Practice and Procedure


PUBLISHED April 15, 2003

Solicitors were liable for wasted costs where their negligent conduct of a road traffic accident claim contributed to a failure to uncover the fact that the claim was fraudulent.Application by the second defendant ('Provident'), the insurer of the first defendant, for a wasted costs order that the claimant's solicitors ('Jacksons') pay Provident's costs of a personal injury action incurred after 30 October 2002. The claim was for damages for personal injury, loss and damage arising out of a road traffic accident alleged to have occurred on 16 July 2001 in which the first defendant was alleged to have driven his car into the rear of the claimant's car. A voluntary interim payment was made to the claimant by Provident. On 14 January 2003, with the trial scheduled for 16 January, Jacksons served a notice of discontinuance on the insurer's solicitors ('DLA'). It became apparent that the reason for discontinuance was that the claimant had come to accept that his claim was fraudulent, because there had been no accident in which the first defendant had been a driver. DLA did not accept that discontinuance was of right because the interim payment meant that either Provident's consent or a court order was required under CPR 38.2(2). Jacksons did not attend the trial and on the adjourned hearing fixed to consider the validity of the notice of discontinuance Jacksons contended that the interim payment had been made outside the proceedings and before Provident were a party so that consent or permission was not required. Nevertheless, Jacksons on instructions from the claimant consented to an order for the proceedings to be discontinued on the basis that the claimant would repay the interim payment and pay Provident's costs up to 30 October 2002. Provident now sought an order that Jacksons pay their costs incurred after 30 October 2002 under s.51 Supreme Court Act 1981 due to their negligent omission in failing to investigate earlier in response to Provident's defence which had raised the issue of fraud.HELD: (1) Jackson's decisions during the case fell to be assessed on their working assumption at the time that the claim was genuine. (2) Jacksons negligently failed either to pursue the action in accordance with the orders made for service of evidence or obtain additional time for compliance. As a result Provident incurred costs that could have been avoided if the case timetable had been altered or the case had been discontinued when the fraud should have been revealed. (3) The court was satisfied that an interim payment had been made and therefore Jacksons had given notice to discontinue in circumstances in which their client could not do so as of right. (4) Jacksons then failed to appear on the hearing of the action despite being solicitors on the court record as acting for the claimant. (5) It was just in all the circumstances to order that Jacksons pay Provident's costs after 30 October 2002. (6) As the underlying reason for the order was negligence, the detailed assessment of costs should be on the indemnity basis.Application allowed.