United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	THE APPELLANT IN PERSON
For the Respondents	NO APPEARANCE BY OR ON BEHALF OF THE RESPONDENTS


 


JUDGE PETER CLARK: This appeal is limited to the question of costs arising in this way.

The respondent to this appeal, Miss Davenport and another lady, Miss Bull brought complaints against the appellant, Mr Clarke, in the following circumstances.

Miss Davenport commenced employment on 21st February 1995. The appellant made enquiries of the Home Office and suspended her pending an investigation into immigration status.

Miss Davenport took advice from the Wellingborough District Racial Equality Council ["the Council"] and on 24th May 1995 presented an originating application to an Industrial Tribunal complaining of racial discrimination. Her representative was named as Jenny Sebastian of the Council.

On 21st August 1995 Miss Bull presented a complaint of victimisation against the appellant. She claimed that she was being harassed by the appellant because she was a potential witness in support of Miss Davenport's complaint of race discrimination.

Both claims were resisted and came on for hearing before the Bedford Industrial Tribunal on 27th and 28th June 1996. The applicants were represented by Miss Sebastian, the appellant by a solicitor, Mr Ellis. The tribunal dismissed both complaints for the full reasons promulgated on 20th August 1996.

Having won, Mr Ellis applied for an order for costs against both applicants. The tribunal refused to order costs against either of them. In this appeal we are concerned only with the tribunal's refusal to order costs against Miss Davenport.

The tribunal dealt with the application for costs against her at paragraphs 25-27 of their reasons in this way:

"25 Our power to award costs, however, is limited to cases where a party has acted "frivolously, vexatiously ... or otherwise unreasonably" in bringing or conducting the proceedings, and to making an award against that party. We do not consider that either Miss Davenport or Miss Bull acted in any of those ways in respect to the bringing or conducting of these proceedings. They acted upon advice given them by Racial Equality Council and, in our view, were entitled to expect that body to know what it was doing and to rely upon what it told them.

26 Accordingly we make no order for costs against them.

27 We do, however, consider that the Racial Equality Commission should have been aware of the decision in the Dhatt case. [That is Dhatt v McDonalds Hamburgers Ltd [1991] IRLR 130.] That case had been decided as long ago as 1991 and after five years should have been well known to the Council. Even in the absence of such a direct authority, we would have thought that common sense would have led it to appreciate that, where an employer would be committing a criminal offence if he were to employ someone who was not entitled to work in this country, then he must be entitled to make reasonable enquiries for the purpose of satisfying himself of that person's eligibility. We do not, however, have any power to make an award of costs against the Racial Equality Council. Had we had the power, then we would undoubtedly have made an order for costs against it in respect of Miss Davenport's application."

The Appeal

Miss Sebastian has indicated in correspondence with this tribunal that she no longer acts for Miss Davenport. Miss Davenport has not appeared before us and is not represented today.

Mr Clarke has presented his own appeal. He submits that the tribunal misdirected itself in law by drawing a distinction between the acts of Miss Davenport and the acts or omissions of the Council.

He argues that under the ordinary principles of agency law Miss Davenport is fixed with liability for the acts of her adviser. The tribunal found that had it the power to do so it would have ordered costs against the Council; he relies upon the Employment Appeal Tribunal decision in Carr v Allen-Bradley Electronics Ltd [1980] ICR 603. In that case an Industrial Tribunal ordered full taxed costs against an applicant who was represented by her trade union regional organiser. It held that the complaint was without merit and was frivolous and vexatious within the meaning of what was then Rule 10(1) of the Schedule to the Industrial Tribunal (Labour Relations) Regulations 1974.

On appeal the appeal tribunal accepted that the Industrial Tribunal was entitled to make an order against the applicant under Rule 10(1), but held that it was inappropriate to apply the High Court practice of ordering costs against union assisted plaintiffs in Industrial Tribunals, unless the union had agreed to provide an indemnity against its costs. The normal practice in the Industrial Tribunal was to enquire into the applicant's means in considering what order to make. In that case the Employment Appeal Tribunal directed that the applicant should pay £50 towards the employer's costs.

Conclusion

The Industrial Tribunal's power to order costs is currently regulated by Rule 12 of the Industrial Tribunal (Constitution and Rules of Procedure) Regulations 1993.

Rule 12(1) provides:

"12.-(1) Where, in the opinion of the tribunal, a party has in bringing or conducting the proceedings acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably, the tribunal may make-

(a) an order containing an award against that party in respect of the costs incurred by another party;..."

In our judgment the findings of the Industrial Tribunal bring the case of Miss Davenport potentially within the definition of unreasonable conduct of the proceedings.

We accept, as does Mr Clarke, that there is no power in the Industrial Tribunal to make an order for costs directly against the Council. However, we think that the Industrial Tribunal was wrong to excuse Miss Davenport from an order for costs simply on the basis that she was entitled to rely on the advice given to her by the Council. Equally, we cannot accept the appellant's submission that she is necessarily fixed with responsibility for the failings of the Council in the advice which it provided.

In our view the position is correctly stated by this appeal tribunal in Stannard & Co (1969) Ltd v Wilson [1983] ICR 86. That was a case decided on the costs provision contained in the Employment Appeal Tribunal Rules 1980. Rule 27(1) provided:

"(1) Where it appears to the appeal tribunal that any proceedings were unnecessary, improper or vexatious or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings the tribunal may order the party at fault to pay any other party the whole or such part as it thinks fit of the costs or expenses incurred by that other party in connection with the proceedings."

It will be seen that for present purposes that rule is not materially different from Rule 12(1) of the current Industrial Tribunal Rules.

In Stannard it was argued by the unsuccessful appellant that it had not acted unreasonably in pursuing the appeal on the advice of solicitors and Counsel. For the successful respondent it was submitted that the question of whether legal advice was taken was irrelevant. The objective question was, was the bringing of the appeal unreasonable?

In giving the judgment of the Employment Appeal Tribunal, Browne-Wilkinson J dealt with those rival submission at pages 88H-89B:

"We cannot accept either of those submissions to their full extent. We do not think that the mere fact that legal advice has been obtained is a complete answer to a claim that the bringing of the appeal amounted to unreasonable conduct. This tribunal has previously regarded the question of whether or not there has been legal advice as a relevant, but not decisive factor. For example, in Spillers-French Holdings Ltd v. Green (unreported), March 18, 1980, this appeal tribunal ordered costs to be paid even thought counsel had advised that there was an arguable case. On the other hand, there are cases where the nature of the advice given has led this tribunal to the view that the bringing of the appeal did not amount to unreasonable conduct. We therefore take the view that whether or not the appellant was acting on legal advice is a relevant but not a decisive factor. It is something that this tribunal can take into account in deciding whether the appellant's conduct is unreasonable; but it is no automatic answer to a claim for costs to say that counsel or solicitors have advised. We therefore hold that we have jurisdiction to make the order for costs."

Applying that approach to this case we hold that the tribunal fell into error by treating the fact that Miss Davenport had acted on the advice of the Council as a complete answer by her to the costs application. That fact was a relevant, but not necessarily decisive factor.

In these circumstances we shall allow the appeal and remit the case to the same Industrial Tribunal for a finding:

(1) as to whether, in the light of the Stannard approach, Miss Davenport acted unreasonably in bringing or conducting the proceedings, and if so,

(2) what order for costs ought to be made, bearing in mind her means.