Neafsey v. Small & Ors

It is insufficient for a wasted costs order to state a conclusion without specifying the improper, unreasonable or negligent acts relied on. Instead the judge must identify with sufficient particularity the act or omission said to have caused the wasted costs and why it was improper, unreasonable or negligent.

Orders for costs may be made as ancillary to procedural hearings such as a pre-hearing review when the costs are consequential to decisions made there. A wasted costs decision that is inadequately reasoned should be remitted for redetermination.

The appellant, a representative who acted in Employment Tribunal proceedings, appealed a wasted costs order made after a pre-hearing review (PHR). The Employment Judge had ordered that the representative pay £2,500 as wasted costs because the PHR did not reach the matters listed in a prior case management order. The appellant challenged the adequacy of the Judge's reasons, the substantive basis for the finding of unreasonable conduct, procedural fairness and jurisdiction to make the order at a PHR. The Employment Appeal Tribunal considered those issues and the proper approach to wasted costs orders and remitted the matter for reconsideration.

(1) Appeal allowed. The wasted costs order was set aside because the Judge's reasons were inadequate. The Judge failed to identify with sufficient specificity the act(s) or omission(s) said to be "improper, unreasonable or negligent" under rule 48 and to explain why those matters caused the wasted costs alleged (see paras [1]–[6]; ["Reasons"]).

(2) On the law of wasted costs, it was preferable, though not essential, for a judge to refer to rule 48 and the principles in the authorities. What is essential is that the Judge adequately identify the disputed issues and the factual/legal basis for a finding of improper, unreasonable or negligent conduct (see discussion under "Adequacy of reasons").

(3) The Tribunal rejected the submission that orders for costs may only be made at a Hearing under rule 26. An order for costs may be made when it is ancillary to a procedural hearing such as a PHR. It would be impractical to require adjournment to a separate hearing whenever costs were appropriate as a consequence of decisions made at a PHR (see "Jurisdiction").

(4) Because the Judge who heard the PHR is best placed to assess whether conduct caused wasted costs, the matter was remitted to the original Employment Judge for redetermination. The remittal should identify with specificity the acts or omissions relied on and allow fair opportunity for written or oral representations. The Council was given a timetable to indicate whether it wished to pursue the application (see "Conclusion").

• Employment Appeal Tribunal: Appeal against wasted costs order allowed; order set aside and matter remitted for redetermination by the Employment Judge (President Underhill) (9 December 2010).
• Employment Tribunal: Pre-hearing review and wasted costs order made by Employment Judge Warren (order promulgated 23 March 2010). Prior case management direction by Employment Judge Hill (5 November 2009) and interlocutory directions by Judge Gumbiti-Zimuto (22 January 2010) feature in the procedural history.