Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF:    1750/13

 

 

 

CLAIMANT:                      Grainne McKeown

 

 

RESPONDENT:                Belfast Metropolitan College

                                       

 

 

DECISION ON COSTS

 

The decision of the tribunal is that the claimant is ordered to pay costs to the respondent in the sum of £1,500.00 inclusive of VAT.

 

 

Constitution of Tribunal:

 

Employment Judge:         Employment Judge Murray

 

Member:                          Ms E Bailie

 

 

Appearances:

 

The claimant was represented by Mr P Moore of PM Associates.

 

The respondent was represented by Mr S Doherty, Barrister-at-Law instructed by JP Blair, Employment Law Solicitors.

 

 

REASONS

 

1.              By letter of 3 November 2014 the parties were advised that one of the panel members had retired.  The parties consented to the costs hearing proceeding before a two-member panel.

 

2.       The respondent claimed costs in the sum of £10,000.00 on the grounds that the claimant had behaved vexatiously and/or unreasonably and that the bringing or conducting of the proceedings was misconceived.

 

3.       The claimant attended the hearing and gave evidence in relation to her means.  The tribunal found the following facts in relation to the claimant’s means.

 

4.       The claimant is currently on a part-time temporary contract which she started on 24 November 2014.  The contract is due to end at the end of March when the funding expires.  The claimant’s monthly pay for ten days per month is £1,322.00.  The claimant has been actively seeking other work.  The claimant was in receipt of JobSeeker’s Allowance until 24 November 2014 and had received Housing Benefit until the same date.

 

5.       From perusal of the claimant’s statements we find that her monthly outgoings amount to approximately £1,099.00 to include her monthly payment for food and travel.  We accept the claimant’s evidence that the credit from her Credit Union account of £300.01 relates to the closure of that account and we accept her evidence that she has no savings in the Credit Union.  The claimant lives in rented accommodation and has no other assets.

 

THE LAW

 

6.       The tribunal’s power to award costs is contained in the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (NI) 2005 (“the Rules”). The general power is outlined at rule 38.  The two specific rules invoked by the respondent were rule 40(2) and rule 40(3) which state as follows:-

 

“40(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.”

         

7.       “Misconceived” is defined at Regulation 2 of the Rules as follows:-

 

                    “misconceived includes having no reasonable prospect of success”.

 

          The tribunal’s jurisdiction in relation to costs is outlined in Harvey on Industrial Relations and Employment Law at division P1 paragraphs 1044–1120 and at Division T Practice and Procedure at paragraphs 1026-1080.  Harvey suggests that the test is more than a simple objective assessment of whether the claimant knew or ought to have known that his case lacked substance or merit.  The tribunal must look at not just the proceedings themselves but the claimant’s conduct in bringing or conducting the proceedings and one potential factor can be the respondents’ failure to apply to strike out the claim or to apply for a deposit at an earlier stage.

 

8.       Harvey states at Division P1 paragraph 1083:-

 

“When considering whether to award costs in respect of a party’s conduct in bringing or pursuing a case that 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 to be taken to have known that his case is unmeritorious (see Cartiers Superfoods Ltd  v  Laws [1978] IRLR 315).”

 

9.       The tribunal must go through a two-stage process in determining whether to award costs.  Firstly, a tribunal must determine whether the respondent in bringing or conducting the proceedings acted vexatiously or unreasonably or whether the claim was misconceived.  This is the threshold test.  Secondly, the tribunal must decide whether or not it is appropriate to exercise its discretion to award costs in the particular circumstances of the case.  (See Criddle  v  Epcot Ltd [UKEAT/0275/05] and Khan  v  Kirklees BC [2007] EWCA Civ 1342.)

 

10.     Costs Orders are exceptional in nature in the tribunals where costs do not normally follow the event as in the Civil Courts.  In Gee  v  Shell UK Ltd [2003] IRLR 82 Sedley LJ stated:

 

“It is nevertheless a very important feature of the employment jurisdiction that it is designed to be accessible to ordinary people without the need of lawyers, and that – in sharp distinction from ordinary litigation in the UK – losing does not ordinarily mean paying the other side’s costs”.

 

11.     An Order for Costs must be compensatory and not punitive.

 

12.     The tribunal must have regard to the overriding objective and to the comments of Girvan LJ in the case of Peifer  v  Castlederg High School and Western Education & Library Board & Another [2008] NICA 49 where Girvan LJ stated as follows:-

 

                    “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.        ...

         

                    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.”

 

13.     In this case the claimant was represented by Mr Moore who kept the questioning focussed on relevant issues.

       

14.     One of the leading cases in relation to the exercise of the discretion is the case of McPherson v BNP Paribas [2004] EWCA Civ 569 where the Court of Appeal held that there was no necessity for a causal link between the party’s unreasonable behaviour and the costs incurred by the receiving party. The Court stated:

 

“In exercising its discretion to award costs, the tribunal must have regard to the nature, gravity and effect of the unreasonable conduct.  However, the discretion is not limited to those costs that are caused by or attributable to the unreasonable conduct.  The unreasonable conduct is a pre-condition of the existence of the power to order costs and it is also a relevant factor to be taken into account in deciding whether it makes an order for costs and the form of the order, but that is not the same as requiring a party to provide that  specific unreasonable conduct caused the particular costs to be incurred.”

 

15.     In the case of Barnsley Metropolitan Borough Council  v  Yerrakalva [2011] EWCA Civ 1255, Mummery LJ reviewed the authorities in relation to the issue of costs and provided guidance as to the correct approach to be adopted in an appeal against a costs order.  Mummery LJ said:

 

“7. As costs are in the discretion of the ET, appeals on costs alone rarely succeed in the EAT or in this court.  The ET’s power to order costs is more sparingly exercised and is more circumscribed by the ET’s rules than that of the ordinary courts.  There the general rule is that costs follow the event and the unsuccessful litigant normally has to foot the legal bill for the litigation.  In the ET costs orders are the exception rather than the rule. In most cases the ET does not make any order for costs.  If it does, it must act within rules that expressly confine the ET’s power to specified circumstances, notably unreasonableness in the bringing or conduct of the proceedings.  The ET manages, hears and decides the case and is normally the best judge of how to exercise its discretion.

 

8. There is therefore a strong, soundly based disinclination in the appellate tribunals and courts to upset any exercise of discretion at first instance. In this court permission is rarely given to appeal against costs orders.  I have noticed a recent tendency to seek permission more frequently. That trend is probably a consequence of the comparatively large amounts of legal costs now incurred in the ETs.

 

9. An appeal against a costs order is doomed to failure, unless it is established that the order is vitiated by an error of legal principle, or that the order was not based on the relevant circumstances.  An appeal will succeed if the order was obviously wrong.  As a general rule it is recognised that a first instance decision-maker is better placed than an appellate body to make a balanced assessment of the interaction of the range of factors affecting the court’s discretion.  This is especially so when the power to order costs is expressly dependent on the unreasonable bringing or conduct of the proceedings.  The ET spends more time overseeing the progress of the case through its preparatory stages and trying it than an appellate body will ever spend on an appeal limited to errors of law.  The ET is familiar with the unfolding of the case over time.  It has good opportunities for gaining insight into how those involved are conducting the proceedings.  An appellate body’s concern is principally with particular points of legal or procedural error in tribunal proceedings, which do not require immersion in all the details that may relate to the conduct of the parties.

...

 

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 the 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. …”

 

16.     In a decision of the EAT in the case Peat & Others  v  Birmingham City Council [UKEAT/0503/11], Supperston J 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.  He held that if the claimant’s side had engaged with the issues and the costs warning letters they likely would have appreciated that the claimant’s reasonable prospects of success was so thin that it was not worth going to the hearing. 

 

17.     The classic definition for vexatious claims is found in the case of ET Marler Ltd  v  Robertson [1974] ICR 72, as follows:-

 

“ … an employee brings a hopeless claim not with any expectation of recovering compensation but out of spite to harass his employers or for some other improper motive, he acts vexatiously.”  

 

18.     The Court made clear that this was a high hurdle for a party to show, stating:-

 

“ … it is a serious finding to make against an applicant, for it will generally involve bad faith on his part and one would expect that discretion to be sparingly exercised … .”

 

19.     In the case of HM Attorney General  v  Bentley [2002] (UKEAT/0556/11) the EAT referred to the judgment of Bingham CJ in the case of HM Attorney General  v  Barker [2002] SCR 1, as follows:

 

“The hallmark of a vexatious proceeding is in my judgment that it has little or no basis in law (or at least no discernible basis); that, whatever the intention of the proceedings may be, its effect is to subject the defendant to inconvenience, harassment and expense out of all proportion to any gain likely to accrue to the claimant, and that it involves an abuse of the process of the Court, meaning by that a use of the Court process for the purpose or in a way which is significantly different from the ordinary and proper use of the Court process.” (emphasis added)

 

20.     The Employment Appeal Tribunal also referred to the judgment of Rimer J, as he then was, in the case of HM Attorney General  v  Roberts [2005] AER (D) 138, when at Paragraph 6 of his judgment he said as follows:-

 

“Most cases of allegedly vexatious litigants, as Lord Bingham there points out [in a reference to Barker], concern repeated claims or applications in respect of one particular matter by which the litigant has become obsessed, commonly involving the same defendant or defendants.  In the employment law field this is a less common feature.  Instead, what is commonly seen is the making of repeated applications of a like time to Employment Tribunals, usually against different respondents but founded on the like basis … .”

 

21.     In the case of A Q Ltd  v  Holden [UKEAT/0021/12], in the Employment Appeal Tribunal 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 [40(2)].  Further, even if the threshold tests 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 cases make clear.  Some litigants in person are found to have behaved vexatiously or unreasonably even when proper allowance is made for their inexperience and lack of objectivity … .”

 

22.     The Rules provide at Rule 41(2) that:-

 

“The tribunal or chairman may have regard to the paying party’s ability to pay when considering whether it or he shall make a costs order or how much that order should be.”

 

23.     The case of Jilley UK emphasises the importance of taking account of the claimant’s means although a lack of means to pay is not a bar to a costs order being made.  (Jilley  v  Birmingham & Solihull Mental Health NHS Trust [UKEAT/0584/06/DA]):-

 

“[53]   The first question is whether to take ability to pay into account.  The Tribunal has no absolute duty to do so.  As we have seen, if it does not do so, the County Court may do so at a later stage.  In many cases it will be desirable to take means into account before making an order; ability to pay may affect the exercise of an overall discretion, and this course will encourage finality and may avoid lengthy enforcement proceedings.  But there may be cases where for good reason ability to pay should not be taken into account; for example, if the paying party has not attended or has given unsatisfactory evidence about means.”

 

CONCLUSIONS

 

24.     By a decision promulgated on 10 September 2014 the claimant’s claims were dismissed.  The claims were for unfair dismissal on ordinary principles, automatic unfair dismissal on grounds of having made a protected disclosure and automatic unfair dismissal on grounds of trade union activities.  It was the respondent’s case that the claimant was dismissed fairly for gross misconduct.

 

25.     We do not find the claimant to have acted vexatiously as we do not accept that she was motivated by spite or acted with a view to harassing her employer.  In our decision we found that the claimant held unshakeable convictions in relation to the running of the respondent organisation.  Our assessment of her throughout the hearing was that she appeared genuinely to believe in the truth of most of what she was saying despite the fact that this was based on rumour, gossip and unreasonable supposition.  We did not find her to have acted with malicious intent but rather she acted with a complete lack of insight into the seriousness of her acts and the allegations she was making. 

 

26.     From December 2013 when the solicitor’s letter was sent to her and set out in detail the problems with her claim, it was misconceived and unreasonable for the claimant to proceed with her claim after that date.  It should have been clear to her at that point that her case had no reasonable prospect of success in relation to the protected disclosure dismissal and in relation to the ordinary unfair dismissal claim.  We deal with the claim for dismissal on grounds of Trade Union activities below.

 

27.     We find that the claimant’s unreasonable behaviour after December 2013 is underlined by the fact that she received a further letter in June 2014 (after the witness statements had been shared) which set out more detail, and reiterated  points previously made, about the weaknesses in her case.

 

28.     We therefore find that the claimant’s behaviour has met the threshold test in the Rules and we turn now to whether or not it is appropriate to award costs in relation to the protected disclosure and ‘ordinary’ dismissal claims.

 

29.     We find that it is appropriate to award costs in this case for the following principal reasons:

 

          (1)      We take account of the inflammatory nature of the allegations which the claimant persisted in putting forward. 

 

          (2)      The claimant in her claim persisted in trying to blame her trade union colleague for dissemination of the report stating that she expected it to be amended, yet at the same time she made the case to us that she ‘stood over’ everything in that report.  This was a contradictory position to adopt which was simply unsustainable and this should have been obvious to her.

 

          (3)     We noted in our decision that several of the allegations were wild allegations, that they were based on no more than rumour or gossip, and that the claimant took no steps at any stage to seek to verify the truth of what she was saying.  She relied on an unnamed source and at no stage named that source yet persisted at hearing in putting forward her view that the source was reliable.

 

          (4)      The claimant agreed in evidence that she did not believe the truth of one of the allegations at the time she put it in her Equality Report yet it formed one of the allegations in her claim and therefore had to be rebutted by evidence from the respondent.

 

          (5)     In relation to the ordinary unfair dismissal claim there was very little emphasis on that at hearing and very little evidence in relation to it as the thrust of the claim was in relation to the protected disclosure dismissal.  Nevertheless the respondent had to prepare evidence to rebut that aspect of the claim.

 

30.     We turn now to the claim for automatic unfair dismissal on grounds of trade union activities.  We do not accept that it was unreasonable and/or misconceived or vexatious for the claimant to launch such a claim nor to proceed with it.  We so find for the following principal reasons:

 

(1)            On the face of it, the claimant was dismissed for producing an Equality Report which she was asked by her trade union to prepare for the purposes of the trade union AGM in her position as a trade union official.  The claimant therefore had an argument to put forward that her act was a trade union activity as it was common case that she was dismissed because of the production and content of that Equality Report.

 

          (2)      The way the burden of truth operates in these cases means that there is a lower hurdle for a claimant to surmount before the burden of proof shifts to the employer. 

 

          (3)      The tribunal rejected the claimant’s case on this after careful consideration of the legal authorities and the submissions on both sides.  The tribunal reached the conclusion that the nature of the allegations was such that it took the actions outside the scope of trade union activities and the claimant’s claim therefore failed on that basis.  This required an analysis of the alleged incidents set out in the equality report to assess whether they crossed a line taking them outside the scope of trade union activities.

 

31.     The respondent has not persuaded us that the threshold test has been met in relation to the claim for automatic unfair dismissal due to trade union activities.

 

32.     The respondent’s bill amounted to £12,000.00 less approximately £500.00 incurred by the solicitor prior to the letter of December 2013. 

 

33.     If the case had proceeded on the sole basis of dismissal on grounds of trade union activities there would still have been an analysis of the allegations in the equality report and some evidence would have been required in relation to that which overlapped with the protective disclosure claim.  There is no doubt however that the hearing would have been a shorter hearing and would have required less preparation by the lawyers for the respondent.  Mr Doherty fairly conceded that the hearing would in those circumstances likely have lasted no more than three days and this was not disputed by Mr Moore.  We agree with that assessment of the likely length of hearing if it had run on the trade union activities point alone.

 

34.     The costs claimed amounted to £12,660 inclusive of VAT.   We take as our starting point for costs, 40% of the total claimed as the hearing was 40% longer than it should have been because of the extra evidence required.  By this calculation we arrive at an approximate figure for costs of £4,800.00.  We find that these are the costs which were incurred due to the inclusion of the misconceived claims which the claimant pursued unreasonably.

 

35.     We take account of the claimant’s means to discount that figure of £4,800.00.  We accept that the claimant has limited means and assets.  This is not a bar to us awarding costs.  We have decided that the costs awarded should be discounted for this reason but we also find that they should bear some relationship to the extra costs incurred by the respondent. 

 

36.     We have therefore decided that an award of £1,500.00, inclusive of VAT, is appropriate in this case.   

 

 

 

 

 

Employment Judge:      

 

 

Date and place of hearing:  17 December 2014, Belfast.   

         

 

Date decision recorded in register and issued to parties: