THE INDUSTRIAL TRIBUNALS

CASE REFS: 	1108/16
2630/15

CLAIMANT:			Jo-Anne Peters

RESPONDENT:		South Eastern Health and Social Care Trust

COSTS DECISION 
The decision of the tribunal is that the following costs are payable to the respondent:

(1)	The claimant must pay £1,932, (inclusive of VAT); 

(2)	The representative Mr Martins must pay £1,932 (inclusive of VAT) by way of wasted costs.

Constitution of Tribunal:
Employment Judge (sitting alone):	Employment Judge Murray	
		
Appearances:
The claimant was represented by Mr Martins of The Employment Law Service.
The claimant and her husband Mr Peters were in attendance
The respondent was represented by Mr Hamill, Barrister-at-Law instructed by Ms McClean of the Directorate of Legal Services.

REASONS

1.	The substantive hearing in this case was listed for two weeks beginning 24 October 2016.  The respondent’s application to adjourn the hearing was granted for reasons given orally at the hearing.  A copy of the record of proceedings of that CMD dealing with the application is attached to this decision.

2.	Essentially the adjournment was granted because of the late production of a psychiatric report from Dr Kelly dated 20 September 2016 which had been received by the solicitor acting for the respondent on Wednesday 19 October 2016, i.e. three working days before the hearing.

3.	As outlined in the attached CMD record, the respondent applied for costs of the first week of the abandoned two-hearing, given the late adjournment. 

4.	The costs hearing proceeded in part on 24 October 2016 but was adjourned by me to enable the claimant and Mr Martins to prepare to deal with an application for costs against the claimant and an application for wasted costs against Mr Martins.  Both parties were aware that they needed to bring evidence of their means to the adjourned costs hearing.  Both the claimant and Mr Martins were also aware that wasted costs were being sought and that Mr Martins blamed the claimant for the delay in serving the medical evidence.

The Law

5.	The respondent’s application was under The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 and specifically under three Rules as follows:

		(1) Rule 40(1) which states:

“A tribunal or chairman may make a costs order when on the application of a party it or he has postponed the day or time fixed for or adjourned a hearing under rule 26 or pre-hearing review. The costs order may be against or, as the case may require, in favour of that party as respects any costs incurred or any allowances paid as a result of the postponement or adjournment. “

	(2) The respondent relied on the words “disruptively or otherwise unreasonably” in Rule 40 (3) which states, where relevant, as follows:
 
“...where the paying party has in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived.”

	(3) Rule 48 (3)(a) in relation to wasted costs where a party can recover costs from a representative where costs are incurred as a result of any “negligent act or omission on the part of any representative”.

6.	Harvey at Division P1 Practice and Procedure, states as follows in relation to wasted costs:

“[1077] The leading general guidance is contained in the judgment of the Court of Appeal in Ridehalgh v Horsefield [1994] Ch 205, [1994] 3 All ER 848 (approved by the House of Lords in Medcalf v Mardell [2002] UKHL 27, [2003] 1 AC 120), from which the general principles set out below are extracted.  Although the Court was there concerned solely with legal representatives, the principles may be adapted so as to apply to any representatives falling within r 48.  The principles are as follows:

(a)	When considering whether to make a wasted costs order, a three-stage test should be applied:

(i)	Has the legal representative of whom complaint was made acted improperly, unreasonably or negligently?
(ii)	If so, did such conduct cause the applicant to incur unnecessary costs?
(iii)	If so, is it, in all the circumstances, just to order the legal representative to compensate the applicant for the whole or part of the relevant costs

	...

	(d)	‘Negligent’ should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.  In adopting an untechnical approach to the meaning of negligence in this context, the Court firmly discountenanced any suggestion that an applicant for a wasted costs order under this head need prove anything less than he would have to prove in an action for negligence. 
	
	... 

 	[1080] There is no general rule as to when a wasted costs application should be heard.  In Jackson v Cambridgeshire County Council UKEAT/0402/09 (8 June 2011, unreported).  Underhill J observed (at para 28) that efficiency and economy would ordinarily point to it being heard at the conclusion of the hearing giving rise to the application and  in many cases there will be no valid objection to that course being taken: ‘Either the representative will have been notified in advance that the application will or may be made, with sufficient indication of its basis to enable him to prepare, or the issue will be one which is sufficiently straightforward for a professional to be able to deal with it without substantial prior notice’.  But there may be cases, such as where the issues are not straightforward or time is too short, when it would be fairer to deal with it at an adjourned hearing.  Although the wasted costs procedure is intended to be summary, it must also be fair.  Underhill J recognised that a finding of negligence is a serious matter for a professional representative, and stated that ‘if a summary procedure is an unfair procedure fairness must come first’.”

7.	In the case of Barnsley Metropolitan Borough Council  v  Yerrakalva [2011] EWCA Civ 1255, the Court of Appeal reviewed the authorities in relation to the issue of costs under the equivalent Rules of Procedure applying in the Employment Tribunals in Great Britain.  He stated:-

“39.	I begin with some words of caution, first about the citation and value of authority on costs questions and, secondly, about the dangers of adopting an over-analytical approach to the exercise of a broad discretion.

40.	The official words of [Rule 40] are clear enough to be applied without the need to add layers of interpretation, which may themselves be open to differing interpretations.  Unfortunately, the leading judgment in McPherson delivered by me has created some confusion in the ET, EAT and in this Court.  I say ‘unfortunately’ because it was never my intention to re-write the Rule, or to add a gloss to it, either by disregarding questions of causation or by requiring the ET to dissect the case in detail and compartmentalise the relevant conduct under separate headings, such as ‘nature’, ‘gravity’ and ‘effect’.  Perhaps I should have said less and simply kept to the actual words of the Rule.

41.	The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by a claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had.  The main thrust of the passages cited above from my judgment in McPherson was to reject as erroneous the submission to the Court that, in deciding whether to make a Costs Order, the ET had to determine whether or not there was a precise causal link between the unreasonable conduct in question and the specific cost being claimed.  In rejecting that submission, I had no intention of giving birth to erroneous notions, such as that causation was irrelevant or that the circumstances had to be separated into sections and each section to be analysed separately so as to lose sight of the totality of the relevant circumstances.

42.	On matters of discretion an earlier case only stands as authority for what are, or what are not, the principles governing the discretion and serving only as a broad steer on the factors covered by the paramount principle of relevance … .”

8.	In addition, Mummery LJ, repeated that costs are in the discretion of the Employment Tribunal and the power to order costs is more sparingly exercised and is more circumscribed by the Rules of Procedure than those of the ordinary Courts and that a costs Order is the exception rather than rule.  (See paragraphs 7-9.)

9.	In the case of AQ Limited  v  Holden [UKEAT/0021/12], the Employment Appeal Tribunal confirmed that the threshold test in Rule 40(3) are the same whether a litigant is or is not professionally represented.  His Honour Judge Richardson stated:-

“Justice requires that Tribunals do not apply professional standards to lay people, who may be involved in legal proceedings for the only time in their life.  …  lay people are likely to lack the objectivity and knowledge of law and practice brought by a professional legal adviser.  Tribunals must bear this in mind when assessing the threshold test in Rule 40(3).  Further, even if the threshold tests for an Order for Costs are met, the Tribunal has discretion whether to make an Order.  This discretion will be exercised having regard to all the circumstances.  It is not irrelevant that a lay person may have brought proceedings with little or no access to specialist help and advice.  

This is not to say that lay people are immune from Order for Costs: far from it as the cases make clear.  Some litigants in person are found to have behaved vexatiously or unreasonably even when proper allowance is made for their inexperience and lack of objectivity …” (paragraphs 32 and 33).

10.	I have a discretion as to whether or not to award costs.  I can take account of a party’s ability to pay but inability to pay is not a bar to costs being awarded.  Costs are the exception rather than the rule in the tribunal and costs are compensatory and not punitive.

Findings of fact and conclusions

11.	The tribunal heard evidence from Mrs Peters in relation to the reasons for the delay in serving relevant medical evidence and in relation to her means.  The tribunal also heard from Mr Peters, as Mrs Peters also gave evidence that she worked closely with her husband in preparing for the case and in reaching various decisions in relation to the preparation of the case.  As Mr Peters had prepared the statement of income outgoings and assets, Mrs Peters also indicated that her husband would be in a better position to provide detail in relation to the figures set out.  

12.      The tribunal heard evidence from Mr Martins in relation to the reasons for the delay in producing medical evidence and Mr Martins was given the opportunity to give evidence in relation to his means. 

13.	The costs hearing ran for a full day.  At the outset of the hearing Mr Martins handed in a bundle of documents in relation to the claimant’s means which comprised a statement of her income and assets and an accountant’s statement of the profit and loss account in relation to three businesses which the claimant operates with her husband.  Mr Martins applied for that documentation to be kept confidential and not to be given to the respondent’s representatives as he stated that it contained sensitive and confidential information and belonged to the claimant.  I considered the submissions from both sides and directed that the documentation and its contents were relevant to the costs application, that they had to be shared with Mr Hamill and his solicitor and I placed a restriction on the wider dissemination of that information namely that Mr Hamill and his solicitor should not provide that information to anyone else without the leave of the tribunal.  I also rejected Mr Martins’ application for the documents to be returned to the claimant after the costs hearing.  

14.	It emerged late in the afternoon that there might be a conflict in evidence between that given by Mr and Mrs Peters and the evidence given by Mr Martins in relation to the sequence of events relating to the arrangement of the appointment with Dr Kelly and the production of the medical report.  

15.	In view of the possible conflict in evidence between Mr Martins and his client which emerged late in the hearing, I gave Mr and Mrs Peters the opportunity to cross-examine Mr Martins and to put forward submissions on their own behalf at the end of the hearing.  It was made clear by me to Mr and Mrs Peters that essentially Mr Martins was blaming them for the delay in producing the medical evidence whereas their evidence was that Mr Martins was at fault for any delay.

16.	During the evidence on this point, I made it clear that it was the sequence of events and the dates of certain decisions which were of importance in relation to the costs application as the focus of the hearing was on the lateness of the production of the medical evidence which essentially led to the adjournment.  I explained to Mr Martins and to Mr and Mrs Peters that they did not have to give detail of any advice or discussions there had been between them and their representative as these were private and might raise issues of litigation privilege.  If litigation privilege was an issue in the case the representatives were told that they would need to make detailed representations about that.  At no point did anyone say that they needed to go into that level of detail of discussions and both representatives agreed that the issue of litigation privilege did not arise.

17.	I specifically asked Mr Martins in his evidence and in his submissions as to whether or not he was constrained by any issues of privilege in providing information on the sequence of events relating to the decision to provide medical evidence.  Mr Martins stated that he understood the point and that he was not constrained by any such issues.  He agreed with the claimant and her husband in relation to the sequence of events, which in my judgment placed some responsibility on him, and then in his evidence tried to put the blame on them for any delay.  

18.	The emails and amendments to Dr Kelly’s report are clearly discoverable as that report is being relied upon and I indicated to the claimant’s side that they must be shared with the respondent on discovery together with any other documents which were provided to Dr Kelly from the claimant and her husband.  Specifically, the respondent is also entitled to receive a copy of the unredacted GP notes for their psychiatrist, together with the letters of instruction and the statements provided by the claimant and her husband to Dr Kelly in relation to the provision of his report.

19.	A key point in the substantive case is whether or not the claimant is disabled for the purposes of DDA.  The claimant and her husband gave evidence:

(i) 	That they were given clear directions by Employment Judge Crothers and Employment Judge Buggy at two previous CMDs about the importance of the claimant producing medical evidence to prove that she was disabled within the meaning of DDA; 

(ii) 	That they had done research at various points on preparing for tribunal proceedings; 

(iii)	That they therefore knew the importance of sharing medical evidence with the respondent in advance of the hearing; and 

	(iv)	That they knew that the respondent might want to arrange its own medical evidence if medical evidence was shared with the respondent.

20.  	I find the following in relation to the sequence of events leading up to the adjournment:

(i)	The claimant attended an appointment with Dr Kelly at the end of July 2016 and his unsigned report was emailed to the claimant and her husband in September having been dated 20 September 2016.  Mr Peters proceeded to make tracked changes on that report which essentially amounted to minor changes in relation to typographical errors and mistakes in work history and some names which were cited.  There was no suggestion at all by the Peters that any major changes needed to be made to the report.  When that report was sent back to Dr Kelly he raised concerns about amendments being made to his document and he required that the original document be returned to him.

(ii)	Unknown to Mr Martins two, or possibly three, drafts passed back and forth between Dr Kelly and Mr and Mrs Peters.  In addition the claimant and her husband gave evidence that Dr Kelly had requested that they each provide a statement to him and this took some time in view of the claimant’s medical difficulties.  There was no reference whatsoever at the CMD on 24 October when the costs application was raised by the respondent, that this correspondence between the Peters and Dr Kelly was the main reason for any delay despite several recesses in that CMD hearing when Mr and Mrs Peters and their representative conferred.

(iii)	In addition it was common case that the other psychiatric evidence in this case which was from Dr Mawhinney was not shared until the bundle was provided to the respondent’s solicitor and received by her on 19 October 2016 as it had been left in her office after 5.00 pm on Tuesday 18 October 2016.  The claimant’s side said that the omission of Dr Mawhinney’s report was an oversight.  The effect of this was that the respondent’s representatives were completely unaware that the claimant had any psychiatric evidence which she wanted to use in the tribunal hearing until Wednesday 19 October when the respondent was also advised that the claimant’s representative had not arranged for Dr Kelly to attend to be 
cross-examined.

(iv)	The claimant’s side made the point that there was a GP report dated February 2016 which comprised one short paragraph and alluded to an assessment by a Consultant Psychiatrist and a diagnosis of an adjustment disorder.  The height of the claimant’s point on this seemed to be that that was sufficient to provide the respondent with notice that there was psychiatric evidence being relied upon.  I reject that argument as the actual psychiatric evidence was not before the respondent until three working days before the hearing.  In view of the medical conditions relied upon, it was reasonable for the employer at that stage to require its own medical evidence and there was clearly insufficient time between that point and the hearing for that to be arranged.  That was the reason for the successful adjournment application.

(v)	Mr Martins stated that he only received Dr Kelly’s report at the beginning of October 2016. 

(vi)	Mr Peters then stated that Mr Martins received the report in the week after Tuesday 11 October ie between 11 and 14 October which was 10 days before the case was due to start.  

(vii)	Despite that, the report was only received by the respondent’s representative on Wednesday 19 October 2016 and was only spotted due to that solicitor’s vigilance as it had not been brought to her attention by the claimant or her representative.  I find that this delay by the claimant and her representative was inexcusable.  

(viii)	It was common case between the claimant and her advisor that between them they decided that Dr Kelly’s report should go into the bundle which was provided the Wednesday before the hearing.

21.	Mr and Mrs Peters made the following points in relation to where the blame lay for late production of the medical evidence:

	(1)	That at all times she was reliant on the guidance of Mr Martins in relation to procedure and the provision of medical evidence;

(2)	That the report was in draft form from Dr Kelly as it was unsigned and indeed the copy in the bundle was unsigned.  I find this point to be irrelevant to the issues before me given that the unsigned report was shared;

	(3)	That the decision to put the report in the bundle was arrived at following discussions with Mr Martins;

	(4)	That she did not know that Dr Kelly would be required for the hearing.

22.	Mr Martins made the following points in relation to where the blame lay:

	(1)	That he was not in control of the arrangement of the appointment with Dr Kelly and was not privy to the drafts which passed back and forth between Mr Peters and Dr Kelly in late September/early October;

	(2)	That he received a copy of the report which ultimately ended up in the bundle, at the beginning of October 2016 and this accorded with Mr Peters’ clear evidence to the effect that Mr Martins received it between Tuesday 11 and Friday 14 October;

	(3)	That there were discussions with the Peters as to whether or not it was necessary to use Dr Kelly’s report, given that they already had Dr Mawhinney’s report which he and the claimant erroneously believed had been shared previously with the respondent.

23.	The thrust of that report from Dr Kelly was supportive of the claimant’s claim that she was disabled within the meaning of DDA.  Any amendments to that report which were sought by the Peters, were ancillary to that key point.  I accept Mr Hamill’s point that it is very unusual indeed for a representative to see such a supportive  report and not share it immediately or to alert the respondent to the fact that they intend to rely on such evidence as it would be clear to any reasonably competent representative with experience in litigation that the sharing of the report would likely lead to a number of consequences including that the respondent would want to cross-examine the doctor or the respondent would try to arrange its own medical evidence.

24.	Effectively the respondent was oblivious as to the psychiatric evidence being relied upon by the claimant as all the respondent’s representative had were redacted GP notes and an allusion in a short GP report to a psychiatric assessment.  I reject the claimant’s point that the respondent was therefore obliged to delve further into the medical position.  The burden is on the claimant to prove that she is disabled within the meaning of DDA and that was made very clear to her at two CMDs.

25.	From the beginning of October at the latest the claimant could have, and should have, shared the reports in an effort to narrow the issues.  This would have given more time for the respondent to apply for an adjournment in advance of the hearing and thus could have minimised any costs incurred.  Mr Martins could have and should have alerted the respondent’s representative on the day he got the report (between 11 and 14 October) that psychiatric evidence was being relied upon and he should have tried to arrange for Dr Kelly to attend.  The claimant and her representative should have contacted each other between July and October in relation to the procurement of evidence from Dr Kelly and I find that fault lay with both of them for their failure to do so.

26.	The effect of such late service was that the respondent applied for and obtained an adjournment on the morning of the hearing to enable it to obtain its own psychiatric evidence.  Rule 40(1) was thus engaged. 

27.	The late production of the medical evidence led to the adjournment.  I find that it also amounted to unreasonable behaviour.  On the evidence before me, the representative’s lack of engagement and tardiness in dealing with this point also amounted to negligence within the meaning of Rule 48.

28.	It was incumbent on the claimant to keep her advisor abreast of developments in relation to the medical evidence.  It was agreed by the parties that they did not do this in relation to the Kelly report and did not inform Mr Martins of the correspondence back and fourth between the Peters and Dr Kelly.  

29.	It was also incumbent on Mr Martins who knew that the claimant was being examined in July, to ask his client what was happening in relation to that examination.  His failure to follow that up was negligent and the delay of a few days once he received the report in early October was also negligent.  I therefore find that his behavior crossed the threshold for wasted costs.  I also find that both sides were equally at fault for the delay in notifying the respondent of the psychiatric evidence.

30.	Mr Martins in evidence stated that he has a law degree, albeit that he is not a qualified solicitor or barrister and that he has ten years’ experience in providing employment law advice and representation to employers and employees in the United Kingdom, Isle of Man, Dublin and Northern Ireland.  He stated that he was fully familiar with the preparation required for tribunal hearings and familiar with running such litigation.  He confirmed that he charges a fee to the claimant on the basis that if she wins her case, he gets a percentage of the damages awarded and in the meantime obtains expenses from the claimant.

31.	Whilst there is an obligation on the representative to conduct the proceedings in a reasonable way in order to prepare them for hearing, in my judgment the claimant cannot escape blame for the lateness of the production of medical evidence.  Mr and Mrs Peters were clearly very organised, articulate and intelligent and they worked closely together in relation to the preparation for hearing.  I find that they acted unreasonably in failing to keep their representative abreast of developments in September after they had received Dr Kelly’s report.

Evidence of Means to pay

32.	Mr Martins’ evidence on his means was that he could not afford to pay any costs that might be awarded against him because he had bills to pay, had no assets and made no more than £8,500.00 profit in the previous year in his business.  He is the sole practitioner in the firm that he owns.  No supporting evidence was provided by Mr Martins in relation to this matter.

33.	Mr Hamill put to Mr Martins extracts from his firm’s website which states that he has recovered compensation for “thousands of clients” in whiplash, personal injury claims.  Mr Martins stated that he had “plagiarised” this statement from another website, that it was untrue and was no more than “a marketing ploy”.  He stated that the true position was that that was a new aspect to his business and it was not the case that he had recovered compensation for thousands of clients.  In view of this surprising admission in relation to Mr Martins and its impact on his veracity, I was not prepared to accept at face value Mr Martins’ averment that he would not have the means to pay any costs awarded.

34.	The claimant’s evidence of her means was unsatisfactory in several respects.  In particular, it was clear that in relation to one of the twelve properties owned by her and her husband, (nine of which are jointly owned) the valuation placed on that property by her husband was £45,000.00 less than the asking price for that property which was recently placed on the market by an estate agent on behalf of the claimant and her husband.  In view of this, I was not prepared to accept the valuations placed on all of the properties by Mr Peters.  Even on those valuations, the property portfolio amounts to property valued at £1.4 million, albeit that there are mortgages on each of the properties.  There are some rental properties which generate income of £35,000.00 per year and there is an account with £25,000.00 cash in it, in relation to rental income.  There are also three businesses operated by the claimant and her husband.

35.	Effectively the claimant is a person of means and in those circumstances I am not satisfied that it is appropriate to discount any costs to be awarded because of an inability to pay as I find in particular that there has likely been undervaluation of at least some of her properties.

36.	I find that the threshold test has been met in relation to the three Rules which have been relied upon as follows:

(1) Rule 40(1): it was conduct by the claimant or her representative which led to an adjournment of the case and led to costs being incurred by the respondent.

(2) Rule 40(3): The claimant’s conduct in relation to the sharing of the medical evidence amounted to unreasonable conduct on her part or on the part of her representative and led to costs being incurred.  I find that the claimant is to some extent responsible for the conduct of her representative, given the way that the three individuals involved namely the claimant, her husband and the representative dealt with each other in organising the medical report and the bundle and in sharing the medical evidence.

(3) Rule 48(3)(a) Mr Martins was negligent in his conduct of the case and should bear some responsibility for the costs incurred due to his failings.
	
37.	I now turn to whether or not it is appropriate to award costs.  I find that it is appropriate to award costs in this case and it is just to award wasted costs.  I make no discount in relation to either party because of a lack of means for the reasons referred to above.

38.	The costs sought by the respondent related to Mr Hamill’s refresher fee of £700.00 per day for the first of the two weeks of hearing.  This amounted to £3,500.00 plus VAT at 20% making a total of £4,200.00.

39.	The respondent decided for pragmatic reasons not to pursue the issue of notional costs for the solicitor and stated that in other cases they might decide that it was appropriate to pursue such costs.  No concession therefore was made by the respondent as to the appropriateness of obtaining such costs and reference was made to the case of Ladak in relation to their right to pursue such costs.

40.	Mr Martins made the point that in advance of the hearing, Mr Hamill had indicated that he had a prior engagement namely a hearing on the first Thursday of the hearing which might take two hours.  That hearing did proceed.  Mr Hamill’s answer to that was that he would have charged his client £700.00 for that day’s hearing irrespective of any late start.  I decline to award the full refresher fee for that day and award three-fifths of that on the basis that 2 hours would have been taken out of a 5-hour hearing day.  This amounts to £420 plus VAT for that day.

41.	I therefore award costs in the sum of £3864 to include VAT.  I assess the apportionment of costs at 50% to the claimant and 50% to Mr Martins and therefore order that the claimant pay £1932 and Mr Martins pay £1932 to the respondent.

Employment Judge:

Date and place of hearing:    8 November 2016, Belfast.

Date decision recorded in register and issued to parties: