Single Homeless Project Ltd v Abu & Ors

On a costs or wasted-costs application, procedural fairness may require each side to have an opportunity to address substantial material relevant to ability to pay, particularly where significant sums are in issue. The procedure must remain proportionate and summary, but only so far as fairness permits.

Ability to pay is a discretionary consideration. It neither has to be considered nor sets an upper limit on any costs order. A tribunal determining wasted costs must apply the correct principles, address privilege where applicable, and give reasons sufficient to show why the legal tests are met.

The claimant, represented by Nieko Solicitors and Mr Meachem, brought numerous employment claims against Single Homeless Project Ltd. All claims failed. The Employment Tribunal then considered applications for costs against the claimant and for wasted costs against his representatives.

After receiving written means evidence and submissions from the claimant and representatives, without providing that material to the employer, the Tribunal made a £500 wasted-costs order against Nieko Solicitors. It made no order against the claimant or Mr Meachem.

The employer appealed, alleging procedural unfairness and an erroneous approach to ability to pay. Nieko cross-appealed, contending that the Tribunal had not applied the governing principles for wasted costs. The central issues were whether the order could stand and, if not, whether the matter should be remitted.

1. Appeal and cross-appeal allowed. The £500 wasted-costs order could not stand. The applications for costs and wasted costs were remitted to the same Employment Tribunal for fresh determination.

2. The Tribunal acted unfairly by deciding the applications substantially by reference to detailed written material about ability to pay which the employer had not seen and could not answer. A costs procedure must be simple and summary only to the extent fairness permits. Where substantial sums and detailed representations are involved, fairness and proportionality may require written submissions from both sides and an opportunity for reply.

3. The Tribunal also erred in treating ability to pay as requiring an order that the paying party could meet. Ability to pay is a discretionary factor. A Tribunal may take it into account, but need not do so, and is not obliged to cap an order at an affordable amount. The Tribunal’s reliance on the dictum in Kovacs was therefore misplaced.

4. On the cross-appeal, the Tribunal had not adequately addressed the applicable wasted-costs principles or the detailed submissions made upon them. Its reasons did not resolve the basic questions relevant to liability for wasted costs. A Tribunal must give full weight to the cautions concerning legal professional privilege where privilege has not been waived, and must provide reasons adequate to disclose its application of the legal tests.

5. The Employment Appeal Tribunal could not itself decide whether the representatives’ conduct justified a wasted-costs order. The material might go beyond merely pursuing a hopeless case, but this was not a plain case. Applying the remittal criteria in Sinclair Roche & Temperley, the same Tribunal should determine the applications afresh after an appropriate timetable for written submissions and any justified hearing application.

• Employment Appeal Tribunal: allowed the employer’s appeal and the representatives’ cross-appeal; set aside the Employment Tribunal’s £500 wasted-costs order and remitted the costs applications to the same Tribunal.
• Employment Tribunal: by an order dated 17 July 2012, ordered Nieko Solicitors to pay £500 by way of wasted costs and made no costs order against the claimant or Mr Meachem.