KL LAW LTD v (1) WINCANTON GROUP LTD (2) MS J MARZEC [2018] UKEAT 0043_18_0105

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2018] UKEAT 0043_18_0105

Case No Appeal No. UKEAT/0043/18

Between

KL LAW LTDAPPELLANT

(1) WINCANTON GROUP LTD (2) MS J MARZECRESPONDENT

Before

Mrs Justice Simler

Date 1 May 2018

[1]APPEARANCES For the Appellant MR MARCIN KOZIK (Representative) KL Law Ltd Censeo House 6 St Peters Street St Albans Hertfordshire AL1 3LF For the First Respondent No appearance or representation by or on behalf the First Respondent For the Second Respondent Second Respondent debarred from taking part in this appeal SUMMARY PRACTICE AND PROCEDURE - Costs Following withdrawal of the Claimant's claims part way through a substantive hearing, the Employment Tribunal dealt with a wasted costs application made against her legal representative by the Respondent. There was no adjournment to enable evidence to be prepared and the Employment Tribunal heard no evidence from the legal representative. The Employment Tribunal made a wasted costs order finding that the legal representative was negligent in relation to the Claimant's disclosure obligations; this caused unnecessary costs; and it was just to make the order.

[2]The appeal was allowed and the order set aside. The Employment Tribunal's finding of negligence was in error in circumstances where privilege was not waived and it had no means of establishing what advice was given to the Claimant about disclosure. Further, the necessary element of breach of duty to the court was not considered by the Employment Tribunal. Finally, the causation finding was flawed by a failure to address the question whether the Claimant would have continued with the claim irrespective of any negative advice she received. THE HONOURABLE MRS JUSTICE SIMLER DBE (PRESIDENT) The Factual Background "26. … First, had the representative acted improperly, unreasonably, or negligently? Second, if so did that conduct cause the party applying for costs to incur unnecessary costs? Finally, would it be, in the circumstances, just to order the representative to compensate the other party for the whole or part of the relevant costs. …" There was no further amplification or consideration of the general approach to wasted costs orders by the Tribunal. "27. We therefore find that there was negligent conduct. 28. We find that that conduct did cause the respondent to incur unnecessary costs. If the representative had sought and obtained from the claimant the missing diary entries it is likely, in our judgment, that by the standard of a reasonably competent representative the claimant would have been advised to either not pursue the claim or, if commenced abandon it or at the very least to severely limit its scope. Moreover if there had been full disclosure to the respondent it would have been in a position to exert legitimate pressure on the claimant to withdraw by pointing out what may well have been serious discrepancies between her pleaded case and her own contemporaneous documentation. 29. The final consideration is whether it would in the circumstances be just to make a wasted costs order. We accept that there must be some speculation as to the likely result of there being full disclosure by the claimant to her representative and then full disclosure by the representative to the respondent. However, we believe that the consequences are sufficiently probable in the way we have described them above to make an order which in the first place only addresses a part of the respondent's actual costs and secondly which represents two thirds only of the amount actually being sought by the respondent. We should add that although Rule 84 permits us to have regard to a paying party's means in the context of a wasted costs order we have not been invited to take into account those means. However, clearly the representative is a Limited company, no doubt with assets. We were told that the claimant on behalf of herself and Mr Tatinger's claim had paid some £13,000 to K L Law Limited in respect of Mr Tatinger's costs and her own." The Grounds of Appeal "(1) Procedure: the application being presented to the appellant on the morning of the costs hearing against his client (which was the day after she abandoned her claim); and then dealt with in one immediate stage (2) The necessary element of breach of duty to the court (see e.g. Persaud v Persaud ): this appears not to have been considered (3) Negligence … (5) Causation: e.g. whether earlier advice to abandon would have been accepted." "21. … Essentially Mr Kozik blamed his client for not telling him that there were more diary entries than had been provided to him. He explained that because the claimant lived in Doncaster and he was based in St Albans the claimant had never visited his office and that communications between them had been via Skype. It appeared that Mr Kozik would not have met the claimant until the recent hearing of Mr Tatinger's claim in which Ms Marzec was a witness. He contended that his organisation had asked the claimant whether there were any other diary entries but suggested that perhaps the claimant had not understood that request because of her alleged mental state. Mr Kozik pointed out that the respondents had never queried whether there were any other diary entries than those that had been disclosed to them. Mr Kozik said that when he had worked for various solicitors' firms in London it had been common practice not to meet the client but to deal via Skype." The Applicable Legal Principles "(1) A Tribunal may make a wasted costs order against a representative in favour of any party ("the receiving party") where that party has incurred costs -(a) as a result of any improper, unreasonable or negligent act or omission on the part of the representative; or

(b) 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. Costs so incurred are described as "wasted costs". (2) "Representative" means a party's legal or other representative or any employee of such representative, but it does not include a representative who is not acting in pursuit of profit with regard to the proceedings. A person acting on a contingency or conditional fee arrangement is considered to be acting in pursuit of profit. (3) A wasted costs order may be made in favour of a party whether or not that party is legally represented and may also be made in favour of a representative's own client. A wasted costs order may not be made against a representative where that representative is representing a party in his or her capacity as an employee of that party." (1) Has the legal representative, of whom complaint is made, acted improperly, unreasonably or negligently? (2) If so, did such conduct cause the applicant to incur unnecessary costs? (3) If so, is it, in the circumstances, just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs? However, it is clear from both Ridehalgh and Medcalf , as applied in an employment context by Elias P in Ratcliffe , that it is not enough simply to establish negligent or other impugned conduct alone. It is also necessary for a duty to the court (or tribunal) to be shown to have been breached by the legal representative if he or she is to be made liable for wasted costs: see the judgment of Sir Thomas Bingham MR in Ridehalgh , and Medcalf where Lord Hobhouse referred to those observations with approval. In Persaud v Persaud

[2003] EWCA Civ 394

, the Court of Appeal described this requirement as a need to establish something akin to an abuse of the process of the Court. The Appeal "23. … We were however much more concerned about the clear failure to make full disclosure of relevant documents. Whilst we considered that the greater fault lay with the claimant's representative, the failure as alleged by her representative of the claimant to provide all the documentation to the representative had contributed to the ultimate failure to discharge the duty of disclosure. In this regard, whilst we accept that the claimant is a lay person we have also been told that she is someway through a five year masters degree in Law in Poland. As an obviously intelligent person with some legal background we fail to see how she could have considered diary entries about meetings or events where she profoundly disagreed with the respondent's documentation as anything other than highly relevant documents." Further, as indicated, at paragraph 21 the Tribunal recorded the fact that Mr Kozik blamed his client for the failure and also referred to the fact that he was hampered by logistical difficulties in communications. It is also clear from paragraph 21 that Mr Kozik's position was that proper advice was given about disclosure and the importance of providing relevant documents.