B Gurney v M Randall & Ors

My preliminary advice

I cannot make any promises, or even firm advice, at this stage. In very rough outline I advise you, based on your instructions, that you have reasonable prospects of success in 6 claims against Betty Gurney, Merali’s Limited and/or Fordover Services (‘the Respondents’):

National Minimum Wage Act : the maximum recoverable would be £9,264 (£1,544 yearly, going back 6 years).

Holiday pay : the maximum recoverable would be £9,800 (based on

£87.50 weekly x 5.6 weeks x 20 years)

Notice pay : the maximum recoverable would be £1,046.40 (for 12 weeks at £87.20 weekly).

Redundancy payment : the maximum recoverable would be £2,625

(based on £87.50 x 1.5 x 20)

Failure to provide itemised payslips : maximum £386 (£29.70 x 13 weeks)

Compensation for unfair dismissal : future lost earnings to be quantified

It is important to emphasise that these would be the sums sought, not necessarily the sums which you will recover. I cannot at this stage assess with any precision your prospects of success, beyond saying that they appear reasonable. This assessment will be reviewed throughout your claims, in particular on consideration of the arguments and evidence advanced by the Respondents.

…. In his oral evidence he said that, in his opinion, he did not think it was worth pursuing an age discrimination claim but this changed before the ET1 was submitted. He said that he had discussed an age discrimination claim in principle because Ms Randall had been concerned that a younger person had replaced her. When he was asked if Ms Randall had given him authority to submit an age discrimination case, he replied “I suppose so. I said to her that I would include it. She said yes and she pushed the button”. Mr Sprack confirmed to me that this was during a telephone call. When I asked him whether he had written an attendance note of that call with the instruction, he said that he took attendance notes of discussions that were significant, but it might have been possible that he had not written an attendance note of that particular advice. I take that to be a “no”. He also confirmed that he did not follow up on his advice in writing with her instructions. Under cross examination, Mr Sprack admitted that he did not take any attendance notes prior to Ms Randall submitting the claim to the Tribunal.

Under cross-examination, Mr Sprack accepted that the age discrimination claim was not particularised. There was no mention of it in the particulars of claim. He said that the open preliminary hearing on employment status had been arranged. He said that Miss Gurney had not applied to have the age discrimination claim struck out and was seeking further information about the claim. He said that Merali and FSL were seeking a strike out of the claims on the premise that they believed that Ms Randall was self-employed. He believed that this was something that could have been resolved before dealing with the request for further information.

I find that Miss Randall was neither an employee or a worker. She was truly self-employed for the following reasons.

there was no requirement for personal service;

there was no mutuality of obligations; and

there was a lack of control.

Ms Randall did not undertake to provide her own work and skill (i.e. the requirement for personal service). She was able to provide a substitute which he did on several occasions. This was an unfettered right. She did so without any restrictions (e.g. prior approval from Miss Gurney). The fact that she was not retained for the personal quality of her work is amplified when one remembers that she took prolonged periods of time off work to return to Colombia to visit her family. She was not paid when she was away. She was not reliant upon Miss Gurney approving her absences. She simply told her when she was going away and was required to find cover for her during her absence. If she failed to do that, she knew that she would be unable to return

to work at SPH. All that was required was the common parts of SPH had to be cleaned. Ultimately it did not matter who did the work. In practice it was Ms Randall, Ms De Sanchez or Carlos. Miss Gurney no longer wanted to do the work and she paid for other to clean out of her own wages.

Apart from an initial period of a couple of weeks where there was a modicum of supervision, Ms Randall had autonomy as to how she performed her cleaning duties on a day-to-day basis. She simply had to ensure that the work was done Monday to Fridays. For the first five years, she came in to SPH before 9 AM. Thereafter, the work had to be performed between 7 PM and 8 AM. She was not supervised or managed. She was not subject to any performance reviews or disciplinary procedures. The fact that latterly, Miss Gurney felt it necessary to write to Ms Randall pointing out deficiencies and reminding her of her tasks does not, in itself, point to a level of control required to establish employee or worker status. Nor is this the situation that arose in Troutbeck. It bears all the hallmarks of an independent contractor who was retained to provide services which must be performed to a requisite level of standard. If the contractor fails to meet the requisite standard, the client is within its rights to bring that fact to the contractor’s attention and require it to remediate the position. When Miss Gurney wrote to Ms Randall that is what she was doing. She was the client, and Ms Randall’s work was found wanting and she was reminded of the tasks that needed to be performed and the level of performance necessary to be satisfactory. Apart from this, there were never any meetings to discuss performance over the 29 years that Ms Randall did the work.

There was no evidence of mutuality of obligation. There was no evidence to suggest that Miss Gurney offered work to Ms Randall which she had to accept. Ms Randall simply performed the work for which she was paid. If she did not want to do the work (e.g. because she wanted to take time off to return to Colombia) she provided a substitute. Ultimately, the arrangement was terminable by Miss Gurney when she wrote to Ms Randall to tell her that if she did not improve, she would get someone else in to do the cleaning.

There are other factors which point to a genuinely self-employed status which are as follows:

The dominant purpose of the contract was cleaning the common parts of SPH rather than an obligation personally to perform work. Ms Randall was essentially carrying out a business undertaking. Miss Gurney was the customer. It cannot be said that Merali was a customer because it is a dormant company. It cannot be said that FSP was a customer because there was no direct relationship between Ms Randall and FSP and no evidence to suggest that Miss Gurney was acting as its agent. Miss Gurney simply wanted someone else to do the cleaning work which she had previously performed, and she shared part of her wages with whoever did the work to achieve that outcome. She was never reimbursed for that by FSP.

As Ms Randall was truly self-employed, it follows that the Tribunal has no jurisdiction to hear her claims.

The Respondents assert that Mr Sprack was negligent, unreasonable, or improper in:

Failing to advise the Claimant that her Claims had no reasonable prospect of

success;

Pursuing an age discrimination on behalf of the Claimant, which was never

particularised (and for which it now seems he did not have authority);

Failing to advise the Claimant of the costs risks when costs threats were made;

Failing to advise the Claimant of the benefit of the offer of settlement made to

her or to engage with the rationale for it.

(1) A Tribunal may make a wasted costs order against a representative in favour of any party (“the receiving party”) where that party has incurred costs—

… courts should apply a three-stage test when a wasted costs order is contemplated. (1) Has the legal representative of whom complaint is made acted improperly, unreasonably or negligently? (2) If so, did such conduct cause the applicant to incur unnecessary costs? (3) If so, is it in all the circumstances just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs? (If so, the costs to be met must be specified and, in a criminal case, the amount of the costs.) …

“Improper, unreasonable or negligent”

A number of different submissions were made on the correct construction of these crucial words in the new section 51(7) of the Supreme Court Act 1981. In our view the meaning of these expressions is not open to serious doubt.

”Improper” means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.

“Unreasonable” also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner’s judgment, but it is not unreasonable.

The term “negligent” was the most controversial of the three. It was argued that the Act of 1990, in this context as in others, used “negligent” as a term of art involving the well known ingredients of duty, breach, causation and damage. Therefore, it was said, conduct cannot be regarded as negligent unless it involves an actionable breach of the legal representative’s duty to his own client, to whom alone a duty is owed. We reject this approach. (1) As already noted, the predecessor of the present Ord. 62, r. 11 made reference to “reasonable competence.” That expression does not invoke technical concepts of the law of negligence. It seems to us inconceivable that by changing the language Parliament intended to make it harder, rather than easier, for courts to make orders. (2) 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 his duty to his client.

We cannot regard this as, in practical terms, a very live issue, since it requires some ingenuity to postulate a situation in which a legal representative causes the other side to incur unnecessary costs without at the same time running up unnecessary costs for his own side and so breaching the ordinary duty owed by a legal representative to his client. But for whatever importance it may have, we are clear that “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, we would however wish firmly to discountenance 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: “advice, acts or omissions in the course of their professional work which no member of the profession who was reasonably well-informed and competent would have given or done or omitted to do;” an error “such as no reasonably well-informed and competent member of that profession could have made:” see Saif Ali v. Sydney Mitchell & Co. [1980] A.C. 198 , 218, 220, per Lord Diplock.

We were invited to give the three adjectives (improper, unreasonable and negligent) specific, self-contained meanings, so as to avoid overlap between the three. We do not read these very familiar expressions in that way. Conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. We do not think any sharp differentiation between these expressions is useful or necessary or intended.

I accept Mr Stewart’s submission that there must be something more than negligence for the wasted costs jurisdiction to arise: there must be something akin to an abuse of process if the conduct of the legal representative is to make him liable to a wasted costs order. [emphasis added]

There have been numerous cautionary statements warning against appeals from judges who have refused to make a wasted costs order: see Wall v Lefevre [1998] 1 Fam LR 605 at page 614A to D per Lord Woolf MR and Royal Institute of Chartered Surveyors v Wiseman Marshall [2000] PNLR 649 at page 659B, where Clarke LJ said:

“…it will only be in a very rare case that this court would interfere with a decision by the judge as to whether or not to make a wasted costs order. It must be rarer still that this court will be willing to interfere with a decision of the judge at the first stage.”

In my judgment the good sense of that is obvious. The judge has conducted the trial and will be fully aware of the conduct of the legal representatives in the case before him. It is striking that in this case the judge, despite the very severe criticisms made by him of the claims on behalf of the sons, nevertheless refused to make a wasted costs order. This case is not, to my mind, the exceptional case where it would be right to interfere with the exercise of discretion by the judge. [emphasis added]

As Elias P (as he then was) held in Ratcliffe Duce and Gammer v Binns UKEAT/0100/08, rule 80(1) of the 2013 Rules (or rather its predecessor, rule 48(3) under the earlier Rules) precisely mirrors the definition of wasted costs given in s 51 of the Supreme Court Act 1981. Accordingly, the authorities applicable to wasted costs in civil cases generally, are equally applicable in an employment context. The two leading authorities analysing the scope of s 51 and the circumstances in which wasted costs orders can be made are Ridehalgh and Medcalf v Weatherill and Another[2002] UKHL 27.

In Ridehalgh, the court emphasised that the courts should apply a three-stage test when determining whether a wasted costs order should be made. The following three questions should be asked:

Has the legal representative, of whom complaint is made, acted improperly, unreasonably or negligently?

If so, did such conduct cause the applicant to incur unnecessary costs?

If so, is it, in the circumstances, just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs?

However, it is clear from both Ridehalgh and Medcalf, as applied in an employment context by Elias P in Ratcliffe, that it is not enough simply to establish negligent or other impugned conduct alone. It is also necessary for a duty to the court (or tribunal) to be shown to have been breached by the legal representative if he or she is to be made liable for wasted costs: see the judgment of Sir Thomas Bingham MR in Ridehalgh, and Medcalf where Lord Hobhouse referred to those observations with approval. In Persaud v Persaud [2003] EWCA Civ 394, the Court of Appeal described this requirement as a need to establish something akin to an abuse of the process of the court.

These cases emphasise the importance of not undermining or putting obstacles in the way of a legal representative fulfilling his or her duty to present the lay client’s case in the best way possible, even if it is thought hopeless and even if advice has been given that the case is unlikely to succeed. A wasted costs application inevitably gives rise to the potential for a conflict of interest between a legal representative and the lay client, and legal representatives ought not to be penalised for presenting their client’s case when instructed to do so.

Moreover, if the wasted costs application is disputed, save in the most obvious case, whether conduct is unreasonable, improper or negligent is likely to turn on what instructions the client gave and what advice the representative provided. Both are covered by legal professional privilege that can only be waived by the client. Where it is not waived, privilege may make it difficult or impossible for a legal representative to provide a full answer to the complaint made against him or her. Where there is doubt in such cases, the legal representative is entitled to the benefit of that doubt (see Ridehalgh). [emphasis added]

The wasted costs jurisdiction is not engaged, and the application is dismissed for the following reasons:

Mr Sprack should not be held to have acted improperly, unreasonably or negligently simply because he acted on behalf of Ms Randall whose claim was doomed to fail. It was his duty to present her case even though he might have thought that it was hopeless and even though he may have advised Ms Randall that it was. Indeed, he believed the case had some prospect of success as set out in his preliminary advice. It was for the Tribunal to judge the merits of the claim. Following Ratcliffe, the notion that a wasted costs order can be made against a lawyer simply because his client is pursuing a hopeless case is entirely erroneous. Such conduct does not of itself demonstrate that the representative has acted improperly or unreasonably. Clients frequently insist on pursuing a case against the best advice of their lawyers.