Gill v Humanware Europe Plc

A wasted costs application against an opposing representative is not governed by an inflexible summary procedure. The EAT has discretion under Rule 34C, but fairness is essential. No automatic two-stage process or oral hearing applies in every case. The procedure must reflect the circumstances, including disputed facts, the representative’s absence, the need for evidence, the amount at stake, reputational consequences and any request for an oral hearing. Where the representative’s conduct is alleged to have caused costs, ordinary but-for causation must be proved. Speculation that the conduct might have influenced a tribunal’s independent errors is insufficient. Costs which would have been incurred in any event are not wasted costs attributable to the representative.

Mr Gill brought constructive dismissal proceedings against Humanware. The employment tribunal dismissed his claim. The Employment Appeal Tribunal found apparent bias and errors of law, set aside the tribunal’s judgment and remitted the claim. It later made a £750 wasted costs order against counsel after finding improper conduct in connection with two private discussions during the tribunal proceedings.

The order was challenged on the grounds that the application was unsuitable for paper determination, that the procedure was unfair, and that the alleged conduct had not caused any recoverable expense. The central issues were the proper procedure under Rule 34C and the approach to causation.

1. Disposition. The appeal was allowed. The EAT’s findings of improper conduct and its £750 wasted costs order were set aside. The matter was not remitted because the application could not succeed on causation.
2. Rule 34C, read in the light of Ridehalgh v Horsefield [1994] Ch 205, Hedrich v Standard Bank London Ltd [2008] EWCA Civ 905 and Medcalf v Weatherill [2002] UKHL 27, gives the EAT procedural discretion. Fairness is essential. There is no invariable requirement for a two-stage process. The procedure depends on the circumstances, including whether the representative was present, whether disputed facts require evidence, the amount at stake, reputational consequences and any request for an oral hearing. The caution concerning plain and obvious cases was also reflected in Re Freudiana Holdings Ltd (unreported, 28 November 1995).
3. On the particular facts, Smith LJ held that fairness required an oral hearing because findings had been made in Miss Twine’s absence, factual disputes had been identified and an oral hearing had been requested. Longmore LJ and Lord Neuberger did not consider an oral hearing mandatory in every such case, but agreed that the EAT had to give a fair opportunity to object or make further submissions and exercise its discretion reasonably. The EAT’s paper determination was therefore unfair.
4. Rule 34C requires the complained-of conduct to have caused wasted costs. The ordinary but-for test asks whether, without the conduct, the claimant would have avoided some expense and, if so, how much. The EAT’s assumption that counsel’s conduct might have influenced the tribunal’s other legal errors was speculation. The EAT appeal and rehearing were inevitable because of independent procedural and legal errors, while the Rule 3.10 hearing resulted from the refusal to allow the bias allegations to proceed.
5. Smith LJ considered that referral to the Bar Standards Board might have been the better course. Longmore LJ agreed that this possibility should have been considered. That guidance did not affect the final order.

• Court of Appeal (Civil Division): allowed the appeal in [2010] EWCA Civ 799, set aside the EAT’s findings of improper conduct and wasted costs order, and refused remission.
• Employment Appeal Tribunal: allowed the substantive appeal from the employment tribunal, set aside its judgment and remitted the claim, then made a £750 wasted costs order against counsel.
• Employment Tribunal: dismissed the constructive dismissal claim.