12. If my legal representative has made several procedural mistakes (such as missing deadlines) or wrongfully disclosed my document without consent, causing wasted costs consequently, can I recover my legal costs from him?

You can apply for a “wasted costs order” against a legal representative, who can be a solicitor or a barrister, either representing you or the other party in the proceedings. The wasted costs order can also be made by the court on its own motion.

Pursuant to section 52A of the High Court Ordinance (Cap. 4) or section 53 of the District Court Ordinance (Cap. 336), the court has the power to make a “wasted costs order” against any legal representative of a party. A wasted costs order may be made if wasted costs had been incurred, and it is just in all the circumstances to order the legal representative to compensate the party for the whole or part of these costs.

Under section 52A(6) of the High Court Ordinance, wasted costs are defined as any costs incurred by a party as a result of:

an improper or unreasonable act or omission; or
any undue delay or other misconduct or default

by any legal representative, whether personally or through an employee or agent.

Here are some examples where a wasted costs order may be made by the court against a legal representative:

Defending or starting proceedings without authority from the client
Solicitors prepared appeal bundles which included a large quantity of irrelevant materials
Procedural mistakes which delay proceedings, e.g., missing deadlines, forgetting to serve on the other side, forgetting to seek leave of court
Unreasonable omission, such as failing to disclose important documents or failing to fully disclose which assets were encumbered
Wrongfully disclosing documents in discovery, particularly privileged or confidential documents, without proper authority or contrary to the client’s interests
Continuing with a claim when it was obvious, after discovery, that the client would be unable to establish his case, knowing that the case was dishonest or that it was an abuse of process

What are the effects of a wasted costs order?

A wasted costs order may disallow the costs as between the legal representative and his client, and direct the legal representative to repay to his client costs which the client has been ordered to pay to other parties to the proceedings or indemnify other parties against costs incurred by them.

Note that the consideration of wasted costs would usually happen after the conclusion of the proceedings, unless the court is satisfied that there is reasonable cause to bring the consideration forward (Order 62, rule 8A(4) of the Rules of the High Court (Cap. 4A) (“RHC”) or the Rules of the District Court (Cap. 336H) (“RDC”)). The legal representative will also be given an opportunity to attend the hearing and explain why he should not be given a wasted cost order.

What is the procedure for applying for a wasted costs order?

It is a summary procedure, i.e. the court would not conduct a full inquiry into the facts. This means that the application will be refused if the investigation is disproportionately long or costly.

The application can be made orally at a hearing, but normally it is commenced by an inter partes summons in the proceedings in which you believe that wasted costs have been incurred.

The application should be served on:

the legal representative whose improper act has allegedly led to wasted costs,
any person represented by that legal representative (if he is not representing you in the proceedings), and
any other person as may be directed by the court (see Order 62, rule 8A(3) of the RHC or RDC).

The summons should be accompanied by particulars clearly specifying the conduct of which complaint is made, i.e., the particulars must identify precisely what the legal representative is alleged to have done or failed to do. It should also state precisely what wasted costs are alleged to have been caused by such acts or omissions of the legal representative and how much of such costs are being claimed.

An affidavit/affirmation should also be submitted with the summons to verify the facts alleged in the particulars of complaint and identify the supporting evidence which the applicant relies on. If such evidence or material is already before the court, they should not be exhibited to the affidavit/affirmation. It should exhibit evidence or material which is crucial to the application and not already before the court.

The hearing for making a wasted costs order consists of at least two stages.

Stage 1: The court has to be satisfied that there is evidence which, if unanswered, would be likely to lead to a wasted costs order being made, and the wasted costs order proceedings are justified notwithstanding the additional costs to be incurred. In other words, there must be a strong prima facie case to demonstrate misconduct or abuse by the legal representative. If the complaint is unclear or plainly unsustainable, objection can be taken or directions sought at this stage.

The legal representative alleged to have incurred wasted costs needs not file any evidence, but he is free to place some important items of evidence before the court for the purposes of its decision at this stage.

Stage 2: The legal representative will be given an opportunity to explain why the court should not make a wasted costs order. The judge will then decide whether he would exercise his discretion to make an order. If he decides to do so, he will consider how much of the wasted costs is the responsibility of the legal representative, specifying the extent of the costs recoverable in the award.

If the court exercises its discretion to make an order, it will specify the amount to be disallowed or paid, often on a party and party basis.

Can I apply for wasted costs order if I am simply dissatisfied with the result of the case? Are there any examples where a wasted costs order may be made?

A legal representative is not automatically liable for a wasted costs order when he presents a weak case on behalf of a client or simply fails to win the case. Instead, a serious misconduct or undue delay by the legal representative has to be shown by the party.

The RHC and the RDC make it clear that a party should not threaten legal representatives for any of the parties with an application for a wasted costs order, with a view to coercing or intimidating them to do or not to do anything. It is also stated in Practice Direction 14.5, issued by the Judiciary, that if the complaint is unclear or plainly unsustainable, objection can be taken or directions sought at the Stage 1 hearing.