Although employment tribunals have the power to make a wasted costs order against an unsuccessful party, the Employment Appeal Tribunal (EAT) held in Wentworth-Wood and ors v Maritime Transport Ltd that they must take great care when doing so. In particular, they must ensure that they have considered not only what specific conduct was “improper, unreasonable or negligent”, but also whether it resulted in unnecessary costs.
Following a successful application to strike out the claimants’ complaints, Maritime Transport Ltd brought a wasted costs order against both the claimants and their solicitors on the basis that they had acted unreasonably and were negligent in bringing and/or conducting the proceedings.
Rule 80(1) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 states that “a tribunal may make a wasted costs order against a representative in favour of any party … where that party has incurred costs … as a result of any improper, unreasonable or negligent act or omission on the part of the representative”.
The tribunal agreed with the application and ordered the claimants to pay Maritime Transport just over £8,000 in costs and their solicitors to pay £600 for their unreasonable conduct.
Although the solicitors accepted that the way in which they had conducted the litigation was not ideal, they appealed against the order on the basis that the tribunal had not identified how it “amounted to behaviour that no solicitor who was reasonably informed and competent would have behaved”. The claimants and their solicitor OH Parsons LLP therefore appealed to challenge the tribunal’s order for costs that it made against both of them.
Upholding the appeal, the EAT found that the tribunal judge had not followed the correct approach. In particular she had not identified the ways in which the solicitors had breached acceptable standards of behaviour. She had also failed to identify each claimant and the ways in which their conduct had been deficient, treating them instead as a single unit which was plainly wrong.
The EAT was also highly critical of the judge for adopting “wholesale” the reasons advanced by the successful party, without identifying those reasons or bothering to explain what the reasons were and/or why she had accepted them. This did not meet the minimum requirements of a judgment that was both “accessible and public”. Likewise, it did not enable a reader of the judgment to understand, in an intelligible way, why the claimants lost.
Instead, the EAT said that the judge should have adopted the following three-stage approach:
1. to recognise that wasted costs is an exceptional jurisdiction to be exercised with great care adopting a staged approach, and requiring consideration of what specific conduct is said to be improper, unreasonable or negligent
2. to consider whether the particular conduct caused the opposing party unnecessary costs
3. to consider whether in all the circumstances it is just to order the legal representative to compensate the receiving party for all or part of those costs.
The EAT therefore allowed the appeal, set aside the orders for costs that the judge had made, and dismissed both applications by the employer for costs.