England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
MAYORS AND CITY DISTRICT REGISTRY
(His Honour Judge Simpson)

		Royal Courts of Justice Strand London, WC2
		6th March 2003

Thursday, 6th March 2003 J U D G M E N T
1. LORD JUSTICE PETER GIBSON: On 7th August 2000 after a five day trial his Honour Judge Simpson in the Mayor's and City of London Court dismissed an action brought by two sons against their father and a company owned by the father; a third son was also a defendant. Costs were awarded against the three sons to be assessed on an indemnity basis. On 13th February 2001 the father and the company applied for a wasted costs order against the barrister who had throughout conducted the case for the two claimant sons and appeared for them at the trial. The judge heard the application on 1st August 2001. In a reserved judgment on 28th August he dismissed the application without requiring the barrister to show cause. Permission to appeal was refused, as it also was by Clarke LJ on paper on 31st May 2002. The application for permission was renewed before Ward LJ and Sir Martin Nourse. They directed that the application should be heard by the full court on notice, with the appeal to follow if permission is granted. That is how the matter comes before us today.
2. I must now flesh out the facts more fully. The first defendant, Mohan Persaud ("the father"), had three sons by his first marriage, the claimants (whom I shall call by their first names "Luke" and "John" respectively) and the third defendant (whom I shall call by his first name "Stephen"). The father owns 9,999 of the 10,000 issued shares in the second defendant M Persaud Ltd ("the Company"). Stephen is the owner of the remaining share. The father and Stephen are the directors of the Company. The sons commenced proceedings on 5th December 1997 in the Queen's Bench Division. The heart of the dispute concerns an alleged meeting summoned by the father in December 1991 and what was said at that meeting.
3. I take the allegations from the re-re-amended statement of claim. The claimants say that the father requested each son to work for him in the Company's business on a scheme to buy and sell machinery for export to Guyana. The father stated that the Company could not afford to pay any salaries for the first five years while the new business was being established, but he assured them that they should look on their work as an investment and that, in consideration for that work, he would bestow a directorship on each of the sons, give each of them 10% of the share capital and would purchase outright for each of them a dwelling house to the value of £100,000. The sons say that they accepted that offer and worked in the machinery export business for the father and the Company from December 1991. They say that the machinery export business of the Company was built up over the years such that the annual turnover exceeded £750,000. However, on 14th August 1997 the father announced to the sons that he was going to dispose of the assets of the business and emigrate to South America. The sons claimed that, in breach of the father's promises and assurances, the father failed or refused to buy houses for them, or give them any shares, or reward them for their unpaid services.
4. They claimed:

(1) a declaration that the father and the Company held their assets upon trust for the benefit of the father and the sons, the share of each son being at least 10% of the capital;

(2) an interlocutory injunction restraining the father and the Company from dissipating or disposing of their assets or removing them from the jurisdiction;

(3) damages for breach of contract, alternatively reasonable remuneration for the services rendered; and

(4) damages for breach of trust.

A Mareva injunction was obtained.

5. The father and the Company by their defence (drafted by counsel other than Mr Adrian Davies who now appears for them) denied the alleged promises or assurances and denied the claimants' entitlement to relief.
6. The judge in his judgment held the sons' account not to be true. He disbelieved them as to the alleged meeting. He continued:

"Even if I had accepted the sons' evidence on the facts of this case, it seems to me that they faced formidable difficulties on the law. The alleged contract is void for uncertainty. The essential elements of a contract for the sale and purchase of land are that there must be agreement on the parties, the property and the price. The property must be sufficiently identified by description. In the present case, the houses are not defined or described at all. They could be anywhere. The identity of the houses is a material term. The contract is silent about this term, and the omission cannot be supplied by the law. It follows that there is no contract. Even if this was not so and contrary to my judgment a contract was made, it would be immediately caught by section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989, which requires a contract for the sale or other disposition of an interest in land be made in writing and by incorporating all the terms which have been expressly agreed. In the present case, there was nothing in writing."

He held that the doctrine of constructive trusts did not help the sons, nor did the doctrine of proprietary estoppel. He further held that if the sons had been entitled to a quantum meruit it can only have been a claim against the Company alone and there were no grounds for piercing the corporate veil. He found that nothing was payable to the sons.

7. The father and the Company applied for a wasted costs order against the legal representatives of the sons and the Legal Services Commission who had funded the costs of the sons. The application against the solicitors was dismissed by consent on 26th March 2001 and discontinued against the Legal Services Commission, though the application under section 18 of the Legal Aid Act 1998 has still to be determined. That left the application for a wasted costs order against Milan Dulovic, counsel for Luke and John.
8. It is convenient at this point to refer to the Supreme Court Act 1981, as amended. By section 51(6) the court has power to order the legal or other representatives in proceedings in (amongst other courts) the county court to meet the whole of any wasted costs or such part of them as may be determined in accordance with the rules of court. The term "wasted costs" is defined in section 51(7) as meaning:

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

By subsection (13):

"...'legal or other representative', in relation to a party to proceedings, means any person exercising a right of audience or right to conduct litigation on his behalf."

9. By CPR 48.7 the court, when considering whether to make an order, must give the legal representative a reasonable opportunity to attend a hearing to give reasons why it should not make that order. The jurisdiction to make a wasted costs order is dependent at two stages on the discretion of the court: (i) when on the initial application the court is invited to give the legal representative an opportunity to show cause, and (ii) at the final stage after that opportunity has been given. As is made clear in Ridehalgh v Horsefield [1994] Ch 205 at page 239 D per Sir Thomas Bingham MR giving the judgment of this court (consisting of himself, Rose and Waite LLJ), the first stage is no mere formality but requires the court to exercise its discretion judicially having regard to the case put by the party seeking the order. A strong prima facie case must be shown. The material that was put before the judge included counsel's three advices, privilege for which was waived. But privilege has not been waived for the instructions to counsel, nor for the material underlying the advices.
10. The three advices can be summarised as follows. By his first advice dated 1st October 1997 on the merits of the then proposed claim, counsel recorded that the advice was based on instructions given at a conference at which he had seen the sons and heard their account. He described the claim as a difficult one to formulate but one which had reasonable merit to justify the grant of legal aid at least to the stage of applying for injunctive relief. He said that the claim could be put under breach of contract and breach of trust. He recorded certain difficulties in the way of a contractual claim, on which he said he needed further instructions. As for the trust claim, he said it could only succeed on the basis of an implied or constructive trust in the absence of writing. He was satisfied that the sons had told him the truth and were likely to be credible witnesses. He described the case as having a reasonable prospect of success, not overwhelming as yet, but with good, better than evens, prospects of success.
11. In the second advice of 21st July 1998, which consisted of a short note to his instructing solicitor, he discussed doubts which had been raised by the Legal Aid Board whether to continue funding the proceedings. He described the prospects of success as much stronger, taking particular encouragement from the failure of the father and the Company to obtain a discharge of the Mareva injunction and describing the issue to be decided as entirely one of fact. He also noted the abandonment of the application to strike out the claim and the concession made in open court by the defendants that the claimants' case was, at the very least, arguable. Counsel told his solicitors that they could use his note in making representations to the Legal Aid Board, as it would be wholly wrong, he said, to withhold legal aid at that stage, and it would certainly not be in the interests of justice.
12. In the third advice of 19th January 2000 counsel referred to a joint conference which had been held with all the sons and their advisers. He said he was asked to give a final advice to the Legal Aid Board on the merits. He set out the issues and expressed the view that the claimants were likely to succeed in establishing liability, assessing their prospects as very good, approximately 70 to 80 per cent. He ended by advising that any lingering limitations on the scope of the work covered by the certificate should now be removed.
13. The evidence that was put before the judge included evidence from the father of the severe hardship which he had suffered as a result of funding the proceedings and as a consequence of the Mareva injunction, and the hardship which he would suffer if he could not recover his legal costs. The judge was supplied with points of claim and points of defence.
14. The judge in his judgment on the wasted costs application noted that counsel had failed to address the Legal Aid Guidelines published by the Bar Council and adequately to assess the points of law involved in the proceedings, but said that the court was not concerned with any breach of duty to the Legal Aid Fund, the Legal Aid Board or the Legal Services Commission but with any breach of duty to the court. The judge pointed out that he had not seen counsel's instructions or the notes of conference at which he had advised. He referred to the fact that the father had made an application to strike out the statement of claim as disclosing no cause of action, but had not proceeded with that application. The judge regarded that as a most telling point, and described as extraordinary the failure by the father's legal advisers to pursue the striking out claim. The judge continued:

"In those circumstances, I cannot see how the barrister on the other side should be in breach of his duty to the court in continuing the litigation. Even at trial on the first day the application might have been resurrected and I could have decided upon it, thus saving four days' costs, plus the further morning for reserved judgment, and there was, in addition, no submission of no case to answer.

Bearing in mind that I am concerned here with breach of the duty to the court and not to the Legal Aid Fund, and bearing in mind that I do not have instructions or notes of the conferences, and the fact that the father never proceeded with his application to strike out, it seems to me to be impossible to say that this barrister is in breach of his duty to the court and, accordingly, the application to show cause is dismissed."

15. Before this court Mr Davies submits that the judge erred in refusing to make an order. His submissions were essentially twofold: (i) Mr Dulovic's pleaded claims were unsustainable in law and the conduct of the litigation was with the benefit of legal aid; (ii) Mr Dulovic wrongly assessed the prospects of the claimants on the facts. He claimed that Mr Dulovic's conduct was both improper and negligent.
16. Mr Roger Stewart QC for Mr Dulovic submits that (1) it is a necessary requirement of any wasted costs application that there should have been a breach of duty to the court; (2) there was no such breach; and (3) in any event there are no grounds to interfere with the judge's exercise of discretion.
17. I shall take Mr Stewart's submissions in turn, incorporating my consideration of the points taken by Mr Davies.
18. The first point is no longer disputed. Mr Davies accepts that it is necessary that there should have been a breach of duty to the court for a legal representative to be made liable by a wasted costs order. That concession seems to me to have been rightly made.
19. The two leading authorities are the decision of this court in Ridehalgh and the decision of the House of Lords in Medcalf v Mardell [2002] 3 WLR 172. In Mardell the guidance given in Ridehalgh was endorsed: see [2002] 3 WLR at paragraph 13 per Lord Bingham. In Ridehalgh in a passage headed "The wasted costs jurisdiction" at page 226 this court considered that jurisdiction as applied to solicitors and as expounded by the House of Lords in Myers v Elman [1940] AC 282. One of the fundamental propositions for which that case was authority was said to be:

"The court's jurisdiction to make a wasted costs order against a solicitor is founded on breach of the duty owed by the solicitor to the court to perform his duty as an officer of the court in promoting within his own sphere the cause of justice." (See page 227 between C and D.)

There can be no doubt that the jurisdiction under section 51 of the Supreme Court Act 1981 to make a wasted costs order has now been extended to barristers. It is equally plain from Ridehalgh and Medcalf that the jurisdiction covers all that it previously covered and which was explained in Myers v Elman and may go further. This court in Ridehalgh explained (at pages 232 and 233) the meaning of the words in section 51(7) "improper, unreasonable or negligent". The expression "improper" covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty (see page 232 between D and E). I need not deal with the term "unreasonable", that not being relied on. The term "negligent" 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" (see page 233 B-C).

20. Mr Davies submitted that Mr Dulovic acted improperly because he breached the Bar Council's Legal Aid Guidelines. Paragraph 1.3 provides that the Guidelines are essentially statements of good practice and should not be rigidly applied. They might be taken into account when a wasted costs order is being considered against a barrister. They should be used in conjunction with the Code of Conduct. Paragraph 3 of the Guidelines is to the effect that the barrister's written opinion, to be supplied to the Legal Aid Board or Legal Services Commission, should show that the legal merits have been specifically addressed in sufficient detail to enable the Board to come to a clear view on them. He relied on the judge's comment that Mr Dulovic had singularly failed to address paragraph 3 and failed to address adequately the various points of law involved.
21. As for negligence, he referred us to the decision of the Privy Council in Harley v McDonald [2001] 2 AC 678, relating to the common law jurisdiction in New Zealand to make wasted costs orders against legal representatives, and the remarks of Lord Hope giving the judgment of the Privy Council at paragraphs 55 to 57 that serious incompetence resulting in a failure to appreciate that a claim is untenable is capable of amounting to a serious dereliction of duty. He further referred to Davy-Chiesman v Davy-Chiesman [1984] Fam 48 and the remarks of May LJ approving what Sachs J had said in Edwards v Edwards [1958] P 235 at page 248. In that judgment Sachs J had said this:

"It is also from the authorities clear, and no submission to the contrary has been here made, that unreasonably to initiate or continue an action when it has no or substantially no chance of success may constitute conduct attracting an exercise of the above jurisdiction."

22. It is clear from what was said in both Ridehalgh and Medcalf that it is necessary for a duty to the court to be breached by the legal representative if he is to be made liable for wasted costs. In Ridehalgh at page 232 H to page 233 A Sir Thomas Bingham said this:

"Since the applicant's right to a wasted costs order against a legal representative depends on showing that the latter is in breach of his duty to the court, it makes no sense to superimpose a requirement under this head (but not in the case of impropriety or unreasonableness) that he is also in breach of duty to his client."

That guidance given in Ridehalgh was confirmed in Medcalf. Lord Hobhouse in that case at paragraph 26 referred approvingly to Ridehalgh and to the necessity for there to be a breach of the advocate's duty to the court. I need say no more on that first point.

23. The second question therefore is whether Mr Dulovic's conduct in the present case amounted to such a breach. Mr Davies, as I have indicated, relies first on the word "improper" and on the failure to observe the Guidelines. To my mind the necessary impropriety must be a very serious one. I have already referred to the sort of conduct that is entailed, justifying disbarment, striking off, suspension or other serious professional penalty. Sir Thomas Bingham in Ridehalgh went on to say that it covered any significant breach of a substantial duty imposed by a relevant code of professional conduct; but I have to say that the breach of duty relied on in this case seems to me to be well below the seriousness to which conduct, to be improper and to justify a wasted costs order, must amount. As for the term "negligent" on which Mr Davies also relied, Mr Stewart submitted that negligence on its own would not suffice, however serious that negligence might be. Mr Davies pointed to the cases of Harley and Davy-Chiesman and Edwards for the contrary proposition. He submitted that it was sufficient that there should be negligence and that it was not necessary for that negligence to amount to some personal conduct by the legal representative which could be characterised as being an abuse of court.
24. To my mind the two cases of Ridehalgh and Medcalf must now be taken to state what the law is in this area, and earlier cases may have to be reconsidered in the light of the authoritative guidance which we now have. In Ridehalgh a clear distinction is drawn between presenting a hopeless case -- it is plain that that cannot of itself lead to a wasted costs order -- and lending assistance to proceedings which amount to an abuse of process. That is stated by the Master of the Rolls in Ridehalgh at page 234 between D and F in this way:

"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 an abuse of the process of the court. Whether instructed or not, a legal representative is not entitled to use litigious procedures for purposes for which they were not intended, as by issuing or pursuing proceedings for reasons unconnected with success in the litigation or pursuing a case known to be dishonest, nor is he entitled to evade rules intended to safeguard the interests of justice, as by knowingly failing to make full disclosure on ex parte application or knowingly conniving the incomplete disclosure of documents. 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."

25. Sir Thomas Bingham then went on to discuss the position where one party was in receipt of legal aid. His concern there was that the representative of the legally assisted party might be made the respondent to an application for costs, the non-assisted party seeking to recoup his costs from persons other than the legally assisted party. It is clear that this court was concerned that thereby representatives of a legally assisted party might find themselves subject to attack and, as Sir Thomas said, it would subvert the benevolent purposes of the legislation if such representatives were subject to any unusual personal risk. He continued at page 235 A:

"They for their part must bear prominently in mind and their advice and their conduct should not be tempered by the knowledge that their client is not their paymaster and so not, in all probability, liable for the costs of the other side."

Thus, if counsel took advantage of the fact that his client was not his paymaster, and so probably not liable for the costs of the other side, to pursue proceedings which ought not to be pursued, then that may amount to an abuse of process, as Mr Stewart readily conceded.

26. In Medcalf Lord Hobhouse at paragraph 56 said this:

"So it is not enough that the court considers that the advocate has been arguing a hopeless case. The litigant is entitled to be heard; to penalise the advocate for presenting his client's case to the court would be contrary to the constitutional principles to which I have referred. The position is different if the court concludes that there has been improper time-wasting by the advocate or the advocate has knowingly lent himself to an abuse of process. However it is relevant to bear in mind that, if a party is raising issues or is taking steps which have no reasonable prospect of success or are scandalous or an abuse of the process, both the aggrieved party and the court have powers to remedy the situation by invoking summary remedies -- striking out -- summary judgment -- peremptory orders etc. The making of a wasted costs order should not be the primary remedy; by definition it only arises once the damage has been done. It is a last resort."

27. None of the other members of the House of Lords referred to Lord Hobhouse's remarks. Nevertheless, it seems to me that what he said there is consonant with what had been said in Ridehalgh in the passage which I have just cited. I accept Mr Stewart's submission that there must be something more than negligence for the wasted costs jurisdiction to arise: there must be something akin to an abuse of process if the conduct of the legal representative is to make him liable to a wasted costs order.
28. I turn to consider whether there has been anything in Mr Dulovic's conduct of the proceedings as to amount to an abuse of process.
29. Mr Davies said that no competent member of the Bar could have advised a privately paying client of modest means to proceed with this case. On the facts, he said, this was a case which turned on the credibility of witnesses and it was reckless at worst and seriously negligent at best to advise proceeding to trial. The father, he said, was of unblemished character, whereas all the sons had convictions for offences of dishonesty, and the only independent witness, a friend of the sons, admitted that he had no direct knowledge of the agreement alleged by the sons.
30. In my judgment it was impossible to foresee that the sons' account was bound to fail. Mr Dulovic had seen the sons' and heard about their account. The father by his pleading in respect of the December 1991 meeting was surprisingly coy about asserting what his positive case was, saying no more than that he did not admit what was said by the sons. Mr Stewart accepts that it was open to the judge to reach the conclusion which he did on the facts. But he also points out, in my view rightly, that some of the points which were taken by the judge against the sons might have been given less weight by another tribunal of fact. For example, the judge rejected the sons' account of their troubled relationship with their father, that part of the evidence being described by the judge as scandalous. Another judge may have thought that that account was relevant, for example, to the defence of the father that no legal relations were intended to be created by what was said between the father and the sons at the meeting in December 1991. Another judge might have thought that account relevant to the question whether it was likely that the sons would have been prepared to work for their father without a salary unless promises such as were allegedly made by the father had indeed been made. Again the judge was critical of the sons' attempt to have the father committed for breaches of the Mareva injunction rather than applying for an unless order. The judge did not appear to take note of the fact that the father had been in breach of his obligations under the Mareva injunction. Again that is a matter which another judge might have thought significant. Either the sons were lying or the father was lying, as the judge recognised. That the judge decided against the sons does not mean that it was improper for Mr Dulovic to advise that the case should go ahead and that it had a good prospect of success. It cannot be assumed that those who have convictions for dishonesty will be disbelieved when they give evidence in relation to a quite different matter. In any event, in relation to the facts there is nothing to suggest that Mr Dulovic was guilty of any abuse of process. It is not, for example, suggested that he encouraged or procured false evidence. All that has been shown is that he was wrong in his assessment of how the facts would appear to the judge. There is no breach of duty to the court there.
31. In relation to the law, Mr Davies submitted that it should have been obvious to any reasonably competent practitioner that all or all but one of the heads of relief sought were unsustainable (the only possible exception being the claim against the father for the failure to allot shares in the Company) and that all but one of the heads of relief against the Company (the exception being the claim for remuneration on a quantum meruit basis) were unsustainable too. He referred to the claimed declaration that the father held his and the Company assets on trust. I agree with the judge in his criticism that that was wildly extravagant. But the two heads of relief on which the claim was brought and on which Mr Davies concentrated seem to me to be of a different character. One related to the claim that the father promised to purchase each son a £100,000 house. Mr Davies said that Mr Dulovic had put forward a claim wholly unsustainable in law. He said that this was obviously void for want of writing by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and was also void for uncertainty because the houses were not identified. He referred us to text book statements relating to the ordinary case of a contract for the sale of identified property of land where it is trite law that the property has to be sufficiently specified.
32. In my judgment Mr Davies puts the case far too high. By the concluding words of section 2(5) of the 1989 Act:

"nothing in this section affects the creation or operation of resulting, implied or constructive trusts."

The 1989 Act substantially implements the recommendations of the Law Commission in its report, Law Com No. 164 Transfer of Land Formalities for Contracts of Sale of Land. In Part V the Law Commission expressly contemplated that equitable remedies such as promissory estoppel and proprietary estoppel might be available to do justice in cases where there has been a failure to comply with the formal requirements such as that the contract be in writing.

33. In considering this point it has to be borne in mind, as Mr Stewart pointed out, that one is contemplating a factual situation where, contrary to the findings of the judge, the father had promised each son a £100,000 house, a 10 per cent shareholding and a directorship to procure the sons' agreement to work in the machinery export business without a salary, that the sons had so worked, and that the father had lied when denying the agreement. It seems to me that any equity judge, given those findings of fact, would have striven mightily to find against the father because of his unconscionable conduct and in favour of the sons.
34. As for Mr Davies' suggestion that the contract was bound to be held to be too uncertain because the house to be purchased was not identified, for my part I am unable to accept his submission. I think it well arguable that there is no real difficulty as to certainty in relation to an agreement under which one party promises another to provide him with a house of a particular value. That can be argued to leave the provider with the choice of what house of that value to provide. That seems to me to be sufficiently certain. No authority has been drawn to our attention in which a comparable situation has arisen, that is to say where a party has been induced by such a promise to give valuable consideration to the intended provider of the house, but the court has thrown up its hands and said that it could not give any remedy when the promise has not been honoured. Lord Denning would be turning in his grave at the notion that there was no remedy for the innocent party.
35. Mr Davies then submitted that the father could not be personally liable on the promises which were made by the father. He contended that to suggest that the father was liable would be directly contrary to Salomon v Salomon [1987] AC 22. Again, I do not agree that the position is as clear-cut as he suggests. I agree with Mr Stewart that there were material factors present in this case suggesting the existence of a personal obligation undertaken by the father. They include the terms in which the father expressed himself in December 1991 and subsequently, the fact that it was unlikely that houses would be purchased out of the modest assets of the Company, and, as is pleaded in the defence, the fact that the father did provide certain benefits to his sons subsequently to the date of the agreement. In those circumstances I do not see that it is at all impossible for a court to reach the conclusion that the father did assume personal responsibility and could not shelter behind the Company to avoid liability to the sons. It is not a question therefore of Salomon v Salomon being subverted.
36. But again, I have to say that in any event I do not see that the conduct of Mr Dulovic, in pursuing the claims under these two main heads, involved any breach of duty to the court. There was no abuse of process.
37. Mr Davies placed heavy reliance on the fact that his clients did not have legal aid, whereas Mr Dulovic's client did. Mr Davies said that the decision of Sir Richard Scott VC in D Walter & Company Ltd v Neville Eckley & Company (a Firm) [1997] BCC 331 was clear authority for the proposition that, where a party's legal representatives pursue a wholly misconceived case with the benefit of legal aid, causing the opposite party to incur irrecoverable costs in defending proceedings which should not have been brought, such conduct should lead to the making of a wasted costs order against those representatives. That was a case where a contributory of a company in liquidation, with the benefit of legal aid, brought proceedings against the liquidator, complaining of his conduct in the liquidation. The liquidator's solicitors pointed out to the contributory's solicitors that the right of action was vested in the Company, not the contributory. They also drew attention to authority that relief would not be granted to a contributory unless it was shown that it would probably result in some benefit to the contributory. The proceedings were dismissed with costs and a wasted costs order made against the contributory's solicitors. The Vice- Chancellor dismissed the appeal and found the solicitors to have been negligent. It is true that the Vice-Chancellor did not refer to any breach of any duty to the court, but, as I have said, that there must be such a breach of duty by the legal representatives is now conceded. It may be that the decision can be justified on the basis that there had been an abuse of process in the particular circumstances to which I have drawn attention.
38. It is, of course, proper to take account of the fact that the legal representatives' clients are legally aided. There could be abuse if the legal representatives allowed this conduct to be tempered by the fact that their client will probably not have to pay the other side's costs. I have already adverted to the fact that the court is concerned that those acting for legally assisted parties should not find themselves subject to applications for wasted costs when that cannot truly be justified. It is to be borne in mind -- as was pointed out in Ridehalgh in the passage of the court's judgment headed "Legal aid" -- that by section 31(1) of the Legal Aid Act 1988:

"...receipt of legal aid shall not, save as expressly provided, affect the relationship between or rights of a legal representative and client or any privilege arising out of the relationship nor the rights or liabilities of other parties to the proceedings or the principles on which any discretion is exercised."

I do not see that the fact that Mr Dulovic's clients were legally aided is of any materiality in this present case, though I hasten add that I can, of course, understand fully the disquiet felt by the father at having won his case but remaining at risk of not recovering his costs. However, there is still the prospect of recovery under section 18.

39. I turn, finally, to the third point taken by Mr Stewart that there are in any event no grounds to interfere with the judge's exercise of discretion.
40. Mr Davies submitted that the judge placed too much reliance on certain matters. One was that the application to strike out had not been pursued. In my judgment that the application to strike out was not pursued was a matter which the judge was fully entitled to take into account, and that is supported by the observations of Lord Hobhouse to which I have already referred. A wasted costs order is a remedy of last resort. Mr Davies sought to submit that the reason why the application had not been pursued was because of impecuniosity. However, that is not the way the matter was presented to the judge. It is clear from what was said to the judge, and indeed from the deletion from the defence of an averment that the claim was demurrable, that it was accepted on behalf of the defendants that the claim was one which had a reasonable prospect of success. It was also, in my judgment, proper for the judge to take into account the fact that there had been only a limited waiver of privilege and that that was a possibility that relevant matters which might have been explained counsel's conduct were unknown to the judge. Any doubt must be resolved in favour of the legal representative sought to be made liable.
41. There have been numerous cautionary statements warning against appeals from judges who have refused to make a wasted costs order: see Wall v Lefevre [1998] 1 Fam LR 605 at page 614 A to D per Lord Woolf MR and Royal Institute of Chartered Surveyors v Wiseman Marshall [2000] PNLR 649 at page 659B, where Clarke LJ 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."

In my judgment the good sense of that is obvious. The judge has conducted the trial and will be fully aware of the conduct of the legal representatives in the case before him. It is striking that in this case the judge, despite the very severe criticisms made by him of the claims on behalf of the sons, nevertheless refused to make a wasted costs order. This case is not, to my mind, the exceptional case where it would be right to interfere with the exercise of discretion by the judge. Because of the importance of the points that have been raised, I would give permission to appeal. But for the reasons given I would dismiss the appeal.

42. LORD JUSTICE MUMMERY: I agree.
43. MR JUSTICE BLACKBURNE: I also agree.

Order: Appeal dismissed. The costs both here and at the hearing before Silber J should be borne by the unsuccessful defendants, though we would hope that the Lord Chancellor's Department would recognise that the additional costs of the hearing before Silber J appear to have been caused by an error on the part of one of the administrative staff in this court, and we would hope that the Lord Chancellor's department would be able to find some way of recognising that by making a contribution to those costs if not paying those costs. We think it appropriate to make a summary assessment of costs as requested by the successful claimants. We will reduce the costs in this court to £7,000. The costs before Silber J will be reduced to £6,900.

(Order does not form part of Approved Judgment)