Wasted Costs

[Thanks to Ed McFarlane of Deminos HR for preparing this case summary]

The EAT (Underhill P) has handed down its decision in Godfrey Morgan Solicitors Ltd v Cobalt Systems Ltd which is authority for the propositions that in a wasted costs hearing, the procedure adopted should be as summary as is consistent with fairness; that it might be permissible for a party and their representative to be cross-examined; and parties may make submissions.

The Claimant, having not been advised by his solicitors in a timeous manner that there were no prospects of settlement, withdrew his claim, but his solicitors did not communicate this until shortly before the hearing. The Respondent sought and won a wasted costs order against the Claimant's solicitors for (a) not advising him properly, and (b) delay in communicating the withdrawal. At the oral costs hearing with privilege waived, the Claimant and his solicitor were cross-examined, although some evidence from the case file was excluded by the tribunal for late disclosure.

The Claimant's solicitors unsuccessfully appealed against the wasted costs order against them on various bases.

The EAT distinguished this situation from a previous EAT decision on wasted costs orders - (Ratcliffe Duce and Gammer v Binns UKEAT/100/08) - and set out guidance on the conduct of wasted costs hearings. The EAT suggested that cross-examination of a representative would generally be inappropriate, disproportionate and/or unnecessary, but it may be fair and proportionate where a representative is no longer acting, privilege has been waived and a hearing fixed, and there are differing accounts of central facts to resolve. There was also no reason why parties could not make submissions to the tribunal.

Having viewed the excluded evidence, the EAT observed that the Employment Judge's findings against the Claimant's solicitors might have been different, but as the exclusion was within his discretion, the EAT did not interfere.