The judgment of the Admin Court in DLA Piper, the major firm of City solicitors, v BDO, a major firm of accountants, [2013] EWHC 3970, will be of considerable interest to solicitors specialising in litigation especially fraud cases. This case relates to whether a solicitor acting for an applicant can be found personally liable to pay the costs of the respondent following the court’s refusal to grant an application to issue a witness summons against the respondent.

In this case DLA represented a client charged by the SFO with fraud offences concerning a company called Torex Retail Ltd of which this client had been a director. Prior to his trial DLA sought disclosure from BDO who had acted as Torex’s auditors, of a substantial amount of its documents. BDO refused to comply and so DLA applied to the Crown Court for the issuance of a summons which would order BDO to disgorge the documents. BDO decided to contest this vigorously and instructed eminent solicitors and leading counsel to oppose. So it incurred considerable legal fees. At the eventual hearing the judge held that the application was unjustified and then made a costs order in BDO’s favour but against DLA, not its client. This was not because of any finding that DLA had acted improperly. BDO’s counsel eschewed such a submission and there was no reference to the wasted costs jurisdiction which would apply if such a submission had been advanced. Instead Counsel persuaded the judge that such an order ought to be made against the entity which had unsuccessfully sought the summons and this was DLA. He pointed for example to the application form where DLA partner stated that she was the applicant. Secondly as this solicitor was in court, her firm had sufficient notice of BDO’s application and so the judge could summarily rule on it.

The possibility that a firm of litigation solicitors despite acting properly for a client in advancing their interests could nonetheless end up being held liable to pay a huge costs order is unsurprisingly something which should sound alarm bells across the profession. To make matters worse, DLA’s ability to appeal this harsh order was severely circumscribed. The Court of Appeal was unavailable as it was plainly not a defendant in the SFO’s prosecution. DLA also believed that a judicial review was also out of reach as pursuant to the Senior Courts Act 1981, the jurisdiction of the Admin Court is excluded from a Crown Court decision relating to a trial before it. The only feasible remedy appeared to be the arcane route of a “case stated” and so DLA embarked on that.

Thankfully this story has a happy ending for DLA and thus by implication for all litigation solicitors. Moses L.J. who was plainly alive to the unfairness inflicted on DLA and how its predicament could if not cured, lead to other solicitors being discouraged from properly and fearlessly representing their clients, held that the 1981 Act did not oust judicial review as the making of this costs order was sufficiently remote from the trial process so as not to interfere with it. He then quashed the order on the basis that the judge had wrongly identified the applicant for the summons against BDO. This was of course DLA’s client, the accused, and not it.  He also unsurprisingly held that any future application for a substantial costs order against a solicitor should be heard only after far greater warning of this is given and should be reserved for an alleged clear case of impropriety.

DLA’s relief will however presumably be the inverse of BDO’s consternation. The accountancy firm despite seeing off the summons application has been deprived of reparation in relation to its own considerable legal costs and to that extent is now only able to celebrate the type of victory which King Pyrrhus had also to endure.