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As explained in Ridehalgh v Horsefield, the court exercises its discretion at two
stages :-
"...... the jurisdiction to make a wasted costs order is dependent at two stages on the discretion
of the court. The first is at the stage of initial application, when the court is invited to give the
legal representative an opportunity to show cause. This is not something to be done
automatically or without careful appraisal of the relevant circumstances. The costs of the
inquiry as compared with the costs claimed will always be one relevant consideration. This is
a discretion, like any other, to be exercised judicially, but judges may not infrequently decide
that further proceedings are not likely to be justified. The second discretion arises at the final
stage. Even if the court is satisfied that a legal representative has acted improperly,
unreasonably or negligently 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."
(Italics supplied)
The first principle, reflected in the italicised words, is that any risk of a wasted costs
claim being disproportionately costly should be treated as an important negative factor
in the court's first stage decision as to whether the lawyer in question should be
invited to "show cause" under O 62 r 8(2).
Notes
Ridehalgh v Horsefield (supra) at 239.
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