The Court of Appeal has taken the highly unusual step of ruling that a judge should have recused himself from hearing a wasted costs order against a party’s solicitors given the comments he made about them in his substantive judgment.
Lady Justice Arden said that “while in almost every case, the judge who heard the substantive application will be the right judge to deal with consequential issues as to costs, even if he made findings adverse to a party in the course of reaching his conclusion”, this was an “exceptional” case where apparent bias meant Mr Justice Peter Smith should have recused himself.
The substance of Mengiste & Anor v Endowment Fund for the Rehabilitation of Tigray & Ors  EWCA Civ 1003 related to whether a claim should be stayed and pursued instead in Ethiopia. Peter Smith J decided it should be and rejected almost all of the evidence from the claimants’ expert witness in Ethiopian law, who gave evidence under the alias of Mr Jones.
Giving the lead judgment, Lady Justice Arden recounted: “The judge concluded that Mr Jones’ evidence did not comply with the rules and that Mr Jones did not understand his duties as an expert to the court. The judge went further. In his judgment, the judge made clear and outspoken criticisms of the appellant solicitors for the poor quality of Mr Jones’ evidence.”
After handing down the ruling, the defendants applied wasted costs order against the claimants’ then solicitors on the grounds that they should have withdrawn from this case in the light of the defects in the Ethiopian law evidence. The solicitors applied for the judge to recuse himself from hearing it.
Mr Justice Peter Smith rejected this and made a stage 1 wasted costs order – that is, that there was a strong prima facie case for the solicitors to answer. The solicitors appealed both decisions.
Lady Justice Arden said there had been “no necessity” for the judge to make the findings he did against the solicitors. She found that his criticism was designed to ward off an application for a wasted costs order against Mr Jones, when no such application was in fact made.
Further, they were primarily relevant to costs, rather than the substantive case, and should in any case have been expressed as provisional.
She continued: “The judge’s failure to leave the door open for the possibility of some explanation when he had not heard evidence or submissions from the appellant solicitors gives rise to an impression of bias because it suggests that no explanation will be considered.
“The impression of bias is further confirmed by the making of findings of this nature when it can be foreseen that an application for a costs order, with serious consequences for the solicitors, may result.”
She added that while she might not have reached the same conclusion if a criticism had been made in absolute terms on a single occasion, “here the judge accepted that there were six criticisms of the appellant solicitors in the stay judgment. The judge recapitulates the criticisms in his recusal judgment.
“He also goes on to make a fresh criticism of the appellant solicitors for their failure to inform him of a possible recusal application as soon as they have wind of an application for a wasted costs application against them. I have the gravest difficulty in following the judge's criticism here since the appellant solicitors were not obliged to make the application any earlier than they did.”
The test for determining apparent bias, as laid down in Porter v Magill  2 AC 357, is whether a fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the judge was biased. Here that test was met, Lady Justice Arden said, and so Mr Justice Peter Smith should have recused himself, and the wasted costs order was set aside. However, she said the application could be renewed in front of another judge.