Isteed v Redbridge London Borough Council

A wasted costs order requires more than improper, unreasonable or negligent conduct. The conduct must have caused identifiable unnecessary costs, and the order must be just in the circumstances. A causal link must be positively examined. Tribunals should exercise the jurisdiction with care, particularly where resolving the application would require disproportionate investigation.

The representative must receive reasonable notice of the case to be met and a reasonable opportunity to respond. A judge should recuse himself where comments, procedural interventions and repeated adverse findings would lead a fair-minded observer to conclude that there is a real possibility of pre-judgment or apparent bias.

The claimant’s unfair dismissal and age discrimination claims were dismissed as out of time. The Employment Tribunal subsequently made a wasted costs order against his solicitors under Rule 80 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013.

The application had initially concerned ordinary costs and later developed into a changing application based on alleged negligent, unreasonable and improper conduct. The Employment Judge made findings concerning the presentation of the claim, attendance at hearings, missing acknowledgements and the authenticity of emails. He also refused an application to recuse himself.

The central issues were whether causation and justice had been properly addressed, whether the solicitors had received a fair opportunity to respond, and whether the conduct of the proceedings created an appearance of bias.

1. Appeal allowed. The wasted costs order was discharged and the Employment Judge’s findings relevant to that order were set aside.
2. Under Rule 80 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, the applicable three-stage inquiry is: whether the representative acted improperly, unreasonably or negligently; whether that conduct caused unnecessary costs; and whether it is just to order compensation for all or part of those costs. The absence of express reference to the authorities is not itself an error if the judge applied the correct principles.
3. The Employment Judge failed to make positive findings identifying how particular impugned conduct caused particular costs. Excluding costs plainly attributable to Tribunal maladministration did not establish that the remaining costs were caused by the solicitors’ conduct. The Judge also failed to distinguish costs allegedly wasted in the underlying proceedings from costs incurred in pursuing the wasted costs application.
4. The Judge gave no adequate reasons for concluding that it was just to make the order. The history, the Tribunal’s own administrative failures, the changing basis of the application and the Judge’s earlier focus on email authenticity required express consideration.
5. Rule 82 required a reasonable opportunity to make representations. That required the solicitors to know the basis of the application before responding. In all but the most obvious cases, the basis should be communicated in writing. The fluid change from an ordinary costs application to allegations concerning negligence, unreasonableness and suspected email fabrication created serious procedural unfairness.
6. The Judge should also have recused himself. Repeated unqualified criticisms, the suggestion that the opposing parties inspect a confidential client file, the incorrect provisional approach to privilege, the insistence on investigating authenticity after the Respondent had deliberately abandoned that issue, and continuing adverse comments after accepting the emails were authentic created an appearance of bias. Legal professional privilege belonged to the claimant and could not be waived by the solicitor.
7. The finding that the solicitors acted in pursuit of profit was not perverse, since evidence supported it, although the reasoning could have been clearer.

• Employment Tribunal: The claimant’s claims were dismissed as out of time. The Employment Judge later made a wasted costs order against Davis Solicitors LLP in a Judgment with Reasons sent on 20 August 2014.
• Employment Appeal Tribunal: The appeal was allowed. The wasted costs order and related findings were set aside.