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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Archer v Williams [2003] EWHC 3048 (QB) (02 December 2003) URL: http://www.bailii.org/ew/cases/EWHC/QB/2003/3048.html Cite as: [2003] EWHC 3048 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION

		Royal Courts of Justice Strand. London, WC2A 2LL
		2nd December 2003

1. Mr Justice Jackson: This judgment is in seven parts.

   Part 1 - Introduction
   Part 2 - The facts
   Part 3 - The wasted costs proceedings
   Part 4 - The grounds of the claimant's application for wasted costs
   Part 5 - The Law
   Part 6 - Is there evidence or other material before the court, which, if unanswered, would be likely to lead to a wasted costs order being made
   Part 7 - Conclusion.

Part 1 - Introduction

2. This is a claim by Lady Archer against the solicitors who acted for her adversary in her recent litigation. Lady Archer was the claimant in that litigation and Ms Jane Williams was the defendant.
3. The present claim is for wasted costs, pursuant to section 51 of the Supreme Court Act 1981 as amended. The relevant statutory provisions will be set out in Part 5 of this judgment.
4. At the hearing today, the claimant is represented by Mr Thomas Linden. The respondent solicitors are represented by Mr William Flenley.
5. Before I address the substantive issues between the parties, it is first necessary to set out the factual background.

Part 2 - The Facts

6. At all material times, the claimant has lived at and worked from the Old Vicarage, Grantchester, Cambridge. From June 1988 until November 2001, the claimant employed the defendant as her secretary and personal assistant. During the year 2001, press interest in the Archer household intensified owing to the criminal prosecution of the claimant's husband, Lord Archer. The claimant required all her staff to sign a comprehensive confidentiality agreement. The defendant refused to do so. This was the principal reason for her dismissal in November 2001.
7. Upon the termination of the defendant's employment, the claimant sought the return of all her property. A controversy then arose as to whether certain working diaries, which the defendant had maintained from 1988 to 2001, were part of the claimant's property. This issue was debated at length in correspondence between the parties' solicitors. Ultimately the disputed diaries were delivered up to the claimant's solicitors, who held them pending the decision of the court. The decision of the court, in July of this year, was that those diaries belonged to the claimant.
    
   
8. Following the termination of her employment and whilst the dispute about the diaries was in progress, the defendant entered into discussions with the prqss about the sale of her story. During December 2001 the defendant had discussions with Paul Henderson of the Mail on Sunday. On 6^th December Associated Newspapers Limited, who publish the Mail on Sunday, sent to the defendant's solicitors a draft agreement. Under this agreement the defendant would provide an exclusive story in return for payment and indemnity.
9. The defendant had reservations about the proposals of the Mail on Sunday. In mid-December 2001 she approached Mr Maxwell Clifford, a well-known public relations consultant. Mr Clifford introduced the defendant to Robert Kellaway, a reporter for News of the World. On 20^th December Mr Kellaway, on behalf of the News of the World, signed an undertaking to the effect that nothing would be published without first reaching a financial agreement with the defendant. On 4^th January 2002 the defendant sent a 13-page fax to Mr Kellaway and sent a copy of that fax to Mr Clifford's office. This fax outlined the history of the Archer family from 1988 to 2001. The fax is replete with details of events, dates, flight numbers, addresses, telephone numbers and so forth. It is also interspersed with unflattering comments about the claimant and her family.
10. In preparing the fax the defendant drew upon information in the diaries as well as her own recollection. She concentrated in the 13 - page fax upon particular individuals and particular events, which Mr Henderson and Mr Kellaway had previously said were of interest to the press. However, the News of the World then lost interest in this matter and no offer was forthcoming from that quarter. Mr Clifford then introduced the defendant to a female journalist for the Daily Mail. This journalist has been referred to as "Y". The defendant and Y had a number of discussions with a view to the defendant's exclusive story appearing in the Daily Mail. Negotiations proceeded between Associated Newspapers, who publish the Daily Mail, and the defendant's solicitors, Taylor Vinters, concerning the terms of an agreement in respect of that exclusive story.
11. On Sunday 2^th February an article appeared in the Sunday Mirror about the claimant. The defendant had not been in communication with any journalist or editor of the Sunday Mirror. The Sunday Mirror article is entitled "Mary's Man". It has a sub-heading underneath, "She has a facelift before trip with special friend." The article goes on to describe various travels and dates of visits and so forth made by the claimant. The article gives details of persons whom she accompanied. The article gives details concerning cosmetic surgery, which the claimant had undergone, including dates, places and so forth. Many parts of the article are closely similar to the 13-page fax, which the defendant had sent to Mr Kellaway and Mr Clifford on 4^th January.
12. In an earlier judgment I have held that those similarities cannot be mere coincidence. By one means or another the contents of the defendant's fax

must have come to the attention of the Sunday Mirror and been used by that newspaper in the preparation of its article.

13. On and after 24 February other newspapers followed suit with similar articles. On 26^th February, that is two days after the Sunday Mirror article, the defendant entered into a written agreement with Associated Newspapers Limited for the publication of her story in the Daily Mail in return for payment of £50,000. In the event, however, the defendant's proposed story never appeared in the Daily Mail. Before the preparation of the Daily Mail article was completed the claimant had obtained an injunction. To complete the story in relation to the defendant's dealings with the press, I should add that the firm of solicitors who were giving her legal advice during and in connection with those negotiations were Messrs Taylor Vinters.
14. Let me now turn to the course of dealings between the parties' solicitors during this period. On Thursday 28^th February 2002 Mishcon de Reya, the claimant's solicitors, wrote to Taylor Vinters, the defendant's solicitors. Mishcon de Reya stated that the defendant must have been the source of the article in the Sunday Mirror. Mishcon de Reya required that the defendant provide by 9.00 am on 1^st March a series of undertakings, which would prevent any future breaches of confidentiality. Taylor Vinters duly took instructions from their client and responded within the deadline which the claimant had imposed. In a strongly worded letter sent by fax to Mishcon de Reya at 8.49 am on 1^st March, Taylor Vinters denied that the defendant was the source of the article in the Sunday Mirror or that she had caused information derived from the working diaries to be provided to the Sunday Mirror. Taylor Vinters added that the defendant would not give any of the undertakings sought and they fleshed out the defendant's position in some detail.
15. The claimant viewed the defendant's denials with scepticism. In order to flush out the truth, the claimant's solicitors broadened their enquiries. In a fax sent to Taylor Vinters on the afternoon of 1^st March, Mishcon de Reya wrote as follows:

"The fourth paragraph of your letter... was, we take it, written upon instructions. We understand this to be a confirmation by your client that she has never discussed confidential information belonging to our client or any member of her family with the media either directly or indirectly. This includes direct or indirect contact with the press and in this regard we would ask you to take express instructions in relation to Michael Crick, Margaret Crick, Paul Henderson, James Wetherup and Max Clifford."

16. Taylor Vinters responded immediately on I^st March by letter as follows:

"Thank you for your faxed letter of this afternoon. Our first faxed letter of today's date addressed the specific allegations raised by your client regarding the article in the Sunday Mirror, no more and no less."

17. Upon receiving this letter, Mr Morton-Hooper, the partner in Mishcon de Reya dealing with the matter, realised that his and the claimant's suspicions were justified. He noted that Taylor Vinters were unable to deny that their client had been speaking to the media: see paragraph 22 of Mr Morton-Hooper's fourth witness statement.
18. Mishcon de Reya carried out investigations over the next few days. They obtained what they described as incontrovertible evidence that the defendant had been dealing with the Daily Mail and the Mail on Sunday. By letters dated 7^th and 8^th March, Mishcon de Reya repeated their demand for undertakings. These undertakings were not forthcoming. By letter dated 8^th March Taylor Vinters wrote to Mishcon de Reya as follows:

"...whilst we have not had time to consider your client's apparently extensive evidence in detail, we can see no evidence whatsoever that our client has breached any confidence or that there is any imminent risk that she will do so. Your client is asking the court to make draconian orders against our client on the basis of extremely flimsy and wholly circumstantial hearsay evidence, seeking to link our client to certain sections of the media. We note also that there is no suggestion that our client has said anything confidential to anyone with whom she is said to have had contact. In the circumstances your client is not, in our view, entitled to any order against our client today."

19. On the evening of Friday 8^th March, Mishcon de Reya applied to the duty judge, Mr Justice Hooper, and obtained an interim injunction restraining the defendant from disclosing to third parties any information concerning the claimant or her family. On 12^th March Mishcon de Reya issued and served the claim form in the present action. By that claim form the claimant sought a perpetual injunction to restrain the defendant from disclosing confidential information, together with damages for past breaches of confidence.
20. The return date which was fixed for reviewing the interim injunction was Friday 15^th March. In the period leading up to that date there were discussions between the two firms of solicitors concerning a possible compromise, whereby the defendant would give certain undertakings in substitution for the interim injunction. In the event, however, and somewhat to the dismay of Mishcon de Reya, the defendant declined to give any undertakings. On Friday 15^th March counsel for the claimant and defendant attended court where they reached agreement that the matter would be deferred for a week, in order to allow more time for the hearing and to enable both sides to file evidence. In the meantime the interim injunction would continue, albeit in wider terms. Mr Justice Stanley Burnton duly made an order dated 15^th March giving effelt to that agreement between counsel. He reserved the costs of that application.
21. On Monday 18^th March Mishcon de Reya, who were displeased at the turn which events had taken, wrote to Taylor Vinters intimating a claim for wasted costs. Since this is the very claim which I am now determining, I shall read out in full Mishcon de Reya's letter, dated 18^th March:

"We refer to the telephone conversations between Mr Morton- Hooper of this firm and Jonathan Davies and Sarah Sharratt of your firm on 14^th and 15^th March. On the evening of 14 March, at about 7.50 pm, we were in a meeting with our client when we received an incoming call from Jonathan Davies at your firm. Mr Davies had telephoned this office earlier to say that he was now dealing with this matter in place of Ms Sharratt and to say that he anticipated serving evidence of Mrs Williams later that day.

The purpose of the 7.50 pm call, as explained by Mr Davies, was a follow-up call after he had taken instructions from your client. He said he was sitting with Mr Edward Perrot who we understand is head of your commercial litigation department. Mr Davies said, and we have a note of the conversation, that he had taken instructions from your client, Mrs Williams and, on the basis that she would not be constrained in her employment tribunal proceedings by reason of any order in these current proceedings, she is able and willing to give the undertakings in paragraphs 1, 2, 3 and 4 of our draft order. He suggested including paragraph 7, which was the provision as to liberty to apply. Mr Davies then went on to agree that the terms of any undertakings and order would incorporate the definition of confidential information in paragraph 10 of the draft order. There was then a discussion about costs.

Later that evening, having taken instructions on your client's offer, we sent our sixth letter of the day to you, by fax, setting out the precise wording of the undertakings, confirming the definition of confidential information, suggesting a form of draft letter from your firm regarding the employment tribunal proceedings, incorporating the suggestion as to liberty to apply and making some further comments regarding costs (a schedule of which you had received earlier in the day).

On 15 March we made repeated attempts to speak to you by telephone, leaving three messages between 9.00 am and 9.30 am. Then at 9.40 am we were told that Sarah Sharratt was now dealing with the matter in place of Mr Davies. We were also informed that you had switched counsel from Miss Alex Marzec to Mr Andrew Monson. At 9.50 am Miss Sharratt said that she still required instructions from her client (notwithstanding what had been said by Mr Davies the previous evening).

Having heard nothing further from you, we sent you by fax a draft order as we were fast approaching the listed time for hearing. The draft order was faxed to you at about 10.40 am but we heard nothing from you until after that time. Eventually we were informed, shortly before 11.00 am that, contrary to everything that had been mentioned to us before, your client had not given you or had withdrawn instructions to agree the undertakings in paragraphs 1, 2, 3, and 4. Indeed she was refusing to do so. In the event a more limited form of order was agreed by consent.

Although a costs application on 15 March was not successful, the matter of costs will be deferred until the next hearing date. We wish to put you on notice, as previously indicated to Miss Sharratt by our Mr Morton-Hooper, that we intend to apply under section 51 of the Supreme Court Act 1981 in respect of what we consider to be 'wasted costs' incurred by our client as a result of your firm's conduct. You have behaved unreasonably and negligently. Apart from the fact that no evidence had been filed by or on behalf of your client by last Friday, you led us to believe that our proposals for a sensible compromise of our application with your client, providing the undertakings in paragraphs 1,2,3 and 4 was acceptable to your client, on her instructions provided that she would not by virtue of her undertakings be subject to constraints in her employment tribunal proceedings against our client.

Not only was it made clear to you that there was no intention that your client should suffer any such constraint, but also you were told that it is implicit that a court order made in one set of proceedings could not have that effect in other proceedings. Therefore your client should have had no misgivings, if she had been properly advised in that respect. For your firm, through Mr Davies, to have given the very clearest indication that those undertakings would be forthcoming, and then to have done nothing about correcting any misunderstanding or indicating any change of position by your client, until nearly 11.00 am on the following day, when the hearing had been listed for not before 11.30 am, was unreasonable and negligent. You knew that we had engaged both leading and junior counsel. In the event it was necessary for us to attend before the court with junior counsel to explain the position to the court. We were deprived of the opportunity to notify the court that our one hour estimate required revision and that we wished our application to be heard. Time had been lost and a further hearing required. You could have indicated far earlier that your client was content for a continuation of Mr Justice Hooper's order with modification so as to incorporate our definition of 'confidential information'. Your client was not represented by solicitors at the hearing, but only by her new counsel, Mr Monson.

We have yet to quantify the amount of wasted costs involved. The purpose of this letter is to put you on notice of the intended section 51 application."

22. On 19^th March Taylor Vinters served the defendant's witness statement. In that stateent the defendant set out on pages 10 to 12 her assertion that the information in the Sunday Mirror article was not confidential and did not in any event come from her. On pages 13 and 14 of that witness statement, the defendant set out a brief account of her dealings with the press since November 2001. The defendant was contending that such dealings as she had had with the press and such information as she had conveyed to the press did not give rise to a breach of any obligations of confidentiality, which she owed to the claimant. It will be recalled that during this period it was the defendant's case that any duties of confidentiality, which she owed to the claimant, following the termination of her employment, were extremely limited and that she had rights to communicate information arising under article 10 of the European Convention on Human Rights.
23. Correspondence then ensued between the solicitors. In due course agreement was reached as to undertakings which the defendant would give in substitution for the interim injunction. On 22^nd March 2002 Mr Justice Morrison made the following order by consent:

"Upon the defendant giving the following undertakings to the court ('the undertakings') until trial or further order:

1. Without any admission of liability of the claimant's entitlement the defendant will not disclose or permit to be disclosed to any third parties any information (insofar as the subject matter is not already in the public domain) in the following classes:

(a) details about the claimant's medical condition or medical treatments (including any cosmetic surgery) that she has received;

(b) details about the claimant's financial affairs;

(c) details about the claimant's office or business affairs, which are commercially sensitive (for the avoidance of doubt and for the purposes of this undertaking only, this includes information relating to the Addenbrooke's NHS Trust and the University of Cambridge);

(d) details about any sexual relationship conducted by the claimant or any member of her family;

(e) any information copied or derived from the claimant's personal, working or other diaries;

(f) any information copied or derived from emails or paper correspondence (whether in original or copy form) passing between the claimant and any third party.

2. The defendant will not allow any third party to read or copy any information in categories (a) to (f) above, which might be contained in any documents or copy documents in her possession, custody or control.

3. The defendant will take all take all reasonable steps (and inform Mishcon de Reya of those steps) to prevent publication of any information defined in categories (a) to (1) above, which she has already disclosed or caused to have been disclosed.

IT IS HEREBY ORDERED BY CONSENT THAT:

1. The costs of this application be costs in the case.

2. Each party shall have liberty to apply to vary or discharge the order upon giving 48 hours' notice in writing of their intention to do so to the other party's solicitors."

24. That order brought to an end the interlocutory battle about injunctions and undertakings. Both parties then turned their attention to the main action. On 8^th April the claimant served her particulars of claim. Thereafter, on a date which is not apparent from the pleadings bundle, the defendant served her defence. That defence was drafted by counsel of 19 years' call, who specialised in media law. In paragraph 5 of that defence it was alleged that the defendant's continuing duty of confidentiality, after the termination of her employment, was extremely limited. In paragraph 5.4 it was alleged that any subsisting obligation of confidence owed to the claimant had to be balanced against the defendant's rights under article 10 of the European Convention on Human Rights to speak freely about her personal experiences and the public interest in information about the claimant, who is a prominent public figure.
25. In paragraph 6 of the defence admissions were made as to the claimant's negotiations with the press. However the defence went on to deny that these negotiations gave rise to any breach of any continuing duty of confidentiality owed by the defendant to the claimant. This matter is taken further in paragraph 9 of the defence. The upshot of the defence was a denial of any past breach and a denial that the claimant was entitled to any relief.
26. Thus were the battle lines drawn. The action then proceeded. Further pleadings were exchanged. Disclosure of documents took place at the appointed time. Statements were prepared and so forth.
27. In the spring of 2003, in circumstances of which I am unaware and into which I cannot enquire, Taylor Vinters ceased to act for the defendant. On 27^th May 2003 the defendant served on Mishcon de Reya notice that she was acting in person. The defendant continued to act in person until just before the start of trial.
28. The trial of this action began on Monday 30^th June. At that stage Mr Rambert De Mello, a member of the Bar, appeared for the defendant on a pro bono basis and represented the defendant throughout the trial. Mr De Mello conceded some parts of the injunction which the claimant was claiming. He opposed other parts of the claimed injunction, relying on article 10 of the European Convention on Human Rights and a number of other arguments foreshadowed by the defence. Mr De Mello also opposed the claim for damages, arguing that the defendant was not responsible for the article which appeared in the Sunday Mirror.
29. The trial lasted for four days. On the final day, namely Thursday 3^rd July, I gave judgment in favour of the claimant: see Archer v Williams [2003] EWHC 1670 (QB). In relation to the human rights issues I held that the claimant's rights under article 8 outweighed the defendant's rights under article 10. In relation to the claim for damages, I found as a fact that the defendant had not been in communication with the Sunday Mirror. Nevertheless, after some hesitation, I held that the claimant succeeded in her claim for damages. The reasoning which led to this conclusion is set out in part 6 of the judgment:

"71. In his closing speech Mr De Mello argued that the leak to the Sunday Mirror, which appears to have occurred is not the responsibility of the defendant. Mr Kellaway and the News of the World were bound by the confidentiality agreement dated 20^th December 2001. Mr Clifford, as the defendant's agent, was obliged not to authorise any publication without the defendant's consent. Furthermore the defendant gave evidence, unchallenged in cross-examination, that she herself never approached the Sunday Mirror. Indeed she instructed solicitors to advise her in this matter and to ensure that at each stage she was not in breach of duty to the claimant. Accordingly, it was not foreseeable by the defendant, submits Mr De Mello, that events would take the course they did take and that the article in question would appear in the Sunday Mirror.

72. I was at first attracted to this argument but I have come to the conclusion that it is unsound. The defendant had embarked upon a high risk strategy. In breach of her duty to the claimant, the defendant had disclosed confidential information in substantial quantities to Max Clifford, a public relations consultant, Mr Henderson of the Mail on Sunday, Mr Kellaway of the News of the World and journalist Y of the Daily Mail. The defendant had been told, both by Mr Henderson and by Mr Kellaway, that the topics covered in her 13-page fax were of particular interest to the press. Mr Clifford was using his contacts in the media world to find a buyer for this information. It must have been obvious to anyone in the defendant's position that there was a substantial risk that, one way or another, the information which she was disclosing would find its way into the newspapers.

73. I therefore conclude that the defendant is liable in damages for the wrongful disclosure of confidential information."

30. In the result, therefore, the action resulted in total victory for the claimant. The claimant also obtained an order for costs. Unfortunately the defendant had no available assets with which to satisfy that order for costs and as a result, apart from recovering a very small sum indeed, pursuant to a master's order early in this litigation, the claimant has not been able to recover any of the substantial costs, which she has incurred in this litigation. In these circumstances the claimant sought to recoup some of her losses by making an application for wasted costs against the defendant's solicitors.

Part 3 - The wasted costs proceedings

31. On Thursday 3^rd July, after I had delivered judgment in the main action, Mr Thomas Linden applied for an order that Taylor Vintcrs should show cause why an order for wasted costs should not be made. I declined at that stage to make an order that Taylor Vinters should show cause. I stated that any such application should be made to the court on notice to Taylor Vinters.
32. This matter then went to sleep until 30^th September. On that date the claimant's solicitors issued an application for wasted costs against Taylor Vinters. This application was supported by the fourth witness statement of Mr Morton-Hooper, which sets out the facts and evidence upon which the claimant relies. In this witness statement, Mr Morton-Hooper traverses the early history of the litigation. He strongly criticises Taylor Vinters' conduct during the period 28^th February to 22^nd March 2002. He contends that because of this, the claimant incurred additional and unnecessary costs, which he quantifies as follows: (a) during the period 25^th February to 22^nd March 2002, £45,600; (b) during the period 11^th March 2003 to 3^rd July 2003, £13,600. Thus the total sum claimed by way of wasted costs amounts to £59,200.
33. An application for directions in the wasted costs proceedings was listed for hearing on 13^th October. On that occasion I ordered that Taylor Vinters be joined in the action for the purpose of the wasted costs application. I gave directions for the service of further evidence which was then envisaged. I ordered that a stage 1 hearing of the wasted costs application, as defined in paragraph 53.6 of the Practice Direction, supplementing part 48 of the Civil Procedure Rules, should take place on Tuesday 2^nd December, that is today.
34. Following the directions hearing on 13^th October, the defendant took legal advice from an independent firm of solicitors as to whether she should waive privilege and whether she should make a witness statement for the assistance of the court in the wasted costs proceedings. The taking of that legal advice was funded by Taylor Vinters. The defendant, having taken independent legal advice, declined to waive privilege and declined to make a witness statement to assist the court in the wasted costs proceedings. The defendant's decision is unsurprising. She is not a party to the wasted costs proceedings and the present litigation has already occupied more than enough of her time.
35. In the result, therefore, the only evidence for the court, which is specifically focussed upon the wasted costs application, is Mr Morton-Hooper's fourth witness statement. In addition, and by way of background, I have the trial bundles and my note of the evidence which was given during the trial.
36. Following the indication that no further evidence would be served, skeleton arguments were exchanged between the parties and the preparations for today's hearing were complete.

Part 4 - The grounds of the claimant's application for wasted costs

37. The allegations upon which the claimant founds her claim for wasted costs are to be distilled from Mr Morton-Hooper's fourth witness statement. Mr Morton-Hooper's fourth witness statement is, quite understandably, in a narrative form. Before the start of today's hearing, I did my own exercise on that witness statement in order to isolate the specific grounds upon which the application for wasted costs is based. I identified five grounds. In the course of argument today I read out the five grounds, which I had identified from Mr Morton-Hooper's statement, to counsel. Mr Thomas Linden, counsel for the claimant, amended the wording of my formulation of ground 2, but subject to that was prepared to accept, as a reasonable effort, my summary of the grounds of the claimant's claim.
38. The five grounds, as amended by Mr Linden, are as follows:

i) Taylor Vinters' first letter, dated 1^st March 2002, was deliberately misleading.

ii) The terms in which Taylor Vinters denied the claimant's claim in their first letter of 1^st March were unduly abusive and strident.

iii) Between the 2^nd and 22^nd March 2002, Taylor Vinters continued to resist the claimant's obviously meritorious claim for an injunction.

iv) On 14^th March 2002 Taylor Vinters led Mishcon de Reya to believe that the claimant would give satisfactory undertakings, thus avoiding the need for an injunction. Taylor Vinters did not disabuse Mishcon de Reya of that impression until mid-morning on 15^th March, the day of the second court hearing.

v) Taylor Vinters were pursuing an improper objective, namely to secure publication of the defendant's story in order that the defendant might have funds to pay Taylor Vinters' fees.

39. These then are the grounds of claim which I must address in due course. Before doing so, it is necessary to outline the relevant law

Part 5 - The Law

40. Section 51 of the Supreme Court Act 1981, as amended by the Courts and Legal Services Act 1990 and the Access to Justice Act 1999, provides:

"(1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in

(a) the Civil Division of the Court of Appeal,

(b) the High Court, and

(c) any County Courtshall be in the discretion of the court...

(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 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 unreasonable to expect that party to pay...

(13) In this section '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."

41. Rule 48.7(1) of the Civil Procedure Rules provides:

"(1) This rule applies where the court is considering whether to make an order under section 51(6) of the Supreme Court Act 1981 (court's power to disallow or (as the case may be) order a legal representative to meet 'wasted costs').

(2) The court must give the legal representative a reasonable opportunity to attend a hearing to give reasons why it should not make such an order..."

42. Section 53 of the Practice Direction supplementing part 48 of the Civil Procedures Rules makes further provision in respect of proceedings to recover wasted costs. This provides:

"53.4 It is appropriate for the court to make a wasted costs order against a legal representative only if

(1) the legal representative has acted improperly, unreasonably or negligently;

(2) his conduct has caused a party to incur unnecessary costs, and

(3) it is just in all the circumstances to order him to compensate that party for the whole or part of those costs.

53.5 The Court will give directions about the procedure that will be followed in each case in order to ensure that the issues are dealt with in a way which is fair and as simple and summary as the circumstances permit.

53.6 As a general rule, the court will consider whether to make a wasted costs order in two stages:

(1) In the first stage, the court must be satisfied -

(a) that it has before it evidence or other material, which, if unanswered, would be likely to lead to a wasted costs order being made; and

(b) the wasted costs proceedings are justified notwithstanding the likely costs involved.

(2) At the second stage (even if the court is satisfied under paragraph (1)) the court will consider, after giving the legal representative an opportunity to give reasons why the court should not make a wasted costs order, whether it is appropriate to make a wasted costs order in accordance with paragraph 53.4 above.

53.7 On an application for a wasted costs order under part 23, the court may proceed to the second stage described in paragraph 53.6 without first adjourning the hearing if it is satisfied that the legal representative has already had a reasonable opportunity to give reasons why the court should not make a wasted costs order. In other cases the court will adjourn the hearing before proceeding to the second stage."

43. It should be noted that these provisions of the Practice Direction in effect codify the procedural guidance, which the Court of Appeal gave in Ridehalgh v Horsefield [1994] Ch 205.
44. Let me now turn from the statutory provisions and procedural rules to the principles upon which the court should act in wasted costs proceedings. In Ridehalgh v Horsefield [1994] Ch 205 the Court of Appeal dealt with a group of six wasted costs appeals together, in order to consider the issues in depth and to give guidance to the profession. Both the Law Society and the Bar Council were represented. Also the Attorney General instructed counsel to represent the public interest. The Court of Appeal, comprising Sir Thomas Bingham, Master of the Rolls, Lord Justice Rose and Lord Justice Waite, gave a single judgment. The court dealt with matters of general principle and approach in the first part of its judgment, before addressing the individual appeals.
45. Seven matters relevant to the present case emerged from the general section of the Court of Appeal's judgment. I would summarise these as follows:

i) The word "improper" connotes conduct which would be regarded as improper according to the consensus of professional opinion.

ii) "Unreasonable" connotes conduct which is vexatious or designed to harass the other side, rather than advance the resolution of the case.

iii) "Negligent" does not connote conduct in which all the ingredients of the tort of negligence are present. On the contrary, the word "negligent" should be understood in an untechnical way, to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.

iv) The mere fact that lawyers have pursued a hopeless case or hopeless defence docs not mean that their conduct was improper, unreasonable or negligent. It is often the duty of lawyers to put forward a hopeless claim or hopeless defence, if the client has rejected wise advice and insists upon that course of action.

v) Lawyers responding to a claim for wasted costs are put in a difficult position, if their client declines to waive privilege. Accordingly the judge must make full allowance for the inability of those lawyers to tell the whole story.

vi) It is essential for the claiming party to demonstrate a causal link between the improper, unreasonable or negligent conduct complaincd of and the wasted costs which are claimed.

vii) Wasted costs claims should not be permitted to develop into a costly form of satellite litigation. A wasted costs claim should not be allowed to go forward, if it cannot properly be dealt with by means of a simple and summary procedure and at a cost which is proportionate to the sum claimed.

46. In Medcalfv Mardell [2002] UKHL 21; [2003] 1 AC 120 the House of Lords endorsed the general guidance which the Court of Appeal had given in Ridehalgh v Horsefield [1994] Ch 205. The House noted with regret that that guidance had not always been followed. Lord Bingham said, at page 129f:

"It does however appear from the material before the House that the clear warnings given in that case [Ridehalgh v Horsefield [1994] Ch 205] have not proved sufficient to deter parties from incurring large and disproportionate sums of costs in pursuing protracted claims for wasted costs, many of which have proved unsuccessful."

47. In one respect, however, the House of Lords found it necessary to strengthen the guidance which the Court of Appeal had given in Ridehalgh v Horsefield [1994] Ch 205. This was in respect of cases where the client has refused to waive privilege. At paragraph 23 of his speech, Lord Bingham (with whom Lord Hoffmann and Lord Rodger agreed) said this:

"But with the benefit of experience over the intervening years, it seems that the passage should be strengthened by emphasising two matters in particular. First, in a situation in which the practitioner is of necessity precluded (in the absence of a waiver by the client) from giving his account of the instructions he received and the material before him at the time of settling the impugned document, the court must be very slow to conclude that a practitioner could have had no sufficient material. Speculation is one thing, the drawing of inferences sufficiently strong to support orders potentially very damaging to the practitioner concerned, is another. The point was well put by Mr George Lawrence QC, sitting as a Deputy High Court Judge in Drums and Packaging Limited v Freeman, unreported, 6^th August 1999, when he said at paragraph 43:

'As it happens, privilege having been waived, the whole story has been told. I cannot help wondering whether I would have arrived at the same conclusion had privilege not been waived. It would not have been particularly easy, in that event, to make the necessary full allowance for the firm's inability to tell the whole story. On the facts known to D3 at the time it lodged this application, D3 might very well have concluded that the firm would not be able to avoid a wasted costs order, even on the 'full allowance' basis recommended by Sir Thomas Bingham, MR'.

Only rarely will the court be able to make 'full allowance' for the inability of the practitioner to tell the whole story or to conclude that there is no room for doubt in a situation in which, of necessity, the court is deprived of access to the full facts on which, in the ordinary way, any sound judicial decision must be based. The second qualification is no less important. The court should not make an order against a practitioner precluded by legal professional privilege from advancing his full answer to the complaint made against him without satisfying itself that it is in all the circumstances fair to do so. This reflects the old rule, applicable in civil and criminal cases alike, that a party should not be condemned without an adequate opportunity to be heard. Even if the court were able properly to be sure that the practitioner could have no answer to the substantive complaint, it could not fairly make an order unless satisfied that nothing could be said to influence the exercise of its discretion. Only exceptionally could these exacting conditions be satisfied. Where a wasted costs order is sought against a practitioner precluded by legal professional privilege from giving his full answer to the application. The court should not make an order unless, proceeding with extreme care, it is satisfied (a) that there is nothing that the practitioner could say if unconstrained, to resist the order and (b) that it is in all the circumstances fair to make the order."

48. This passage is particularly apposite to the present case, since Ms Jane Williams, who was Taylor Vinters' client, is unwilling to waive privilege. Taylor Vinters have done their best to assist in this regard by paying for Ms Williams to receive independent legal advice in connection with the question of waiver of privilege.

Part 6 - Is there evidence or other material before the court, which, if unanswered, would be likely to lead to a wasted costs order being made?

49. The formulation of the question which I address in this part of the judgment is derived from paragraph 53.6(1 )(a) of the Practice Direction. In order to answer this question, I must address each of the grounds of claim, keeping well in mind the guidance of higher courts as summarised in part 5 of this judgment. I shall address the grounds of claim as formulated in part 4 of this judgment, taking into account the amendment suggested by Mr Linden.
50. Ground 1: In my judgment Taylor Vinters' first letter, dated 1^st March 2002, when read in conjunction with the second letter, was not deliberately misleading. It is fairly clear that Taylor Vinters were told by their client that she had not communicated with the Sunday Mirror. That assertion, as we now know, was correct. It is quite true that the defendant had put information into limited circulation, which somehow reached the ears of the Sunday Mirror, but in the short time available to Taylor Vinters, it cannot have been Taylor Vinters' duty to go through the reasoning process which is set out in paragraphs 27, 28 and 72 of the judgment of 3^rd July 2003. Taylor Vinters' first letter of 1^st March 2002 was not a denial that the defendant had had any contact with the media and Mishcon de Reya did not in truth read the letter in that way. In any event, the fact that the defendant had had dealings with other parts of the press was made perfectly clear by Taylor Vinters' second letter of the same date.
51. Furthermore it should be borne in mind that Taylor Vinters wrote this letter under acute pressure of time. Less than 24 hours were allowed for Taylor Vinters to respond to Mishcon de Reya's letter dated 28^th February. The fact that the legal defences foreshadowed in the letter of 1^st March were unsuccessful at trial, does not make the letter misleading. A further significant feature is that I do not know what instructions the defendant was giving to Taylor Vinters on 28^th February and 1^st March. Nor do I know what advice Taylor Vinters were giving to their client. On the material available to the court, it is not possible to castigate the content of the letter of 1^st March as improper, unreasonable or negligent.
52. Ground 2: This ground concerns the style and language in which that letter was written. In my view Taylor Vinters' first letter dated 1^st March was unduly strident and harsh. Some of the language in that letter overstepped the mark of courteous correspondence between solicitors engaged in an adversarial dispute. Sadly, the same is true of many letters which one sees in solicitors' litigation files. The stridency and extreme language of the letter of 1^st March does not bring it into the realm of improper, unreasonable or negligent. Furthermore this feature of the letter cannot possibly be shown to have generated any additional costs or wasted costs.
53. Ground 3: This allegation seems to me quite hopeless as the foundation of a claim for wasted costs. The short answer to this ground is that the defendant has refused to waive privilege and therefore the court has no way of knowing what advice Taylor Vinters were giving to their client. It may very well be that Taylor Vinters were warning the defendant of the difficulties in her line of defence but she insisted upon pressing on. The defendant was not legally aided at that stage and so there was no sanction if she disregarded legal advice. In the light of the guidance given by the Court of Appeal in Ridehalgh v Horsefield [1994] Ch 205 and by the House of Lords in Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120, the claimant cannot possibly recover wasted costs on this basis.
54. Ground 4: This is the ground upon which Mishcon de Reya relied in their letter of 18 March 2002, first advancing the claim for wasted costs. With all due respect, it is hopeless. The most likely inference from that part of the material which I am permitted to see is this: at first the defendant was minded to give certain undertakings. However, at the last moment (and probably contrary to advice) the defendant changed her mind and rejected the draft undertakings which were under discussion. That was no doubt very irritating for the claimant and her legal team. However, it was not the fault of Taylor Vinters. There is no basis for saying that Taylor Vinters' conduct of negotiations in the run-up to the second court hearing was improper, unreasonable or negligent.
55. Ground 5: Mr Linden places reliance upon all that is known from the now disclosed documents about Taylor Vinters' course of dealing with the defendant. They acted for her over many months during 2001 and 2002. They advised on her disputes with the claimant and her dealings with the media between December 2001 and February 2002. Substantial fees were owed by the defendant to Taylor Vinters by the end of February 2002.
56. Nevertheless it seems to me that the serious charge which is levelled under ground 5 simply cannot be established by the correspondence and documents which Mr Morton-Hooper relies upon in his fourth witness statement. Furthermore, ground 5 is focussed upon the specific period, 1^st March to 22^nd March 2002. The crucial correspondence and attendance notes recording what passed between Taylor Vinters and their client both before and during the relevant period are not available to the court. Without seeing this material, the court could not possibly make a finding that ground 5 is established.
57. Let me now turn from the five specific grounds and look at the broader picture. Apart from the matters which I have set out so far, there seem to me to be other obstacles in the path of the claimant's claim. First, a claim for wasted costs can only be founded upon conduct by lawyers after proceedings have been commenced: see Byrne v Sefton Health Authority [2001] EWCA Civ 1904; [2002] 1 WLR 775. Mr Linden developed an argument today that the reasoning of Byrne v Sefton Health Authority [2001] EWCA Civ 1904; [2002] 1 WLR 775 was not upheld by the House of Lords in Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120. I am not persuaded by that submission. At paragraph 20 of his speech in Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120, Lord Bingham referred to the reasoning of the Court of Appeal in Byrne v Sefton Health Authority [2001] EWCA Civ 1904; [2002] 1 WLR 775 without any hint of disapproval. In the present case much of the conduct complained of, in particular the writing of the first letter dated 1^st March 2002, occurred before the date when proceedings were commenced. Proceedings were commenced on 12^th March 2002. That seems to me to be the first additional obstacle in the claimant's path.
58. Secondly, it seems to me, that the claimant faces formidable difficulties in establishing causation of the wasted costs which are alleged. Indeed the proposition that Taylor Vinters' conduct in March 2002 generated a fresh amount of wasted costs to be incurred over a year later is self-evidently untenable. Leaving that point aside, however, the only evidence upon which the claimant relies in support of her case on causation is to be found in the fourth witness statement of Mr Morton-Hooper at paragraphs 41 to 53. In my view the claimant will face formidable difficulties in establishing causation on the basis of that evidence.
59. Thirdly, if I am wrong about everything I have said so far, it seems to me clear that the wasted costs proceedings which the claimant is seeking to pursue will, if they go forward, become satellite litigation on an unacceptable scale. Indeed the wasted costs proceedings have already become satellite litigation on an unacceptable scale. I am told by Mr Linden that the claimant's costs incurred up to the end of stage 1 of the wasted costs proceedings amount to £19,285. The respondent solicitors, Messrs Taylor Vinters, have put forward a bill of costs quantifying their costs up to the end of stage 1 of the wasted costs proceedings in the sum of £22,563. Mr Linden is strongly critical of this latter bill and has made certain observations about it. I do not think it necessary, for the purposes of this judgment, to embark upon a taxation of costs in respect of either of those two bills. It is quite clear to me that the costs of these satellite proceedings have already become disproportionate to any sum which the claimant could sensibly hope to recover by way of wasted costs. Likewise, if the proceedings go forward to stage 2, the costs of the stage 2 proceedings would also be disproportionate to any sum which the claimant could sensibly hope to recover by way of wasted costs.
60. For present purposes, however, it is not necessary to explore these three further avenues in any detail. I have come to the conclusion, as previously indicated, that each of the five grounds of claim are not grounds which are likely to lead to any wasted costs order being made, if this case proceeds to stage 2.
61. For all of these reasons, my answer to the question posed in part 6 of this judgment is "no".

Part 7 - Conclusion

62. For the reasons set out in part 6 of this judgment, the claimant's claim for wasted costs is flawed. That claim must be dismissed at the first stage of the procedure laid down in paragraph 53.6 of the Practice Direction.
63. Despite the best efforts of judges and, dare I say it, textbook writers, the true nature of the wasted costs jurisdiction is still insufficiently appreciated. This is a procedure for dealing with relatively straightforward claims which are capable of summary disposal at a proportionate cost. It is not a vehicle for mounting a complex professional negligence action in circumstances where much of the relevant evidence is obscured from the court's view.
64. Finally, I cannot part with this case without thanking both counsel for the excellence of their written submissions and oral advocacy.