Neutral Citation Number: [2006] EWHC 1217 (Ch)
Case No: HC02C00594
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 25/05/2006

Before :

MR JUSTICE DAVID RICHARDS
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Between :

	EFI MARSH	Claimant	
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	1. CLIVE SOFAER
2. GRIFFINHOOFE & CO (a firm)	
Defendants	
	
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	1. CLIVE SOFAER
2. GRIFFINHOOFE & CO (a firm)	
Applicants	
	- and -		
	JUDKINS (a firm)	Respondent	

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Hugh Jackson (instructed by Denniss Matthews) for the Applicants
Paul Parker (instructed by Barlow Lyde & Gilbert) for Judkins

Hearing dates: 19 and 20 January 2006
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Judgment

The Honourable Mr Justice David Richards : 
1.	This action was discontinued by notice given on behalf of the claimant on 15 July 2005, on the second day of an application by the defendants to strike out the material parts of the particulars of claim and dismiss the claim. The defendants have applied for a wasted costs order against the claimant’s solicitors, Judkins. The claimant had the benefit of funding by the Legal Services Commission.
2.	In accordance with directions given by Blackburne J, the defendants served a statement setting out those parts of their costs which they assert should be paid by Judkins and the grounds for the application. Judkins served a statement in response to the defendants’ statement. The present application is for an order that Judkins should show cause why they should not pay the costs claimed.
3.	The claim in the action was for damages for negligence against the defendants who had acted as the claimant’s solicitors from July 1996 to November 1992. The first defendant, Mr Sofaer, was at all relevant times a partner in the second defendants, Griffinhoofe & Co. In this judgment, I shall generally refer to the defendants without distinguishing between them.
4.	The background and facts are as follows. The claimant was born in 1956. The evidence suggests that she has always been of very limited intellectual ability.
5.	In 1978, she began to work for a Mr Ben Goder. She became involved in the business of Ciel Travel Limited, which he incorporated in September 1979. They started to live together in the summer of 1980 and subsequently she had three children by him. Between January 1983 and August 1986, she was concerned in some degree with the management of Ciel Travel Limited, and of a company subsequently incorporated by Mr Goder called Ravina Transport Limited.
6.	Mr Goder died on 10 July 1986 intestate. The consequence was that his estate went to his widow and children by his marriage, rather than the claimant and her three children.
7.	On 22 July 1986, she retained the defendants to advise her in relation to her rights in respect of Mr Goder’s estate and certain properties that he had bought in conjunction with her.
8.	On 16 June 1987, the defendants issued on her behalf an originating summons, supported by an affidavit made by her on 15 June 1987, seeking declarations as to her beneficial interest in certain properties and for provision out of the estate of Mr Goder under the Inheritance (Provision for Family and Dependants) Act 1975. The affidavit was drafted by counsel on the basis of a statement taken by the defendants from the claimant.
9.	Before that application was heard, there was a criminal prosecution of the claimant. Her trial took place between 2 and 25 February 1988 at Wood Green Crown Court. The claimant was prosecuted on six charges of carrying on the business of Ciel Travel Limited and Ravina Transport Limited for a fraudulent purpose. She pleaded not guilty and was represented by solicitors (not Griffenhoofe & Co) and counsel.  She was found guilty on 25 February 1988 on three counts out of the six. She was sentenced to nine months imprisonment, of which six months was suspended. She served six weeks in prison.
10.	On 19 June 1989, a consent order was approved by Thorpe J sitting in the Family Division by way of compromise of the proceedings commenced by the claimant in June 1987. Under the terms of the compromise, Mr Goder’s wife and one of her daughters renounced letters of administration in favour of the claimant. She undertook to make certain payments to the widow, to transfer a property to her and gave certain undertakings to the court with regard to the payment of other debts of Mr Goder.
11.	 In the present action it was alleged that the defendants had been negligent in their advice as regards entering into the compromise. It was further alleged that the claimant had borrowed £50,000 from Barclays Bank plc to pay a sum due under the compromise and £150,000 from The National Home Loans Corporation plc to pay liabilities of the estate, and that the defendants had been negligent in their advice as regards these borrowings and security given to secure the larger borrowing. Further allegations of negligent advice were made in relation to the administration of the estate of Mr Goder and the use of personal assets to pay liabilities of the estate.
12.	Central to the case pleaded against the defendants was that at all material times, and in any event by June 1989, the claimant lacked the mental capacity to give instructions to the defendants, to understand the financial consequences of the compromise and of subsequent steps taken by her in relation to the estate, and to perform or assume the duties of administrator of the estate, and that the defendants knew or ought to have known that she lacked such mental capacity. These allegations are central also to the defendants’ claim against Judkins and I will return to them shortly.
13.	In November 1992 the claimant terminated the defendants’ retainer and instructed another firm of solicitors, Marcou & Co. Her letter of instruction to Marcou & Co dated 24 November 1992 was to act in the administration of Mr Goder’s estate and all related matters. Marcou & Co were also instructed to consider a possible claim in negligence against the defendants. In early 1993 they obtained legal aid for counsel’s opinion, and to settle proceedings if counsel so advised. Progress was halted on this from early 1993 to February 1994 while the Official Solicitor was involved in the circumstances described below. Subsequently counsel provided an inconclusive opinion.
14.	An urgent matter to which Marcou & Co had to attend were proceedings against the claimant, in her capacity as administratrix of Mr Goder’s estate, brought by a creditor, Monique Li Ping Wah, in the Clerkenwell County Court. The defendants had instructed counsel to advise the claimant in conference on 16 September 1991 in relation to this claim and to appear on her behalf at the trial on 19 September 1991. The claimant gave evidence but was unsuccessful in her defence of the claim. Judgment was entered for £14,954. Miss Ping Wah later obtained a charging order against two properties owned by the estate and applied for an order for sale which was due for hearing on 4 December 1992. Marcou & Co instructed counsel, who advised the claimant in conference on 2 December 1992, drafted an affidavit for her on 3 December 1992 and appeared on her behalf on 4 December 1992. An order for sale was made by consent, but on an undertaking by Miss Ping Wah not to enforce it for 56 days.
15.	On 27 January 2003 a hearing took place before HH Judge Head in the Clerkenwell County Court, at which Miss Ping Wah appeared by counsel and the claimant appeared in person. Judge Head ordered a stay of execution of the order of 4 December 1992 to allow an opportunity for the Official Solicitor to consider whether to become the claimant’s guardian ad litem. In his judgment Judge Head referred to a medical report dated August 1992 by Dr I Kashi “which clearly indicates the measure of her distress” and stated:
“I am therefore in the position that I have come to the conclusion in the light of that medical certificate, and in the light of the entirety of the papers, the change in the Defendant’s handwriting, the change in the sequence of her ability to put concepts together and so forth, that it would be impossible for me to do justice to this application with the Defendant as a litigant in person. That being the case it does appear to me that the Defendant is a lady who is within the ambit of Order 10, rule 6, and in those circumstances I think I must treat today in those circumstances as an application for the appointment of a guardian ad litem of the defendant, and I cannot appoint the Official Solicitor who is the appropriate person without his consent.”
Judge Head’s view was that “this lady is in no way capable at the moment of dealing with any legal affairs.” 
16.	The claimant was again examined by Dr Kashi and he certified on 17 May 1993 that she was incapable of managing her affairs and that the prospects of mental recovery were “very unlikely”. In a letter to Judkins dated 28 April 1995, Dr Kashi wrote that the claimant had been under his care since 1991 and that he “had always suspected that Mrs Goder was not really capable of looking after her legal affairs herself”.
17.	Dr Kashi provided a further certificate dated 10 February 1994. He had examined the claimant and formed the opinion that her mental condition had markedly improved and that she was capable of managing and administering her property and affairs. However, Dr Kashi seems to have had some doubts about this, because in his letter dated 28 April 1995 to Judkins, he wrote:
“In February 1994 I thought that Mrs Goder’s condition had improved somewhat and together with the fact that I had understood it was in her best interests generally I felt able to confirm to the Official Solicitor that she was capable of looking after her legal affairs. However, Mrs Goder’s condition is very difficult to categorise for one moment she appears able to look after her affairs and the next moment not. I was not surprised therefore to hear that her improvement was not sustained during 1994.”
18.	Following receipt of Dr Kashi’s certificate and discussions with a member of staff at Haringey Council’s social services department who had knowledge of the claimant, the Official Solicitor concluded that she was able to manage her affairs.
19.	In January 1995 Judge Head lifted the stay imposed in January 1993. In May 1995, the claimant applied in person to the Court of Appeal to set aside the order lifting the stay. Although she appeared in person, her notice of appeal and supporting affidavit were drafted by Judkins. She submitted in her notice of appeal and affidavit that the Official Solicitor was incorrect in his conclusion and that throughout 1994 she had been, and she remained, unable to manage her affairs. Dr Kashi’s letter dated 28 April 1995 was exhibited to her affidavit. 
20.	The Court of Appeal (Peter Gibson and Saville LJJ) dismissed her application. In giving judgment, Saville LJ said:
“As to the position, it seems to me that there is no doubt that on some, indeed possible many, occasions Effi Goder is finding that things tend to get on top of her and that it is difficult to cope, especially with these financial difficulties, but I am not persuaded that she is at this moment wholly incapable of conducting her own affairs.
The alleged shortcomings of her former solicitors are, of course, of no concern to the plaintiff. It should be noted, however, that some 6 years have gone by since Effi Goder suggests that they started to fail properly to act on her behalf, yet to date it seems no proceedings have been taken against the solicitors, nor any other material steps taken to prosecute complaints against them.”
Peter Gibson LJ, agreeing, said:
“Having seen Mrs Goder in person and having read the letter of 3 May of this year from her doctor in which the doctor sets out her mental and her emotional condition in 1994, I have considerable sympathy with Mrs Goder in the position in which she finds herself. However, like my Lord, I can see no basis on which it would be right for this court to interfere with the exercise of discretion by the judge. I too would dismiss this application.”
21.	Judkins were retained to advise the claimant in or about April 1995. In a witness statement of Mr Judkins, a partner in the firm, made on 8 March 2005, he said:
“I was first instructed to advise the Claimant in during 1995. She presented to me in a confused and distressed state complaining that her previous solicitors (whom I now know to be Clive Sofaer of Griffinhoofe) had stolen money from her. I was immediately concerned by her state of mental health and well-being. I was always convinced that it would necessary for a Receiver to be appointed if proceedings were to be commenced on the Claimant’s behalf seeking redress for the inadequate services she had received from the First Defendant of the Second Defendant firm between about mid-1986 and late 1992.”
As Mr Judkins put it in an earlier witness statement, she presented herself as being mentally ill. In a letter dated 19 October 1995 to Johnson J, before whom an application relating to Mr Goder’s estate was (it would appear) listed, Judkins stated that the claimant was “under immense strain and unwell”.
22.	In 1995 Judkins obtained legal aid to investigate a claim against the defendants. By an order dated 18 February 2000, John Marsh, who had married the claimant in 1996, was appointed her receiver. The proceedings against the defendants were issued in March 2002, by Mr Marsh without the knowledge of Judkins and before they were ready to proceed. Judkins obtained extensions of time for service of the particulars of claim which were served in March 2003. They were settled by counsel. Mr Marsh was appointed the claimant’s litigation friend by order made on 3 March 2003.
23.	The particulars of claim alleged that the claimant had lacked mental capacity at all material times and, in any event, since before June 1989. In support of this allegation, reliance was placed principally on three medical reports, to which I shall later refer.
24.	The claims, being in each case made more than six years after the accrual of the causes of action against the defendants, were on the face of it statute-barred and the defendants pleaded the limitation defence. The claimant relied on section 28(1) of the Limitation Act 1980 which provides that:
“…if on the date when any right of action accrued for which a period of limitation is prescribed by this Act, the person to whom it accrued was under a disability, the action may be brought at any time before the expiration of six years from the date when he ceased to be under a disability or died (whichever first occurred) notwithstanding that the period of limitation has expired.”
Section 38 provides:
“(2) For the purposes of this Act a person shall be treated as under a disability while he is an infant, or of unsound mind.
(3) For the purposes of subsection (2) above a person is of unsound mind if he is a person who, by reason of mental disorder within the meaning of the Mental Health Act 1983, is incapable of managing and administering his property and affairs.”
The limitation defence was therefore available unless the claimant lacked mental capacity when the causes of action against the defendants accrued and at all times thereafter or until a time which was less than six years before the commencement of the proceedings. The burden of proving such incapacity rested on the claimant.
25.	In addition to the claims relating to the defendants’ advice to the claimant as regards the compromise in 1989, her borrowings and the administration of Mr Goder’s estate, a further claim was made that in breach of duty the defendants had failed to inform the solicitors acting for her in the criminal proceedings that she was mentally incapable. It was alleged that, if they had informed the other solicitors of her mental incapacity or of grounds for concern on that score, it was likely that she would have been found to be unfit to plead and would have been acquitted or given an absolute discharge. Damages for personal injuries suffered as a result of her conviction and imprisonment were claimed. The defendants  applied to strike out this part of the claim, on the grounds that the pleaded duty to communicate their knowledge of any mental incapacity was unsupported by authority and wrong in law, as it would involve a breach by them of their duty of confidence to the claimant as their client and a breach of legal professional privilege. Sir Andrew Morritt V-C, who heard the application in December 2003, accepted this submission and on that ground struck out this part of the claim. He added ([2003] EWHC 3334 (Ch) at paras 61-62):
“I say all this because I have to assume that the allegations are correct. There must be a considerable question mark over that assumption, given that counsel involved in the criminal trial and the judge, if the claimant is right, failed to spot the point which it is said that Mr Sofaer should have seen and should have communicated to the solicitors involved in the criminal proceedings.
Accordingly, I do not think it appropriate to say anything about that point, but I will grant the relief sought on the first point, namely the absence of any duty in law.”
26.	The Vice-Chancellor gave directions for the further conduct of the proceedings, including standard disclosure by list by 30 January 2004, exchange of statements of witnesses of fact by 19 March 2004, and permission to each side to call one psychiatrist, with the claimant’s expert report to be served by 16 April 2004. Disclosure was given by the parties, but the claimant was not ready to exchange witness statements by 19 March 2004 or any later date.
27.	On 5 April 2005 the defendants applied to strike out, or for the summary determination of, the remaining parts of the claim, on four grounds. First, the limitation defence would succeed because the evidence established that, at a time more than six years before the commencement of the proceedings, she was not suffering from mental incapacity. Secondly, there was in any event no reasonable prospect of success in the claim that the first defendant, Mr Sofaer, ought to have appreciated that the claimant was suffering from any mental incapacity. Thirdly, it was demonstrably not the case that the defendants advised the claimant to borrow from Barclays Bank plc or The National Homes Loans Corporation plc. Fourthly, it was demonstrably not the case that the defendants failed to advise her as to the consequences of incurring debts.
28.	On 18 March 2005 the claimant had applied to amend the particulars of claim and for summary judgment on liability. In his witness statement in support of the application, Mr Judkins stated:
“The Particulars of Claim as originally settled by Junior Counsel were in accordance with my instructions as derived from the documents and matters conveyed to me by the Claimant and her Receiver. It was only after seeking advice from and obtaining the Opinion of leading Counsel, Mr Edward Davidson QC, (in respect of which privilege is not waived) that it became apparent that the Claimant’s case could be analysed and put in the way that is proposed by the terms of the amendments for which permission is now sought and that summary judgment on liability could be sought at the same time.”
29.	Both applications were listed for hearing in July 2005, but on the second day the claimant gave notice of discontinuance.
30.	As to costs, it was ordered that on the basis that the claimant was LSC funded she should pay such amount as a costs judge determined. By consent, an order was made that John Marsh pay the defendants’ costs, as limited by the terms of an undertaking given by him in March 2003 which provided that his liability should be limited to any personal liability of the claimant.
31.	The defendants rely on five separate grounds in support of their application for a wasted costs order against Judkins. First, Judkins acted unreasonably or negligently in pursuing the proceedings when any reasonably competent legal representative, knowing the facts known to Judkins, would have concluded that there was no realistic prospect at trial of establishing that at all times between the accrual of her causes of action and 23 March 1998 (being the date six years before the commencement of the proceedings) the claimant had been under a disability for the purposes of section 28 of the Limitation Act 1980. Secondly, Judkins acted unreasonably or negligently in pursuing the proceedings, when any reasonably competent legal representative, knowing the facts known to Judkins, would have concluded that there was no realistic prospect at trial of establishing either that Mr Sofaer knew  or ought to have concluded that the claimant lacked mental capacity, or that he had advised her to borrow monies from Barclays Bank plc or The National Home Loans Corporation plc, or that he had failed to advise the claimant of the need to sell properties. Thirdly, Judkins acted improperly, unreasonably or negligently in pursuing the proceedings on the basis that the claimant had sustained loss by being placed in a position where she had received and would receive no benefit from Mr Goder’s estate, when such contention was untenable. The above three grounds are put forward in support of the case that Judkins should show cause why they should not pay the defendants’ costs of the entire proceedings. The fourth ground is that Judkins acted unreasonably or negligently in that any reasonably competent legal representative would have concluded that the defendants’ application heard by the Vice-Chancellor was bound to succeed and in that they declined the defendants’ invitation to withdraw that part of the claim. Accordingly, Judkins should show cause why they should not pay the costs of and occasioned by that application. Fifthly, the defendants submit that Judkins should show cause why they should not pay the defendants’ costs of and occasioned by the application dated 3 April 2005 to strike out the rest of the claim, in that they acted unreasonably or negligently on a number of grounds in resisting that application.
32.	The power of the court to order a legal representative to pay costs is conferred by section 51 of the Supreme Court Act 1981, as substituted by the Courts and Legal Services Act 1990:
“(6) In any proceedings mentioned in sub-section (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.
(7) In sub-section (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 unreasonable to expect that party to pay.”
33.	The principal part of the case made against Judkins is that they acted unreasonably or negligently. These are concepts which overlap to a considerable degree and in the context of this application involve asking whether Judkins had pursued the proceedings when no reasonably competent solicitor could have considered that there were any prospects of success which could justify commencing or continuing the proceedings: Dempsey v Johnstone [2003] EWCA Civ 1134 at paras 16, 24-25 and 30 (Latham LJ). At para 28 Latham LJ said:
“It is therefore in the context of counsel’s duty to the court the question under section 51 has to be answered. The context is, as always, critical. In cases where the allegation is that the legal representative pursued a hopeless case, the question was correctly identified by the judge as whether no reasonably competent legal representative would have continued with the action. It is difficult to see how that question can be answered affirmatively unless it can also be said that the legal representative acted unreasonably, which is akin to establishing an abuse of process. That is the concept which seems to me to be the appropriate concept when assessing the exercise of judgment, which is essentially what the legal representative is doing in balancing the various interests which have to be balanced in such a situation. I can see, however, that negligence could be the appropriate word to describe a situation in which it is abundantly plain that the legal representative has failed to appreciate that there is binding authority fatal to the client’s case.”
See also Mance LJ at paras 36, 40 and 41. Where it is said that the case is unsupported by evidence, or credible evidence, proper weight must be given to the solicitor’s duty to his client and to his inability to refer to privileged material. A case may be doomed to failure because there is no real prospect of the evidence being believed, but if the client insists on the evidence being given, the solicitor does not act unreasonably or negligently in continuing to act: Ridehalgh v Horsefield [1994] Ch 205 at 234 per Sir Thomas Bingham MR, Dempsey v Johnstone at para 34 per Mance LJ. The inability to disclose privileged material means that the legal representative must be given the benefit of the doubt in any case where it is possible that privileged material could justify the representative’s conduct or might influence the exercise of the discretion to make a wasted costs order: Ridehalgh v Horsefield at 237 per Sir Thomas Bingham MR, Medcalf v Mardell [2003] 1 AC 120 at para 23 per Lord Bingham.
34.	I turn to consider the grounds on which the present application is made.
35.	The first ground is that no reasonably competent solicitor could have concluded that the claimant had any realistic prospect of succeeding in showing that the claimant was under a disability from the accrual of her cause of action to 23 March 1996. This would need to be established if the limitation defence were to be overcome by virtue of section 28 of the Limitation Act 1980. The defendants rely on the following matters. First, the claimant had retained the defendants from 1986 to 1992 and had sufficient mental capacity to give instructions to them during that time. Secondly, the claimant had retained Marcou & Co from November 1992 to March 1993 and had sufficient mental capacity to give instructions to that firm, and also to counsel in December 1992 in respect of the Ping Wah case. Thirdly, the claimant had from 1992 let various properties belonging to the estate. Fourthly, Dr Kashi certified in February 1994 that the claimant was able to manage her affairs, an opinion backed up by a member of staff of the local authority’s social services department. Fifthly, Judkins must have considered that the claimant had sufficient mental capacity to instruct them to settle her notice of appeal and affidavit for her application to the Court of Appeal in May 1995 and to instruct them in relation to her possible claim against the defendants. Sixthly, no expert or other evidence was served pursuant to the directions of the Vice-Chancellor.
36.	On behalf of the defendants, Mr Jackson submitted that the issue was not a general enquiry as to whether the claimant had capacity to manage her affairs, but a more focussed question as to whether she had the capacity to understand that she had a possible claim against the defendants, to give instructions to a solicitor as regards such claim, to understand the advice given to her and to make informed decisions in relation to proceedings to pursue the claim, including any compromise. This issue–specific test of mental capacity is established by authorities including Masterman-Lister v Brutton & Co (Nos 1 & 2) [2003] 1 WLR 1511 and Sheffield CC v E [2005] Fam 326. Mr Parker on behalf of Judkins did not take issue with this approach.
37.	The issue of the claimant’s mental capacity would to a material degree depend on expert psychiatric evidence. This was acknowledged by the defendants as much as by the claimant. In their allocation questionnaire dated 3 August 2003, the defendants stated that they would call a psychiatrist and that “oral medical/psychiatric evidence will be important to the outcome/decision in the trial”. 
38.	The pleaded allegations of lack of capacity were supported by reference to three medical reports. Dr David Pariente, a consultant psychiatric to the Barnet Community Healthcare NHS Trust, examined the claimant in May 1998 and provided a ten-page report dated 26 May 1998. He stated that:
“I formed the opinion that her intellectual function, verbal ability, emotional expression, educational skills and level of maturity compared most unfavourably with that of an average primary school child of under eight years old.”
Tests carried out in March 1996 revealed an IQ of 65, clearly within the “mentally retarded intellectual category”, and it was likely that this represented her natural and inborn IQ, rather than being the result of later deterioration. Her mental capacity was, in the opinion of Dr Pariente, further impaired by the trauma suffered as a result of Mr Goder’s death and her imprisonment. His conclusion was:
“Mrs Goder has suffered all her adult life with mental retardation, resulting in very limited intellectual ability. By itself, this is sufficient to render her someone with a mental incapacity.
Between 1986 and 1990 Mrs Goder was the victim of traumatic events, which included the death of Mr Goder and a period of imprisonment. The consequences of these events were such as to have resulted in recognisable psychiatric conditions of sufficient severity to call into doubt her mental capacity at the time in question.
The combination of the mental retardation with the psychiatric conditions renders it very highly probable that at the relevant time Mrs Goder lacked the necessary mental capacity.”
39.	Dr Pariente’s report was prepared for the purposes of the claimant’s defence to proceedings brought by Paragon Finance plc (formerly The National Home Loans Corporation plc) on the mortgage granted to it by the claimant in 1990. I do not, however, regard this of itself as significant. The mental capacity required for the grant of mortgage does not seem to be materially different from that required to compromise the claim against Mr Goder’s estate, to administer the estate and make borrowings for that purpose and to bring proceedings for professional negligence against her former solicitors. In any event, Dr Pariente’s opinion and conclusions are expressed in terms which are wide enough to be readily applicable to the issues in the present case.
40.	Reports by Dr Robert Schapira, consultant psychiatrist and clinical director of mental health for the Essex and Herts NHS Trust at The Princess Alexandra Hospital in Harlow, were annexed to the particulars of claim. The main report dated March 1996 was prepared after several interviews with the claimant, and there was an addendum dated 14 November 1996. He was the responsible medical officer in charge of her psychiatric care. There is some difference between Dr Schapira and Dr Pariente as to the claimant’s reaction to Mr Goder’s death, but in general their opinions are consistent.
41.	In the face of these reports, it would be a surprising conclusion that no reasonable solicitor could have thought that there was any realistic prospect of establishing mental incapacity on the part of the claimant for the relevant period. The strongest evidence against that conclusion is Dr Kashi’s report to the Official Solicitor in February 1994 that she was capable of managing her affairs. However, the value of that opinion is called into question by the terms of Dr Kashi’s own letter dated 28 April 1995 to Judkins. It should also be noted that Dr Kashi was a general practitioner, not a psychiatrist.
42.	The fact that the defendants and Marcou & Co took instructions from the claimants over an extended period is not a decisive factor, because the issue at this point is whether she was fit to give those instructions. Perhaps more significant is that Judkins took instructions from her for five years before a receiver was appointed and felt able to draft her notice of appeal and witness statement for use by her personally in her application to the Court of Appeal in May 1995. However, the witness statement states in terms that she is not capable of managing her affairs and Mr Judkins, in the passage from his statement dated 8 March 2005 which I have already quoted, makes clear that from the start he thought that she was mentally ill and would not be able to bring proceedings without a litigation friend.
43.	I am satisfied that the first ground on which the defendants rely is not made out.
44.	The second ground includes, first, that no reasonable solicitor could have concluded that the defendants knew or ought to have known the claimant was suffering from a mental incapacity during the relevant period.
45.	It is a striking fact on which the defendants are entitled to rely that over a period of several years, at least three firms of solicitors as well as several counsel acted for her without concluding that she lacked the mental capacity necessary to instruct them. Judge Head in 1993 did have serious concerns in this respect but by May 1994 the Court of Appeal felt able to deal with her application. However a number of these people had only a limited contact with the claimant. In particular, counsel had occasional conferences with her, which might well in any case provide an insufficient opportunity to appreciate her mental state. 
46.	As against this important evidence, both Dr Pariente and Dr Schapira expressed strong views that the claimant’s incapacity should have become apparent to professional advisers dealing with her. In reaching his view on this, Dr Pariente takes into account attendance notes made by the defendants. Dr Pariente and Dr Schapira may well be wrong about this, and it is very possible that the court at trial would lay the greatest store by Mr Sofaer’s evidence as to how the claimant appeared to him at the time. But that does not mean that a reasonably competent solicitor could conclude only there was no realistic prospect of a finding adverse to the defendants. According to Mr Judkins’ evidence he was immediately alerted to the real possibility of a lack of mental capacity. In view of the strongly-expressed expert opinions, Judkins were not in my judgment acting in a way which no reasonably competent solicitor could act in continuing to pursue the proceedings.
47.	It is of course the case that no witness statements or experts’ reports were served, as required by the Vice-Chancellor’s directions. Without sight of Judkins’ privileged files, it is impossible to know the true reasons for this or to assess whether they were by some stage acting in a way which could justify a wasted costs order.
48.	The defendants have relied on the compromise of the proceedings brought by Paragon Finance against the claimant, in which she sought to avoid a legal charge granted in 1990 on grounds of mental incapacity. The compromise included a provision for the payment of £170,000 by the claimant to Paragon Finance. The defendants submit that this indicates that there was no reasonable basis for a case either that the claimant lacked mental capacity in 1990 or that others such as the defendants should have realised it. Judkins are precluded by legal professional privilege from giving a full explanation for the settlement and, having regard to the matters stated by Mr Judkins in his witness statement dated 28 April 2005, the suggested inference cannot, in my view, be drawn.
49.	The defendants rely also on two particulars of negligence (para. 19(f1) and (f) of the amended particulars of claim) as allegations which no reasonably competent solicitor could have thought had any realistic prospect of success. It is not appropriate to consider these in detail, because even if the criticisms were well-founded, there remained a case in negligence against the defendants, with particulars given in the other sub-paragraphs of paragraph 19.
50.	The third ground of the defendants’ application is that Judkins acted improperly or unreasonably or negligently in advancing a case that the claimant had sustained loss in that she had received, and would receive, no benefit from Mr Goder’s estate, when it was clear on the evidence that she had received rental income and the proceeds of sale of estate properties. This was not, however, the claimant’s pleaded case of loss. The case set out in paragraph 20 of the particulars of claim is not that the claimant received no income or sale proceeds from the estate but that her financial position was worse than it would have been if the defendants had properly advised her. In support of their case on this ground, the defendants rely on various instances of alleged non-disclosure. Even if they are established, I am unable to see that they have led to the costs claimed by the defendants.
51.	The fourth ground relates to the costs of the strike-out application heard by the Vice-Chancellor. Mr Jackson confirmed that this ground is confined to the basis on which the Vice–Chancellor decided the application. The case is therefore that no reasonably competent solicitor could have thought there was any prospect of success on an argument that a solicitor in civil proceedings with concerns as to the mental health of a client was not precluded by legal professional privilege from passing on those concerns to the same client’s solicitors in criminal proceedings. I am clear that this ground should be rejected. It was acknowledged that the issue was not covered by authority. The claimant’s case was presented by counsel who, it may be assumed, had not advised that it was so hopeless that it should not be argued. In my judgment, it was not an obviously hopeless case, but one which it was quite proper to argue.
52.	The fifth ground relates to the costs of the defendants’ application to strike out the claim or for summary judgment which was heard for a day and a half in July 2005 until the action was discontinued. The matters relied on in support of this ground are for the most part a repetition of matters relied on for the first to third grounds. For the reasons already given, I do not consider that they can justify the order sought by the defendants.
53.	Accordingly, I am satisfied that none of the grounds advanced by the defendants is made out and I dismiss their application.