Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REFS: 1180/05

1253/06

455/06

CLAIMANT: Thomas Bradin

RESPONDENT: Department for Regional Development

NOTICE PARTY: Agnew Andress Higgins, Solicitors

DECISION
1. The application of the respondent for a Wasted Costs Order against the notice party is refused.
2. The application of the respondent for an Order for Costs against the claimant is refused.

Constitution of the Tribunal:

Chairman (sitting alone): Mr N Drennan QC

Appearances:

The claimant did not appear and was unrepresented

The respondent was represented by Mr S Sands, Barrister-at-Law, instructed by The Departmental Solicitor's Office.

The Notice Party was represented by Mr L. Agnew, Solicitor, and Mr S. Andress, Solicitor.

Reasons

3. The claims of the claimant were case managed at a Case Management Discussion on 13 November 2006. At that hearing, various case management orders and directions were given. The said Orders were subsequently carried out by the parties, though with some amendments/variations agreed between the representatives of the parties. By agreement, Notice of Hearing was issued on 30 November 2006 for the claims to be heard by the tribunal from 28 May 2007 to 6 June 2007; which was subsequently amended to 29 May 2007 - 6 June 2007 to take account of the bank holiday on 28 May 2007.
4. As set out in the Record of Proceedings of the Case Management Discussion on 25 May 2007, the claimant made an application, by letter dated 24 May 2007, for an adjournment of the hearing. At the Case Management Discussion the claimant explained that the reason for his application was that he had received a letter from his legal advisers on 22 May 2007, stating that they were no longer acting for him and had come off record. On 21 May 2007, the claimant's former solicitors, Agnew Andress Higgins, Solicitors (the notice party) had sent a fax to the tribunal stating that they no longer acted for the claimant and wished to come off record. It indicated that they had copied this letter to the claimant. No reason for coming off record was stated in the correspondence to the tribunal.
5. The claimant further stated to the Chairman, as recorded in the Record of Proceedings, he had spoken to his union, which was providing financial backing for his case, and he understood new representation would be sought. Mr Sands, who acted for the respondent, at the Case Management Discussion and also at this hearing, objected to the application; pointing out that the case had been case managed, had been listed for hearing in November 2006 by agreement and the application had only been made on the last working day before the hearing. He further stated that both counsel and the respondent's witnesses were prepared and ready for the hearing to commence on 29 May 2007. The Chairman decided that, although she had sympathy for the respondent, she considered that the claimant's application for an adjournment of the substantive hearing had to be granted in the circumstances.
6. Mr Sands made an application for costs. As recorded by the Chairman in the said Record of Proceedings, the application was stated to be based on Rule 40 of the Industrial Tribunals Rules of Procedure (Northern Ireland) 2005 ("Rules of Procedure") and, in particular, Rule 40 Sub-section 3. Further, Mr Sands accepted that there was no evidence that the claimant had behaved unreasonably; however, in view of the conduct of the claimant's former legal advisers, the respondent sought an Order for Costs against the representatives. The Chairman then directed that, before making any Order for Costs, it was necessary for the party affected to be informed and given an opportunity to make representations. She therefore ordered, in the presence of the parties, that a Costs Hearing be arranged for 19 June 2007; and that the notice party be invited to attend and make representations in relation to the application for costs.
7. By letter dated 30 May 2007, the claimant was again informed of the date of the Costs Hearing and sent a copy of the Record of Proceedings by the tribunal, which also stated that the Costs Hearing would be heard on 19 June 2007. On 18 June 2007 the claimant contacted the tribunal and was again informed the hearing was on 19 June 2007, commencing at 10.00 am. He did not receive the said letter dated 30 May 2007. He was further informed it would be in his interests to attend the hearing. As set out above, the claimant did not attend the Costs Hearing; nor did he make any application for any adjournment of the said hearing. In the circumstances, I decided to proceed with this hearing, in the absence of the claimant.
8. The following Rules in the Rules of Procedure are relevant and material to this application by the respondent:-

"40-(1) The tribunal or Chairman may make a Costs Order when on the application of a party it or he has postponed the day or time fixed for or adjourned a hearing under Rule 26 or pre-hearing review. The Costs Order may be against or, as the case may require, in favour of that party in respects of any costs incurred or any allowances paid as a result of the postponement or adjournment.

(2) A tribunal or Chairman shall consider making a Costs Order against a paying party where, in the opinion of the tribunal or Chairman (as the case may be), any of the circumstances in paragraph (3) apply. Having so considered, the tribunal or Chairman may make a Costs Order against the paying party if it or he considers it appropriate to do so.

(3) The circumstances referred to in paragraph (2) are where the paying party has in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived.

(4) …..

41 – (1) The amount of the Costs Order against the paying party shall be determined in any of the following ways:-

(a) The tribunal may specify the sum which the paying party must pay to the receiving party, provided that sum does not exceed £10,000;

(b) Parties may agree on a sum to be paid by the paying party to the receiving party and if they do so the Costs Order shall be for the sum so agreed.

(c) The tribunal may order the paying party to pay the receiving party the whole or specified part of the costs of the receiving party with the amount to be paid being determined by way of detailed assessment in a County Court in accordance with such of the scales prescribed by County Court Rules for Proceedings in the County Court as shall be directed by the Order.

(2) The tribunal or Chairman may have regard to the paying party's ability to pay when considering whether it or he shall make a Costs Order or how much that Order should be.

(3) For the avoidance of doubt the amount of a Costs Order made under Paragraph (1)(b) or (c) may exceed £10,000.

48 – (1) The tribunal or Chairman may make a Wasted Costs Order against a party's representative.

(2) In a Wasted Costs Order the tribunal or Chairman may –

(a) disallow, or order the representative of the party to meet, the whole or part of any wasted costs of any party (including an Order that the representative repay to his client any costs which have already been paid); and

(b) order the representative to pay to the Department, in whole or in part, any allowances paid by the Department for the purposes of, or in connection with, that person's attendance at the tribunal by reason of the representative's conduct of the proceedings.

(3) "Wasted Costs" means any costs incurred by a party –

(a) as a result of any improper, unreasonable or negligent act or omission on the part of any representative; or

(b) which, in the light of any such act or omission occurring after they were incurred, the tribunal or Chairman considers it unreasonable to expect that party to pay.

(4) ….

(5) ….

(6) Before making Wasted Costs Order, the tribunal or Chairman shall give the representative a reasonable opportunity to make oral or written representations as to reasons why such an Order should not be made. The tribunal or Chairman may also have regard to the representative's ability to pay when considering whether to make a Wasted Costs Order or how much that Order should be.

(7) Where a tribunal or Chairman makes a Wasted Costs Order, it or he must specify in the Order the amount to be disallowed or paid.

(8) The Secretary shall inform the representative's client in writing –

(a) of any proceedings under this rule; or

(b) of any Order made under this rule against the party's representative.

(9) Where a tribunal or Chairman makes a Wasted Costs Order, it or he shall provide written reasons for doing so if a request is made for written reasons within 14 days of the date of the Wasted Costs Order. This 14 day time limit may not be extended under Rule 10. The Secretary shall send a copy of the written reasons to all parties to the proceedings.

Mr Sands accepted that, in making his application at the Case Management Discussion on 25 May 2007, he had referred to Rule 40(3) of the Rules of Procedure; but had not expressly referred to Rule 48 (Wasted Costs Order); although he said that that was also clearly intended to be the subject matter of the application, by reason of the reference to seeking costs against the notice party and the Chairman's Order inviting the notice party to the Costs Hearing in order to make representations.

It is only under Rule 48, a Wasted Costs Order, that a respondent could obtain an Order against the notice party. Under Rule 40(3), if an Order for costs was made by the Chairman or tribunal under that Rule, such an Order could only be against the claimant, in contrast to the position under Rule 48. Mr Sands also indicated that he was seeking, as an alternative, to make an application for costs, pursuant to Rule 40(1); but again acknowledged that, if any such Order was made it could only be against the claimant.

9. Mr Agnew and Mr Andress, solicitors for the notice party, and who had both had knowledge and carriage of the file in this matter at various stages of the proceedings, gave to the tribunal a chronology of relevant events. This chronology was not challenged by Mr Sands.
10. The tribunal was informed that the notice party wrote on 8 May 2007 to the claimant's trade union, who had been financially supporting the claimant's claims, giving certain advices to the union. This advice was the subject of legal professional privilege, which had not been waived by the claimant. The notice party was therefore not in a position, at this hearing, to inform the tribunal of its contents. By a telephone call on 9 May 2007, the union informed the notice party that it was no longer willing to support the claimant's claims. Again the contents of that telephone call were stated to be the subject of legal professional privilege. By letter dated 10 May 2007, the notice party wrote to the claimant inviting him to a meeting on 15 May 2007. Unfortunately, due to a problem with the address of the claimant, the claimant did not immediately get the letter and the meeting did not take place until 18 May 2007. At that meeting, the tribunal was informed, the claimant was told of the reasons for the above decision; and it was confirmed to him that the notice party would no longer be in a position to act for him and was coming off record. This meeting was also stated to be the subject of legal professional privilege. The tribunal was sent a letter dated 21 May 2007, as referred to above, and at the same time the claimant was also written to by the notice party in which it was confirmed to the claimant that it was no longer acting for him and had applied to come off record with the tribunal. Both Mr Agnew and Mr Andress confirmed that, once their instructions had been withdrawn by the claimant's union, the notice party had no authority to continue to act for the claimant and had to immediately inform the claimant, at the first opportunity, that it was no longer acting for the claimant and that it was coming off record. Having so informed the claimant at the meeting on 18 May 2007, they then wrote to the tribunal by letter dated 21 May 2007, as referred to previously. Mr Andress indicated that he understood that the claimant had sought, from the union, a second opinion which he understood the union was arranging; but he stressed that the notice party's involvement with the claimant's claim had ceased, as set out above.
11. Wasted Costs Orders against a party's representative were first introduced by the 2005 Industrial Tribunal's Rules of Procedure.

As set out above, 'wasted costs' are defined as meaning, the costs incurred by a party:-

(a) As a result of any improper, unreasonable or negligent act or omission on the party of any representative or;

(b) Which, in the light of any such act or omission occurring after they were incurred, the tribunal or Chairman considers it unreasonable to expect that party to pay.

Mr Sands made it clear that he was not seeking to suggest the notice party acted improperly. He said that he could have contended that the notice party was negligent; but having stated from the outset that he was contending that the notice party's actions were unreasonable he had decided not to now contend that any action of the notice party was negligent. He submitted, in essence, that the notice party had acted unreasonably by coming off record at such a late stage in the proceedings, in the circumstances set out above, and with the consequent adjournment of the substantive hearing. He accepted that there would be occasions when a solicitor will be required to come off record; but his complaint was the "lateness of the hour", when this occurred, in circumstances where it had been known for some considerable time when the claim was due to be heard. He suggested that such advice, if it required to be given, should have been given much earlier. Mr Andress stressed that, at all times, his firm had acted properly in this matter. However, he also made it clear that he found himself in considerable difficulty in that he was not in a position, because of the rules relating to legal professional privilege, to inform the tribunal of the full circumstances of what had happened and/or the details of the various advices given to the claimant and/or the union. Mr Andress also pointed out that, although the claimant had suggested at the Case Management Discussion that he had simply received a letter on 22 May 2007 from the notice party; in fact there had been the meeting on 18 May 2007 when reasons for the decision had been given to the claimant. However, Mr Andress was unable, as stated previously, to give details of what was said at the meeting.

12. Mr Sands was not able to refer me to any authority in this jurisdiction where a Wasted Costs Order has been made, to date, by the Industrial Tribunals. He referred to Harvey on Industrial Relations and Employment Law, Volume 5, Part T, Paragraphs 1076, and following, and the guidance set out therein. I was satisfied that, in considering whether to make a Wasted Costs Order against the notice party, it was firstly necessary for me to determine whether the notice party had acted unreasonably, as claimed by Mr Sands. This required me to consider what was the meaning of "unreasonable" as used in the said Rule. Rule 48 is based on the Wasted Costs Provisions that apply in the Civil Courts in GB, with the said definition of wasted costs being identical to that contained in Section 51(7) of the Supreme Court Act 1981 (as substituted by Section 4 of the Courts and Legal Services Act 1990). This said definition has been considered by the Court of Appeal in England and Wales, in the case of Ridehalgh –v Horsefield [1994] 3AER 848. This case set out a three stage test that should be followed when a Wasted Costs Order was being considered. Firstly, the Court should consider whether the representative acted improperly, unreasonably or negligently. If so, the next question was whether the representative's conduct caused the claimant to incur unnecessary costs. If so, the Court should ask the third question; namely is it just to order the representative to compensate the claimant for the whole or part of the relevant costs.

The Court of Appeal in Ridehalgh also examined the meaning of "improper", "unreasonable" and "negligent".

In view of the application made by Mr Sands, it is only necessary for me to consider the guidance given, in the Ridehalgh case, in relation to the meaning of "unreasonable".

Sir Thomas Bingham M R, as he then was, stated, at Page 861:-:

"'Unreasonable' also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic as reflecting on a practitioner's judgement, but it is not unreasonable."

Mr Sands submitted that, whilst he would not describe the conduct of the notice party as vexatious or designed to harass the other side rather than advance the resolution of the case, he said that unreasonable had no special meaning and was no different to the use of the term "otherwise unreasonable" as used in Rule 40. He laid stress on the reference, in the definition given by the Master of the Rolls, to "the acid test is whether the conduct permits of a reasonable explanation".

There is no doubt, that in considering what is meant by "otherwise unreasonable" under Rule 40, the way in which a case has been handled by a party or his advisers has been held to be unreasonable. Each case has always depended on its own particular facts and whether, at the end of the day, the Chairman/tribunal come to the conclusion that the claimant or his representative, in conducting the claim acted otherwise unreasonably.

Before the new definition contained in Section 51(7) of the Supreme Court Act 1981 came into force, by virtue of Section 4 of the Courts and Legal Services Act 1990, the Rule in relation to this area of wasted costs was very similar, in the Civil Courts, both in Northern Ireland and in GB. In Northern Ireland, under Order 62 Rule 11, where it appears that costs have been improperly or unreasonably incurred, or wasted by lack of competence or expedition, by his solicitor or agent, the Court may order the solicitor to reimburse his client for costs payable to another party; reimburse another party for his own costs; and disallow his costs against his own client. There is no longer any need to show gross dereliction or misconduct; and the purpose of the Rule is compensatory rather than punitive. Apart from Rule 11, the Supreme Court has inherent power to order restitution, compensation or costs against the solicitor, but only in a case of serious misconduct or gross negligence or breach of undertaking. (See Valentine's Civil proceedings in the Supreme Court Paragraph 17.61 0 17.63). In the case of O'Neill (a minor) v Nicholson [1995] NIJB 11, Mr Justice Higgins, as he then was, considered the provisions of Order 62 Rule 11 and found that, in the particular facts of the case, that the solicitor had failed to conduct proceedings with reasonable competence and expedition. In the course of his judgment, Mr Justice Higgins reviewed many of the authorities referred to in the Ridehalgh case. Failure to conduct proceedings with reasonable competence and expedition no longer appears in the new definition, found in the GB legislation, which has used the term negligent. However, as was pointed out by the Master of the Rolls in Ridehalgh, the expression "negligent" in this context does not invoke technical concepts of the law of negligence. He further stated that, by changing the language, parliament did not, in his view, intend to make it harder, rather than easier, for Courts to make Orders. Indeed, he found that "negligent" was to be understood in an un-technical way to denote failure to act with the competence reasonably expected by ordinary members of the profession.

I think there can be little doubt that, in many factual situations, there will be considerable overlap between "unreasonable" and "negligent" conduct. In the circumstances, therefore, I think that the guidance set out in Ridehalgh is appropriate to be considered in this jurisdiction. Clearly, the O'Neill decision is a decision on its own facts; but I think it is of interest to note that, in the course of his judgment, Mr Justice Higgins stated "awarding costs against a solicitor personally is never a matter to be treated lightly and requires a solid basis for the allegation that the solicitor has failed to conduct proceedings with reasonable competence and expedition".

As indicated above, a real practical difficulty arises, in an application for wasted costs, where the principle of legal professional privilege arises; and the question as to whether a legal representative's conduct was unreasonable may turn on what instructions were provided by the client, what advice was given by the representative; both of which are matters covered by legal professional privilege and which can only be waived by the client. Thus, in cases where privilege is not waived, a representative may be prevented from advancing a full answer to the complaint made against him or her. Indeed, this was the very situation that the notice party found itself in this particular case.

The case of Ridehalgh provides some useful guidance, which was expressly approved by the House of Lords in the case of Metcalf –v- Weatherill [2002] UKHL 27. In the Ridehalgh case, the Court of Appeal recognised the difficulties that privilege might cause lawyers in these circumstances, and stated that judges, who are invited to make a Wasted Costs Order, must make full allowance for the fact that legal representatives may be prevented from telling the full story. Where there is room for doubt in these circumstances, the legal representatives are entitled to the benefit of the doubt and it is "only when, with all allowances made, a lawyer's conduct of proceedings is quite plainly unjustifiable that it can be appropriate to make a Wasted Costs Order". In the House of Lords decision, Metcalf, Lord Bingham emphasised that only exceptionally could the exacting conditions set out in Ridehalgh be satisfied. He stated that "where a Wasted Costs Order is sought against a practitioner precluded by legal professional privilege from giving his full answer to the application, the Court should not make an Order unless, proceeding with extreme care, it is:-

(a) satisfied that there is nothing the petitioner could say, if unconstrained, to resist the Order; and

(b) that it is in all the circumstances fair to make the Order.

13. In the circumstances, and applying the above guidance, I came to the conclusion that it would not be fair and appropriate to make a Wasted Costs Order against the notice party. I had particular regard to the fact that, due to legal professional privilege, the notice party had been unable to set out to the tribunal the full circumstances and reasons why the advice had to be given to the union on 8 May 2007, which was les than three weeks before the commencement of the hearing, which led to the solicitors having to come off record and the substantive hearing having to be adjourned. I therefore refuse the respondent's application to make a Wasted Costs Order against the notice party.
14. Mr Sands, sought, in the alternative, an application under Rule 40(3), for an Order for Costs on the grounds that the notice party had in conducting the proceedings acted otherwise unreasonably. Under Rule 40(3) of the Rules of Procedure it is necessary for a tribunal, when considering an application for costs under the said Rule to embark on a two stage process. Firstly, the tribunal has to consider whether it has been established that the relevant party satisfied the terms of Rule 40(3) – for example the finding of unreasonable conduct. The tribunal has to consider, secondly, separately whether to exercise its discretion to make an Order for Costs (see further Criddle v Epcot Ltd [UKEAT/0275/05]).

In the case of Lodwick v London Borough of Southwark [2004] IRLR 554, Lord Justice Pill made it clear that, when considering whether an Order for Costs should be made under the said Rule:- "to order costs in the Employment tribunal is an exceptional course of action and the reason for, and the basis of, an Order should be specified clearly; especially where a sum as substantial as £4,000 is involved".

There is nothing in the Rules of Procedure which states that an Order for Costs should be considered the exception rather than the Rule. Certainly, however, this has been the view taken, in relation to the exercise of the power under the said Rule, in relation to claims, such as unfair dismissal/unlawful discrimination (see further the case of Gee v Shell (UK) Limited [2003] IRLR 82). However, as Burton J in the case of Salinas v Bear Stearns International Holding [2005] ICR 1117 stated, "the reason why Costs Orders are not made, in the substantial majority of cases, is that the tribunal Rules contain a high hurdle to be surmounted, before such an Order can be considered". Those rules to which Burton J was referring were the preconditions, which require to be considered before the issue of the discretion arises.

However, it has to be noted that, when costs are awarded under Rule 40(1) there is no need for a tribunal to find that a party has acted vexatiously, abusively, disruptively or otherwise unreasonably – Ladbroke Racing Limited v Hickey [1979] ICR 525. Under Rule 40(1) of the Rules of Procedure, the tribunal has a broad discretion to make any such Order for Costs as befits the justice of the case. However, in exercising that discretion, it is likely that a tribunal will always have regard to the circumstances in which the said postponement/adjournment has come about. In the case of Beynon v Scadden [1999] IRLR 700, it was made clear that the costs rules are discretionary, and as such, cannot be restricted by case law. Matters to be derived from the case law can only be factors that may or may not be given weight by the tribunal.

15. Having refused to grant the respondent's application for a Wasted Costs Order against the notice party, on the grounds of unreasonable conduct, it does not seem to me that, in applying Rule 40(3) of the Rules of Procedure on an application that the notice party (as the claimant's representative) had conducted the proceedings otherwise unreasonably, I can come to any different conclusion than that reached above under Rule 48. I think it is of some interest that, in Harvey (Section T, Paragraph 1054), in considering the application of Rule 40(3) in relation to the conduct of a representative it is stated that –"the principle that a party can be rendered liable to pay costs because of the way his representative conducted the proceedings has a reduced impact in light of the power granted to a tribunal by the [2005] Rules to make Wasted Costs Orders". It also states that this Rule will remain of particular application where the representative is a representative who is not acting for profit and thus cannot have a Wasted Costs Order made against him personally.

Equally, there was no basis, having regard to the limited evidence which could be placed before the tribunal, upon which I could find that the claimant acted otherwise unreasonably. It also has to be noted that, in making his initial application at the Case Management Discussion, Mr Sands made it clear that there was no evidence the claimant had acted unreasonably and his application was for an Order for Costs, against the notice party, by reason of the conduct of the claimant's notice party. Even if I am wrong, and I was satisfied that the claimant had acted otherwise unreasonably, in the conduct of the proceedings, I would not have been prepared, in the exercise of my discretion, to make an Order for Costs under Rule 40(3). Such an Order, if made, would have had to have been an Order for Costs against the claimant. The claimant clearly found himself in a very difficult position. He had had no alternative, in the circumstances where his legal representation had been withdrawn following the withdrawal of financial backing by the union , but to make the application for the adjournment. I do not think it would be a proper exercise of my discretion to make such an Order for Costs, against the claimant, in such circumstances and also where I was not in a position to make a Wasted Costs Order against his former legal representatives.

Mr Sands made an alternative application for costs against the claimant under Rule 40(1) of the Rules of Procedure. As stated above, it is not necessary for me to be satisfied, under that Rule, in relation to any of the preconditions, such as conducting the proceedings otherwise unreasonably. I have therefore a complete discretion whether to make such an Order for Costs, which again would require to be against the claimant and not his legal representative. For similar reasons to those set out above, when I concluded that I would not have, if I had been required to do so, exercised my discretion to make an Order for Costs against the claimant under Rule 40(3); I am also not prepared to exercise my discretion to make an Order under Rule 40(1) of the Rules of Procedure. At all times, in considering the exercise of my discretion I was very much aware that an Order for Costs, in the tribunal is the exception rather than the rule. As I was not prepared to make any Order for Costs against the claimant, it was not necessary for me to consider further the ability of the claimant to pay any such Order for Costs.

16. Thus, in the particular circumstances of this case, I refuse the respondent's application for an Order for Costs against the claimant under Rule 40(3) and/or Rule 40(1) of the Rules of Procedure. I also refuse the respondent's application for a Wasted Costs Order against the notice party under Rule 48 of the Rules of Procedure. Although, for the reasons set out above, I refused to make any Order for Costs against the claimant and/or a Wasted Costs Order against the notice party, in the particular circumstances of this case, I want to make it clear that I have considerable sympathy for the position in which the respondent found itself. It is clearly most unsatisfactory that the substantive hearing in this matter has had to be adjourned in the circumstances which I set out above. The fact that, in this particular case, the solicitors had to come off record at a very late stage and the substantive hearing had to be adjourned and no Order for Costs and/or Wasted Costs has been made, should not be seen in any way as an encouragement to any party and/or representative to take similar action. To do so, as seen above, may leave such a party/representative to face a real risk that such Orders may be made, depending on the particular facts in any particular case.

Chairman:

Date and place of hearing: 19 June 2007, Belfast

Date decision recorded in register and issued to parties: