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Lord Wedderburn of Charlton: My noble friend is surely right when he says that there is an enormous distinction between what the present rules deal with—namely, cases which are brought on a basis which is vexatious, misconceived or conducted wholly unreasonably—and cases referred to by the noble Baroness. I have some sympathy with her in relation to Rule 48.7 of the High Court's Civil Procedure Rules, which we shall deal with in a later amendment.
As to the vast number of cases where claims which are quite improper are pressed, to repeat what was said yesterday, last year out of 130,000 cases brought by applicants to tribunals, only 247 were found to be vexatious or misconceived to the extent that costs should have been awarded. Not all of those were applicants, but let us not worry about that, even if they all were.
Where is the research which shows this vast hinterland of cases to which the noble Baroness addresses herself? Where is the work that has been done since Professor Linda Dickens' book in the late 1980s on those who were dismissed and brought cases to the industrial tribunals? There is no mention in that work of all those cases. What is the justification in inquiries? I am sure that I must have missed some great work that has been carried out to back the Conservative Party's view that it is necessary to attack those in the tribunal. Where is the research to show that all the appeals that are taken to the employment appeals tribunal are perhaps wrongly misconceived in some way, beyond the couple of hundred cases of last year?
If we are to discuss propositions to increase costs, which is what this matter is all about, I should tell the Committee that there is enormous pressure from groups of employers—I stress, not all employers but groups of employers, especially the Federation of Small Businesses and, to some extent, wings of the CBI—to increase the incidence of costs.
The noble Baroness speaks of costs following the event in the ordinary court. It is true that that occurs—at least at the discretion of the court, which can intervene. However, costs do not follow the event in civilised labour tribunals. Does the noble Baroness know of any jurisdiction of labour tribunals where anything like the rule that costs follow the event is applied? If she does not, and if there is no research, then we can look forward to the noble Baroness withdrawing the amendment.
Baroness Gardner of Parkes: I support my noble friend in seeking to obtain, through Amendment No. 65, compensation for preparation time. Yesterday I drew attention to the extensive amount of staff time and trouble which we expended in a case brought by an
employee of a charity. The case was eventually thrown out. The time spent was charitable time—we did not employ anyone to undertake the work. Therefore, I believe that Amendment No. 65, in the name of the noble Baroness, which states that if this amount is to be paid to someone for preparation time, is different from the example given by the noble Lord, Lord Wedderburn, which was a cost after the event. Considering time that it takes to prepare one's case, particularly if pressing for details from the other side which do not come and which hold one up again and again, it can be quite an expensive business, whether or not one is employed to deal with the case. That was not the case as regards the charity I mentioned, but often the person undertaking the case would have to give up perhaps remunerative time. Therefore, I think the noble Baroness is right in Amendment No. 65, which would include people whether they were remunerated or not.It may be that the Minister says the amendment is not necessary because it might be that whether one is remunerated or not one could make a claim. However, as regards new Section 13A in the Bill, I am not clear whether if you were unremunerated you could claim for that preparation time. If the Minister can tell me that it would be included in any event, the amendment of the noble Baroness is unnecessary, but I would at least like that on record in Hansard. If he cannot tell me that, I think there is a case for including the provision. In cases in which costs are to be awarded, whether or not the person is charging for his services, he should be compensated either for the loss of time in his business or his own personal time, or whatever it is.
Lord Wedderburn of Charlton: If the noble Baroness will excuse me, may I ask which amendment she is discussing?
Baroness Gardner of Parkes: Amendment No. 65, which is about compensation for preparation time.
Lord Wedderburn of Charlton: It is not about preparation time.
Baroness Gardner of Parkes: Yes it is. I do not know what the noble Lord, Lord Wedderburn is looking at, but Amendment No. 65 states:
- "Page 32, line 17, at end insert 'whether or not the representative charges for his services'".
Lord Gladwin of Clee: Yesterday I got into some difficulty and my noble friend said I was confused. On Amendment No. 61, I was told that we were not on (1A) but on (1)(a) and so I sank down giving way. I think now may be the opportunity, because we are on (1A), to ask the question I was seeking to ask yesterday. We were discussing an amendment which would put on the face of the Bill those criteria which are set out in regulations as to when costs are awarded, usually called vexatious and conceived.
This clause talks about the representative. What I am unclear about is what the representative does. The clause deals with the conduct. Do we assume that if his conduct is vexatious and so forth as listed in the regulations, costs can apply? Or are we going to have a separate set of regulations that do not apply to the party, as is the case at the moment, but apply to the representative of the party?
The noble Baroness, Lady Miller, gave examples of cases which were fine and in which if the applicant had been left to his own devices he would probably have won. But his representative screwed it up—if I may use unparliamentary language—in the end the tribunal was faced with a difficulty. The applicant may win but the case may have been pursued vexatiously.
The question I am posing is: do we determine whether the representative is blameworthy by reference to the criteria that are set out for the party, or are we going to have another set of regulations which apply to representatives? I am not very clear at the moment.
Lord McCarthy: But it may not!
Lord Davies of Coity: It may not.
Lord McCarthy: This is critical. We have been remiss in failing to table an amendment which deals with the matter. All the Government say is "conduct". Is it vexatious conduct or some other kind of conduct? I would have thought that an incompetent brief—the kind of brief that appears in "Rumpole of the Bailey" but never faces Rumpole—is not incompetent because he is vexatious but incompetent because he does not know the law, because he is half drunk or something of that kind. Therefore, it is important that the Government tell us what the Dickens they mean.
Baroness Miller of Hendon: Before the Minister replies, I want to thank my noble friend for her support. The point I wish to make is that this would intimidate people who might be there to help an applicant or a defendant, either the employee or the employer. The position is not quite so difficult when we talk about the paid representative, whether he be the barrister, solicitor or whoever. I do not know whether the measure applies to an unpaid representative, someone who is a friend, someone who is articulate, but I made the point about subsections (1A) and (1)(a). I do not know enough about the law to understand whether because the first part deals with payment the rest of the section does. It is ambiguous and dangerous, which is why I tabled these amendments. I notice that the Minister has been given a note, so perhaps we may find a definitive answer to this vexatious problem.
Baroness Gardner of Parkes: The grouping is unfortunate in that I can understand why the noble Lord, Lord Wedderburn, did not know what I was talking about with Amendment No. 65. It is different from Amendment No. 63. This group is large and covers a number of entirely different matters, so it might have been better had it been grouped differently.
4.45 p.m.
Lord Sainsbury of Turville: I want to speak to Amendments Nos. 63, 65, 67, 69, 76, 77 and 78. Amendment No. 63 seeks to limit the power to authorise employment tribunals to make wasted costs orders to the circumstances in which the civil courts may make such orders, as set out in the Civil Procedure Rule 48.7.
I appreciate the intentions to ensure that the principles which operate in the civil courts apply equally to the tribunals but I do not believe that this amendment is the best means of achieving a clear and sensible set of rules for the exercise of tribunals' powers in respect of wasted costs.
Employment tribunals are different from the civil courts and, while there are many similarities, I do not think it is wise to make employment tribunal procedures subject to the procedures of the civil courts. It is not a practical way of legislating on employment tribunals, because it ties the tribunals to the Civil Procedures Rules and thereby any future changes to those rules, without the consideration of whether they are suited to the specific nature of employment tribunals.
However, the Civil Procedure Rules set out important principles on how wasted costs orders operate in the civil courts and the tribunals will be subject to similar principles. It is our intention to set these out in the tribunal regulations on which there will be full public consultation. But, let me put on record how we envisage that the wasted costs provisions will apply.
Civil Procedure Rule 48.7 sets down two requirements on the court: when the court is considering making a wasted order, it requires that the court must give the representative a reasonable opportunity to attend the hearing to give reasons why no order should be made; and, secondly, that the court must specify the amount to be disallowed or paid.
It also has three powers: that the court may direct that notice of a wasted costs application or order be given to the representative's client; that the court may direct an inquiry into the matter by a costs judge or district judge; and that it may refer the whole question to a costs judge or district judge.
This rule is supported by a practice direction which sets out general procedure and guidance on such matters as when to make applications, when it will be appropriate for the court to make orders and how the court should approach the question. It specifies that a wasted costs order is appropriate only where a representative has acted improperly, unreasonably or negligently, and where his conduct has resulted in unnecessary costs to a party and compensation for those costs is just in all the circumstances.
Under current employment tribunal rules, costs may be awarded where a party, or a party's representative, has conducted the proceedings vexatiously, abusively, disruptively or otherwise unreasonably. At present, where a representative has misconducted the proceedings, employment tribunals have the power to award costs only against the party
which he or she represents. It makes sense that where a representative has behaved badly, it is the representative who should shoulder the responsibility for any costs which his client or the other side incurs as a result. In line with provisions in the courts, the Bill will enable the rules to allow the tribunal to order that a representative meets any party's costs where he or she has misconducted the case.Additionally, as in the civil courts, the Bill provides for the tribunal to disallow any of the representative's cost to his own client. Wasted costs orders, therefore, will be able to protect the client of unscrupulous or unprofessional practitioners as well as the other party to the action. However, we intend to limit wasted costs orders to representatives who act with a profit motive in order to ensure that those who provide advice and assistance on a not-for-profit basis are not deterred from doing so by the possibility of wasted costs orders.
We intend that the circumstances in which wasted costs may be made will be as described above; that is, where a case has been conducted vexatiously, abusively, disruptively or otherwise unreasonably. These circumstances are similar to those in which wasted costs orders may be made in the civil courts; that is, where there has been an improper, unreasonable or negligent act or omission by a representative. However, we think it better to retain the language with which employment tribunals are familiar.
For the avoidance of doubt, we do not intend to allow tribunals to penalise representatives simply because they have taken on a case which has no reasonable prospect of success. For that reason, Clause 22 refers only to the representative's conduct of the proceedings. We recognise that parties may insist on cases being litigated, despite receiving advice that that is unwise, and that representatives may not be in a position to refuse to represent a client.
The Civil Procedure Rules provide that the court must give the representative the opportunity to attend the hearing about the proposed order and to put his or her case. Tribunal rules will do the same. We have given a commitment to include a provision in the tribunal regulations that a wasted costs order may not be made by the tribunal unless the representative has been afforded an opportunity to put his or her case to the tribunal on any such award.
Finally, the tribunal already has a power to refer costs awards to the county courts for a detailed assessment. The power to refer wasted costs awards to the courts for a detailed assessment is expressly provided for in Clause 22.
As I said, the key principles which apply in the civil courts will also apply to employment tribunals. These points, and any others which we consider necessary, will be covered in the supporting regulations. Our differences lie not with the principles which the amendment seeks to establish but rather with the means by which it seeks to establish them.
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