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United Kingdom Employment Appeal Tribunal |
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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Mitchells Solicitors v Funkwerk Information Technologies York Ltd [2008] UKEAT 0541_07_0804 (8 April 2008) URL: http://www.bailii.org/uk/cases/UKEAT/2008/0541_07_0804.html Cite as: [2008] UKEAT 541_7_804, [2008] UKEAT 0541_07_0804 |
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| At the Tribunal | |
| On 19 February 2008 | |
Before
HIS HONOUR JUDGE BURKE QC
MR P SMITH
MR S YEBOAH
| APPELLANT | |
| RESPONDENT |
Transcript of Proceedings
JUDGMENT
| For the Appellant | MR P CHAPMAN (Solicitor) Messrs Mitchells Solicitors 2 Peckitt Street Clifford Street York YO1 9SF |
| For the Respondent |
MS N TWINE (of Counsel) Instructed by: Messrs Raworths LLP Solicitors Eaton House 89 Station Road Harrogate N Yorkshire HG1 1HF |
SUMMARY
PRACTICE AND PROCEDURE: Costs
After the Claimant's discrimination claim failed the Respondents sought an order for costs against her or a wasted costs order against her solicitors for pursuing a hopeless case ab initio after the third day when the hopelessness was manifest. The Tribunal rejected the application for costs against the Claimant but made a wasted costs order against the solicitors on the basis that they ought to have advised her after Day 3 and before the hearing resumed 6 weeks later that her case would fail. On the solicitors' appeal
Held:
(i) The Tribunal were not referred to the guidance in Ridehalgh v Horsefield (CA) and Medcalf v Weatherill (HL) or even to the summary in Harvey.
(ii) The Tribunal erred in principle in not applying that guidance and in
(a) failing to consider whether the pursuing of a hopeless case was not only very negligent but amounted to an abuse of the Court.
(b) failing to consider whether the solicitor between the 3rd and 4th days made any assessment of the merits, and if so what it was and how he reached it.
(c) failing to consider whether the solicitors' failure had caused the costs of the 4th and 5th days i.e. whether, if advised, the Claimant would have withdrawn
(iii) Therefore appeal allowed; the parties not seeking a remission, wasted costs application dismissed.
HIS HONOUR JUDGE BURKE QC
The Nature of the Appeal
The Facts
"6. The Tribunal carefully considered the Respondent's submissions, but concluded that it would be inappropriate to exercise the discretion against the Claimant in circumstances where the Claimant received advice throughout from her representative. It was clear that the Claimant had not received advice regarding the weakness of the case, but merely that the outcome would depend on what the Tribunal believed. She was never advised that it might be sensible to withdraw from the case."
and continued as follows at paragraphs 7 and 8:
"7. The advice on the merits of the claim which the Claimant had received was that in September, shortly before the Hearing, the Claimant was advised she stood between a 50 and 55% chance of success. Earlier the Claimant had been informed in February 2006 that she stood a 55-60% chance of success. Even if the claim technically comes within the statutory definition of "misconceived" on the grounds that it had no reasonable prospect of success, the Tribunal was satisfied that this Claimant held a strong conviction that the claim stood a prospect of success in accordance with the advice which she received from her Solicitor. That advice seems to have had no detailed basis in the factual analysis of the respective allegations in the claim, and it is difficult to see how the Claimant could have been called upon to interrogate her Solicitor further regarding the basis on which he made that assessment of her prospects of success.
8. Accordingly, we did not find that the Claimant acted unreasonably in her conduct of the proceedings."
"11. The Tribunal's analysis of the conduct of the case was that the Claimant's statement was rambling and unfocussed and far longer than it need have been if properly drafted. The effect of this was that the cross–examination of the Claimant and the preliminary reading took the first two days of the Hearing. One of the Respondent's witnesses was dealt with on the third day, and that concluded the Hearings of the 3rd, 4th and 5th October 2006. The Hearing resumed on 21st and 22nd November 2006, with the final witness being taken on 22 November 2006 and the submissions concluding at 4 pm on that day. The Tribunal deliberated on the final day, 23 November, and reached its conclusion.
12. Our analysis of the case was that although often discrimination cases turn on the way in which particular witnesses give evidence, the Claimant's evidence in this case had a strangely disengaged approach to the serious issues faced. It may be that the Claimant's representative should have been aware that the evidence would be given in this way in advance of the first set of Hearings because of the deficiencies in the preparation of the witness statement and the failure to focus the case on potentially successful claims of sex discrimination and the Claimant's unfair constructive dismissal case. The first set of Hearings was occupied with the Claimant's case and one Respondent's witness. Whatever could be said prior to the first set of hearings, it was certainly clear by the time the Claimant's evidence had been completed and Mr Davies had been heard for the Respondent that the Claimant's prospects of succeeding in this case were extremely limited. To have allowed the Claimant to proceed in those circumstances without making clear to the Claimant the fact that any realistic assessment of her chances put them well below the figures previously quoted amounted to conduct on the part of the Claimant's representative leading this Tribunal with no alternative but to make a wasted costs order.
13. We appreciate the importance attached by the Appellate Courts to representation being available to allow Claimants to pursue claims in the field of discrimination. In addition, therefore, to any natural reluctance to make a wasted costs order, given the very serious finding on which such an Order must be based, there is in the context of a discrimination case an additional component imposing on us a duty to consider very carefully whether such an Order might discourage a representative such as Mr Scott from pursuing cases in discrimination when other representatives might not be available.
14. Having said that, we did not consider that it would be appropriate to make an Order against the Claimant's representative in respect of the costs incurred in the first three days of the Hearing. While it may be that Mr Scott acted improperly, unreasonably or negligently in allowing the case to proceed to Hearing, we accept that it would be reasonable for him to allow the Claimant to give her evidence in-chief and put forward her view of the facts and her case that it was sex discrimination which she experienced. However, once the Claimant had completed her evidence and Mr Davies had given his evidence, any competent advisor would have been obliged to point out to the Claimant the fact that after her case had been heard and her evidence had been challenged there was very little factual basis on which a Tribunal was likely to find a case of sex discrimination or constructive dismissal in her favour.
15. There is nothing to suggest that, despite a significant number of costs warnings on the part of the Respondent, Mr Scott gave the Claimant anything approaching a critical analysis of the strengths and weaknesses of her case after the first set of Hearings was concluded. It therefore follows that the Respondent in this case was put to the cost of the second set of Hearings without any true need for that work to be undertaken.
16. In those circumstances, we consider that a wasted costs order against the Claimant's representative is amply justified in this case. We computed the amount thereof on the basis that there were two brief refreshers at £650 and 12 hours of Solicitor's work, that is £1,125 - a total of £2,425. We also considered it right that the Claimant's representative should pay the costs of the Hearing today incurred by the Respondent in the sum of a further £650 refresher for Counsel and £250 Solicitor's costs - a total of £900."
Submissions
(1) The Court of Appeal in Ridehalgh v Horsefield [1994] 3 AER 848 gave guidance as to the correct approach to wasted costs applications, which guidance was adopted by the House of Lords in Medcalf v Weatherill [2002] 3 WLR 172. In so far as relevant to this appeal that guidance was that:
i. The wasted costs jurisdiction should only be exercised with great caution and as a last resort.
ii. A wasted costs order should be made only if the court or tribunal is satisfied that the conduct of the impugned representative was properly to be characterised as improper, unreasonable or negligent; see, so far as Employment Tribunals are concerned, rule 48(3)(a) of Schedule 1 to the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004.
iii. A legal representative, solicitor or counsel, should not be held to have acted improperly, unreasonably or negligently simply because he acts on behalf of a party who pursues a hopeless case.
iv. The Tribunal can only make a wasted costs order in such a case if it is shown (i) that the legal representative has presented a case which he regards as bound to fail; and (ii) that, in so doing, he has failed in his duty to the court and that the proceedings amount to an abuse of the process.
v. The Tribunal, must in deciding whether to make a wasted costs order, take into account that, unless the legal representative's lay client waives privilege, the cloak of confidence between client and legal representative is likely to prevent that representative from being able to explain why he has pursued his client's case as he has.
vi. It must be shown that the conduct of which complaint is made caused the applicant to incur unnecessary costs.
vii. The court or tribunal must exercise a discretion at two stages; it must first consider whether the merits and circumstances of the application render the application justified and proportionate; if it exercises its discretion in favour of the complaint proceeding at that first stage, the application will proceed to a hearing at which the court or tribunal has to exercise a further discretion if the central prerequisites for an order are made out, as to whether to make an order or not.
(2) The Tribunal failed to comply with that guidance and therefore erred in law in the following respects:
i. There had been no waiver of privilege. Any waiver was given only under unfair pressure from the Tribunal; the Tribunal had not borne in mind the guidance as to the difficulties of making a wasted costs order in those circumstances.
ii. The Tribunal had not found that Mr Scott had failed in his duty to the court or lent himself to an abuse of process.
iii. The Tribunal had not considered or made findings as to Mr Scott's assessment of the merits of Mrs Wright's case at the time when, as they held, he had failed to advise her as to those merits.
iv. The Tribunal had not made findings as to causation; had Mrs Wright been given advice as to the merits before the resumed hearings in November it was highly likely that she would have insisted on continuing, either with or without her solicitors.
v. The Tribunal had not exercised a discretion at either of the two stages set out in Ridehalgh; the first stage was omitted altogether; at the second stage the Tribunal directed themselves at paragraph 12 of their Judgment that they had no alternative but to make a wasted costs order.
vi. The Tribunal failed to consider that there had been no or no sustained attempt to strike out the claims or seek payment of a preliminary deposit on the basis of an absence of merit.
(1) There had been a full waiver of privilege; the guidance as to the correct approach where there had been no such waiver was of no relevance.
(2) Where there was more than the pursuing of a hopeless case, for example – as on the Tribunal's findings in the present case - where there had also been a failure to assess and advise as to that hopelessness, it was not necessary for the Tribunal to go further and find an abuse of the process; alternatively on the findings of fact there was such an abuse and the Tribunal should have be taken so to have found.
(3) The Tribunal's judgments demonstrated that they had found Mr Scott to have appreciated that the merits were, after the first three days of the hearing, greatly reduced, to the extent that the hearing should not have continued.
(4) It was implied from the Tribunal's findings, in particular at paragraph 6, that they had concluded that, had Mrs Wright been given appropriate advice, she would not have persisted; she or Mr Scott had been given costs warnings by the Respondent four times; she would not have risked continuing.
(5) As to the first of the two stages at which a discretion could have been exercised, there had been case management discussion, to which we have referred, at which the Tribunal considered whether the application for a wasted costs order was out of time and, having decided that it was not, gave directions for the hearing of the application. No point that the Tribunal should have specifically considered whether the application was merited was raised by Mr Scott on that occasion; that hearing was conducted on the basis that, subject to the time point, there would be a full hearing of the application.
(6) There had been an application to strike out or for a deposit to be paid at the outset before Mrs Wright's claims were properly particularised. Thereafter it was not appropriate to make such an application. The wasted costs order in any event applied only to the last two days of the five day hearing.
Discussion and Conclusions
Mrs Wright
Privilege
The Authorities
"Pursuing a hopeless case
A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he acts for a party who pursues a claim or a defence which is plainly doomed to fail. As Lord Pearce observed in Rondel v Worsely [1967] 3 All ER 993 at 1029, [1969] 1 AC 191 at 275:
'It is easier, pleasanter and more advantageous professionally for barristers to advise, represent or defend those who are decent and reasonable and likely to succeed in their action or their defence than those who are unpleasant, unreasonable, disreputable, and have an apparently hopeless case. Yet it would be tragic if our legal system came to provide no reputable defenders, or representatives or advisers for the latter.'
As is well known, barristers in independent practice are not permitted to pick and choose their clients. Paragraph 209 of the Code of Conduct of the Bar of England and Wales provides:
'A barrister in independent practice must comply with the "Cab-rank rule" and accordingly except only as otherwise provided in paragraphs 501, 502 and 503 he must in any field in which he professes to practise in relation to work appropriate to his experience and seniority and irrespective of whether his client is paying privately or is legally aided or otherwise publicly funded: (a) accept any brief to appear before a court in which he professes to practise; (b) accept any instructions; (c) act for any person on whose behalf he is briefed or instructed; and do so irrespective of (i) the party on whose behalf he is briefed or instructed (ii) the nature of the case and (iii) any belief or opinion which he may have formed as to the character reputation cause conduct guilt or innocence of that person.'
As is well known, solicitors are not subject to an equivalent cab-rank rule, but many solicitors would and do respect the public policy underlying it by affording representation to the unpopular and the unmeritorious. Legal representatives will, of course, whether barristers or solicitors, advise clients of the perceived weakness of their case and of the risk of failure. But clients are free to reject advice and insist that cases be litigated. It is rarely if ever safe for a court to assume that a hopeless case is being litigated on the advice of the lawyers involved. They are there to present the case; it is (as Samuel Johnson unforgettably pointed out) for the judge and not for the lawyers to judge it.
It is, however, one thing for a legal representative to present, on instructions, a case which he regards as bound to fail; it is quite another to lend his assistance to proceedings which are an abuse of the process of the court. Whether instructed or not, a legal representative is not entitled to use litigious procedures for purposes for which they were not intended, as by issuing or pursuing proceedings for reasons unconnected with success in the litigation or pursuing a case known to be dishonest, nor is he entitled to evade rules intended to safeguard the interests of justice, as by knowingly failing to make full disclosure on ex parte application or knowingly conniving at incomplete disclosure of documents. It is not entirely easy to distinguish by definition between the hopeless case and the case which amounts to an abuse of the process, but in practice it is not hard to say which is which and if there is doubt the legal representative is entitled to the benefit of it."
"I cannot accept the view of the majority. The law reports are replete with cases which were thought to be hopeless before investigation but were decided the other way after the court allowed the matter to be tried."
"51. The starting point must be a recognition of the role of the advocate in our system of justice. It is fundamental to a just and fair judicial system that there be available to a litigant (criminal or civil), in substantial cases, competent and independent legal representation. The duty of the advocate is with proper competence to represent his lay client and promote and protect fearlessly and by all proper and lawful means his lay client's best interests. This is a duty which the advocate owes to his client but it is also in the public interest that the duty should be performed. The judicial system exists to administer justice and it is integral to such a system that it provide within a society a means by which rights, obligations and liabilities can be recognised and given effect in accordance with the law and disputes be justly (and efficiently) resolved. The role of the independent professional advocate is central to achieving this outcome, particularly where the judicial system uses adversarial procedures.
52. It follows that the willingness of professional advocates to represent litigants should not be undermined either by creating conflicts of interest or by exposing the advocates to pressures which will tend to deter them from representing certain clients or from doing so effectively. In England the professional rule that a barrister must be prepared to represent any client within his field of practice and competence and the principles of professional independence underwrite in a manner too often taken for granted this constitutional safeguard. Unpopular and seemingly unmeritorious litigants must be capable of being represented without the advocate being penalised or harassed whether by the Executive, the Judiciary or by anyone else. Similarly, situations must be avoided where the advocate's conduct of a case is influenced not by his duty to his client but by concerns about his own self-interest.
53. Thus the advocate owes no duty to his client's opponent; inevitably, the proper discharge by the advocate of his duty to his own client will more often than not be disadvantageous to the interests of his client's opponent. (Orchard v S E Electricity Bd [1987] QB 565, 571). At times, the proper discharge by the advocate of his duties to his client will be liable to bring him into conflict with the court. This does not alter the duty of the advocate. It may require more courage to represent a client in the face of a hostile court but the advocate must still be prepared to act fearlessly. It is part of the duty of an advocate, where necessary, appropriately to protect his client from the court as well as from the opposing party. Similarly, the advocate acting in good faith is entitled to protection from outside pressures for what he does as an advocate. Thus, what the advocate says in the course of the legal proceedings is privileged and he cannot be sued for defamation. For similar reasons the others involved in the proceedings (e.g. the judge, the witness) have a similar immunity."
And then he continued at paragraph 56:
"56. In my judgment, the jurisdiction must be approached with considerable caution and the relevant provisions of s.51 construed and applied so as not to impinge upon the constitutional position of the advocate and the contribution he is required to make on behalf of his client in the administration of civil justice. The judgment in Ridehalgh referred to most of the relevant points.
First, from the point of view of the advocate the jurisdiction is penal. It involves making a finding of fault against the advocate and visiting upon him a financial sanction. Unlike the position between the advocate and his own client where the potential for liability will encourage the performance of the advocate's duty to his client (see Arthur Hall v Simons, sup) and the order would be truly compensatory, the jurisdiction to make orders at the instance of and in favour of the opposing party gives rise to wholly different considerations for the advocate. The risk of such an application can, at best, only provide a distraction in the proper representation of his own client and, at worst, may cause him to put his own interests above those of his client. The construction of the section and the application of the jurisdiction should accordingly be no wider than is clearly required by the statute.
Secondly, the fault must, in the present context, relate clearly to a fault in relation to the advocate's duty to the court not in relation to the opposing party, to whom he owes no duty.
Thirdly, the terms used in subsection (7) should receive an appropriately restrictive interpretation in relation to advocates. The judgment in Ridehalgh spelled this out at p.232 of the report. The use of the first two terms, improper and unreasonable, call for no further explanation. The word negligent raises additional problems of interpretation which are not material to the present appeal since the respondents' allegation against the appellants is impropriety not negligence. But it would appear that the inclusion of the word negligent in substitution for "reasonable competence", is directed primarily to the jurisdiction as between a legal representative and his own client. It is possible to visualise situations where the negligence of an advocate might justify the making of a wasted costs order which included both parties, such as where an advocate fails to turn up on an adjourned hearing so that a hearing date is lost. The breach of the advocate's duty to the court will be clear and if the breach was not deliberate, the term negligent would best describe it. For a person exercising a right o conduct litigation (ie a litigation agent) it is less difficult to think of apt examples affecting the other side as was the situation in Myers v Elman [1940] AC 282. The use of the same language in subsection (7) in relation to both categories of legal representative does not mean that it will have the same breadth application for both categories.
Fourthly, it is the duty of the advocate to present his client's case even though he may think that it is hopeless and even though he may have advised his client that it is. (Ridehalgh pp 233-4). So it is not enough that the court considers that the advocate has been arguing a hopeless case. The litigant is entitled to be heard: to penalise the advocate for presenting his client's case to the court would be contrary to the constitutional principles to which I have referred. The position is different if the court concludes that there has been improper time-wasting by the advocate or the advocate has knowingly lent himself to an abuse of process. However, it is relevant to bear in mind that, if a party is raising issues or is taking steps which have no reasonable prospect of success or are scandalous or an abuse of process, both the aggrieved party and the court have powers to remedy the situation by invoking summary remedies – striking out – summary judgment – peremptory orders etc. The making of a wasted costs order should not be the primary remedy; by definition it only arises once the damage has been done. It is a last resort."
"22. It is clear from what was said in both Ridehalgh and Medcalf that it is necessary for a duty to the court to be breached by the legal representative if he is to be made liable for wasted costs. In Ridehalgh at page 232 H to page 233 A Sir Thomas Bingham said this:
"Since the applicant's right to a wasted costs order against a legal representative depends on showing that the latter is in breach of his duty to the court, it makes no sense to superimpose a requirement under this head (but not in the case of impropriety or unreasonableness) that he is also in breach of duty to his client."
That guidance given in Ridehalgh was confirmed in Medcalf. Lord Hobhouse in that case at paragraph 26 referred approvingly to Ridehalgh and to the necessity for there to be a breach of the advocate's duty to the court. I need say no more on that first point."
"24. To my mind the two cases of Ridehalgh and Medcalf must now be taken to state what the law is in this area, and earlier cases may heave to be reconsidered in the light of the authoritative guidance which we now have. In Ridehalgh a clear distinction is drawn between presenting a hopeless case. It is plain that that cannot of itself lead to a wasted costs order – and lending assistance to proceedings which amount to an abuse of process."
Abuse of the Process
"Legal representatives will, of course, whether barrister or solicitor, advise clients of the presumed weakness of their case…"
She argues that, if a legal representative does not give any advice at all or at a relevant point in the case when the merits have changed, then either there is no need to prove abuse of the court or the failure to give such advice is itself an abuse of the court.
Mr Scott's state of mind
Causation
The exercise of discretion
"leading" [sic] "this Tribunal with no alternative but to make a wasted costs order…"
should be read as an indication that the Tribunal did not exercise their discretion, having found that there was negligent conduct, in deciding to make the order which they made. The Tribunal's judgment must be read as a whole; in paragraph 13 the Tribunal referred to the importance of not discouraging legal representatives from representing claimants in discrimination cases, a policy point which could only have been relevant as part of the exercise of a discretion.. In paragraphs 14 and 15 the Tribunal balanced various considerations. In our judgment the Tribunal can be seen, when all the relevant paragraphs are considered together to have exercised their discretion in favour of making an order.
Striking out etc.
Conclusion