United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A HUGHES (a Friend)


 


HIS HONOUR JUDGE J McMULLEN QC

1. This case is about costs in an Employment Tribunal. It arises in an appeal by the Applicant in proceedings before a Tribunal at Manchester, Chairman Miss H J Slater, on 12 June 2002, promulgated with Extended Reasons on 5 July 2002.
2. The Applicant had been represented by Mr Bowie who was her partner and is now her husband and the Respondent by Counsel. We will continue to refer to the parties as Applicant and Respondent.
3. The Tribunal ordered, at the conclusion of lengthy proceedings for unfair dismissal brought by the Applicant, that she had acted unreasonably and ordered her to pay costs of £7,998.47 to the Respondent. The Applicant appeals against that finding on two grounds. First, that the Tribunal was wrong to award costs at all. Secondly, that the amount was so disproportionate as to be wrong in law.
4. The proceedings in this case have a long history. The Applicant was employed by the Union in a clerical capacity at an office in Lancashire. The Applicant was in a relationship with Mr Bowie, who is an officer of the Union. The nub of the case against the Applicant was that the Applicant allowed Mr Bowie to remove £100 of Union money in exchange for a cheque which she knew to have no value. She therefore knowingly colluded in a breach of the Union's financial procedures.
5. That is essentially the finding of the Employment Tribunal, supported by a judgment that the procedure adopted by the Union for investigation of the matter, hearing of the Applicant's case and the conduct of an appeal, were all reasonable procedures. The Respondent had reasonable grounds for its belief that the Applicant had been guilty of misconduct as alleged. It formed that belief after a reasonable investigation and the response of the Union, as employer, was within the band of reasonable responses. The Tribunal adjudged that this was a serious matter involving someone in a position of trust with responsibility for union members' money. It was a matter going to the heart of the relationship.
6. That was to have been an end of the matter, but the Union asks for costs to be awarded against the Applicant. At a pre-hearing review on the application of the Union a Tribunal Chairman, sitting on 30 January 2001, again in Manchester, decided that the Applicant's claim of unfair dismissal had no reasonable prospect of success and she was ordered to pay a deposit of £150 as a condition of being allowed to proceed with it. That decision was made under Rule 7 of the 1993 Rules of Procedure.
7. The Chairman set out his reasons for that conclusion saying, amongst other things, the following:

10 "It is plain to me that the Applicant's claim in this matter is a specious one. She was in charge of the cash at the relevant time. A transaction took place which was, at best unusual. In the particular circumstances of this case any reasonable employer could look upon it as a reprehensible one."

8. The Applicant appealed against that decision and on 13 July 2001 Mr Justice Lindsay, presiding at a Preliminary Hearing with members dismissed her appeal. The EAT therefore upheld that Chairman's finding, indicating that her case had not been pre-judged and that it would be open to consider the matter of costs at a later stage.
9. The Applicant was not deterred by the costs warning which, it will be recalled, enables a submission to be made specifically by reference to the earlier costs warning. In this case the decision of the Employment Tribunal came back before the same Employment Tribunal to consider costs. It had in its substantive decision said this:

"80 The tribunal considers its reasons for finding the applicant's dismissal to be fair are substantially the same as the reasons recorded in the chairman's decision promulgated on 7 February 2001 for considering that the contentions of the applicant had no reasonable prospect of success. The tribunal is, therefore, required by Rule 14 (7) of the Employment Tribunals Rules of Procedure 2001, to consider whether to award costs against the applicant on the ground that she conducted the proceedings relating to the matter unreasonably in persisting in having the matter determined by a tribunal, if no other award of costs is made against the applicant in these proceedings."

10. It was a matter that the Tribunal was unable to deal with on that day and it was put over to 12 June 2002. The Applicant again was represented by Mr Bowie and its Extended Reasons are contained in 18 pages.
11. The Tribunal considered arguments put by both representatives and really affirmed its decision which we have cited above. It came to the conclusion that not all of the Respondent's claim succeeded, in that it did not accept that the Applicant behaved vexatiously, but simply unreasonably in pursuing her case. It concluded that from the date of the pre-hearing review the Applicant should have known that her case was hopeless. As it put it:

67 "…the Applicant could have been in no doubt that her case had no reasonable prospect of success and carried a real risk of costs being awarded against he if she proceeded. Although the Applicant appealed the decision made at the pre-hearing review, the Tribunal considered that was not an appeal which the Applicant could realistically have considered to have any merit (and the EAT duly dismissed it at a Preliminary Hearing) so, from the date of the decision at the pre-hearing review 30 January 2001, the Tribunal considered that the Applicant acted unreasonably in pursuing her case."

12. It rejected the contention that the Applicant knew or ought to have known from the outset that her claim was misconceived. It thus based its decision entirely upon the wording of Rule 14 (1) in the 2001 Rules. The Tribunal under the 1993 Rules, as under the 2001 Rules, had a jurisdiction to make an award of costs where a party have behaved unreasonably in bringing or conducting proceedings. There is, however, a difference in the amount of costs which can be awarded because in the earlier Rule a limit of £500 was imposed upon the Tribunal's power itself to assess costs, whereas from 16 July 2001 it was increased to £10,000.
13. The ability of the Tribunal always existed to refer the matter for a detailed assessment to a judicial officer of the County Court. Mr Hughes readily accepts that there was power under precisely the same wording to order an assessment which could lead to a finding that costs of the amount awarded in this case could be awarded.
14. However, he contends it is unfair because the Tribunal failed to pay attention to the 2001 Regulations, Regulation 10, which require a consideration of the overriding objective. What is missing from the Tribunal's reading, he contends, is a decision about the justice of the case, since the overriding objective requires Tribunals to deal with cases justly.
15. In our judgment the Tribunal has done that. It has assessed the justice of the situation and considered the relevant material. It was common ground at the Employment Tribunal and has been urged on us today that as a result of the judgment in Kovacs v Queen Mary and Westfield College [2001] IRLR 414 the means and ability to pay, of an Applicant in this case, are not relevant.
16. Since that case was decided the Court of Appeal has also, in Gee v Shell UK Ltd (the Times, 24 October 2002) considered the approach of an Employment Tribunal in making a threat of costs at the instance of a Respondent employer to such an extent that the Applicant abandons his or her case. The circumstances in that case do not arise in our case.
17. Regulation 14 of the 2001 Regulations provides this:

14 "These Regulations shall apply in relation to all proceedings to which they relate, irrespective of when those proceedings were commenced."

Thus this new regime applies to on-going proceedings. That is a clear answer to the submission of unfairness, in our judgment. Parliament made provision for the transition between the old and the new Regulations and decided that cases would all be affected at whatever stage they had reached upon the coming into effect of the new Regulations.

18. We reject the contention that the Applicant may have not have been at risk of costs when she set out and continued along the road of these proceedings. As we have demonstrated, power was there in 2000 to award costs, or to order an assessment leading to costs, for unreasonable conduct. The amount, in this case extremely high, as statistics produced by Mr Hughes show, would be a matter flowing from a decision that the costs had been reasonably incurred by a Respondent. We thus reject the contention that the Tribunal erred in awarding costs at all and turn to the second contention, as to the scale.
19. Since the Tribunal had the power to award up to £10,000 it was for the Respondent to prove the costs it had incurred. The Tribunal set about examining in detail the schedule of costs produced by Counsel on behalf of the Union. It whittled down, in the light of evidence about rates of solicitors fees, Counsel fees, its own experience of fees in the Manchester area, the claim made by the Respondent, both as to amount, item and date. In our judgment those are matters pre-eminently within the remit of an Employment Tribunal acting upon evidence put before it. We see no error of law in its approach and this appeal is dismissed.