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Lord McCarthy: Before the Minister continues, perhaps I may try to clarify the matter. He
refers to "negligently", "abusively", "vexatiously", "unscrupulously" and "unreasonably". Each of those equals misconduct. Further, he states that the representative will be allowed to make the case that he was not negligent or abusive, and so on, to the tribunal. Why cannot that be placed on the face of the Bill?
Lord Sainsbury of Turville: These cases require the flexibility of the regulations. They do not concern essential issues of principle which should be in primary legislation. That is the argument.
I turn now to Amendment No. 65. We do not intend the provisions on wasted costs to apply to representatives who are not acting in pursuit of profit, such as trade union representatives, or those working for voluntary or not-for-profit organisations. This is the basis on which we consulted, and on which we have committed to implementing the provisions on wasted costs.
The amendment seeks to prevent the provisions on wasted costs distinguishing between a large multi-national legal firm and a small voluntary advice centre or a local trade union official. I cannot agree that we should adopt such a blanket approach to all representatives.
I acknowledge that poor conduct may come from all types of representative, but I believe we must look to the nature of employment tribunals, their users and their representatives and adopt an approach which reflects this.
People who come to tribunals are those who have lost their jobs, who are seeking to recover unpaid wages, or redundancy pay. Around 25 per cent of applicants are out of work. Only 19 per cent of applicants come from management, and only 13 per cent are professionals. It follows, therefore, that many applicants are likely to be of limited means. The employment tribunal rules recognise this by providing that parties may be represented by anyone they choose. Legal representation is not a requirement in tribunals and neither is it the norm. As I have said, nearly 70 per cent of applicants rely on voluntary or not-for-profit advice bodies or trade unions for assistance. Membership organisations may also be a valuable source of advice for small firms.
The resources of organisations which gain financially from the provision of their services and those which do not are simply not comparable. Applying wasted costs to the not-for-profit sector could discourage voluntary advisers from offering their services, or mean that an order against an individual impacts on an organisation's ability to provide its services.
Baroness Gardner of Parkes: Could the Minister give way? I understood that Amendment No. 67 applied to new Section 13A on the face of the Bill. Surely this compensation will be paid only if the person is found to be in the wrong. If that is the case, I do not understand why this difference should be made. From the way the Minister talks, it seems as though everyone will be awarded costs against them all the
time, but this is not the normal procedure in tribunals; it is only when there is some exceptional reason for thinking that costs should be awarded.In that case, I still do not understand why either a trade union or a voluntary organisation or friend should not be compensated for time for preparation. Either the case should have been thrown out at a pre-hearing stage, and not commenced, or, if was decided that the case was worthy of hearing, compensation or payment should not have been made to anyone.
Lord Sainsbury of Turville: I am not certain that we are talking about the same part of the Bill.
Baroness Gardner of Parkes: It is the part the Minister is talking about now.
Lord Sainsbury of Turville: This is about wasted costs orders.
Baroness Gardner of Parkes: But the Minister then said he would speak to Amendment No. 65.
Lord Sainsbury of Turville: That is what I am speaking to. It is about wasted costs orders, and the question here, which I was trying to address, was whether it was fair to treat people from non-profit organisations in the same way as one treats legal professionals. I am absolutely clear.
Baroness Gardner of Parkes: I apologise, I have misread the amendment. I thought it related to line 32.
Lord Sainsbury of Turville: I am grateful for that clarification; I thought we were talking about something different.
Accessibility is an essential feature of the employment tribunal system and one which we are committed to preserving. On the one hand, we must have in place provisions for dealing with unreasonable behaviour, but at the same time, we must take great care not to damage the support systems for those of limited means or in financial hardship.
The definition of who is, or who is not, covered by the provisions on wasted costs will need to be worked out very carefully in the regulations. We will also consult carefully with legal organisations and those who work closely with tribunal users to ensure that we get the definition right. There will, of course, be full public consultation on the regulations.
As the point has been made a number of times, costs awards are rare, and we would expect costs awards against representatives to be few and far between. However, I believe that while we must have provisions in place to enable tribunals to deal with the occasional cases, we must take great care not to take away the safety net for those who rely on the voluntary and non-profit sectors for assistance in preparation for, and representation at, employment tribunals. That is why I oppose the amendment.
Turning to Amendment No. 67, this amendment is very similar to the one which we have discussed, and it follows that I would also oppose that. The same applies to Amendment No.69.
As regards Amendment No. 76, the employment tribunal procedure regulations provide broadly that costs orders can be requested by either party, or made by the tribunal of its own volition, where in the opinion of the tribunal a party, or a representative, has behaved unreasonably in some way, or the case was misconceived. The amendment proposes a specific requirement on tribunals to give reasons why an award for costs has not been made. The regulations set out the circumstances in which a costs order can be made, and where a party has requested such an order the tribunal is necessarily required to examine the case, or the behaviour of the party in question, and consider whether or not an award is justified.
In practice, this generally takes place at the hearing, or at a separate costs hearing, where both parties and their representatives would be present. The outcome of tribunal decisions are recorded and sent to the parties, so in general tribunals give their reasons for awarding, or not awarding, costs. One of the changes made to the tribunal rules last year was to impose a duty on tribunals to consider making an award of costs where they consider that any of the grounds for making a costs award are made out. This means that even in the absence of a request from one of the parties, tribunals will generally give reasons for not making an award where they find there are circumstances which might justify such an order.
Turning now to Amendment No. 77, costs awards may be made in the employment appeals tribunal where proceedings are unnecessary, improper, vexatious, or where there has been unreasonable delay, or unreasonable conduct, in bringing or conducting the proceedings. These circumstances are very similar in the employment tribunals.
This amendment proposes a general costs recovery regime in the employment appeals tribunal, whereby the loser pays the winner's costs, except in cases where this would be unjust.
However, the message from tribunal users is that they do not want general costs recovery. It would act as a barrier to justice to applicants in particular, and would undermine the principles on which tribunals are founded. Applying a general costs regime to the employment appeals tribunal would have the same effect.
Let us consider the nature of employment tribunals and their users. They are people who have lost their jobs, who have been denied wages, or whose employment is threatened because of discrimination in the workplace. We also know that small firms make up a disproportionate share of cases. Consequently, in many cases they are people of limited means.
Employment appeals tribunal users are, of course, the same as those for employment tribunals, and I cannot see that it would be fairer to impose costs recovery in respect of appeals than it would be for bringing or defending tribunal cases. These are people for whom the prospect of costs recovery would be a serious deterrent, both to bringing a case, and to appealing a case.
Turning finally to Amendment No. 78, we have already examined the question of how wasted costs orders should operate in relation to Clause 22. I have set out the principles which will apply to the exercise of those powers in employment tribunals, and I have explained why I believe that it is not appropriate for employment tribunals to be bound by the rules and procedures of the civil courts.
The same arguments apply to the employment appeals tribunal. The employment appeals tribunal is, of course, a superior court of record and there are necessarily some differences between it and the employment tribunals. However, it is important that the employment appeals tribunal and employment tribunals work closely together and where practicable the principles and procedures should be closely aligned.
We envisage that the wasted costs provisions in the employment appeals tribunal will operate in a very similar way to those of employment tribunals. Likewise, there will be full consultation on the employment appeals tribunal rules, which will be drawn up the Lord Chancellor alongside the employment tribunal regulations. For the same reasons I have set out in respect of Clause 22, and with the same assurances as to the content of the regulations, I would ask the noble Baroness, Lady Miller of Hendon, to withdraw the amendment.
5 p.m.
Lord Wedderburn of Charlton: Perhaps I may say to my noble friend the Minister before he sits down that while he has given a detailed explanation of the Government's position, I am sure he will understand the importance of the extension of the costs regime. It is extremely important that representatives—that includes legal representatives and others—and their clients maintain confidence in the way in which this is done.
As I understood him, and he will correct me if I am wrong, his general case was that, whilst he could not accept this particular amendment, the regulations would adopt the general approach of the High Court Civil Procedure Rules and, in particular, Rule 48.7, which deals with that. The noble Lord then proceeded to elaborate to the extent of saying that, amongst the headings, was to be found "unreasonable conduct" or "negligent conduct".
In the Civil Procedure Rules, one finds that there are perhaps greater limitations in the many cases that have applied these notions than my noble friend suggested. I hesitate to cite all the cases but I will cite the summary of them in the current edition of Civil Procedure Rules itself. It states:
- "'Unreasonable' aptly describes conduct which is vexatious, or designed to harass the other side, rather than advance the resolution of the case."
- "Negligence should be understood in an untechnical way to denote failure to act with competence reasonably expected of ordinary members of the legal profession."
In adopting that approach, the court firmly "discountenanced" any suggestion that an application for a wasted costs order needed to prove under the negligence head anything less than would have to be proved in an action of negligence.
- "A personal representative",
- "was not to be held to have acted improperly and unreasonably or negligently simply because he acted for a party who pursued a claim or defence that was plainly doomed to fail."
I hesitate to quote further from the rules but there is much more. Can we have an assurance that the regulations will be drafted with an eye not merely on the general headings to which my noble friend the Minister referred, but also on the interpretation that the courts have put on them—I refer to the summaries? Can we also have the assurance that they will not be interpreted more narrowly than the High Court rules in the Civil Procedure Rules?
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