Clyde & Co: Explanation for error manifestly inadequate
A leading City law firm has been ordered to pay wasted costs in a maritime matter because it wrongly told the defendants that it was instructed by the claimant’s insurer.
Admiralty Registrar Davison described Clyde & Co’s explanation of how it came to believe it was instructed as “manifestly inadequate” and found that the case would not happened but for the error.
Clydes acted “improperly, unreasonably or negligently” so as to justify a wasted costs order of £127,577, 90% of the fees incurred by the defendants.
In June 2021, Clydes issued a claim form in respect of a collision that was alleged to have occurred two years earlier in the South China Sea between the claimant’s fishing vessel and the defendants’ oil tanker.
The defendants denied that a collision, of which there was no contemporaneous record, had taken place.
A 2022 court order for security for costs was not complied with and in July 2025 the claim was struck out because it had not been actively pursued and because of non-compliance with the order for security.
The defendants argued that Clydes be ordered to pay the costs of the action on the grounds that it did not have the authority of either the claimant – which the judge found it did – or its hull and machinery underwriter, PetroVietnam Insurance (PVI).
Clyde had confirmed to the defendants’ insurer that it was instructed by both but it emerged after the security for costs order that in fact it was not instructed by PVI.
It told the opposing solicitors that its instructions came via a claims agency in Singapore when it was typically instructed by both insurers and the insured for the purposes of recovery, but it later discovered that PVI had not in this instance.
“We very much regret the error on our part which was inadvertent and unreservedly apologise for that; there was no intention to mislead,” it said.
Registrar Davison held that the breach of the warranty of authority caused the defendants to incur wasted costs.
The dispute over whether the collision actually took place was “a classic case” where the defendants’ insurer would have adopted a ‘wait and see’ stance. But the stated involvement of PVI, represented by a leading law firm, caused it to agree English jurisdiction and instruct its own solicitors.
Given the seriousness of the breach, Clyde’s explanation of what happened was “manifestly inadequate”, the judge said.
Pursuant to the rules on wasted costs, he held that Clyde acted “improperly, unreasonably or negligently” and that it was “just in all the circumstances” to order the firm to compensate the defendants for the whole or part of the costs wasted.
Last year, Registrar Davison assessed the costs at nearly £142,000 but he reduced them by 10% to £127,577 for the purposes of wasted costs on the basis that a claim would have been “intimated or threatened” on behalf of the claimant, perhaps by Clydes or a local law firm.
This would have meant the defendants incurring some costs but he decided that any payment to the claimant would have been unlikely.
Leave a Comment