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Session 2001- 02
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Judgments - Medcalf v Weatherill and Another


Lord Bingham of Cornhill Lord Steyn Lord Hoffmann Lord Hobhouse of Wood-borough Lord Rodger of Earlsferry






ON 27 JUNE 2002

[2002] UKHL 27


My Lords,

    1. In this appeal two barristers (Mr Bernard Weatherill QC and Ms Josephine Hayes) challenge a wasted costs order made against them by the Court of Appeal. They do so on two grounds: first, that the court had no jurisdiction to make the order; and second, that such an order should not have been made when they were precluded by legal professional privilege from answering the complaints made against them. The appeal requires the House, for the first time, to consider the wasted costs order regime introduced by section 4 of the Courts and Legal Services Act 1990 and expressed in section 51(6)(7) and (13) of the Supreme Court Act 1981.

The proceedings

    2. The proceedings in which the wasted costs order was made against the barristers concerned a snooker-based television quiz game, originally conceived by Mr Michael Kemp in about 1984 and developed in its early stages in 1987, first by Mr Kemp and Mr Roger Medcalf and then by these two with the addition of Mr Mardell, who had professional experience of developing and exploiting television game shows and was involved both personally and through his company, originally named Createl Ltd and then the Terry Mardell Organisation Ltd ("the TMO"). The plans for this new game show went through various different versions and were the subject of much discussion and refinement. Presentations were made on several occasions to the BBC, which was slow to respond. In the end, however, the BBC did respond. It bought the new game show and programmes were transmitted. They have proved to be a continuing success. But from about the end of 1987 Mr Medcalf was excluded from any part in the development and exploitation of the project, which were handled by Mr Mardell and his company and Mr Kemp.

    3. In July 1993 Mr Medcalf issued proceedings against Mr Mardell, Mr Kemp, the BBC (which settled before the action came to trial and played no further part) and the TMO. Mr Medcalf's claim at that stage was based on alleged infringement of copyright and breach of confidence. The action came on for trial before Lightman J in January 1997 but was aborted on the third day of trial to enable Mr Medcalf's advisers to re-plead his case so as to include an additional claim in partnership. A stringent order in costs was made against Mr Medcalf as a condition of the postponement. Mr Medcalf's case was then re-pleaded and a second trial took place before Lloyd J in May 1998. At this trial the judge preferred the evidence of Mr Medcalf to that of Mr Mardell and Mr Kemp. He found that there had been a partnership between the three men to be inferred from their conduct and that there had also been a breach of confidence. The defendants were ordered to provide an account of the profits of the partnership and to make an interim payment of £100,000 into court.

    4. Mr Mardell and the TMO (but not Mr Kemp) at once appealed against the judge's decision and there was a second appeal against certain orders made by the judge in a later decision on the taking of the partnership accounts. No satisfactory account was provided in compliance with the judge's order and in July 1999 Mr Medcalf applied to strike out the defendants' third attempt to provide the account ordered. In response the defendants served witness statements making, for the first time, serious allegations of fraud against Mr Medcalf and his solicitors in connection with the conduct of the action before Lloyd J. It was alleged that Mr Medcalf or his solicitors had tampered with the transcripts of evidence given at the trial, that Mr Medcalf's solicitors had attempted to pervert the course of justice during without prejudice discussions with Mr Kemp and that Mr Medcalf's signature on his witness statement had been forged. No transcripts of evidence had been available to the judge when he had given judgment and Mr Medcalf in evidence had vouched the proof of his witness statement, but these points were relied on as impugning the credibility of Mr Medcalf, and the reliability of his evidence had been an important issue at the trial. The master referred the striking out application to Lloyd J, who was to have heard it on 26 November 1999 but who was in the event unable to hear it until 2 December 1999.

    5. Neither of the appellant barristers had up to then represented Mr Mardell or the TMO. Ms Hayes was instructed shortly before 24 November. On 25 November she informed leading counsel for Mr Medcalf (Mr Romie Tager QC) of an application she intended to make (and shortly thereafter did make) to the judge, that he should direct the police to investigate the allegations made concerning the transcripts and the perversion of the course of justice and that Mr Medcalf's application to strike out the account should meanwhile be stayed. Mr Medcalf's solicitors intimated an intention to apply for a wasted costs order against the defendants' solicitors, although this was not pursued. In her skeleton argument for the hearing before Lloyd J on 2 December Ms Hayes included the allegations of misconduct already mentioned but with the addition of certain serious allegations of a similar character. An amended notice of appeal was drafted, although not formally served, including these and additional allegations of impropriety.

    6. On 6 December 1999 Lloyd J rejected the defendants' application and refused permission to appeal. He went on to hear Mr Medcalf's application to strike out the defendants' third partnership account. Mr Weatherill, appeared before the judge with Ms Hayes on 8 December 1999 (having been instructed on that date or shortly before) when application was made that the judge should defer giving judgment on the striking out application pending receipt of evidence from the United States Department of Justice which might substantiate one of the allegations of fraud made against Mr Medcalf. This application was refused. On Mr Medcalf's application to strike out the judge refused to make the order sought, but held that the third account which the defendants had given did not comply with his order and that they should have a last opportunity to comply.

    7. There was intense interlocutory activity on the part of Mr Medcalf and the defendants over the next two months. Relevantly for present purposes, the defendants' appeal against the judge's substantive decision in favour of Mr Medcalf, coupled with an application by the defendants to amend their notice of appeal so as to include the allegations of impropriety against Mr Medcalf already referred to, were due to be heard by the Court of Appeal on 14 February 2000. At a hearing on 28 January 2000 Clarke LJ gave directions to ensure that that date would be effective: among other things he ordered that evidence in the defendants' possession relevant to matters raised in the draft amended notice of appeal be served that day, with an indication in writing of any further evidence the defendants might wish to put before the court, and that the defendants should by 4 February 2000 issue and serve an application to amend their notice of appeal and to introduce fresh evidence, serve and file a bundle comprising all witness statements and evidence intended to be relied on, and serve and file a draft amended notice of appeal and supporting skeleton arguments covering those of the existing grounds of appeal still advanced and identifying any which were abandoned.

    8. In response to that order of Clarke LJ, the defendants served certain reports and listed evidence which was not in their possession but which they hoped would follow. A draft amended notice of appeal dated 3 February 2000, bearing the names of both barristers, was served on the following day. Skeleton arguments dated 4 February 2000, including a supplementary skeleton argument in support of the application to amend the notice of appeal signed by both the barristers, were also served on 4 February. The supplementary skeleton argument advanced submissions in support of each of the new allegations of fraud, forgery and other impropriety. Two additional bundles of evidence were served on Mr Medcalf. In the course of Friday 4 February 2000, for reasons which have not been disclosed, instructions were withdrawn from the defendants' solicitors. The barristers ceased to be instructed and the solicitors came off the record on Monday 7 February. During the following week Mr Medcalf's advisers prepared and filed evidence to rebut the allegations of fraud and impropriety raised in the draft amended notice of appeal. This evidence was not served on the barristers, who were no longer acting, but they were again instructed at about midday on Friday 11 February and the evidence was then made available to them.

    9. At the hearing before the Court of Appeal (Peter Gibson and Schiemann LJJ and Wilson J) on Monday 14 February, Mr Weatherill and Ms Hayes, acting (as it is accepted that they did throughout) on instructions, opened the defendants' application to amend the notice of appeal and to adduce new evidence. The application to amend failed in respect of the allegations of impropriety. In the course of argument Mr Weatherill abandoned some of the allegations in the face of judicial hostility. In relation to the remaining allegations, the Court of Appeal rejected the application to amend (although other parts of the application to amend were conceded or were successful). This application occupied about one and a half days of court time, although no oral answer on behalf of Mr Medcalf was called for. A further two and a half days were devoted to argument on the substantive appeal. On 2 March 2000 the Court of Appeal handed down a unanimous reserved judgment, giving its reasons for rejecting the application to amend in respect of the defendants' allegations of fraud and impropriety and dismissing the substantive appeal. Counsel for Mr Medcalf indicated that he would be seeking a wasted costs order against the barristers. This matter was adjourned to enable Mr Medcalf to state his case and to enable the barristers to respond. At a hearing on 2 July 2000 the Court of Appeal ordered that this application proceed to a second stage.

    10. Before that application was resolved, Mr Medcalf compromised his action against Mr Mardell, Mr Kemp and the TMO. The terms of the compromise are not material, save to note that it expressly preserved and excluded Mr Medcalf's claim for wasted costs against the barristers. The principal basis upon which counsel for Mr Medcalf advanced the application for wasted costs against the barristers was that it had been improper of them as counsel for the defendants to have advanced allegations of fraud and other improprieties in the draft amended notice of appeal, in the supplementary skeleton argument and at the hearing of the appeal when, in contravention of paragraph 606 of the Code of Conduct of the Bar of England and Wales, they could not have had before them reasonably credible material establishing a prima facie case of fraud. Mr Medcalf sought to recover as wasted costs the costs said to have been incurred in investigating and rebutting the allegations made, both by way of written evidence and oral argument at the hearing.

Paragraph 606 of the Code of Conduct

    11. Paragraph 606 of the Code of Conduct, headed "Drafting pleadings and other documents", at the relevant time provided:

    "A practising barrister must not devise facts which will assist in advancing his lay client's case and must not draft any originating process pleading affidavit witness statement or notice of appeal containing:

    . . .

    (c)  any allegation of fraud unless he has clear instructions to make such allegation and has before him reasonably credible material which as it stands establishes a prima facie case of fraud;

    . . .

    provided that nothing in this paragraph shall prevent a barrister drafting a pleading affidavit or witness statement containing specific facts matters or contentions included by the barrister subject to the lay client's confirmation as to their accuracy."

Section 51 of the Supreme Court Act 1981

    12. So far as relevant to this appeal, section 51 of the Supreme Court Act 1981, as substituted by section 4 of the Courts and Legal Services Act 1990, 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 court,

    shall be in the discretion of the court. . . .

    (3.) The court shall have full power to determine by whom and to what extent the costs are to be paid. . . .

    (6.)  In any proceedings mentioned in subsection (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.


    In subsection (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. . . .

    (13.) In this section 'legal or any 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."

Sections 111 and 112 of the 1990 Act make provision for wasted costs to be awarded in criminal proceedings and civil proceedings in the magistrates' court.

The wasted costs jurisdiction

    13. In Ridehalgh v Horsefield [1994] Ch 205 the Court of Appeal heard a composite group of six test appeals. Both the Bar and the Law Society were represented by leading counsel. At the invitation of the court, the Attorney General nominated two counsel to represent the general public interest. In a reserved judgment of the court, the Court of Appeal (Sir Thomas Bingham MR, Rose and Waite LJJ) reviewed at some length the history of the court's jurisdiction to order payment of costs by legal practitioners whose conduct had led to the incurring of unnecessary costs, made detailed reference to the rules and legislation governing the exercise of this jurisdiction, drew attention to certain obvious dangers to which the jurisdiction was subject and gave guidance on the future handling of such applications. Save that this judgment must now be read subject to the decision of the House in Hall (Arthur) JS v Simons [2000] 3 WLR 543, and subject to what is said in paragraph 23 below, I would endorse and need not repeat what the Court of Appeal said in Ridehalgh. It does however appear, from material laid before the House, that the clear warnings given in that case 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. The House is grateful for the perceptive commentary on the weaknesses of this jurisdiction made by Hugh Evans, "The Wasted Costs Jurisdiction" 64 MLR 51 (January 2001).

The decision under appeal

    14. The decision of the Court of Appeal now under appeal is reported at [2001] Lloyd's Rep PN 146. Opinion was divided. Peter Gibson and Schiemann LJJ (for reasons given by Peter Gibson LJ on behalf of both) held that a wasted costs order should be made against the barristers. Wilson J dissented.

    15. In paragraph 25 of the majority judgment, Peter Gibson LJ recorded that there was no dispute as to the jurisdiction to make a wasted costs order nor as to the principles to be applied. Full reference was made to Ridehalgh. The crux of Mr Tager's case (for Mr Medcalf) was that the barristers had acted improperly, in breach of paragraph 606 of the Code of Conduct, in making allegations of fraud unsupported by any reasonably credible material establishing a prima facie case: see paragraph 35 of the judgment. The defence advanced by Mr Davidson QC on behalf of the barristers was summarised in paragraph 39 of the judgment:

    "He says that the fundamental point was that this was a case in which it appeared that the court had been deceived at the trial and that it was right and in the public interest for advocates to bring that point forward for adjudication. His main line of defence, however, was based on the fact that, despite the best efforts of the solicitors acting for the barristers, the defendants have not responded to requests that they waive privilege so as to enable the barristers to refer to privileged material in defending the wasted costs claim. The barristers have put in evidence that they were fully aware of their duties under the Code of Conduct and believed that they complied with those duties. They say that they would like to put before the court full details of what material was available, their own consideration of it and their reasoning but are prevented by the law of privilege and confidentiality from doing so. They believe that if they could do so, no wasted costs order would be made. Mr Davidson submits that it is impossible for this court to know on what material the barristers acted, that it is unfair to the barristers, who are unable to give evidence on privileged and confidential matters, for us to draw inferences as to the available material or to exercise our discretion as to whether an order should be made. He and his junior, Miss Mulcahy, have drawn our attention to Article 6 of the European Convention on Human Rights and to the cases decided thereunder. They submit that it would be a contravention of that Article to decide this case in circumstances where the barristers cannot give evidence on material matters whereas Mr Medcalf is able to bring forward all the evidence in his possession on what they call 'the key issue of fact'."

    16. The majority began by considering the allegations of fraud in the draft amended notice of appeal in order to assess whether there was a possibility that the barristers had had other material. This review was prefaced by certain preliminary observations. First, the majority emphasised the importance of paragraph 606, which gave litigating parties a measure of redress against potentially very damaging allegations for which (because of the law of absolute privilege) they could obtain no redress. Thus a barrister must be instructed to make the allegation in question, and should have reasonably credible material establishing a prima facie case before drafting such an allegation. The judgment continued (paragraph 40):

    "The material must be evidence which can be put before the court to make good the allegation. If there is material before counsel which cannot be used in court, the existence of that material cannot justify the actions of counsel in putting their names to the allegation."

Secondly, it was said that paragraph 606 applied not only to allegations of fraud but also to other allegations of dishonest or dishonourable conduct. Thirdly, the majority made plain that counsel must maintain his independence and not compromise his professional standards in order to please the client. In its review of 10 allegations made by the defendants, the majority held that no reasonably credible material had been produced to the court to justify seven, while concluding that there was some evidence to support the remaining three. In considering whether, on the material put before the court, the conduct of the barristers had been shown to be improper, unreasonable or negligent, the majority commented on the peripheral character of these allegations in relation to the main issues in the action (paragraph 54) and based its finding against the barristers primarily on the failure to produce evidence to the court to support the allegations made. In paragraph 58 of its judgment the majority said:

    "Second, the barristers could not have allowed the draft amended notice of appeal to go out under their names to Mr Medcalf containing allegations of impropriety reliant on the expected contents of the witness statements without the barristers satisfying themselves of the existence of that evidence in a form to be put before the court. We emphasise that the duty under section 606 is one personal to counsel and cannot be delegated to his solicitors. He has to satisfy himself that he has reasonable credible material before him which as it stands establishes a prima facie case of fraud when he drafts the notice of appeal."

In paragraph 59 the majority held that the propriety of the pleading had to be assessed in the light of the material put before the court. It was not persuaded (paragraph 60) that the inability of the barristers to reveal privileged or confidential material made the hearing of the application unfair or contrary to article 6 of the European Convention. While acknowledging the high professional standing of the barristers, the majority found no reasons why, in the exercise of the court's discretion, it should deny Mr Medcalf the order he sought (paragraph 64).

    17. In his dissenting judgment Wilson J compressed into six the seven allegations on which the majority had found against the barristers. He agreed that, at the hearing, no reasonably credible evidence had been placed before the court which prima facie established the validity of those six allegations made against Mr Medcalf (paragraph 72). But in his opinion that was not the point. The point was whether the barristers had had such material before them. Wilson J first considered the barristers' position on 3-4 February when the draft amended notice of appeal had been finalised and the skeleton arguments delivered. He said (in paragraphs 78-80):

    "78.  I harbour doubts whether on 3 and 4 February the barristers had before them the material which justified their making the six allegations. All six of them had figured in drafts of Ms Hayes dating back to early December 1999 so there had already been two months in which to collect the evidence to justify them. In the drafting of the jointly signed notice dated 3 February it is hard to discern selection, as opposed to blanket repetition, of (to use Mr Weatherill's own description at the hearing) the gallimaufry of allegations which on instructions had been assembled in the drafts of Ms Hayes.

    79.  But, in the complete absence of evidence as to what the barristers actually had before them on 3 and 4 February, I have insufficient confidence in the fertility of my imagination to come to a positive conclusion that they could not have had before them whatever paragraph 606 required.

    80.  There is an initial question as to what paragraph 606 did require to be before them. The words refer to 'reasonably credible material which as it stands establishes a prima facie case of fraud'. In paragraph 58 above my Lords so construe those words as to require the barristers to have before them reasonably credible evidence, in a form to be put before the court, which establishes the prima facie case. My view is that the word 'material' goes wider than evidence in proper form; that the phrase 'as it stands' just means 'at face value'; and that to construe the word 'establishes' as something which can be achieved only by evidence admissible in court is, in this context, arguably to read too much into it. My own preference would be not to adopt any such paraphrase."

Wilson J raised a series of questions relating to the material which might have been before the barristers on 3-4 February and concluded:

    "84.  Answers to such questions might well have enabled me to concur in the conclusion of my Lords. Or they might have had the reverse effect. Lacking the answers, I remain in doubt as to whether on 3 and 4 February the barristers were guilty of professional impropriety. It is doubt of which, pursuant to the same passage in Ridehalgh v Horsefield, they must have the benefit. It is better that in certain circumstances the wasted costs jurisdiction should be emasculated by the principle of legal professional privilege than vice versa."

Of the hearing on 14-15 February he said (in paragraph 85) that "There was therefore an element of professional impropriety in articulation of these serious allegations at the hearing" in the absence of evidence to support them. In the exercise of his discretion, however, Wilson J would have declined to make an order against the barristers on this limited ground. In reaching this conclusion he was impressed by the extremely difficult circumstances in which both barristers, but particularly Mr Weatherill, had been called upon to act in this complex and highly contentious matter.


    18. The barristers' argument on jurisdiction was first raised in the House. It was said, first, that section 51 conferred no right on a party to seek a wasted costs order against any legal representative other than his own. Thus the court had no power to make an order against the legal representative of any opposing party. This submission was based on the wording of section 51(13) quoted above, and in particular the words "on his behalf": it was argued that a party could only seek a wasted costs order against a person exercising a right of audience or a right to conduct litigation on his behalf or any employee of such a person.

    19. There are in my opinion very compelling reasons why this construction cannot reflect the intention of Parliament. It is clear that in the exercise of its inherent jurisdiction the court could order a solicitor to compensate a party who was not the client of that solicitor, as it did in Myers v Elman [1940] AC 282. In Orchard v South Eastern Electricity Board [1987] QB 565, 571, 581, the Court of Appeal expressly dissented from the view, advanced obiter by Lord Denning MR in Kelly v London Transport Executive [1982] 1 WLR 1055, 1065, that this jurisdiction could be exercised against counsel also. In the context of the 1990 Act, which among other things provided for a substantial extension of solicitors' rights of audience in the higher courts, this inequality of treatment as between advocates performing the same professional function was plainly indefensible, and the object of section 51(6) and (7) was to put barristers and solicitors, for this purpose, effectively in the same position. Section 51 only applies in civil proceedings, but (as was accepted on behalf of the barristers) it is quite clear from section 111 of the 1990 Act (amending the Prosecution of Offences Act 1985) and section 112 of the 1990 Act (amending the Magistrates' Courts Act 1980) that in criminal proceedings in the Court of Appeal, the Crown Court or a magistrates' court and civil proceedings in a magistrates' court a wasted costs order may be made in favour of a party to the proceedings against the legal representative of any other party. No reason has been advanced why Parliament should have wished to lay down a different rule governing barristers in civil proceedings in the High Court, and it is to my mind inconceivable in the context of the 1990 Act that Parliament should have wished to afford to barristers in civil proceedings (otherwise than in a magistrates court) a ground of exemption not enjoyed by solicitors. Against arguments of this weight, any submission based on the wording of subsection (13) would have to be irresistible. The barristers' argument is not. The subsection is intended to make plain that no liability can attach to any practitioner not involved in the litigation giving rise to the claim. I note without surprise that a similar conclusion was reached by Neuberger J in Brown v Bennett (No 2) [2002] 1 WLR 713.