Jersey Unreported Judgments

Jersey Employment Tribunal - costs judgment.

[2014]JRC145

Royal Court

(Samedi)

22 July 2014

Advocate B. H. Lacey for the Appellant.

Advocate D. M. Cadin for the First and Second Respondents.

judgment

the commissioner:

1.        Following the handing down of my decision on 25^th June, 2014, (Piazza-v-Dominion and Others [2014] JRC 138) setting aside the case management decision of the Jersey Employment Bureau of 6^th February 2014, I heard arguments as to costs.  I will use the same definitions as in that judgment. 

2.        Advocate Lacey, for Mr Piazza, sought costs against Dominion Managed Services on the indemnity basis, for the following reasons which I set out by way of summary:-

(i)        I found at paragraph 33 of the judgment that Mr Piazza had no real alternative but to embark upon an appeal incurring costs, I was informed, of some £40,000. 

(ii)       Advocate Cadin had wrongly failed or omitted to draw the Employment Tribunal's attention to the provisions of Article 80(2) of the Employment (Jersey) Law 2003 which was of direct relevance to the basis of the application for a stay and for the undertaking not to issue Royal Court proceedings. 

(iii)      The Andrew John Halstead-v-Paymentshield Group Holdings Ltd [2012] EWCA Civ 524 case had not been appropriately put to the Employment Tribunal in that Advocate Cadin had, in effect, "cherry picked" and failed or omitted to quote adequately or to give the correct context to the section of the judgment being purportedly relied on.  This was particularly concerning when the hearing was before a litigant in person and lay members of the Employment Tribunal.  

(iv)      The decision's "starvation effect".  As a result of the flawed application for an adjournment by Dominion Managed Services and the resulting decision of the Employment Tribunal, Mr Piazza had been wrongly deprived of his statutory remedies at a time when he had been without any income whatsoever, was unable to work in the finance industry as a consequence of restrictive covenants being binding upon him and the dividends due on his shares were being withheld. 

(v)       Dominion Managed Services should have conceded what was a clear error of law on the part of the Employment Tribunal.  Instead, it strongly resisted the appeal by arguing a play on the actual words adopted by the Employment Tribunal in its decision. 

3.        In addition to the above points, Advocate Lacey submitted that there was a considerable and important public interest in the decision of the Employment Tribunal being overturned as it would otherwise have stood as the sole legal authority in Jersey on the applicable law and the approach on relation to stays before the Employment Tribunal.  It was therefore only fair and reasonable that Mr Piazza be properly financially compensated for having been forced to incur that financial burden. 

4.        Advocate Cadin took great exception to what he said amounted to an inappropriate personal attack on his conduct, which was wholly unwarranted and unfounded.  If it was to be alleged that he had misled the Tribunal, then the cost of the appeal was not something that could or should be visited on Dominion Managed Services and should form the basis of an application for wasted costs against him personally, for which there had to be a proper application, proper evidence and a proper inquiry with independent representation (he referred in this respect to the case of Ridehalgh and Horsefield [1994] 3 All ER 848). 

5.        Objectively, he said, the decision of the Employment Tribunal was a decision:-

(i)        neither party sought;

(ii)       in respect of which there was no Jersey authority;

(iii)      in which the Employment Tribunal erred in law;

(iv)      which the Employment Tribunal itself incorrectly documented; and

(v)       which could not be corrected by the parties and could only be corrected by appeal as per paragraph 33 of the judgment. 

6.        He submitted that there should be no award of costs against Dominion Managed Services for the following reasons:-

(i)        It is harsh in the context of this case, given that it punishes Dominion Managed Services for an order made by the Employment Tribunal which it did not seek;

(ii)       It requires Dominion Managed Services to compensate Mr Piazza for his costs of the appeal, when it was impacted in a similar way and had to incur its own costs of the appeal;

(iii)      It is unfair, in that if Dominion Managed Services succeeds in the Employment Tribunal, it cannot and will not get an order for costs against Mr Piazza (the Employment Tribunal having no jurisdiction to award costs) yet will be required to pay part of the costs of the proceedings. 

7.        It is only if the Court is minded to consider making an order against Dominion Managed Services that it should consider the basis of the award and there is nothing in the current appeal, he said, which takes it out of the norm justifying indemnity costs. 

8.        Costs in the cause, he said, would be a logical order in that the error of the Employment Tribunal was a cost of the litigation and impacted equally on the parties, but there can be no order for costs in a case before the Employment Tribunal and this would therefore be a meaningless order. 

9.        He submitted that no order as to costs would fit with the factual position in the Employment Tribunal and would reflect the position that would have arisen had Mr Piazza acceded to the suggestion of applying to the Employment Tribunal to lift the adjournment. 

Decision

10.      I reject the suggestion that Advocate Cadin misled the Employment Tribunal or otherwise misconducted himself.  There is no such misconduct patent on the face of the Employment Tribunal's decision and apart from the decision itself there was no evidence before me as to what had been said before the Employment Tribunal.  There were apparently transcripts available, but Advocate Lacey had not herself listened to them. 

11.      The Employment Tribunal had clearly erred in law and in my judgment that should have been conceded by Dominion Managed Services from the outset.  Instead, it argued that there had been no error of law and sought to uphold the case management decision of the Employment Tribunal (see paragraphs 28 and 29 of the judgment).  It lost that argument.  On the other hand Mr Piazza succeeded in his appeal and fairness dictates that he should have his costs against Dominion Managed Services.  However, I do not consider that resisting the appeal takes the conduct of Dominion Managed Services out of the norm warranting the imposition of costs on the indemnity basis.  I am therefore going to order Dominion Managed Services to pay the costs of Mr Piazza of and incidental to this appeal on the standard basis. 

12.      That leaves Mr Piazza having to fund the difference between what he would have recovered if costs had been awarded on the indemnity basis and the costs he has been awarded on the standard basis - I will refer to this as the "costs deficit".

13.      Advocate Cadin drew my attention to the Court of Appeal decision in C I Knitwear Co Ltd v Hotchkiss [2001] JLR 570 where the Royal Court had fallen into serious error.  The Court of Appeal held that there was jurisdiction to order costs to be paid by the States of Jersey.  Quoting from the judgment of Smith JA at paragraphs 26-28:-

"26     The first relates to the nature of the error.  Where a court has come to a conclusion of fact or law with which the Court of Appeal disagrees, no question of an order for costs of the appeal out of public funds should normally arise.  This is because those eventualities are within the scope of the well-known ordinary risks of litigation - the kind of thing one would expect an advocate to warn his or her client about before the litigation gets under way.  But an advocate should not have to warn a client in advance that a significant part of the client's damages may be forfeited because the court of trial may make the kind of mistake made in the instant case.  Thus, in my judgment, the first principle should be that the possibility of a costs order against the States would only arise where a seri9ous injustice has been perpetrated by a court lying outside even the widest interpretation of the normal risks inherent in involvement in legal proceedings.

27       The second principle relates to the financial circumstances of the party in whose favour the costs order is sought.  Because neither the States nor the public have been directly responsible for the error it is, in my view, appropriate for the public purse to be fixed with the burden of a costs order only when the party in whose favour it is to be made would otherwise suffer severe financial hardship - a concept recognized in statutory legal aid schemes in the United Kingdom in the context of orders for costs against a legal aid fund in favour of successful non-legally-aided defendants.

28       I pause to emphasize that the jurisdiction to order the States to pay costs in respect of an appeal, made necessary by very serious error on the part of a first instance court, would fall to be exercised only in the most exceptional circumstances.  In the vast majority of cases, it would be entirely inappropriate for any such order to be made.  While it would not be wise to attempt to define "the most exceptional circumstances", it would be right to warn litigants that applications for costs against the States in which the circumstances do not meet this very stringent test would not only not succeed but could very well result in an adverse costs order being made in respect of the application."

14.      The error of the Employment Tribunal did lie outside even the widest interpretation of the normal risks inherent in involvement in legal proceedings, in that it quoted from and applied the judgment of the Employment Appeals Tribunal in the Paymentshield case which had been expressly over-ruled by the English Court of Appeal.  The first principle is therefore met.  Turning to the second principle, I know that Mr Piazza represented himself before the Employment Tribunal; that he has been out of work for some nine months; that he remains subject to restrictive covenants preventing him from getting work in the finance industry and that his dividends have been withheld.  However, up until August 2013, he had been well paid and still owns shares with substantial value.  I know nothing else about his means and therefore I am quite unable to say that unless the States of Jersey pay the costs deficit he will suffer severe financial hardship.  Accordingly, I do not feel able to make an order against the States of Jersey in relation to the costs deficit.  The result, therefore, is that Mr Piazza will have to bear the costs deficit personally. 

Authorities

Piazza-v-Dominion and Others [2014] JRC 138.

Employment (Jersey) Law 2003.

Andrew John Halstead-v-Paymentshield Group Holdings Ltd [2012] EWCA Civ 524.

Ridehalgh and Horsefield [1994] 3 All ER 848.

C I Knitwear Co Ltd v Hotchkiss [2001] JLR 570.