Bank of Scotland v Azam Qutb (Administrator of the Estate of Mona Qutb) (2012)
A bank was awarded indemnity costs orders against a litigant personally, and in his capacity as an administrator of his deceased mother's estate, on the basis that he had acted in breach of a warrant of authority in conducting litigation brought against the bank.
The applicant bank (B) applied for an order that the respondent (Q) be made personally liable, and liable as administrator of his deceased mother's estate, for the costs of an appeal on an indemnity basis and for an order for payment on account.
The Court of Appeal had previously struck out an appeal that had been brought by Q, on the basis that he had deceived the court and B into believing that he acted as litigation friend for his deceased mother. The court also permitted B to add the costs of the appeal to security held over Q's property. However, B was unable to recover its costs out of that security. The issues were whether (i) Q could be made personally liable for costs on a basis analogous to solicitors who had been held personally liable for costs incurred where they had acted in conducting litigation without authority; (ii) it was just to exercise the court's discretion under the Senior Courts Act 1981 and CPR r.48.2 to make a personal costs order against Q.
(1) There was no reason in principle why those considerations which applied to solicitors who act without authority should not apply to any person who conducted proceedings on behalf of another so as to represent that he had authority to do so: such a person was liable to pay damages for a breach of warranty of authority and was consequently personally liable to pay the opposing party's costs, Yonge v Toynbee  1 K.B. 215 applied. Q, who acted without authority in the instant proceedings, had no defence to B's claim for costs. He was personally liable for breach of warranty of authority, and the measure of damages was the amount of costs B incurred since Q ceased to conduct the litigation as his mother's litigation friend (see paras 7-9 of judgment). (2) The instant case was clearly a case where it was just for the court to exercise its statutory discretion to make a personal costs order against Q. Q had conducted the trial and obtained permission to appeal for his own personal benefit as a beneficiary of his mother's estate; he had deceived B into spending significant costs in the belief Q was entitled to conduct proceedings on his mother's behalf, and had been guilty of gross misconduct by making false representations in evidence and submissions that his mother was still alive, when he knew that she had died. Accordingly, as B's security was insufficient to discharge the costs it had incurred, B was awarded indemnity costs orders against Q personally and in his capacity as administrator of his mother's estate (paras 11-12, 15).
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13 Dec 2012
Court of Appeal
Mummery LJ, Toulson LJ, Kitchin LJ
LTL 13/12/2012 :  EWCA Civ 1661
Thomas Grant QC