Rybak & Ors v Langbar International Ltd

This is an application by Langbar International Limited (to whom I will refer as “Langbar”) for a wasted costs order. The respondent to the application is Withers LLP (to whom I will refer as “Withers”), a firm of solicitors who acted for the other side to litigation in which Langbar was involved. For convenience, I will refer to the other side to the litigation as the “Rybak parties”, or, simply, Mr. Rybak. Mr. Peto QC and Mr. Marven appear on behalf of Langbar. Mr. Mansfield QC appears on behalf of Withers.

The application was made by an application notice dated 14^th October 2010. The application asked for an order as follows:

“… that the defendant [that is Langbar] be awarded a wasted costs order against the claimants’ solicitor [that is Withers] during the relevant period on an indemnity basis because Withers’ improper, unreasonable and/or negligent conduct in the proceedings caused the defendant to incur substantial, unnecessary costs, and, in all the circumstances, it is just to order that Withers compensate the defendant for the relevant costs.”

Attached to the application notice was a draft order which contained a number of recitals. One of the recitals referred to the court being satisfied, pursuant to s.51(6) of the Senior Courts Act 1981 :

“… that the costs, including disbursements, incurred by Langbar in this action on or after 19^th December 2008 in the amount of £1,037,887.23 are wasted costs.”

The draft order then included an order that Withers do forthwith pay to Langbar wasted costs in the sum which I have mentioned.

There is some element of ambiguity in the draft order. It refers to “this action”. That is a reference to action HC09C00581. That action was begun by a claim form issued on 26^th February 2009. Accordingly, costs which were incurred on 19^th December 2008 were not incurred in this present action. They were incurred in relation to an application arising in an earlier action where Langbar was the claimant and the Rybak parties were the defendants. However, in the end, nothing really turns on this point. Langbar wishes to include in the costs, which it says were wasted, the costs it incurred on 19^th December 2008. Withers has not made any point about the drafting of the application notice or the draft order. Further, in any event, the events which led up to the hearing on 19^th December 2008 and the events of that day are very much relied upon by Langbar in the application which has been made, which has been argued and which has been fully investigated.

Before I go to the facts in any further detail, I think it is helpful to refer to what I see as the relevant legal principles which I should apply in this present application. Happily, counsel are agreed as to most of the legal principles. I will therefore attempt to summarise what those principles are. When I have done so, I will refer to one submission made by Mr. Peto, on behalf of Langbar, which seems to me to involve a question of principle on which the parties are not agreed.

I start with s.51 of the Senior Courts Act 1981, as amended. Section 51(1) refers to costs of and incidental to proceedings in, amongst other places, the High Court. Section 51(6) is in these terms:

“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.”

Section 51(7) provides:

“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.”

Section 51(6) refers to a “legal or other representative”. There is no dispute that that embraces Withers in this case.

These statutory provisions were considered in detail in the case of Ridehalgh v Horsefield [1994] Ch 205, a decision of the Court of Appeal. The judgment was the judgment of the court. At p.232 the Court of Appeal considered the meaning to be given to the three words “improper”, “unreasonable” and “negligent”, as they appeared in s.51(7) of the 1981 Act.

In the present application Langbar does not submit that Withers acted in an improper way. It therefore seems to me to be unnecessary to read into this judgment the definition of “improper” given in Ridehalgh v Horsefield, although I bear it in mind in seeking to understand the nature of the jurisdiction to make a wasted costs order. Similarly, Langbar does not say that Withers’ conduct was “unreasonable”, as defined in Ridehalgh v Horsefield, unless Withers were negligent and their negligence also amounted to unreasonable behaviour, in which case a reference to their behaviour being “unreasonable” does not add anything. Accordingly, I will not read the definition of “unreasonable” in Ridehalgh v Horsefield. What Langbar does say is that Withers acted in a way which was “negligent”, as that word is defined in Ridehalgh v Horsefield.

The meaning of “negligent” is discussed at pages 232 and 233 in a lengthy passage, which I will therefore not read out in full. I will, however, refer to one or two of the points made in the discussion as to the meaning of the word “negligent” in this context. The Court of Appeal rejected a submission that “negligent” required there to be an actionable breach of the legal representative’s duty to his own client. Instead, they referred to the legal representative being in breach of a duty to the court. It was also made clear that the word “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”. The court stressed that this untechnical approach did not lessen the burden on the party alleging negligence, and the court referred to standard definitions of negligence which required it to be shown that no member of the relevant profession “who was reasonably well informed and competent would have given or done or omitted to do” the relevant thing; in other language, the behaviour had to be such that no reasonable, well informed and competent member of the profession would have been guilty of. The court also stressed that it did not think that there was a “sharp differentiation” between the three expressions “improper”, “unreasonable” and “negligent”. I take the court to mean that it may be possible for conduct to fall within one or more than one of these three expressions. They are not necessarily separate one from the other.

Still on the question of what behaviour is “improper”, “unreasonable” or “negligent”, Mr. Mansfield drew my attention to a number of places in the judgment of the Court of Appeal where there is a reference to a lawyer’s conduct of proceedings being “plainly unjustifiable”. I will assume in favour of Langbar that the word “unjustifiable” does not add anything to the definition of “negligent”; in other words, if I find that Withers acted in a way which was negligent, as that term is defined in Ridehalgh v Horsefield, that of itself will produce the result that their conduct was unjustifiable. I will also assume that the word “plainly” does not have to be separately considered at the stage at which this present application has reached.

It may be that the question of whether the case is a “plain” one is relevant at the first stage of the relevant procedure when one is asking whether the case should go forward to the second stage. At the second stage it may be that the court has to make up its mind whether the solicitors’ behaviour was, in the opinion of the court, improper, unreasonable or negligent. If the court is able to reach a decision on that point, it may not matter that the case is not a completely “plain” one. I express myself in these tentative terms because it does not seem to me to matter for present purposes whether I am right on these points. I will assume in Langbar’s favour that it does not have to satisfy me that this is a “plain” case if it can satisfy me that Withers were “negligent”, as defined in Ridehalgh v Horsefield.

That case also considered the necessary causation between the conduct complained of and the costs which are said to be wasted. That is discussed in the judgment at p.237 E-F, where it was said :

“Demonstration of a causal link is essential. Where the conduct is proved but no waste of costs is shown to have resulted, the case may be one to be referred to the appropriate disciplinary body or the legal aid authorities, but it is not one for exercise of the wasted costs jurisdiction.”

I add that it is demonstrated by other decisions that what must be shown is the causation of wasted costs, not the loss of a chance that costs might not have been incurred if the conduct complained of had not occurred.

Lastly, in relation to Ridehalgh v Horsefield, I refer to the discussion at p.239 D-F of the judgment where the court considers the discretion which ultimately rests with the court in deciding whether to make a wasted costs order. It is said (and I quote):

“Even if the court is satisfied that a legal representative has acted improperly, unreasonably, or negligibly and that such conduct has caused the other side to incur an identifiable sum of wasted costs, it is not bound to make an order but in that situation it would of course have to give sustainable reasons for exercising its discretion against making an order.”

In the present case I intend to concentrate on the first stage of the three stages identified in Ridehalgh v Horsefield, and that is to ask myself whether Withers were negligent at some point, or points, in the conduct of the litigation, taking the meaning of “negligent” from the definition in that case.

I have been shown a number of later decisions on this jurisdiction to make a wasted costs order. I will refer to the decision of the House of Lords in Medcalf v Mardell [2003] 1 AC 120. At para.13 in the speech of Lord Bingham of Cornhill, Lord Bingham expressed his view that what the Court of Appeal said in Ridehalgh v Horsefield was an accurate statement of the relevant legal principles, save only that the discussion in that case of advocates’ immunity obviously had to be read subject to the decision of the House of Lords in Arthur JS Hall & Co v Simons [2002] 1 AC 615. The other members of the House in Medcalf v Mardell agreed with Lord Bingham of Cornhill’s endorsement of the earlier decision in Ridehalgh v Horsefield. Lord Bingham, however, added this :

“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.”

So those are the general principles as to the jurisdiction of the court to make a wasted costs order.

Another legal matter which I need to note at this stage concerns the duty owed by a solicitor involved in litigation in certain circumstances arising in the course of the litigation. One of those circumstances did arise in the present case, namely, Withers, acting for the Rybak parties, made an application for ex parte relief. Indeed, that was the application made on 19^th December 2008, to which I have already referred in passing. The relevant duty on an applicant for ex parte relief is well established. I was shown one or two cases that describe the nature of that duty.

It is convenient to go to the way it was put by Bingham J. (as he then was) in Siporex Trade v Comdel [1986] 2 Lloyd’s Rep 428 at 437 where he said:

“The scope of the duty of disclosure of a party applying ex parte for injunctive relief is, in broad terms, agreed by the parties. Such an applicant must show the utmost good faith and disclose his case fully and fairly. He must, for the protection and information of the defendant, summarize his case and the evidence in support of it by an affidavit or affidavits sworn before or immediately after the application. He must identify the crucial points for and against the application, and not rely on general statements and the mere exhibiting of numerous documents. He must investigate the nature of the cause of action asserted and the facts relied on before applying and identify any likely defences. He must disclose all facts which reasonably could or would be taken into account by the Judge in deciding whether to grant the application. It is no excuse for an applicant to say that he was not aware of the importance of matters he has omitted to state. If the duty of full and fair disclosure is not observed, the Court may discharge the injunction even if after a full enquiry the view is taken that the order made was just and convenient and would probably have been made even if there had been full disclosure. Most of these principles are established by authorities …”

Mr. Justice Bingham then went on to refer to a number of well-known cases. I draw attention in that passage to Bingham J.’s statement that the applicant for ex parte relief must investigate, amongst other things, the facts relied upon.

Perhaps, by way of supplement to that citation, I should refer to a further point that Mr. Peto made today, which is not in dispute, namely, that this duty of disclosure is a continuing one which may require applications back to the court if new material becomes available after the grant of the without notice order but before the matter has been considered on a fully contested basis.

The duty which I have described is primarily the duty of the applicant, but the solicitor for the applicant plays a crucial role in this respect. Indeed, the solicitor owes his own duty to the court to perform the obligation to give full and frank disclosure. This was shown by a number of authorities. One of these did not involve a wasted costs application but two of the cases, to which I will briefly refer, did.

The first case relevant for this purpose is the decision of Court of Appeal in Memory Corporation plc v Sidhu (No. 2) [2000] 1 WLR 1443. In the judgment of Robert Walker LJ. (as he then was) there are several references not only to the duty being upon the applicant for ex parte relief but also upon the legal team acting for such an applicant. Perhaps the clearest such statement, but there are others, is at p.1455, letter E, where Robert Walker LJ. said:

“The correct view, it seems to me, is that the advocate’s individual duty to the court and the collective duty to the court on a without notice application of the plaintiff and his team of legal advisors are duties which often overlap.”

The Lord Justice was making a particular point, which is not necessary to elaborate further, but I do take from his statement that there is a duty upon the solicitor and counsel themselves; it is not merely a duty which rests upon the applicant. That indeed is clear from two decisions where the position of the legal representatives of a party seeking ex parte relief were discussed in the context of a wasted costs application.

The second in time, to which I will refer briefly, is Brown v Bennett (No 2) [2002] 1 WLR 713. At paras.164-186 in the judgment of Neuberger J. (as he then was) there is a lengthy discussion of the circumstances in which a legal advisor making an ex parte application owes a duty to the court to give full and frank disclosure. The reference to legal advisors appears in terms in para.165 and the remaining paragraphs are all on the basis that solicitors and counsel owed a duty to give full and frank disclosure to the court of a relevant matter. It is right to say that the facts of that case involved an allegation that the solicitors and counsel actually knew the alleged fact and the case did not turn upon a duty to investigate a matter that was not directly known.

The other case where the legal representative’s duty to give full and frank disclosure was discussed in the context of a wasted costs application is the unreported decision of Rix J., given on 8^th March 1999, in Lowline (PSV) Limited v Direct Aviation Limited. The copy of the judgment is not, I think, paginated in the same way in the copies everyone has and the paragraphs are not numbered, so I will attempt to identify the passages that seem to me to be material. Although Mr. Peto did not take me to this decision in any detail, it is entirely right that it is supportive of some of the ways in which he would wish to put his case, and I have therefore considered it, I hope, with appropriate care.

Mr. Justice Rix summarised the case that was put against the solicitor in Lowline. The case was that if the client had been properly advised as to the disclosure which he had to make the injunction application would not have been made, or, if it had been made, it would have failed once and for all on the first hearing without involving subsequent hearings and subsequent costs. In dealing with a submission made by counsel on behalf of the solicitor, Rix J. commented on the test, referring to conduct which is improper, unreasonable or negligent. The learned judge said that it would be sufficient if the solicitor knew a material fact that was not disclosed on an ex parte application but negligently or unreasonably believed it was not material, or even that a solicitor negligently failed to cause inquiries to be made that would have revealed matters material for disclosure. The case that was put to me on the present application is that Withers, here, negligently failed to cause inquiries to be made that would have revealed matters material for disclosure, which then should have been disclosed on the ex parte application.

Mr. Justice Rix later distinguished between mistakes that could be characterised as an error of judgment and those which should be condemned as negligence. That is a well-known distinction that I need not elaborate. Later in the judgment, when dealing with the duty on a solicitor to raise matters with his client, the learned judge indicated that if there had been a possibility that the client would have, as he put it, “brushed off” the solicitor then that would be a point to be taken into account, whether for the purpose of considering the solicitor’s duty and whether it was performed or for the purpose of considering whether any breach of duty had caused any loss.

In a later passage under the heading “Negligence” the learned judge explained why the mistakes, or errors, in that case went beyond errors of judgment and fully deserved to be called, or condemned as, “negligence”. There are references in that discussion to things which the solicitor ought to have known, even if it was accepted that he did not know them. Mr. Justice Rix then said this, by reference to the facts of that case :

“There was a failure to act with the competence reasonably to be expected of ordinary members of the profession. In this connection it seems to me pertinent to remind myself of what Lord Justice Woolf said in Behbehani v Salem [1989] 1 WLR 723 at p.729 C-D …”

I will not read the entirety of the quotation. I will read the part of it which was also read by Rix J. dealing with the burden on a legal advisor dealing with an application by his client for ex parte relief. Lord Justice Woolf said this:

“I recognise the strain placed on legal advisers and the pressure under which they have to work, especially in large commercial actions where prompt steps sometimes have to be taken in order to protect their client’s interests. However, if the court does not approach the question of the non-disclosure of material matters in the way that has been indicated in earlier decisions, there will be little hope of solicitors who are subjected to such pressures appreciating the importance of making full disclosure and, more important, bringing home to the clients the serious consequences of non-disclosure.”

Although Mr. Peto did not in terms refer me to that passage, he must have had it very much in his mind as he made submissions to me stressing very much those points which Woolf LJ. has put so clearly.

I want to make it absolutely clear that anything I say in the remainder of this judgment is not intended to be, in any sense, a failure to apply these important principles or a watering down of the duty on a solicitor acting for a client who makes an ex parte application. This case, however, has to be judged on its particular facts. It is one thing to say that the duty exists and it is a heavy duty and places a grave responsibility on a solicitor; it is another thing to say whether or not, on the facts of a particular case, the duty has been performed or it has been broken.

The only legal submission which was controversial in the hearing before me was Mr. Peto’s submission as to the existence of, and the scope of, a duty on a solicitor in connection with the witness statements signed by the solicitor’s client and used in the litigation. It is said by Mr. Peto that there is a duty of some kind or other to take some action or other to prevent the client signing a witness statement which contained inaccurate material. I have deliberately put Mr. Peto’s submission rather vaguely. It seemed to me that he described the duty in different terms at different times during his submissions. In the course of his submissions yesterday he certainly seemed to me to be placing a very heavy responsibility on a solicitor to check whether his client’s instructions and his client’s evidence contained in the witness statement were accurate. References were made to checking up on what the client was saying. Even in a matter where the facts were within the client’s own direct knowledge and not within the solicitor’s own direct knowledge, there were references to the solicitor asking third parties whether the client was accurate or inaccurate in a relevant respect. At other times, particularly in the course of some short submissions this morning, Mr. Peto seemed to reduce the responsibility to one which applied to the highly particular facts of this case and to submit that a duty arose where a solicitor had something on the solicitor’s file which might be at variance with the draft witness statement which should then be put to the client for the client’s explanation. It was important to Mr. Peto’s submission that this alleged duty, which must, in order to be relevant today, be a duty owed to the court, was said to arise whether the solicitor knew of the relevant matter contained within his file or did not know of the relevant matter. It was submitted the solicitor had a duty to check up, by reading through his file, to see if there was anything there which might conflict with the draft witness statement.

I pressed Mr. Peto to show me authority for this proposition in whatever shape he chose to put it forward. I asked him to deal with the rival legal analysis, which was that the solicitor’s duty in relation to the client’s witness statement was a duty not knowingly to mislead the court. A duty expressed in that way, and it is so expressed in some of the relevant authorities, would appear to contradict the idea that the solicitor was under a wider duty to check through his file, or carry out any other sort of check, as to the accuracy of facts stated by the client when those facts were within the client’s own direct knowledge and they were not within the solicitor’s own direct knowledge.

Despite my request, Mr. Peto did not show me any authority which supported his proposition. I doubt if his submissions are legally correct. In the end, he submitted that a failure to check, in the way which he described, should be regarded as “negligent”, as that term is defined in Ridehalgh v Horsefield. I do not think that Mr Peto can get out of this difficulty in that way. If the solicitor does not owe the alleged duty, then what is, after all, an omission to take a step to perform the alleged duty cannot be said to be negligent.

I now turn to the facts. The material that has been put before the court on this application has been very considerable. Even if I refer only to the material in the hearing bundles that have been prepared for this application, there is a considerable history, a lot of detail and many documents. Further, I was asked to look here and there into the bundles which had been prepared for a trial of this matter in July of last year. In order to keep this present judgment to manageable proportions, I will refer to documents, and paragraphs in documents, but I will not read them out in extenso. Any other course would produce an unwieldy and excessively detailed recital of the relevant material.

It is necessary to begin by referring to what I will describe as the first action which was initiated by Langbar against the Rybak parties. In a judgment which I gave on 9^th July 2010 (admittedly not in that action but in the second set of proceedings) I described what was involved in the first action. The description appears in para.7 of my earlier judgment, and I will not repeat it. That action was settled in the way I described in my earlier judgment at paras.8, 9 and 10 and resulted in the parties entering into a Tomlin order which contained a schedule setting out terms of settlement. The Tomlin order was made on 25^th April 2008. Thereafter, the principals, namely, Mr. Buchler of Langbar and Mr. Rybak, met to discuss a possible variation to those terms of settlement. Revised terms were agreed in a supplemental deed executed on 24^th September 2008, leading to a revised consent order, a revised Tomlin order, made by the court on 23^rd October 2008. That is described in paras.10 and 11 of my earlier judgment.

The later stages of the history leading up to the application ex parte on the 19^th December 2008 are described in para.12 of my earlier judgment, and I will not repeat what I then said, although it is I think necessary to supplement what I then said by reason of the difficulties that have arisen and which were discussed on the present application.

The application made to the court on 19^th December 2008 was supported by a witness statement signed that day by Mr. Wass of Withers. He referred to the history of the matter: to the terms of settlement and the amended terms of settlement; to steps which had been taken by the Rybak parties to sell an apartment in Monaco, which was the subject of those terms of settlement; and to the steps which had been taken by Langbar to prevent such a sale on account of concerns which Langbar had about the matter. Mr. Wass then explained that the Rybak parties wished the court to make an order ex parte which prevented Langbar from blocking the sale and which would allow the sale to proceed. Mr. Wass, in his witness statement, exhibited the relevant documents as to the terms of settlement between the parties and he also exhibited a number of offers that had been made by potential purchasers for the apartment, including an offer made by the purchaser who had been chosen as the successful purchaser. It was not entirely clear whether there was a contract of sale or just an offer which had been accepted, which may have had certain contractual consequences but not the full contractual consequences of a contract of sale.

In addition to that witness statement from Mr. Wass, which was put before the court on 19^th December 2008, the Rybak parties also had the advantage of a skeleton argument which had been prepared by counsel, a Mr. Sawyer. As I understand it, Mr. Sawyer had been involved in the first action which led up to the settlement in April 2008 and therefore had some acquaintance with the lengthy history of the matter. Mr. Sawyer’s skeleton argument set out a brief summary of the facts and of the legal arguments in favour of the Rybak parties. Then, between paras.19 and 28, Mr. Sawyer addressed the subject of the necessary full and frank disclosure. Mr. Sawyer made a number of points extending over two or more pages in those numbered paragraphs which might be relevant to the court in deciding what to do. Some notice had been given to Langbar and its solicitors, and Langbar was able to be represented by Mr. Quest of counsel. As I understand it, Mr. Quest, had been involved in the first action and, again, like Mr. Sawyer, had some acquaintance with the facts involved, at any rate, up to the time of the settlement of the first action.

I have also been shown a transcript of what was said in court on 19^th December 2008. The hearing, as it happened, was before me. 19^th December 2008 was the last day of the relevant term. It was a Friday and my notebook indicates that the hearing began after a heavy day at around 4pm on the Friday and there are references in the transcript to the hearing continuing at 5.25pm and indeed beyond. I have been able to remind myself from the transcript of what was said, what I was told and how I reacted.

The other material I was given about the events of 19^th December 2008 is a transcript of a short judgment, running to some two pages, which I gave on that occasion. I will not read it into the present judgment but in para.5 of that judgment, as transcribed, I referred to the more important considerations which persuaded me to make the order, essentially as sought. I referred there to the material I had as to the value of the apartment in question and made an assessment on that material as to how strong the case might be for Langbar that the property was being sold at an undervalue. The material did not give me confidence that Langbar would be able to show that at a trial. In view of the fact that I was constrained to make a decision, I made the decision, for the reasons I gave, to grant relief on that occasion. As was stressed then and has been stressed since, although it was an ex parte application effectively there was not to be a return date because the order made on that occasion effectively was not going to be reversed at a later inter partes hearing. Indeed, I have been shown the detailed steps that were taken after 19^th December 2008 up to 29^th December 2008 when the sale was completed.

I can go from there to the second action, which began, as I have described, in February 2009. In the judgment I gave in July of last year I described the second action in some detail at paras.13-25. In those paragraphs I described the summary judgment application and the application by the Rybak parties to release funds. The outcome of the second action is described in a summary way in para.6 of my earlier judgment. I held that the Rybak parties were in breach of an earlier “unless” order. The result of the breach was that their claim and their defence to counterclaim stood struck out. I declined to grant them relief against the sanctions imposed by the “unless” order and the consequence was that the claim remained struck out and the defence to counterclaim remained struck out. I then gave judgment on a subsequent day, as I recall it, on the counterclaim in favour of Langbar against the Rybak parties. Under that judgment damages are to be assessed and that step has not yet been taken.

I think it is important to say and bear in mind that, although this an application for wasted costs following the disposal of the second action, that action was disposed of in a way which did not involve a trial on the merits with judgment on the merits as to the issues in the action. So there has not been a finding as to whether Mr. Rybak made a misrepresentation, as alleged in the second action, or was in breach of a duty of disclosure, as there alleged, nor indeed any finding as to whether the apartment had a value in excess of the value achieved on the sale in December 2008.

I go from there to the matters which are advanced on the present application. Langbar say that Withers were in breach of a duty owed to the court when acting for Mr. Rybak in connection with the application made on 19^th December 2008. In support of the application, Mr. Peto reminded me of the duty of full and frank disclosure on Mr. Rybak and the duty owed to the court by Withers. Mr. Peto took me through the events involving Withers in relation to Mr. Rybak from not later than July 2008 all the way up to 19^th December 2008.

Mr. Peto relied heavily on an email which had been sent by Mr. Rybak to two persons at Withers on 6^th August 2008: one of those was Mr. Andrew Ford, who was a partner in Withers; the other was Mr. Wass, to whom I have referred when describing the witness statement used on 19^th December 2008. I think Mr. Wass was not a partner at that time but has since become a partner, but it does not matter. The email is quite a lengthy one as emails go. In it Mr. Rybak refers to a number of matters of concern. He refers to the fact that the Rybak parties have a right to sell the apartment in Monaco. He refers to the fact that he encountered difficulty in obtaining a loan on the security of the title to the apartment, and then there appears this sentence:

“At the same time the real estate agent seemed to be smelling the potential sale of the apartment, and we have already refused two offers.”

Then Mr. Rybak turns to other matters. He then identifies a point on which he is seeking advice, which was, in very brief summary, a question of whether it was open to him to enter into a transaction with a potential purchaser who would be granted an option to purchase, the option not to be exercised until a future date, and in the interim the arrangement between the vendor and the grantee of the option would be one where the grantee made a loan to the owner of the apartment which would be repayable in certain circumstances, or which would be treated as a part payment of the purchase price in other circumstances. The matter was not without its complications, but that is something that is described in a little detail in the continuing parts of the email. There is one other part of the email which is stressed on the present application. There is a reference to real estate agents “who have submitted proposals to acquire our apartment”.

I do not intend to go through email by email, day by day, the communications between representatives of Withers and Mr. Rybak in consequence of the email of 6^th August 2008. The communications essentially were Withers’ attempt to grapple with the question posed to them about the loan plus an option suggestion and also to advise Mr. Rybak on whether he had to inform the solicitors acting for Langbar of what progress he was making in various respects.

I can go I think to what is said about Withers’ conduct on and just before 19^th December 2008. Mr. Peto did not submit that Withers positively knew something on 19^th December 2008, which they failed to communicate to the court. He did not submit that anybody at Withers, and Mr. Wass in particular, who was handling the application on 19^th December 2008, positively had in mind the contents of the email of 6^th August 2008 when the ex parte application was made. The submission was instead that Withers had something on what was called “their file”, namely, the statement made by Mr. Rybak in the email to which I have referred that Mr. Rybak had refused two offers from apparently willing purchasers. What is said is that Mr. Wass should have checked the file before he went to court on 19^th December 2008. He should have seen the email of 6^th August 2008. He should have noticed the reference to refusing two offers. He should then have asked Mr. Rybak what that was a reference to and he should have enquired if there was anyone else who could give information about these two offers, in particular, a Maître Mullot, who was a Monaco lawyer who was acting for the Rybak family in connection with the apartment in Monaco. It was then said that, having made those investigations and obtained whatever the answers might have been, Mr. Wass should either have communicated that information faithfully to the court on 19^th December 2008 or, at the very least, he should have told the court what he had seen in his file about two offers having been refused and should have added that he had not had time to explore the matter any further so that the court would be invited to proceed, to that extent, in the dark as to what further investigations might have revealed.

So that, in summary, is the charge which is made as to Withers’ conduct on, and leading up, to 19^th December 2008. As one would expect, this charge has been the subject of very detailed comment in three witness statements prepared by representatives of Withers. The most relevant statement is that of Mr. Wass himself, signed on 26^th November 2010. I also have a witness statement of Mr. Ford of the same date and a witness statement of another solicitor, Mr. Katsivelis. I think he signed it on 25^th November, possibly 28^th November 2010.

As I indicated, I do not intend to read out in extenso Mr. Wass’s statement, which runs to some 87 paragraphs and some 26 pages. In paras.1-40 he gives background which takes one all the way through up to, but not including, December 2008. In paras.40-50 Mr. Wass describes in detail what he did on 17^th, 18^th and 19^th December 2008, the way his mind worked, and he comments on the allegation which is made, that he broke a duty to the court by incompetently failing to take further steps which he should have taken. I pay attention to what Mr. Wass says in para.46-49 where he gives his own comment on the allegation of breach of a duty to the court.

In the course of his address Mr. Peto has examined in detail and with conspicuous care all of the communications involving Withers from July 2008 up to December 2008. I have taken all that into account, but it would be inappropriate for me to recite every point that is made on every document, every email, every note. I have also considered how Mr. Wass saw it and what he says in his witness statement. In my judgment, neither Mr. Wass, nor anyone else at Withers, was in breach of a duty to the court in relation to the alleged failure to give full and frank disclosure on 19^th December 2008.

In reaching this conclusion:

At the very end of his submissions Mr. Peto put forward a new argument. He said that even if Withers were not in breach of their duty to the court before and at the hearing on 19^th December 2008 they were in breach of their duty to the court after that date, before completion of the sale on 29^th December 2008. It is said that the only excuse Withers could have for not being in breach on 19^th December 2008 was the shortage of time. It was submitted that excuse was removed and was no longer available in the period up to 29^th December 2008. I reject that submission. I have already explained that my decision that Withers were not in breach of duty on or before 19^th December 2008 turned on a number of matters, only one of which was the shortage of time. Even in relation to the period 19^th December to 29^th December 2009, I equally hold that Withers were not in breach of duty by not raising the question of the two offers in that period. I also hold that this is a separate allegation of a breach of duty. It was not one that was put forward in the grounds which were defined as the grounds on which today’s hearing could proceed.

The above conclusion means that I do not have to consider whether any breach on 19^th December 2008 caused costs to be wasted on or after that date. I will make two brief comments only on this question of causation. If the question had arisen, I would probably have concluded that the costs on 19^th December 2008 would have been incurred in any event. Mr. Peto stressed the alleged breach of duty on 19^th December 2008 not so much for the purpose of having a wasted costs order for the modest costs on that day; he had an altogether bigger target. He wished to argue that if Withers had acted differently on 19^th December 2008 then the second action would not have happened, or, if it had happened, then it would have been resolved in Langbar’s favour on the merits at modest expense. It is sufficient for present purposes to say that that submission bristles with difficulties, and I think it unlikely that Langbar would have been able to show what they set out to show.

The next main allegation made by Langbar relates to the contents of the evidence filed by the Rybak parties in support of their application for summary judgment and in support of a separate application for the release of funds from an escrow account held by Withers. Mr. Peto criticises the statements made by Mr. Rybak in his witness statement. He says, correctly, that Mr. Rybak’s evidence was incomplete and seriously misleading in important respects. He then submits that Withers were in breach of a duty to the court in allowing Mr. Rybak to describe those matters in the way in which he did. He does not submit that Withers knowingly misled the court in that respect. As I have already explained, he described the duty owed by Withers in various and not wholly compatible ways. I doubt if Withers did, in law, owe the duty which Mr. Peto alleges. However, I would not wish to deal with the matter on that narrow ground. What actually happened is described in the documents to which my attention has been drawn and in some detailed evidence contained in the witness statements of Mr. Wass.

For this purpose, I refer, without reading out in extenso what is said, in Mr. Wass’s witness statement of 26^th November 2010. Between paras.51 and 75 Mr. Wass gives evidence, which I accept, as to the detailed steps that were taken to collect evidence, to analyse evidence and to draft witness statements, which led to witness statements being signed and used in the application subsequently made to the court. That witness statement was supplemented by a further statement from Mr. Wass of 29^th November 2010. I refer to paras.5-7 of that statement. Finally, there is a more recent witness statement signed on 11^th February 2011 in which Mr. Wass describes in detail the events of March 2009 and certain interviews with potential witnesses, including a Ms. Pelissier . I accept what Mr. Wass says about the facts. On those facts, and standing back in a non-technical way, I do not think that Withers behaved in any culpable way. They were not incompetent. They were not “negligent”, using that word in a non-technical sense. Their conduct was not unjustifiable. This means that Langbar has not established that the court has jurisdiction to make an order for costs against Withers in relation to what are alleged to have been wasted costs. In these circumstances, it is not necessary and, I think, not appropriate to discuss the many issues which would arise as to causation if I had held, which I do not, that Withers had behaved in a way that was open to criticism.

I have now, I think, dealt with the principal points which were made in support of this application for a wasted costs order. In my judgment, the application fails and it will be dismissed.