Partner Article

Wasted Costs Orders

Legal costs accumulate readily, and, as a result, parties to legal proceedings and their legal representatives are discouraged from incurring costs unnecessarily. The Supreme Court Act 1981 enables the Court to make an order requiring legal representatives to meet the whole, or part, of any “wasted costs” incurred in legal proceedings. A wasted costs order aims to protect the parties from having to meet costs incurred unnecessarily.The party bringing an application for a wasted costs order must satisfy the Court that the wasted costs proceedings are justified, taking into account the likely costs involved. Applications are normally made at the end of the trial and are intended to be short, and fair. They are not intended to become costly satellite litigation.Guidance provided under the court rules states that a wasted costs order should only be made against a legal representative if: (a) He has acted improperly (i.e. a significant breach of a substantial duty), unreasonably (conduct which is vexatious and designed to harass the other party, as opposed to advancing the resolution of the case) or negligently (failure to act with the competence reasonably expected of ordinary members of the profession); (b) his conduct has caused a party to incur unnecessary costs; and (c) it is just in all the circumstances to order him to compensate that party for the whole or part of those costs.The legal representative is required to “show cause” as to why a wasted costs order should not be made. Such orders are, however, not awarded lightly, and there are restrictions which prevent the legal representative from disclosing a client’s confidential papers in defending the wasted costs application. They do, however, provide clients with a mechanism for challenging costs incurred unnecessarily by their legal representatives.If you have any queries in relation to this article or any other litigation issues, please contact Stephen McLellan at Watson Burton LLP on 0191 244 4456 or email stephen.mclellan@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .