S.57: The Sting That Defendants Forget

It was entirely without irony that the Defendant in Williams-Henry v Associated British Ports Holdings Ltd & Anor (Re Wasted Costs) [2024] EWHC 2415 (KB) spent around £50,000, proposing to double that to £100,000 if their application was allowed to continue, trying to pursue the Claimant’s solicitors for wasted costs following the finding of fundamental dishonesty against the Claimant at trial.

Although readers will no doubt recall the rather excoriating judgment of Mr Justice Ritchie, which can be found under the neutral citation [2024] EWHC 806 (KB), a brief summary is always useful. The Claimant had fallen off Aberavon Pier and sustained a brain injury. Liability was settled at 2/3 in her favour. She claimed net damages at around £2.3 million but the judge found she had lied about 19 different aspects of her claim – such as her level of mobility, through her light and noise intolerance to her need for help with activities of daily living, to name but a few. In other words, the Claimant had been fundamentally dishonest. The judge assessed ‘honest’ damages at just under £600,000 (still over £200,000 more than the Defendant had suggested). Then, in accordance with s.57 Criminal Justice and Courts Act 2015 and in the absence of any finding of substantial injustice to the Claimant, the judge dismissed the claim.

A brief recap of the process for s.57 is of benefit at this point;

• A claimant has an honest claim;
• That claimant is found to be fundamentally dishonest in their claim or somebody else’s claim related to the claimant’s claim;
• The honest element of the claim is assessed;
• The claim is dismissed unless substantial injustice would result from the dismissal;
• The value of the otherwise honest element of the claim is deducted from the costs the claimant would otherwise be ordered to pay {my emphasis}.

It is this last point, which arises from the effect of s.57(5), that led to the latest judgment in Williams-Henry, (although perhaps more properly we should be saying Associated British Ports Holdings Ltd v Hugh James (A Firm) for this part). In a case such as this, where there are significant honest damages, there is every reason to assume that the costs in defending the claim will be wiped out by the effect of s.57(5). Indeed, this is what happened here where the Defendant’s costs capped in the region of £550,000 it would appear.

Accordingly, even though a Defendant has won, has proven the Claimant to be fundamentally dishonest and technically had an enforceable costs order, that costs order is reduced to zero (in practical terms) by the operation of s.57(5). To try and get some of those costs back, or perhaps as part of a wider strategy, the Defendant in this case made an application for wasted costs against the Claimant’s solicitors.

This is not the article for a deep dive into wasted costs, but it would be remiss of me not to tell you, dear readers, the outcome. Before that, some useful background to the type of order we are talking about.

• Wasted costs are a specific type of costs, essentially the court ordered the legal representatives, not the party instructing them, to pay some of the costs;
• The powers are contained within Senior Courts Act 1981 and CPR r46.8 and are fleshed out by various case-law (As usual with Mr Justice Ritchie, he provides a thorough review of the authorities and his interpretation of them);
• The process is supposed to be a summary one, with a first stage, where the applicant must show cause that, if unanswered, could lead to a wasted costs order;
• There is then a second stage where the respondent to the application can more properly respond and the court substantively determines the matter;
• The threshold is, per [21] of the decision:
  • Improper – “conduct which would be regarded as improper according to the consensus of professional opinion”;
  • Unreasonable – “conduct which is vexatious or designed to harass the other side, rather than advance the resolution of the case
  • 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”
• There must be causation of the wasted costs, not just costs generally (which would necessarily occur when a claim is brought) but those which should never have been incurred save for the conduct complained of;
• Even if the threshold and causation stages are met, the court must still stand back and ask if it is just to make such an order.

It is the summary nature that is of particular importance, i.e. this is not supposed to be a power that invites parties to engage in satellite litigation, albeit that will of course be fact specific as to what ‘summary’ means in the context of different types of cases. Even in this, an originally 11 day High Court trial in a claim valued in excess of £1 million, the proposition that the parties would be spending a combined total of nearly £200,000 on a wasted costs process was a firm indicator that, whatever else, this was not an appropriate case for a wasted costs order. As such the Defendant’s application was dismissed at the first stage and was not allowed to proceed further. The judge also noted the potentially fettering approach on access to justice that the making of wasted costs orders in fundamental dishonesty cases may have.

Ultimately it should be remembered that s.57 was deliberately drafted to strike a balance. A defendant could use it to defeat the entirety of a claim, even where the honest portion, sometimes entirely independent of any dishonest, was many times more valuable than the dishonest part. But the quid pro quo for that was that the costs would be impacted, such that the claimant did not have to contend with both the loss of their entire claim and the need to pay the whole of the defendant’s costs. It is always worth bearing in mind, particularly when considering those offers before or after fundamental dishonesty is raised that may require the payment of some costs to the defendant, that if it is a true s.57 case i.e. genuine in part but tainted by fundamental dishonesty, then the application of s.57 has a sting for a defendant too that needs to be factored in.