Dr Uwhubetine and Dr Njoku v NHS Commissioning Board England and others: 1806183/2017 and 1806184/2017
JUDGMENT
[1]The second respondent’s application that the claimants should pay some or all of the costs of and occasioned by these proceedings is refused and stands dismissed.[2]The second respondent’s application for an order that Mr Echendu should pay the costs of and occasioned by the adjournment of the hearing held on 20 November 2018 is refused and stands dismissed. Case No: 1806183/2017 1806184/2017[3]Mr Echendu’s application for an order that the second respondent’s solicitors shall pay the costs of and occasioned by him attending today’s hearing is adjourned in accordance with the directions given today. JUDGMENT having been sent to the parties on 8 October 2019 and written reasons having been requested in accordance with Rule 62(3) of the Employment Tribunals Rules of Procedure 2013, the following reasons are provided:REASONS
[1]These reasons are provided at the request of the claimants’ solicitors.[2]On 12 June 2018, I determined that the claimants had failed to comply with paragraph 3 of the ‘unless order’ made by Employment Judge Little on 21 March 2018 in material respects. Accordingly, I held that the claimants’ claims were struck out upon 29 March 2018 pursuant to that order without any need for further order. Reasons for that ruling were promulgated on 2 August 2018. Those reasons set out the procedural history leading up to the determination of 12 June 2018 and my reasons for finding that there had been material noncompliance with the unless order of 21 March 2018. I shall not repeat those reasons here.[3]On 9 July 2018 the solicitors acting for the second respondent applied for a costs order. The application was made pursuant to Rules 76(1)(a) and/or (b) and/or 76(2) of schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. I shall not set out in full these Rules in particular and the provisions of Rules 74 to 84 inclusive of the Rules of Procedure. They are familiar to the parties.[4]On 25 July 2018 the solicitors acting for the first, third and fourth respondents also made a costs application. The grounds for the application were set out in a letter dated 31 July 2018. The first, third and fourth respondents relied upon Rule 76(1)(a) and Rule 76(1)(b). I shall not say anything further about the costs application made by the first, third and fourth respondents. (That costs application is stayed (pursuant to an order that I made on 27 August 2019) pending the outcome of the claimants’ application to the Court of Appeal for leave to appeal against the Judgment of the Employment Appeal Tribunal which dismissed the claimants’ appeals against my Judgment of 12 June 2018).[5]Before turning to the second respondent’s costs application, I remind myself of the relevant principles in relation to costs applications in the Employment Tribunal. These are helpfully and succinctly set out in the claimants’ counsel’s skeleton reply to the costs application. The first of these is that in Employment Tribunal proceedings costs are still very much the exception and not the norm. As set out in Harvey on Industrial Relations and Employment Law (at paragraph 10.44 in part P1), “the fundamental principle remains that costs are the exception rather than the rule, and that costs do not follow the event in Employment Tribunals”.[6]Tribunals should not be unduly critical of parties bringing claims which are not then pursued or which are struck out. Further, any unreasonable conduct must not automatically result in a costs order. Even where unreasonable conduct has been found, the Tribunal has discretion as to whether costs should be awarded and if so in what amount and must consider all relevant circumstances in exercising that discretion. In Oni v Unison [2015] ICR D17 (EAT) it was held (in paragraph 14) that, “it is clear that Rule 76 imposes a two-stage exercise. At the first stage the Tribunal must determine whether the paying party has acted unreasonably or in any other way such as to invoke the jurisdiction to make an order for costs. If satisfied that there has been unreasonable or other relevant conduct at that stage, the second stage is engaged. At the second stage the Tribunal is required to consider making a costs order but has a discretion whether or not to do so”.[7]The first question I must ask myself therefore is whether the claimants’ conduct falls within that in Rules 76(1)(a) and/or 76(1)(b) and/or 76(2). If it does not, then the costs application will fail. If it does then the question that arises is whether it is appropriate for the Tribunal to exercise discretion in favour of an award of costs. It is an error to go straight to the making of an award of costs if the proscribed conduct within the relevant parts of the rules is established. If there is a proscribed conduct then it is necessary to step back and look at the facts and circumstances in order to consider whether a costs award is appropriate.[8]By application of these principles, the costs claim made under Rule 76(1)(b) can be quickly disposed of. This arises where a claim is found to have had no reasonable prospect of success. It cannot be said that the claimants’ claims have no reasonable prospect of success in circumstances where Employment Judge Little determined (on 14 February 2018) that the claims had little reasonable prospect of success. A finding that a claim has little reasonable prospect of success is plainly distinct from a finding that a complaint has no reasonable prospect of success. Therefore, in so far as the costs application is made pursuant to Rule 76(1)(b) the claim falls at the first hurdle and it is unnecessary for me to go on to consider the exercise of discretion.[9]The costs claim brought under Rule 76(1)(a) is brought solely upon the basis that the way in which the claimants conducted the proceedings was unreasonable (in failing to comply with the Tribunals’ Orders). The second respondent does not contend that the claimants were acting vexatiously, abusively or disruptively (which conduct also falls within the ambit of the Rule) in their conduct of matters. It follows therefore that the costs claims brought under Rule 76(1)(a) and (2) cover very much the same ground: that the claimants conducted the proceedings unreasonably by failing to comply with the Tribunal’s orders to furnish proper particulars of their claims. It was the material failure so to do which led me to conclude that there had been a failure to comply with Employment Judge Little’s order of 21 March 2018 and which resulted in the claims standing dismissed pursuant to the unless order. It is that failure which is said to constitute the unreasonable conduct pursuant to Rule 76(1)(a). It follows therefore that the two remaining grounds of claim stand or fall together.[10]The conduct of a party’s representative is effectively that of the party. A persistent failure to provide information can be unreasonable conduct. The word “unreasonable” has its ordinary English meaning. The Tribunal must look at the nature, gravity and effect of a party’s conduct in determining reasonableness. Should the second respondent establish that the claimants conducted the proceedings unreasonably and acted in breach of the Tribunal’s orders then a broad-brush approach to causation is required, the Tribunal being enjoined to identify the unreasonable conduct complained of and its effect.[11]The chronology of events is well known to the parties. The claimants today rightly do not seek to go behind any of the orders made in the case. The recitation of the procedural history is set out in my Judgment which is at pages 167 and onwards in the hearing bundle.[12]The kernel of the second respondent’s contention that the claimants’ conducted the proceedings unreasonably and were in breach of the Tribunal’s orders (which conduct overall gives rise to a costs liability) is the failure upon the part of the claimants to properly particularise and provide further information about their case and the basis of it. I drew the parties’ attention during the course of this morning’s hearing to the case of Kaur v John L Brierley Limited EAT 783/00 as authority for the proposition that a persistent failure to provide information can be unreasonable conduct. In that case, the claimant and her advisors persistently failed to identify the unlawful deduction that they were alleging had been made from her wages. This was despite repeated and reasonable requests from the employer’s solicitors. Although the claimant in the case was not able to provide any explanation for the failure she pursued the proceedings causing the employer to incur additional and wholly unnecessary costs. When the final hearing was imminent, the claimant withdrew. The Employment Tribunal’s decision to make a costs order against the claimants was upheld by the Employment Appeal Tribunal.[13]By reference to the procedural history which I set out in the reasons for the Judgment of 12 June 2018 it can be seen that on 5 March 2018 the claimants presented a document entitled “claimants’ details of claim”. This was effectively further particulars of the grounds of claim set out in the claim form presented on 3 November 2017. Employment Judge Little was concerned that the further and better particulars told the respondents little more than was in the grounds of claim. I refer to paragraph 13 of my reasons that were sent to the parties on 22 August 2018. This led to the order of 21 March 2018 ordering the claimants to “re-file the details of claim document (that they have filed on 5 March 2018) clearly indicating where and how that has been amended so as to provide the information required by paragraph 1 of the order made on 14 February 2018”. (The latter is a reference to Employment Judge Little’s order of that date ordering the provision of the further and better particulars and which in the event materialised on 5 March 2018).[14]On 28 March 2018 the claimants’ counsel presented to the Employment Tribunal a third pleading which was entitled “claimants’ details of claim”. This was therefore the third iteration of the claimants’ claims. (In the event of course I held this document to be materially non-compliant with Employment Judge Little’s order of 21 March 2018).[15]The recitation of the procedural history shows that in my judgment the claimants’ conduct was not as egregious as that of the claimant in the Kaur case. In the latter case, the claimant persistently failed to identify the unlawful deduction which she contended the respondent had made from her wages. This was held to be an inexplicable failure in what appears to be a relatively straightforward matter. In the instant case, the claimants at least sought to comply with the Tribunal’s orders.[16]I also take into account that the claimants themselves were very much in the hands of their representative (Mr Echendu) in formulating the case in such a way as to comply with the Tribunal’s orders. As I have said, a party’s representative’s conduct is effectively that of the party. In my judgment the conduct of the claimants themselves is not so egregious as to warrant a description of their conduct as unreasonable. True it is that there was failure to comply with the Tribunal’s orders but there is no suggestion that such conduct was wilful, in deliberate defiance or disobedience or disrespectful of the Tribunal’s orders. Two attempts were made by the claimants to comply. They instructed Mr Echendu to formulate their claims. The attempts were unsuccessful but there were at least an attempts (in contrast to the Kaur case).[17]I now turn to the application of the two-stage test described at paragraphs 6 and 7 above. By reference to the second respondent’s application under Rule 76(1)(a) I find that the initial threshold is passed as there was material noncompliance with the Tribunal’s orders for the provision of further and better particulars of the claim. However, at the second stage of the test, I find that the claimants have not acted unreasonably for the reasons that I have given in paragraphs 12 to 16 above. It follows therefore that the second stage of the test is not engaged.[18]Upon the second respondent’s costs application made under Rule 76(2) I find that the claimants did fail to comply with the Employment Tribunal’s orders made on 14 February 2018 and 21 March 2018. That is an inevitable finding given the conclusions that I reached on 12 June 2018. Therefore, the second stage of the test is engaged. I exercise my discretion in favour of the claimants. The factors which tell in favour of the exercise of discretion in the claimants’ favour are that: the claimants were reliant on their legal representative to comply with the orders; and the claimants purported to comply albeit that they failed to do so. There was therefore no wilful disregard of Tribunal orders. Further, the claimants have suffered the strike out of their claims.[19]For these reasons, the second respondent’s costs application is refused.[20]In the final paragraph this is said: - “On the issue of legal privilege, our client does not waive privilege in our advice. The Tribunal will however be aware that solicitors are creatures of instruction. This firm is not in the habit of acting against client’s instructions and we invite the Tribunal to draw its own inferences from this”.[21]This paragraph leads me full circle to the principles that I have set out above. The second respondent’s solicitors can only have a liability if they were negligent, or guilty of improper or unreasonable conduct within the meaning of those terms per Ridehalgh. The question of whether the second respondent’s solicitors were negligent (in the sense of failing to act with the competence reasonably expected or ordinary members of the legal profession) often turns on what instructions were provided by the client and what advice was given by the representative. I am satisfied, by application of the principles in the Medcalf case, that I cannot be satisfied that there is nothing that the second respondent’s solicitors could say unconstrained by legal professional privilege in order to resist the order sought against them. I am bound to give the benefit of the doubt to the second respondent’s solicitors in this matter and can only infer that in their favour that certain advice was given by them to their clients about the prospects of success of the pursuit of a wasted costs order against Mr Echendu and that, in the light of the advice given, the second respondent nonetheless wished to proceed with the application.[22]This is sufficient to dispose of the application made by Mr Echendu against the second respondent’s solicitor. However, the second respondent’s solicitors have raised a further issue in their letter of 30 January 2020. Essentially, it is contended that Mr Echendu has in any event got no standing to make a wasted costs application against them.[23]As I said earlier, Rule 80(1) provides that, “Tribunal may make a wasted costs order against a representative in favour of any party in the circumstances set out in the Rule.” The term “representative” is defined in Rule 80(2). This term means “a party’s legal or other representative or any employee of such representative…” [emphasis added].[24]The second respondent’s solicitors rightly point out that the term “party” is not defined within the Rules. There is, in my judgment much force in their representation that a wasted costs order may only be made against a representative in favour of a party. There is no dispute in principle, of course, that the second respondent’s solicitors are that party’s representative and therefore potentially have a wasted costs liability. (On the facts, of course, I find that no liability for wasted costs has arisen but in principle one may have been made against the second respondent’s solicitor).[25]The difficulty for Mr Echendu is that he is not a party to the proceedings. He was in fact a representative of the claimants who were, of course, two of the parties to the proceedings. It was upon this basis that the second respondent pursued the application against them for their wasted costs. That step was taken in their capacities as parties to the action. Mr Echendu had a potential liability to the second respondent as a representative as defined by Rule 80(2). (Again, on the facts, this did not in fact arise for the reasons that I have explained in this judgment).[26]The 2013 Rules draw a distinction between a party on the one hand and other persons on the other. For example, Rule 34 provides that: “the tribunal may on its own initiative, or on the application of a party or any other person wishing to become a party, add any person as a party, by way of substitution or otherwise, if it appears that there are issues between that person and any of the existing parties falling within the jurisdiction of the tribunal which it is in the interests of justice to have determined in the proceedings; and may remove any party apparently wrongly included” [emphasis added].[27]Rule 35 provides that: “The tribunal may permit any person to participate in proceedings, on such terms as may be specified, in respect of any matter in which that person has a legitimate interest.”[28]In the context of Rules 34 and 35, therefore, the term “party” on the one hand and “other person” and “person” on the other plainly have a different meaning. A distinction is to be drawn between a party to the proceedings on one hand and other persons on the other.[29]Jowitt’s Dictionary of English Law (5th Edition) provides, in its revision dated 1 August 2019, that “a person who takes part in a legal transaction or proceedings is said to be a party to it.” It goes on to say that a party is a litigant and that, “in a legal proceeding the parties are the persons whose names appear on the record.”[30]Upon this basis, I am satisfied that although not defined in the Rules, the term “party” for the purposes of the Rules is confined to the claimant, respondent or another added to the proceedings as a party pursuant to Rule 34. The term “party” does not extend to anyone else. Had it been the intention of the Rulemakers that a representative could make a costs application in his or her own right then that would have been provided for within the Rules. The Rules limit the right to make a wasted costs order only to parties.[31]There is a further difficulty for Mr Echendu. This is that Rule 80 provides that “a wasted costs order may be made in favour of any party where that party has incurred costs” [emphasis added] as a result of any improper unreasonable or negligent act or omission on the part of a representative or which, in the light of any such act or omission occurring after they were incurred, the Tribunal considers it unreasonable to expect the receiving party to pay. Therefore, only the costs which a party has actually incurred are recoverable by way of wasted costs.[32]In this case, there is no suggestion that the claimants have incurred the costs which Mr Echendu seeks to recover from the second respondents’ solicitor. Upon the basis of my ruling in paragraphs 23 to 30, only the claimants may pursue the wasted costs order being sought against the second respondent’s solicitors. However, the costs in question are those incurred by Mr Echendu in preparing for and resisting the wasted costs application against him. These are not the claimants’ costs. To the best of my knowledge, the claimants are not liable to pay these costs to Mr Echendu.[33]It seems to me therefore that to make an award of wasted costs in Mr Echendu’s favour would be a breach of the indemnity principle. This is a principle of law which provides that cost ordered to be paid as between parties to litigation are given as an indemnity to the person entitled to them and the amount which the paying party has to pay cannot exceed the amount which the successful party has to pay to his own solicitor. The claimants have no obligation to pay Mr Echendu in respect of his costs of defending the wasted costs application against him (or at any rate, I was not told that they do have such a liability). There are therefore no costs incurred by the claimants in respect of which they are entitled to seek indemnity from the second respondent or the second respondents’ solicitors.[34]In summary therefore, I hold that: 33.1. The second respondents’ solicitors conduct of the proceedings was not improper, unreasonable or negligent as defined in Ridehalgh and therefore no wasted costs arise upon which basis a wasted costs order can be made against them. 33.2. In any event, Mr Echendu has no standing to bring his claim in respect of his costs as against the second respondents’ solicitors as he was not a party to the proceedings. 33.3. The costs incurred by Mr Echendu are not those of the claimants. As the wasted costs order can only be made in favour of a party and are intended to indemnify a party against the wasted costs incurred by them as a consequence of improper, unreasonable or negligent conduct by the other party it would be a breach of the indemnity principle to make an award against the second respondents’ solicitors in the circumstances.