FAIR EMPLOYMENT TRIBUNAL
CASE REF: 14/13 FET
CLAIMANT: Ian Leslie Bailie
RESPONDENT: Newry & Mourne District Council
DECISION ON COSTS
The unanimous decision of the Tribunal is as follows:-
“The Tribunal orders the claimant to pay to the respondent the sum of £2,500.00 (together with any Value Added Tax properly payable, on the said sum by the claimant to the respondent) in respect of the respondent’s costs.”
Chairman: Mr N Drennan QC
Members: Mrs C Stewart
Ms E McFarline
The claimant was represented by Mr A Hanna, Trade Union, Independent Workers Union.
The respondent was represented by Mr P O’Kane, Solicitor, of McShane & Company, Solicitors.
1.1 The Tribunal, in a decision recorded in the Register and issued to the parties on 3 October 2013 decided, in an unanimous decision, that the claimant’s claim of unlawful discrimination on the grounds of religious belief, contrary to the Fair Employment and Treatment (Northern Ireland) Order 1998, was dismissed.
1.2 The said decision followed a hearing on 9 September 2013 in Belfast, when the claimant did not appear and was not represented. The respondent at the said hearing on 9 September 2013 was represented by Mr P O’Kane, Solicitor, of McShane & Company, Solicitors.
1.3 By letter dated 7 October 2013, the solicitor for the respondent, Mr O’Kane, made application to the Tribunal for costs in accordance with Rules 34 – 36 of the Fair Employment Tribunal Rules of Procedure (‘the Rules of Procedure’), contained in Schedule 1 of the Fair Employment Tribunal (Rules of Procedure) Regulations (Northern Ireland) 2005. In the said letter to the Tribunal, dated 7 October 2013, the solicitor for the respondent enclosed copies of letters of the same date sent to the claimant’s representative, Mr A Hanna, and also to the claimant. In the letter, dated 7 October 2013, to the claimant, the respondent’s representative stated:-
“ … We enclose copy letter we have sent today to your representative, Mr Hanna, advising of the respondent’s intention to apply for a Costs Order against you in the amount of costs being claimed.”
In the letter, dated 7 October 2013, to Mr Aidan Hanna, the claimant’s representative, the respondent’s representative stated, as follows:-
“ … The unanimous decision of the Tribunal, which has recently issued in the above case, is that the claimant’s claim of unlawful discrimination on the grounds of religious belief, contrary to the Fair Employment and Treatment (NI) Order 1998, is dismissed. We are instructed to make an application for costs against the claimant pursuant to Rules 34 – 35 of the Rules of Procedure.
We enclose a schedule of the costs incurred by the respondent in relation to these proceedings in the sum of £17,942.40 inclusive of VAT and outlay. We also enclose a schedule of the respondent’s costs restricted to the period from 3rd of August 2013 to the date of the Tribunal hearing, which are in the sum of £5,645.40.
The respondent’s position is that it would seek to recover the larger amount of costs (£17,942.40) from the claimant subject to the statutory cap in the Rules of Procedure, if applicable. In the event that the Tribunal rules the respondent is entitled to recover costs, but that the costs should be restricted to costs incurred the expiration of the time period specified in the costs warning letter of 18th of July 2013, the respondent will seek to recover the sum of £5,645.40 from the claimant.
Please note that use will be made of this correspondence as proof that the claimant has been put on notice of the respondent’s intention to apply for costs and furthermore the amount of costs being claimed by the respondent. … .”
It was accepted, at the commencement of this hearing, that in the said letter dated 7 October 2013 to Mr Hanna, the respondent’s representative, had referred, incorrectly, to the Industrial Tribunals Rules of Procedure, rather than the Fair Employment Tribunal Rules of Procedure. Both representatives agreed that, since the Rules in relation to costs were the same in both the Industrial Tribunal and the Fair Employment Tribunal, the above error was of no relevance to the outcome of the respondent’s application for costs.
1.4 The costs set out in the said schedules were not agreed; but the claimant’s representative had nothing further to say about them and, in particular, in relation to the method of calculation or the amount of same; but to which further reference shall be made elsewhere in this decision:-
The said schedule of costs were made up as follows:-
SCHEDULE OF COSTS (HOURLY RATE OF £150.00) –
UP TO TRIBUNAL HEARING ON 9 SEPTEMBER 2013
Time engaged: 85.40 hours @ £150.00 per hour £12,810.00
Letters out: 90 letters @ £ 15.00 per letter £ 1,350.00
Telephone Calls: 36 calls @ £ 15.00 per call £ 540.00
Plus VAT 20.0% £ 2,940.00
Photocopying 2520 pages @10p per page £252.00
Plus VAT @ 20% £ 50.40 £ 302.40
SCHEDULE OF COSTS (HOURLY RATE OF £150.00) –
FROM 3 AUGUST 2013 - TRIBUNAL DATE 9 SEPTEMBER 2013
Time engaged: 24.50 hours @ £150.00 per hour £3,675.00
Letters out: 20 letters @ £ 15.00 per letter £ 300.00
Telephone calls: 9 calls @ £ 15.00 per call £ 135.00
Plus VAT 20.0% £1,233.00
Photocopying 2520 pages @10p per page £252.00
VAT thereon @ 20% £ 50.40 £ 302.40
2.1 Rule 35 of the Fair Employment Tribunal Rules of Procedure (‘the Rules of Procedure’), insofar as relevant and material, provides:-
(2) A Tribunal or Chairman shall consider making a costs order against a paying party where, in the opinion of the Tribunal or Chairman (as the case may be), any of the circumstances in paragraph (3) apply. Having so considered, the Tribunal or Chairman may make a costs order against the paying party if it or he considers it appropriate to do so.
(3) The circumstances referred to in paragraph (2) are where the paying party has in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived.
2.2 At the outset of this hearing, the respondent’s representative confirmed that the respondent, in making its application for costs, was relying on the following circumstances, namely the claimant or his representative had, in conducting the proceedings, acted otherwise unreasonably and/or the bringing or conducting by the claimant had been misconceived (ie had no reasonable prospect of success – see later).
2.3 Rule 36 of the Rules of Procedure, insofar as relevant and material, provides:-
“(i) The amount of a Costs Order against the paying party shall be determined in any of the following ways:
(a) the Tribunal may specify the sum which the paying party must pay to the receiving party, provided that sum does not exceed £10,000.00;
(b) the parties may agree on a sum to be paid by the paying party to the receiving party and if they do so the Costs Order shall be for the sum so agreed;
(c) the Tribunal may order the paying party to pay the receiving party the whole or a specified part of the costs of the receiving party with the amount to be paid being determined by way of detailed assessment in a County Court in accordance with such of the scales prescribed by County Court Rules for proceedings in the County Court as shall be directed by the Order.
(ii) The Tribunal or Chairman may have regard to the paying party’s ability to pay when considering whether it or he make a Costs Order or how much that Order should be.
(iii) For the avoidance of doubt, the amount of a Costs Order made under Paragraph (i)(b) or (c) may exceed £10,000.00.”
2.4 In Article 2(1) of the Fair Employment Tribunal (Rules of Procedures) Regulations (Northern Ireland) 2005 ‘misconceived’ is defined as including having no reasonable prospect of success.
2.5 In Raggett v John Lewis PLc  UKEAT/0082/12 the Employment Appeal Tribunal held that Value Added Tax should not be included in costs ordered to be paid (under Rule 36) if the receiving party is able to re-claim Value Added Tax as input tax.
2.6 The Tribunal is satisfied that the cap of £10,000.00 on the amount of costs which can be awarded, pursuant to Rule 36(a) of the Rules of Procedure, includes any sum properly payable by way of Value Added Tax.
2.7 The respondent’s representative confirmed, as he had in his letter dated 7 October 2013, that, in making his application for costs, he was doing so, pursuant to Rule 36(1)(a) of the Rules of Procedure (with the said cap of £10,000.00); as he was not able to make an application for assessment, pursuant to Rule 36(1)(c) of the Rules of Procedure by reason of the matters set out below. In this context, it has to be noted that the power to seek an assessment of costs by way of detailed assessment in the County Court, in accordance with such of the scales prescribed by County Court Rules for proceedings in the County Court, is of limited assistance, if any, to many parties despite the provision in Rule 36(3) that such a Costs Order, following such an assessment, may exceed £10,000.00. This is because none of the relevant County Court scales would allow for an Order for Costs in excess of the cap of £10,000.00, provided for in Rule 36(1)(a) of the Rules of Procedure. Increasingly, the Tribunals are faced with applications for Orders for Costs in excess of £10,000.00; but parties are unable to recover same because of the said cap and the absence of any relevant scale in the County Court which would allow for a detailed assessment of costs in excess of £10,000.00. In the Tribunal’s judgment this is an issue which should be urgently addressed by the relevant rule-making authorities, so that, in an appropriate case, a party can make an application for costs in excess of £10,000.00 and the Tribunal can, in such circumstances, make such an Order for Assessment if it is appropriate to do so.
3.1 Under Rule 35(2) and (3) of the Rules of Procedure, it has long been recognised that it is necessary for a Tribunal, when considering an application for costs under the said Rules of Procedure, to embark on a two-stage process. Firstly, the Tribunal has to consider whether it has been established that the relevant party has satisfied the terms of Rule 35(3) – for example a finding of otherwise unreasonable conduct and/or bringing or conducting of proceedings has been misconceived. A Tribunal then has to consider, secondly and separately, whether to exercise its discretion to make an Order for Costs (see further Criddle v Epcot Ltd [UKEAT/0275/05]. Vaughan v London Borough of Lewisham & Others  UKEAT/0533/12. Mummery LJ in Khan v Kirklees BC  EWCA Civ 1342, in the course of his judgment, stated that it was not possible to list exhaustively what all the circumstances at the second stage might be. However, he indicated (see Paragraph 8 of the judgment) potentially relevant considerations might include conduct, proportionality and the merits of the case and also whether a person is represented or unrepresented. However he emphasised this was not an exhaustive list and each case would depend on its own particular facts.
Unlike the Rules, which normally apply to proceedings in, for example, the High Court/County Court, costs do not follow the event. In addition, the Rules of Procedure do not replicate the general Rules, applicable in those Courts, which provide, where a plaintiff discontinues proceedings, he is normally liable for the costs which a defendant has incurred before a Notice of Discontinuance is served on him. In the case of Lodwick v London Borough of Southwark  IRLR 554, a case of unfair dismissal/ breach of contract, Lord Justice Pill made it clear, when considering whether an Order for Costs should be made under the said Rule:-
“To order costs in the Employment Tribunal is an exceptional course of action and the reason for, and the basis of, an Order should be specified clearly; especially where a sum as substantial as £4,000.00 is involved.”
There is nothing in the Rules of Procedure which expressly states that an Order for Costs should be considered the exception rather than the rule. Certainly, however, that has been the view taken in relation to the exercise of the power under the said Rule, which governs claims, such as unfair dismissal/unlawful discrimination (see further the case of Gee v Shell UK Ltd  IRLR 82).
But, as Burton P in the case of Salinas v Bear Stearns International Holdings  ICR 1117, stated:-
“The reason why Costs Orders are not made in the substantial majority of cases is that the Tribunal Rules contain a high hurdle to be surmounted, before such an Order can be considered.”
Those Rules, to which Burton P was referring, were the pre-conditions which required to be considered before the issue of the discretion arises, as set out above. In the case of Benyon v Scadden  IRLR 700, it was emphasised that the Costs Rules are discretionary and, as such, cannot be restricted by case law. Matters to be derived from the case law can only be factors that may or may not be given weight by the Tribunal. In any event, an Order for Costs must be compensatory and not punitive (see further Lodwick v London Borough of Southwark  IRLR 554). (In the decision of the Employment Appeal Tribunal in the case of Baker v Toal Bookmakers Ltd t/a Tote Sports [UKEAT/0538/11], unreported, HH Judge Clark again emphasised that Costs Orders in the Tribunal are exceptional (see further the recent decision in Sud v London Borough of Ealing  EWCA Civ 949.).)
3.2 However, in the judgment of this Tribunal, when exercising its discretion, the Tribunal also has to have regard to the judgment of Girvan LJ in the case of Peifer v Castlederg High School and Western Education & Library and Another  NICA 49, where he confirmed that a Tribunal is required to give effect to the terms of the overriding objective, when it exercised any power given to it under the Rules of Procedure, which would include the power to order costs; and he stressed that these objectives were intended to be exactly what they were described as being, namely overriding objectives. Indeed, he went on to state that:-
“Tribunals should be encouraged to use their increased costs powers set out in the Rules of Procedure to penalise time wasting or the pursuit of cases in a way which unduly and unfairly increases the costs falling on opponents.”
3.3 In the well-known case of McPherson v BNP Paribas  IRLR 558, the Court of Appeal emphasised that withdrawal on its own is not necessarily unreasonable behaviour for the purposes of the said Rules of Procedure.
In that case, the claimant withdrew his case several weeks before the hearing so there was no decision on the substantive merits, but the Tribunal nevertheless made an Order for Costs in favour of the respondent. Mummery LJ set out the conflicting considerations. He stated, on the one hand, it was important for claimants not to be deterred from making a sensible litigation decision by dropping a claim because of the prospect of an Order for Costs on withdrawal, which may not be made against them if they fought on to a full hearing and failed. He acknowledged that in most cases the withdrawal will result in a saving of costs. On the other hand, he also recognised that the practice of never making Costs Orders on withdrawal might encourage speculative claims, by allowing claimants to start cases and to pursue them down to the last week or two before the hearing in the hope of receiving an offer to settle, and then, failing an offer, dropping the case without any risk of a costs sanction. He concluded:-
“The solution lay in the proper construction and sensible application of the Rule. The crucial question is whether, in all the circumstances of the case, the claimant withdrawing the claim has conducted the proceedings unreasonably. It is not whether the withdrawal of a claim is in itself unreasonable.”
On the facts of the McPherson case, the Court found that the Tribunal was entitled to conclude that there was unreasonable conduct at the proceedings on the part of the claimant.
3.4 In a recent decision of the Court of Appeal in the case of Barnsley Metropolitan Borough Council v Yerrakalva  EWCA Civ 1255, Mummery LJ took the opportunity to review the authorities in relation to the issue to costs under the Rules of Procedure applying in the Employment Tribunals in Great Britain, which are in similar terms to the Fair Employment Tribunals Rules of Procedure applying in Northern Ireland.
In particular, in the course of his judgment he stated:-
“39 I begin with some words of caution, first about the citation and value of authority on costs questions and, secondly, about the dangers of adopting an over analytical approach to the exercise of a broad exercise.
40 The official words of [Rule 40] are clear enough to be applied without the need to add layers of interpretation, which may themselves be open to differing interpretations. Unfortunately, the leading judgment in McPherson delivered by me has created some confusion in the ET, EAT and in this Court. I say ‘unfortunately’ because it was never my intention to re-write the Rule, or to add a gloss to it, either by disregarding questions for causation or by requiring the ET to dissect the case in detail and compartmentalise the relevant conduct under separate headings, such as ‘nature’, ‘gravity’ and ‘effect’. Perhaps I should have said less and simply kept the actual words of the Rule.
41 The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by a claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had. The main thrust of the passages cited above from my judgment in McPherson was to reject as erroneous the submission to the Court that, in deciding whether to make a Costs Order, the ET had to determine whether or not there was a precise causal link between the unreasonable conduct in question and the specific costs being claimed. In rejecting that submission, I had no intention of giving birth to erroneous notions, such as that causation was irrelevant or that the circumstances had to be separated into sections and each section to be analysed separately so as to lose sight of the totality of the relevant circumstances.
42 On matters of discretion an earlier case only stands as authority for what are, or what are not, the principles governing the discretion and serving only as a broad steer on the factors on the paramount principles of relevance … .”
In addition, Mummery LJ in the course of his judgment (see, in particular, Paragraphs 7 – 9) repeated that costs are in the discretion of the Employment Tribunal and the Employment Tribunal’s powers to order costs are more sparingly exercised and are more circumscribed by the Rules of Procedure than those in the ordinary Courts; and that an Employment Tribunal Costs Order is the exception rather than the Rule. Mummery LJ, at Paragraph 49 of his judgment, also made it clear that Orders for Costs are based on and reflect broad brush first instance assessments.
3.5 In the recent case of Sud v London Borough of Ealing  EWCA Civ 949, Lord Justice Fulford, having reviewed the above legal authorities, referred to in the previous sub-paragraphs, stated at Paragraph 75 of his judgment:-
“On the basis of those authorities, although an award of costs against a paying party in the Employment Tribunal, is an exceptional event, the Tribunal should focus principally on the criteria established in Rule 40. In the context of the present case, the Tribunal needed to consider whether the claimant’s conduct of the proceedings was unreasonable and, if it so concluded, it was necessary for the Court to identify the particular unreasonable conduct, along with its effect. This is not a process that entails a detailed or minute assessment, but instead the Court should adopt a broad brush approach, against the background of the totality of the relevant circumstances.”
3.6 In the case of A Q Ltd v Holden [UKEAT/0021/12], the Employment Appeal Tribunal confirmed that the threshold test in Rule [35(3)] are the same whether a litigant is or is not professionally represented; but, in the application of those tests, whether a litigant is professionally represented may well require to be taken into account. It held that a Tribunal cannot and should not judge a litigant-in-person by the standards of a professional representative. It suggested that, since lay people are entitled to represent themselves in Tribunals and since legal aid is not available and will not usually recover costs if they are successful, it is inevitable that many lay people will represent themselves. His Honour Judge Richardson stated:-
“Justice requires that Tribunals do not apply professional standards to lay people, who may be involved in legal proceedings for the only time in their life … lay people are likely to lack the objectivity and knowledge of law and practice brought by a professional legal adviser. Tribunals must bear this in mind when assessing the threshold test in Rule [35(3)]. Further, even if the threshold test for an Order for Costs are met, the Tribunal has discretion whether to make an Order. This discretion will be exercised having regard to all the circumstances. It is not irrelevant that a lay person may have brought proceedings with little or no access to specialist help and advice. This is not to say that lay people are immune for an Order for Costs; far from it as the case has made clear. Some litigant-in-persons are found to have behaved vexatiously or unreasonably even when proper allowance is made for their inexperience and lack of objectivity … .”
In this context, it is also relevant to consider the judgment of Girvan LJ in Peifer when he stated:-
“When parties before the Tribunal appear in person, without the benefit of legal representation, the lack of legal experience on the part of an unrepresented party may lead to the pursuit of irrelevancies and unnecessary lengthy proceedings. Whilst Tribunals must give some latitude to personal litigants who may be struggling in a complex field they must also be aware that the other parties will suffer from delay, incur increased cost, be exposed to unstructured and at times irrelevant cross-examination. While we must have sympathy for a Tribunal faced with such a situation the Tribunal remains under the same duty to ensure that the overriding objectives and Regulation 3 are pursued.”
In the context of the present case, it is also relevant to note the judgment of the Employment Appeal Tribunal in the case of Jackson v Walsall Metropolitan Borough Council [UKEATPA/1247/10], when the Employment Appeal Tribunal decided that it would not interfere with the Employment Tribunal’s discretion to award costs against a claimant whose five claims had been dismissed, noting the claimant was a barrister with special experience in employment law and sure she was a barrister meant that she should be alert to weaknesses in her case. It also confirmed that a barrister specialising in employment law and asserting her knowledge is particularly open to scrutiny.
3.7 In the case of Peat & Others v Birmingham City Council [UKEAT/0503/11], Mr Justice Supperstone noted that for a party to succeed in arguing for costs on the basis of unreasonable conduct, it was not necessary to show that the other party had no reasonable prospect of success. In his judgment he held, on the facts of the case, if the claimant’s solicitors had engaged with the issues and the costs warnings letters, they would have likely have appreciated that the claimant’s reasonable prospect of success was so thin that it was not worth going to the hearing.
As set out in Harvey on Industrial Relations and Employment Law, Paragraph 1047, Section P1:-
“Considering whether to award costs in respect of a party’s conduct in bringing or pursuing a case which is subsequently held to lack merit, the type of conduct that will be considered unreasonable by a Tribunal will obviously depend on the facts of the individual case and there can be no hard and fast principle applicable to every situation. In general, however, it would seem that the party must at least know or to be taken to have known that his case is unmeritorious (see Cartiers Superfoods Ltd v Laws  IRLR 315) … .”
In Harvey on Industrial Relations and Employment Law, Paragraph 1052.01 it is stated:-
“The Court of Appeal has emphasised that a lie will not necessarily, of itself, be sufficient to find an Order for Costs (nor, conversely, will the absence of a lie necessarily mean that there cannot be a finding that the proceedings have been brought or conducted unreasonably or are misconceived … .”
In Arrowsmith v Nottingham Trent University  EWCA Civ 797 …, at Paragraph 33, Rimer LJ giving the only reasoned judgment of the Court endorsed the statement of Cox J in the case of HCA International Ltd v May-Bheemul [UKEAT/0477/10] that neither the case of Daleside nor any other case established a point of principle of general application that lying, even in respect of a central allegation in the case, must inevitably result in an award of costs, and that “it will always be necessary for the Tribunal to examine the context and to look at the nature, gravity and effect of the lie in determining the unreasonableness of the alleged conduct”. … Rimer LJ added that the consideration of whether the elements of Rule 40(3) are satisfied in a particular case is ‘a fact-sensitive exercise’ and a decision in another case, in what might superficially appear to be circumstances similar to those in the instant case, will not dictate the decision in it. (Paragraph 33). The Employment Tribunal in Arrowsmith was held to have applied the test correctly and to have reached a conclusion that was open to it when awarding costs against the claimant in circumstances where she ‘had a made a case that was materially dependent on the advance by her of assertions that were untruthful’.
In a recent decision of the Employment Appeal Tribunal, Langstaff P in the case of Ladrick Lemonious v Church Commissioners [UKEAT/0253/12] endorsed the analysis and conclusion in the case of HCA International Ltd but also the judgment of the Court of Appeal in Arrowsmith v Nottingham Trent University  EWCA Civ 797 where Rimer LJ had endorsed the words of Cox J in HCA International Ltd where she stated:-
“ … in some cases, a central allegation is found to be a lie. That may support an application for costs, but does not mean that on every occasion that a claimant fails to establish the central point of the claim, an award of costs must follow.” [Tribunal’s emphasis]
(See also Topic v Hollyland Pitta Bakery Company  UKEAT/0523/11.)
3.8 Although in the case of Jilley v Birmingham and Solihull Mental Health NHS Trust [UKEAT/0584/06], HH Judge Richardson confirmed that there is no ‘absolute duty’ on a Tribunal to take ability into account, he commented that it would in many cases be desirable to take means into account before making an Order, as the ability of a party to pay may affect the exercise of an overall discretion. In Doyle v North West & London Hospitals NHS Trust [UKEAT/0271/11], the Employment Appeal Tribunal commented that Tribunals should always be cautious before making a very large costs award, given the very serious potential consequence to a claimant of such an Order because such Orders may act as a disincentive to those bringing legitimate claims. It was suggested that, in such a case, it would normally be necessary for a Tribunal to raise the issue of the potential paying party’s ability to pay costs, even if the issue was not raised by on or on behalf of that party. (See further Oni v NHS Leicester City  UKEAT/0144.) In the case of Vaughan v London Borough of Lewisham & Others  IRLR 713 Underhill J, as he then was, approved the decision in Jilley and went on to hold that it was not wrong in principle to make an award where a claimant could not in her present financial circumstances afford to pay and the Tribunal had formed the view that she might be able to meet it in due course.
3.9 In proceedings in the Civil Courts, if a winning party fails to do better than an offer made to him by the losing party, it will usually expect to pay the losing party’s costs from the date of the offer. The use of ‘Calderbank letters’ is common in the Civil Courts – an offer to settle without prejudice, save as to costs. Such a letter is not revealed to the Court until the end of the trial. In Kopel v Safeway Stores PLc  IRLR 753, it was held that a failure by a party to beat a Calderbank offer will not, by itself, result in an award of costs against him. What must be shown is ‘that the conduct of the party in rejecting the offer was unreasonable before the rejection becomes a relevant factor in the exercise of the Tribunal’s discretion of the Rules of Procedure’.
As stated in Harvey on Industrial Relations and Employment Law, Paragraph 1052.07:-
“A costs warning letter will not of course necessary result in an Order for Costs being made where the party giving the warning is ultimately successful in obtaining a judgment in his favour. Whether it will do so will depend on the facts. But if a well-argued warning letter is sent, failure by the claimant to engage properly with the points raised in it can amount to unreasonable conduct and if a case proceeds to a hearing and the respondents are successful for substantially the reasons that were contained in the letter. A good example of this is Peat v Birmingham City Council [UKEAT/0503/11].”
In Raggett v John Lewis PLc [UKEAT/0082/12], Mrs Justice Slade referred, with approval, to the judgment of the EAT in Copel where it made clear at Paragraph 16 that whilst the Rule in Calderbank v Calderbank does not apply to Tribunals an offer of a Calderbank-type is a factor which the ET can take into account in assessing the amount of costs.
In the Employment Appeal Tribunal, in the case of Rogers v Dorothy Barley School  UKEAT/0013/12 the Employment Tribunal recently emphasised the importance of issuing a written costs warning as early as possible, setting out reasons. This is to enable the other party to be put on clear notice that it is intended to pursue this course of action if the case proceeds in a certain way.
It is to be noted that Rogers was a case where the Employment Appeal Tribunal refused to award costs against an appellant, who was unrepresented, and who had refused to accept that his claim was wholly misconceived (ie no reasonable prospect of success), on the grounds that the respondent employers had at no stage given him a warning that they would seek costs nor given him any notice of the amount of such costs, with the result that he had no opportunity to consider his position.
In Vaughan v London Borough of Lewisham & Others  IRLR 713, Underhill J made it clear that a party’s failure to seek a Deposit Order, or otherwise to issue any costs warning asserting that the claims were hopeless, was not cogent evidence that those claims had any reasonable prospect of success. He accepted that respondents faced with what they believe to be weak claims do not always seek Deposit Orders, on the grounds it sometimes is thought that to do so risks the expenditure of further costs on a diversion which may not succeed, or which may only conduce to further delay and appeals, or which in any event may not deter the claimant. Underhill J concluded:-
“Such a view may be over pessimistic – Deposit Orders properly used, are a valuable tool for averting weak claims – nevertheless it is understandable.”
3.10 In Jilley it was held that once the Tribunal has decided that it will have regard to the paying party’s ability to pay then, as set out in the judgment of the Employment Appeal Tribunal:-
“ … it should set out its findings about ability to pay, say what impact this has on its decision whether to award costs or on the amount of costs, and explain why. Lengthy reasons are not required. A succinct statement of how the Tribunal has dealt with the matter and why it has done so is generally essential.
Therefore if the Tribunal has decided that it will have regard to the paying party’s ability to pay, it has to take into account what is has found to be the paying party’s ability to pay.”
In Jilley the Employment Appeal Tribunal held that the Rules are wide enough … to allow a Tribunal to take account of ability to pay by placing a cap on an award of costs even where it orders a detailed assessment.
(See further Arrowsmith v Nottingham Trent University  ICR 159 and Vaughan v London Borough of Lewisham & Others  IRLR 715.)
In the recent case of Howman v The Queen Elizabeth Hospital Kings Lynn  UKEAT/0509/12, the Employment Appeal Tribunal held that, if the Tribunal decides to have regard to someone’s ability to pay when deciding what Order for Costs it should make, it requires to balance the need to compensate the claimant who has unreasonably been put to expense against the other litigant’s ability to pay. It held ‘the latter does not necessarily trump the former, but it may do so’.
In Shields Automotive Ltd v Grieg [UKEATS/0024/10], the Employment Appeal Tribunal held that assessing a person’s ability to pay involves considering their whole means, which can include reference to a person’s capital, represented by property or other investments [Tribunal’s emphasis].
3.11 It is well-known that to show that a claim was misconceived (ie had no reasonable prospect of success) involves a high threshold.
Indeed, as set out in Harvey on Industrial Relations and Employment Law, Volume 3, Section PI, Paragraph 1083:-
“When considering whether to award costs in respect of a party’s conduct in bringing or pursuing a case which is subsequently held to have lacked merit, the type of conduct that will be considered unreasonable by a Tribunal will obviously depend on the facts of the individual case, and there can be no hard-and-fast principle applicable to every situation. In general, however, it would seem that the party must at least know or be taken to have known that his case is unmeritorious. See Cartiers Superfoods Ltd v Laws, which was decided under the old Rules, when the only grounds for awarding costs were whether the claimant or respondent to any proceedings had act frivolously or vexatiously.”
However, as stated at Paragraph 1084 of Harvey, such an approach needs to be applied with caution, otherwise parties could end up being penalised for not assessing the case at the outset in the same ways a Tribunal may do following a hearing and evidence. Indeed, as Sir Hugh Griffiths stated in E T Marler v Robertson  ICR 72 NIRC:-
“The ordinary experience of life frequently teaches us that which is plain for all to see once the dust of battle has subsided was far from clear to the combatants once they took up arms.”
However, as Knox J stated in Keskar v Governors of All Saints Church of England School  ICR 493:-
“The question whether a party against whom an Order for Costs is proposed to be made ought to have known that the claims he was making had no substance, is plainly something which is, at the lowest capable of being relevant.”
He emphasised that, where there was no significant material to support the allegations, it involved an assessment of the reasonableness of bringing the proceedings; and this ‘necessarily involved’ a consideration of the question whether the claimant ought to have known that there was no such supportive material.
4.1 The claimant’s representative, in an e-mail dated 7 October 2013, provided to the Tribunal details of the claimant’s present net salary in his continuing employment with the respondent, together with details of his relevant outgoings per month. In relation to his detailed list of monthly outgoings, which were stated to be approximately £1,035.00 per month, the respondent’s representative did not seriously challenge this list of outgoings. The claimant suggested his net salary was £1,164.00 per month; whereas the respondent, having taken into account his normal/average overtime, stated the correct figure was £1,212.00. The Tribunal preferred the latter calculation. In addition to the foregoing, it was not disputed by the claimant, who gave oral evidence to the Tribunal, the claimant was the sole owner of a house/farmland, where he resides with his wife and son and which has a present valuation of approximately £135,000.00. This property is not the subject of any mortgage. The claimant also owns a half-share with his wife in a house, where his mother resides, which is worth approximately £66,000.00. Again, this property is not the subject of any mortgage. The claimant’s wife works for some 16 hours per week and earns approximately £8,000.00 per annum gross. It was not disputed she would contribute, to a limited undefined extent, to the said household outgoings.
4.2 The respondent did not call any oral evidence in relation to this application for costs; but both the claimant’s representative and the respondent’s representative made oral submissions. The respondent’s representative, in his submission, referred to the history of these proceedings, prior to the hearing on 9 September 2013, much of which is set out in the Tribunal’s decision and, in particular, at Paragraph 1 of the said decision. The respondent’s representative highlighted, in particular, how the claimant and his representative failed, without explanation, to appear at the Case Management Discussion on 27 August 2013. They had earlier failed to provide a ‘draft’ index for the trial bundle. When the respondent’s representative, given the imminent hearing, had decided it was necessary to prepare an index itself and had asked the claimant’s representative for comments/amendments about the said draft, it received no reply and had to prepare trial bundles for the substantive hearing; albeit this was the responsibility of the claimant and/or his representative. He also noted the claimant and his representative had failed to appear at the substantive hearing, on 9 September 2013, without explanation, as set out in the said decision. Neither the claimant nor his representative sought an adjournment of the substantive hearing, despite earlier indications to the respondent’s representative, but not the Tribunal, that one would be made, either on the grounds of the ill-health of the claimant and/or his representative or otherwise. Indeed the respondent’s representative pointed out the claimant and his witnesses had never sought leave from their employment with the respondent to be at the Tribunal hearing. It is correct to state that the claimant, at this hearing, to determine the respondent’s application for costs, apologised to the Tribunal for his non-attendance, however belatedly. The claimant, in his evidence, sought to suggest that he was not really aware of what was taking place in relation to his claim, prior to the substantive hearing, despite his acknowledged receipt of all relevant correspondence from the respondent’s representative and/or the Tribunal. However, the Tribunal was not prepared to accept, given the history of this matter as set out in the decision, the claimant was as unaware of what was taking place as he might have sought to suggest at this hearing. It is also correct to note the claimant’s representative, at this hearing, acknowledged the above failures and accepted responsibility on behalf of the Independent Workers Union for most of them. However, as the claimant’s representative properly recognised, Rule 35 of the Rules of Procedure relates to the unreasonable conduct of the claimant and/or his representative; and, in particular, that any Order made by the Tribunal in such circumstances has to be made under Rule 34 of the Rules of Procedure, against the claimant. In light of the failures and circumstances set out above, and the legal authorities referred to previously, the Tribunal had no hesitation in concluding that the conduct of the claimant and/or his representative, as referred to above, was unreasonable.
4.3 On 16 January 2013 the claimant had presented to the Tribunal his claim for discrimination on the grounds of religious belief contrary to the Fair Employment and Treatment (Northern Ireland) Order 1998. Prior to doing so, the claimant, on 9 January 2013, had received the respondent’s detailed reply to his Fair Employment questionnaire under the said 1998 Order. In addition, on 28 January 2013, the respondent had presented a response, in which it had set out, in some detail, its denial of liability for the claimant’s said claims. Further, as set out in the decision, the claimant’s claim had been the subject of detailed case-management, providing for receipt by the claimant and his representative of detailed discovery/ additional information. On or about 9 July 2013 the respondent provided to the claimant and his representative copies of its witness statements, as referred to in the said decision. Whilst the Tribunal can accept, not without some hesitation, that the claimant and/or his representative may not have been aware of all relevant matters prior to the exchange of the said witness statements by the respondent, the Tribunal has no doubt that, having properly considered the matters set out in those witness statements, the claimant and/or his representative would and should have known, after receipt of the said witness statements, that the claimant’s claim was misconceived (ie had no reasonable prospect of success). This is clearly illustrated by the terms of Paragraphs 3.2(i), (iv) (vi); and also, Paragraph 3.3 of the Tribunal’s decision, where the Tribunal was satisfied that the claimant ‘was intending to use these proceedings, to obtain from the respondent, the changes he personally wanted to his route; in circumstances where he must have known there was no evidence to support a claim of religious discrimination’.
If the above was not sufficient for the claimant and his representative to consider the position of the claimant in this matter then there could have been no excuse for any failure to do so when the respondent’s representative wrote to the claimant’s representative on 18 July 2013, with relevant copy to the claimant himself, in which it was stated, inter alia:-
“The above case is listed for hearing from 9th – 17th September 2013. The parties have now exchanged witness statements. The respondent, for its part, served witness statements from six persons which collectively set out the respondent’s defence to the allegation of religious discrimination that has been raised by the claimant.
It is clear from reading the papers in this case, to include the pleadings, statement of issues and the witness statements of both sides, that there is no merit whatsoever in the claimant’s case and that the respondent has an absolute defence to the allegations that have been made. In particular, you are referred to the witness statement of Phelim Jennings, the claimant’s former trade union representative. In his statement Mr Jennings, in the strongest possible terms, refutes any suggestion that the actions of the respondent towards the claimant could have been construed as religious discrimination. In Paragraph 9 of his statement Mr Jennings states that ‘this allegation (of religious discrimination) has been concocted by the claimant for his purposes’. He concludes in Paragraph 11 that he does not believe there is any substance to the allegation of religious discrimination that has been made by the claimant.
The respondent has incurred considerable costs to date in thoroughly investigating the accusations raised by the claimant and raising a detailed offence in this case which has been funded by the public purse. In an effort to avoid any public monies being spent in defending this unmeritorious claim, the respondent invites the claimant to immediately withdraw his claim before the Fair Employment Tribunal, before any further additional costs are incurred. In the event that the claim is withdrawn on or before Friday 2nd August 2013 the respondent is prepared to bear its own costs in this case. However, if the proceedings are not withdrawn by that date, you are put on notice that, if the claimant’s claim is dismissed, the respondent will seek at the appropriate time an Order for Costs against the claimant personally … and use shall be made of this letter as proof of you being placed on notice of the respondent’s intentions to pursue costs.
In view of the potential financial implications for the claimant personally, if an Order for Costs is made against him, a copy of this communication is being sent today to the claimant at his home address by first class post.
The claimant and his representative effectively ignored the letter and continued to pursue the claimant’s claim, without any regard to the terms of the letter, in circumstances where the Tribunal is satisfied the claimant and/or his representative must have known the claimant’s claim was misconceived (ie had no reasonable prospect of success). It is correct that the claimant was not legally represented; but he was represented at that time by Mr D Rafferty of the Independent Workers Union, an experienced trade union official, experienced in employment matters. Despite the terms of the letter, not only was the claim pursued but the claimant and his representative did so ‘in absentia’, as outlined above.
4.4 Having decided that the conduct of the claimant and/or his representative had been unreasonable and that the claimant’s claim was misconceived, pursuant to Rule 35(3) of the Rules of Procedure, for the reasons and in the circumstances set out above, it was then necessary for the Tribunal to consider, as part of the two stage process, whether to exercise its discretion to make an Order for Costs. The Tribunal had no hesitation in concluding, given the nature of the unreasonable conduct and the failure by the claimant and/or his representative, that if they had gone about matters sensibly (see further Peat & Others v Birmingham City Council [UKEAT/0503/11 and Cartiers Superfoods Ltd v Laws  IRLR 315) they would have known or should have known upon receipt of the respondent’s witness statements, if not earlier, that the claimant’s claim was misconceived and to proceed with the claim was unreasonable conduct. Despite this and indeed the costs warning letter, the claimant and his representative gave no indication whatsoever the claimant’s claim was not to be pursued, in full, to a substantive hearing, which, of course, as set out above, they failed to attend, without any explanation. In the Tribunal’s view, there could be no clearer case where the Tribunal should exercise its discretion and make an Order for Costs.
4.5 The fees and/or breakdown of same set out by the respondent’s representative in the schedule of costs were not the subject of any serious challenge by the claimant’s representative and the Tribunal is satisfied, in the circumstances, the said schedules were an appropriate basis for calculation, in the absence of any other evidence. Further, the Tribunal was satisfied that the rates claimed by the respondent’s representative were in accordance with the letter from the Taxing Master re: hourly rates, dated 4 April 2011 and the well-known authority of Donaldson v Eastern Health & Social Services Board  NI 232, which allow for a ‘normal’ mark-up/uplift of 50%. The Tribunal noted, in particular, the terms of the respondent’s representative’s costs warning letter, dated 18 July 2013, which could not have been clearer. It noted that the respondent’s representative decided, at that time, not to make an application for a Deposit Order but rather to write the said costs warning letter to both the claimant and his representative. The Tribunal accepts that this was a matter of judgment by the respondent’s representative, as he emphasised in the course of his submissions; especially where he did not believe such an Order would deflect the claimant and/or his representative from pursing his claim. In any event, as seen in Vaughan v London Borough of Lewisham  IRLR 715, a failure to make such an application cannot be determinative of such an application for costs. If the respondent’s representative had not issued his costs warning letter, the Tribunal might have taken a different view about this failure to make an application for a Deposit Order. Indeed it is apparent, as set out above, even the issuing of the costs warning letter did nothing to deflect the claimant and/or his representative from pursuing the claim to a substantive hearing. In light of the circumstances, as referred to above, however, the Tribunal decided that it should only consider, in the exercise of its discretion, to make an Order for Costs, on the basis of costs incurred since the expiry of the time-limits set out in the costs warning letter, namely 3 August 2013. As set out previously, the appropriate schedule of costs, from 3 August 2013 to 9 September 2013, was in the sum of £5,645.40. The Tribunal was satisfied that, in view of the size of the said sum, if was appropriate to take into account the claimant’s ability to pay, in light of the information which it had obtained at this hearing, as referred to above. In Arrowsmith v Nottingham Trent University  ICR 159, the Court of Appeal has recently held that:-
“The fact that [the employee’s] ability to pay was … limited did not … require the Tribunal to assess the sum [or costs] that was confined to an amount that [the employee] could pay.”
Taking all these matters in to account, including the value of the claimant’s property interests (see Shields Automotive Ltd), but also ‘balancing the need to compensate a litigant who has unreasonably being put to expense against the other litigant’s ability to pay’ (see Howman v The Queen Elizabeth Hospital Kings Lynn [UKEAT/0509/12], the Tribunal decided it was appropriate to make an Order for Costs against the claimant in the sum of £2,500.00.
4.6 The Tribunal therefore orders the claimant to pay to the respondent the sum of £2,500.00 (together with any Value Added Tax properly payable on the said sum by the claimant to the respondent) in respect of the respondent’s costs (see further Raggett v John Lewis PLC  UKEAT/0082/12).
Date and place of hearing: 7 November 2013, Belfast
Date decision recorded in register and issued to parties: