My Lords, the amendment is to Clause 50, which deals with the Government’s new provisions in respect of wasted costs orders. Such orders fall to be made at the discretion of the court when it is thought by the court that the conduct of lawyers for the parties, or one of the parties, may have acted in such a way, either by deliberate act or by act of omission, so as to prolong the case unnecessarily and lead to costs which should not have fallen to either side or to the court system to pay.
The Government consulted about improving the system, as they described it, for wasted costs orders, and have in the end come forward with this clause, which requires the court to consider reporting lawyers to the regulatory agency to which they are responsible. Those agencies would be the Law Society, the Bar Council and, I assume—perhaps the Minister will correct me if I am wrong—the Chartered Institute of Legal Executives, if it is involved. These considerations would apply both to court proceedings and to proceedings in the tribunal system.
There was a consultation on this matter, and the responses of the Bar Council and the Law Society were quite interesting. The Bar Council certainly took the view that the Government’s proposals were flawed and opposed them in pretty forthright fashion. They responded to a number of questions—for example, on whether the fee should be charged to cover the costs of
any oral hearing of a wasted costs order and whether that fee should be contingent on the case being successful. The Bar Council’s response was that,
“A person seeking to defend a wasted costs application should not be required to pay a fee at an oral hearing … It is appropriate to require a party asking for a wasted costs order to pay a fee upon making the application, as a disincentive to unfounded applications and satellite litigation”.
I assume that, since the Government are not legislating on that point, they have accepted the Bar Council’s view in that respect.
A general question was also asked about the possible scope for any changes relating to wasted cost orders for cases other than judicial reviews. The Bar Council’s response to that was very clear. It stated that the Jackson reforms, instituted by Lord Justice Jackson over a year or so ago now,
“ought to be permitted to take their full effect before further changes are made. The costs budgeting provisions of the Civil Procedure Rules are intended to reduce the costs of civil litigation as a whole and ought to reduce the prospects of a party paying for the avoidable errors of a legal representative”.
It did not see how any additional cost provisions would materially assist.
3.15 pm
The Law Society was somewhat briefer, as is the society’s wont in these matters, and described what was Clause 36 in the Bill as debated in the House of Commons—now Clause 50—as “unnecessary”. The society made the valid point that:
“The court already has the discretion to make a lawyer personally liable to pay any litigation costs”.
The additional sanction therefore seemed to be “superfluous”—it might be thought a piece of legislative window dressing. The society also made the statement, on which it would be interesting to hear the Minister’s comments, that,
“The Solicitors Regulation Authority would not take further action if notified that a wasted costs order has been made against a solicitor”,
on the grounds that,
“The existing liability to a financial penalty is sufficient sanction”.
If the solicitor transgressed—heaven forefend that that should ever happen, but if it did—then the financial penalty incurred by the imposition of a wasted costs order by the court would be sufficient and the Law Society would not take any further steps. There was also a suggestion that reference should be made to the legal aid authority, but it seems it would have no power to do anything. Quite what the rationale of that would be remains to be seen.
The clause has no place in the Bill at all. It is not necessary, for reasons which have already been explained. It is purely window dressing. The sensible thing would be for the Government to withdraw it—hence our intention to oppose it. On the amendment, if the clause, despite all logic, remains in the Bill and is enacted, to make it clear that it does not impose a strict duty on the court or tribunal, the wording should be such that the court “may” make such a reference, rather than be required to make such a reference, which looks like the implication of the clause as drafted. I beg to move.