Hafiz & Haque Solicitors v Mullick

An application for wasted costs under Rule 80 requires proof of both improper, unreasonable or negligent conduct by the representative and costs incurred as a result of that conduct. Where legal professional privilege prevents the representative from explaining the instructions received or advice given, the tribunal must proceed with extreme care. It must be satisfied that there is no room for doubt that the representative could have resisted the order if unconstrained, and must separately consider whether making the order is fair. Speculation that the client was misled by the representative is insufficient where other realistic explanations remain. The causation requirement in Rule 80 differs from the general costs regime.

Mr Mullick’s discrimination, unfair dismissal and wrongful dismissal claims were dismissed by the London Central Employment Tribunal. The Tribunal ordered him to pay costs and subsequently made a wasted costs order against his solicitors, Hafiz & Haque, alleging that they had prepared a grossly inflated Schedule of Loss and caused the claim to continue after reasonable settlement offers.

The solicitors relied on legal professional privilege and could not disclose their instructions or advice. Employment Judge Goodman made the order on 28 November 2013 and refused reconsideration on 7 February 2014. The appeal concerned the correct approach to privilege, the limits of permissible speculation, causation and fairness.

1. Appeal allowed. The wasted costs order against the solicitors was set aside because the Tribunal had not applied the sufficiently rigorous approach required where privilege prevented a full answer.
2. Rule 80 involves two stages. The applicant must establish the conduct criterion: an improper, unreasonable or negligent act or omission by the representative. The applicant must also establish the causation question: the costs claimed must have been incurred as a result of that conduct. The causation wording in Rule 80 differs from the general costs rule in Rule 76, although the conduct need not be identified with such precision that each item of loss is attributed to a particular act.
3. The meaning of improper, unreasonable and negligent conduct should be understood in accordance with Ridehalgh v Horsfield & Anr [1994] EWCA Civ 40. Negligence requires an error which no reasonably well-informed and competent member of the profession would have made, rather than a lesser standard.
4. Where privilege prevents the representative from disclosing the relevant instructions or advice, the tribunal must make full allowance for that inability. It should be very slow to conclude that the representative had no sufficient material. It must be satisfied both that nothing the representative could say if unconstrained would resist the order and that it is fair in all the circumstances to make it. These conditions will be satisfied only exceptionally.
5. The Tribunal impermissibly inferred that the solicitors had misled the client into rejecting settlement offers. The client might instead have held an inflated view of the claim independently, or might have received and disregarded proper advice. Those possibilities meant that there was room for doubt.
6. The application for appeal costs under Rule 34A was refused. The solicitors were awarded £400 under Rule 34A(2A), representing the fee necessary to lodge the appeal; the further £1,200 fee was not recoverable because the appeal should have been withdrawn before that fee was incurred.

• London Central Employment Tribunal: claims dismissed; the Claimant was ordered to pay costs.
• Employment Tribunal: wasted costs order made against Hafiz & Haque on 28 November 2013; reconsideration refused on 7 February 2014.
• Employment Appeal Tribunal: appeal allowed and the wasted costs order set aside. Appeal costs application refused, but £400 awarded under Rule 34A(2A).