In Hafiz & Haque Solicitors v Mullick the claimant resigned after a disciplinary hearing in respect of performance issues. He claimed constructive dismissal and race discrimination. He put forward a schedule of loss in respect of his discrimination claim that the tribunal described as "grossly exaggerated". It included claims for injury to feelings compensation of £30,000, aggravated damages of £3,000, £18,500 in interest, a year's loss of earnings (despite having already secured alternative employment on a slightly higher rate of pay) and past loss of earnings (despite having been ill and unable to work during that period). Altogether the net amount claimed was in the region of £85,000.

At the hearing, all the claims were rejected by the tribunal. The respondent then applied for wasted costs orders, on the basis that the claim was overinflated, and that despite being warned that this was the case, the claimant had refused to settle his claim for a reasonable sum. The Tribunal made orders against the claimant but also against his solicitors, relying on the tribunal's power to make a wasted costs order against a representative if an "improper, unreasonable or negligent act or omission on the part of the representative" has resulted in costs to the other party. The tribunal took the view that had the claimant been properly advised he would have settled his claim for a reasonable sum and the need for a hearing would have been avoided.

The difficulty for the solicitors in the case was that their advice to their client was subject to legal professional privilege and they were unable to refer to it without his consent, which he had not given. In such a case, existing principle says that it will be appropriate to make an order for costs only where there is "no room for doubt" that the way the proceedings have been conducted is unjustifiable. The EAT pointed out that this is a high threshold and that the tribunal should have asked itself whether there would have been anything that the solicitors could say to resist the order, if they had not been bound by privilege.

In this case there was plainly room for doubt about why the schedule had been served in its original form, why it had not been amended subsequently, particularly in light of the claimant's new job, and why the claimant had been unwilling to accept a reasonable settlement offer. On that basis the appeal against the costs order succeeded. The case demonstrates just how difficult it is likely to be to obtain costs against a party's legal representatives, however apparently unreasonable their conduct of the case.