In Willers & Joyce & Ors  EWHC 2183 (Ch) the Court dismissed an application to fix the Lawyers with a non-party costs liability.
The case followed an initial unsuccessful claim (“the Langstone action”) brought by Mr Gubay (“G”) against Mr Willers (“W”). W was awarded costs which were settled a c. £1.5m leaving a shortfall of c. £2m. Of the shortfall c. £1m was attributable to the costs of W’s solicitor (“S”) in the Langstone action and c. £500k each to Leading and Junior Counsel (“L” and “J”).
W brought proceedings against G’s estate (G having died) alleging G had maliciously prosecuted the Langstone action against him. One of the heads of damages was the c. £2m shortfall in costs.
When W’s malicious prosecution claim was lost, G’s executors sought to add S, L and J (“the Lawyers”) as defendants for the purposes of costs on the basis that the Lawyers were the real parties to the claim because the principal purpose of the claim was the recovery of the Lawyers’ unpaid fees. This “direct, personal financial interest” was said to go further “in a significant way” than the interest that any lawyer has in a successful outcome for their client under a CFA.
The Judge, noting the key question is “whether [it makes a difference that] the … damages claimed … included a substantial amount of money still owed to [the Lawyers] from the Langstone Action”, concluded that the Lawyers had not acted outside the role of legal representatives to such an extent as to bring themselves within the non-party costs jurisdiction.
In reaching the decision the Judge considered that the risk of a non-party costs order would, in many instances, force a party to instruct new lawyers, who may not understand the case as well as the former lawyers, and who would cost more to get up to speed. Such consideration may not apply to the other side leading to unfairness.
Further, there are many scenarios in which damages claimed in second proceedings include unpaid costs incurred in first proceedings. For policy reasons, including access to justice, lawyers should, generally, be protected from non-party costs applications in such cases.