KL Law Ltd v. Wincanton Group Ltd & Anor

A wasted costs order requires more than proof of negligent, improper or unreasonable conduct. The representative must also have breached a duty to the court or tribunal, in a manner akin to an abuse of process. Where legal professional privilege has not been waived, a tribunal must not infer negligence without an evidential basis concerning the client’s instructions and the advice given; doubt must favour the representative.

It must also identify the additional costs actually caused by the impugned conduct. A finding that earlier advice would have led a client to abandon or limit a claim requires evidence that the client would have acted on that advice.

The Claimant withdrew discrimination and constructive dismissal claims during a substantive Employment Tribunal hearing after previously undisclosed diary entries emerged. The respondent then sought costs against the Claimant and a wasted costs order against her claims-management representative, KL Law Ltd.

The Employment Tribunal refused an adjournment, heard submissions without evidence from the representative, and ordered it to pay £6,300. It found negligent disclosure failures, causation, and that an order was just. KL Law Ltd appealed. The central issues were whether negligence and breach of duty to the Tribunal had been established, and whether the alleged conduct had caused recoverable wasted costs.

1. Appeal allowed. The wasted costs order was set aside and the respondent’s wasted costs application against KL Law Ltd was dismissed. There was nothing to remit.

2. Under Rule 80 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, the three-stage approach to wasted costs must be applied. Proof of improper, unreasonable or negligent conduct is insufficient by itself. The representative must also have breached a duty owed to the court or tribunal. That requirement is akin to an abuse of process: Ridehalgh v Horsefield [1994] 3 All ER 848, Medcalf v Weatherill & Another [2002] UKHL 27, and Persaud v Persaud [2003] EWCA Civ 394.

3. The Tribunal had not considered breach of duty at all. It could not assume that incomplete disclosure by a litigant established either negligence by her representative or a failure by that representative to discharge its duty to the Tribunal.

4. The negligence finding lacked an evidential basis. Whether the representative had acted properly depended on the Claimant’s instructions and the advice given about disclosure. Privilege had not been waived, and the representative had not been allowed to give evidence. For all the Tribunal knew, full and clear advice had been given and the representative had acted properly. In such circumstances, the representative was entitled to the benefit of doubt.

5. The causation finding was also flawed. A wasted costs order must, so far as possible, be confined to the actual loss caused by the impugned conduct. The Tribunal had no evidence that the Claimant would have withdrawn, curtailed, or otherwise acted on adverse advice if earlier disclosure had occurred. She might have continued the proceedings despite such advice. The respondent’s costs therefore could not be treated as wasted on the Tribunal’s speculative reasoning.

6. Although unnecessary to decide the procedural ground, the EAT observed that wasted costs orders are serious sanctions and require careful handling. An adjournment would preferably have allowed the representative to prepare evidence and address any conflict of interest with the client.

• Employment Appeal Tribunal: allowed KL Law Ltd’s appeal and set aside the wasted costs order.
• Employment Tribunal, Sheffield: following the Claimant’s withdrawal of her substantive claims, made a wasted costs order of £6,300 against KL Law Ltd.