is in effect a mini-trial. In such cases, the court would be right to refuse to do so and to dismiss the application for a wasted costs order on that basis. It is agreed between the parties, as stated by Mackay J in Harrison -v- Harrison, that the jurisdiction is confined to cases which are “plain and obvious” and where the matter is capable of being dealt with in “hours rather than days”. However, in my Judgment, Mr Timson is wrong to suggest that an assertion by the senior partner of a firm of solicitors of the nature contained in Mr Panesar’s statement is sufficient to bring the claim into the category of cases which a judge should decline to consider. Judge Monty was entitled to look beneath the surface of Mr Panesar’s assertions and consider whether Mr Panesar had set out a sufficient basis for making them: the reason is that, without there being such a sufficient basis, the assertions remain just that: assertions, and nothing more. There are obvious examples. Thus, at paragraph 7 of his statement, referring to Mrs Karadag having an in-person meeting with representatives of the firm in September 2020, Mr Panesar said:


“At this meeting it was clear that Mrs Karadag had a good grasp of English,”.

    1. What was the basis for that assertion? Mr Panesar did not suggest that he was at the meeting: if he had been, he would surely have said so. There is no attendance note suggesting he attended the meeting. If he did not, then he could only properly make that assertion on the basis of what someone else had told him. However, the source of his knowledge is not stated even though, at paragraph 3 of the statement, he states:


“Where I refer to facts and matters outside my own knowledge, I identify the source of those facts and matters”.

    1. Mr Timson submitted that Judge Monty should have inferred – and I can infer – that Mr Panesar’s claim that, at the meeting, it was clear that Mrs Karadag had a good grasp of English arises from facts and matters within his own knowledge because of what he says, at paragraph 3,


    1. I disagree. Where it is so straightforward a matter for Mr Panesar to state, if it is the case, that he personally heard Mrs Karadag speaking and was present at the meeting, he would be expected to say so. The absence of such evidence is in the nature of a deafening silence.


    1. In his Judgment, Judge Monty from paragraphs 49-73, subjected the documentary history to a full analysis: this was appropriate to see what support, if any, there was for the position adopted by Mr Panesar and what the evidence showed about Mrs Karadag’s fluency in the English language. The Judge concluded that the picture which emerged from the documents and correspondence was a very clear one – namely that it had been found from the outset that Mrs Karadag would need a translator and thereafter there was “a proliferation of red flags here which should have led Rainer Hughes to realise that without properly translated statements, this was a disaster waiting to happen.” On that basis, in my Judgment, Judge Monty was fully entitled to conclude that Rainer Hughes had been negligent in the sense identified in Ridehalgh and that it was a breach of the firm’s duty to the court, applying Persaud and Gillian Radford & Co -v- Charles [2003] EWHC 3180 (CH). As the Judge said, “this is because there was a clear breach of CPR 32 and PD 22” and also a breach of the overriding objective imposing an obligation on the court to deal with cases justly and at proportionate cost by, among other things, enforcing compliance with rules, practice directions and orders. The identified negligence of the solicitors was a breach of the duty on a legal representative to assist the court in promoting the overriding objective.


    1. Grounds 4 and 5 of the Appeal can be dealt with relatively briefly. Firstly, the decision to award costs on an indemnity basis was a matter within Judge Monty’s discretion and there were features of this case which justified him in finding that it fell outside the norm such that an indemnity order was appropriate. Thus, he said at paragraph 85:


“This was, in my judgment, a very clear case in which Rainer Hughes … have defended this application without calling evidence from those actually involved at the truly material times such as the drafting of the statement, have failed to produce all relevant documents, and have ignored what is in my view clear from the documents. That is why the costs are greater than they should have been.”

    1. Judge Monty took this up at paragraph 100 where he stated:


“I have no doubt that the negligence of Rainer Hughes together with their stance on this application which I would define as an attempt to defend the indefensible, took this out of the norm and that I should assess the costs on an indemnity basis.”

    1. Mr Timson criticises the reliance by Judge Monty on the negligence of Rainer Hughes on the basis that this is not a matter which should go to indemnity costs but goes to “liability” and should not be visited on the solicitors twice. There is arguably some force in this, but the approach of the solicitors to the application was, in any event, more than sufficient to justify the judge awarding costs on the indemnity basis. In any event, it seems unlikely that this has made a significant difference to the summary assessment of the costs particularly when the learned Judge reduced the costs to £9,500 to reflect the failure on the part of the First Respondent to provide the Statement of Costs in good time and because some of the costs were in relation to conduct rather than translation issues.


    1. The submission that the Second and Third Respondents should not have had their costs of attending the hearing was, in my judgment, hopeless. They had been advised by Rainer Hughes themselves to seek alternative representation and Mrs Karadag, in particular, had a clear interest in the outcome of the application because such costs as were awarded against Rainer Hughes as wasted costs would go to reduce her own liability to the First Respondent arising out of the Costs Order made by Judge Monty in December 2022. No challenge is made to the level of costs awarded by Judge Monty.


    1. Finally, I return to procedural matters and in particular paragraph 5.9 of Practice Direction 46 which states:



On an application for a wasted costs order under Part 23 the application notice and any evidence in support must identify—

(a) what the legal representative is alleged to have done or failed to do; and

(b) the costs that the legal representative may be ordered to pay or which are sought against the legal representative.”

It was acknowledged by Mr Timson that this paragraph did not have direct application here because there had been no application notice or evidence in support. It seems to me that it would be desirable for the spirit of this practice direction to apply, though, even where there has not been such an application notice. Where a Judge decides to make a “show cause” order, it is desirable that the matters referred to in PD 46, paragraph 5.9 should be addressed as early as possible. A judge making a “show cause” order should consider giving a direction that the applicant (in this case it would have been the First Respondent) serve a notice and witness statement identifying;

(a) what the legal representative is alleged to have done or failed to do

(b) the costs that the legal representative may be ordered to pay or which are sought against the legal representative.

This will then give the court a basis upon which to make an early assessment of the issue of proportionality because there will then be information on how straightforward or complicated the “negligence” issues are likely to be and how the likely costs of dealing with those issues will compare to the wasted costs that are sought. Even if, at the early stage, it appears that it is not disproportionate to allow the application to proceed, a court should be encouraged to keep the matter under review as the application progresses. Andrews J (as she then was) undertook a similar exercise in Adegbulugbe v Nursing and Midwifery Council [2014] EWHC 405 (Admin): she said:

“4. After hearing argument on the matter after giving judgment dismissing the appeal, I was satisfied that the evidence before me was sufficient to cross the threshold in CPR 48 PD53.6, namely that if it was unanswered, it would be likely to lead to a wasted costs order being made, and that the wasted costs proceedings were justified, notwithstanding that they would lead to further costs being incurred. I gave directions for the service of further evidence and submissions, and that there should be a further hearing at which the Solicitors and Counsel would be afforded the opportunity to put forward reasons why a wasted costs order should not be made against them. I also adjourned over to the further hearing the NMC’s application for costs against Ms Adegbulugbe, as the losing party to the appeal.” (emphasis added)

Thus, she took an early view on the issue of proportionality although she did not refer in terms to PD46, para 5.9. In fact, I have no doubt that Judge Monty would instinctively have considered these factors before deciding to make the “show cause” order.

    1. Subject to the above, I wish to commend the clarity and careful nature of the Judgment given by HHJ Monty KC in this case which was, as it seems to me, a model of its kind and made this court’s task so much easier in adjudicating upon this appeal.