United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR PAUL McGRATH (of Counsel) Instructed by: Messrs Hossacks Solicitors The Station Masters House 61 Station Road Kettering NN15 7HJ
For the Respondent	MR JEFFREY JUPP (of Counsel) Instructed by: Messrs Geoffrey Taylor Solicitors 12 High Street Coton Cambridge CB3 7PL


 


HIS HONOUR JUDGE ANSELL

1. This is an appeal from a remedies decision of an Employment Tribunal sitting at Bedford on 10 June 2003 who in a decision promulgated on 2 July 2003, ordered that:

(1) the Appellant was entitled to £1,841.70 by way of pay in lieu of holiday pay;

(2) her application for an adjournment of the hearing of the Respondents' application for costs was refused;

(3) she was ordered to pay £10,000 to the Respondents, Milton Keynes Council in respect of their claim for costs.

2. She appeals in respect of items (2) and (3), leave being given by His Honour Judge McMullen QC in chambers on 29 August 2003.
3. The Appellant had commenced proceedings alleging unfair dismissal, breach of contract, race discrimination and victimisation by an Originating Application dated 8 March 2002. There had been three interlocutory hearings on 8 July, 30 August and 22 October 2002. The substantive hearing commenced on 24 February 2003 when there were also interlocutory applications. The hearing lasted until 4 March 2003; that is, over 7 working days, and the substantive decision was promulgated on 9 May 2003.
4. Save for the issue of holiday pay, all the Appellant's claims were rejected. A remedy hearing had already been fixed for Tuesday 10 June and the Tribunal's decision concluded as follows:

65 "Should either party wish to pursue any further application at the hearing on Tuesday 10 June, written notice should be given by that party to the other party and to the Tribunal within 14 days of the promulgation of this decision." [i.e. by 23 May]

5. By letter dated 21 May 2003 the Respondent's solicitor wrote to the Tribunal with a copy to the Appellant stating that they intended to apply for an order for costs against the Appellant pursuant to Schedule 1, paragraph 14 of the Employment Tribunals (Constitution & Rules of Procedure) Regulations 2001:

"The grounds for the application are that the Applicant acted vexatiously, disruptively or otherwise unreasonably in both bringing and conducting the proceedings. Further, large parts of her claim were misconceived.

The application is that the Applicant pays the Respondent's costs to be the subject of a detailed assessment if not agreed in accordance with paragraph 14(3)(c) of Schedule 1. If the Tribunal is not minded to make such an award, the Respondent will seek an award that the Applicant pays the Respondent's costs of a specified sum of £10,000 in accordance with paragraph 14(3)(a) of Schedule 1. The Respondent will serve on the Tribunal and the Applicant a schedule of its costs prior to the Hearing on 10 June 2003."

6. The Appellant wrote to the Tribunal in response on 28 May 2003 rejecting the allegations made against her. She continued as follows:

"I would kindly request you to ask the respondent's representative to list the above allegations against me to enable me to respond to them individually.

…

I would humbly ask the tribunal to reject the respondent's claim for costs, as it is grossly unfair. If the tribunal just decides that there needs to be a decision, then I request that a hearing be listed to discuss the matter."

Neither the Tribunal nor the Respondents replied to that letter.

7. On 6 June the Respondents sent a letter both to the Tribunal and the Appellant enclosing a statement of costs for the purposes of summary assessment at a total sum of £20,206.47 (inclusive of VAT). Of that sum solicitors profit costs came to £6,372.70 plus VAT and Counsel's fees £10,500 plus VAT, to which were added disbursements of £324.30.
8. On 10 June the Tribunal firstly dealt with the Appellant's request for a review of the substantive decision, which they refused; and then dealt with the issue of holiday pay, making an award of £1,841.70. They then went on to deal with the two decisions which are the subject of this appeal; namely, the refusal of an adjournment and the order for costs in the sum of £10,000.

The Law

9. Regulation 10 of the Employment Tribunals (Constitution & Rules of Procedure) Regulations 2001 provides that:

Overriding objective

10 (1) "The overriding objective of the rules in Schedules 1, 2, 3, 4, 5 and 6 is to enable tribunals to deal with cases justly.

(2) Dealing with a case justly includes, so far as practicable –

(a) ensuring that the parties are on an equal footing;

(b) saving expense;

(c) dealing with the case in ways which are proportionate to the complexity of the issues; and

(d) ensuring that it is dealt with expeditiously and fairly.

(3) A tribunal shall seek to give effect to the overriding objective when it -

(a) exercises any power given to it by the rules in Schedules 1, 2, 3, 4, 5 and 6; or

(b) interprets any rule in Schedules 1, 2, 3, 4, 5 and 6.

(4) The parties shall assist the tribunal to further the overriding objective."

10. Schedule 1 Rule 14 (1) provides that:

"Costs

14 (1) Where, in the opinion of the tribunal, a party has in bringing the proceedings, or a party or a party's representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived, the tribunal shall consider making, and if it so decides, may make –

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

(b) an order that that party shall pay to the Secretary of State the whole, or any part, of any allowances (other than allowances paid to members of tribunals) paid by the Secretary of State under section 5 (2) or (3) of the 1996 Act to any person for the purposes of, or in connection with, his attendance at the tribunal.

…

(3) An order containing an award against a party ("the first party") in respect of the costs incurred by another party ("the second party") shall be –

(a) where the tribunal thinks fit, an order that the first party pay to the second party a specified sum not exceeding £10,000;

(b) where those parties agree on a sum to be paid by the first party to the second party in respect of those costs, an order that the first party pay to the second party a specified sum, being the sum so agreed; or

(c) in any other case, an order that the first party pay to the second party the whole or a specified part of the costs incurred by the second party as assessed by way of detailed assessment (if not otherwise agreed)."

Refusal of Adjournment

11. The Appellant had asserted before the Tribunal that she was only prepared to deal with the holiday pay issue and wanted the hearing of both the review application and the application for costs deferred so that she could seek advice and call witnesses. She had referred to her letter of 28 May requesting a hearing and said that she had heard nothing from the Tribunal by way of response.
12. In paragraph 57 the Tribunal rejected her application for an adjournment pointing out that at the end of the substantive decision the Tribunal had made it clear that any ancillary application was to be dealt with on 10 June and they continued as follows:

57 "We did not think that any adjournment would be in the interests of the parties or of justice. There were no witnesses who could help the Tribunal to adjudicate: because the Tribunal has to adjudicate in a costs Application in a summary fashion, in the light of its own experience of the parties and their conduct of the proceedings in which the order for costs was sought. We are aware of the history of Dr Vaidyanathan's Applications. The present Application had been submitted in March 2002. There had been a number of interlocutory hearings before the commencement of the substantive hearing. The substantive hearing had commenced o 24 February which continued until 4 March. An application for costs was in any event normally a summary Application in which it was for the Tribunal to exercise its own discretion based on its own experience of the conduct of the case, as to when the hearing on the Application should take place, and how it should be determined. The normal practice was for an Application for costs to be dealt with as soon as possible after the Application was made, very often immediately at the end of a completed hearing. In this instance, Dr Vaidyanathan had received longer notice of the Application for costs than would be the case if such an Application were dealt with immediately following the completion of the hearing. Any further delay can only add to the costs and time expended by both parties. We are satisfied that in this case the interests of justice require us to deal with this Application promptly and not to permit any further delay. We therefore refuse the Application for an adjournment and will determine the costs Application at this point."

13. This court has no jurisdiction to interfere with such an interlocutory decision "unless it can be shown to have been contrary to some established principle of law or to have involved a result at which no reasonable Tribunal exercising the same discretion could have arrived": See Wait J in Medallion Holidays Ltd v Birch [1985] IRLR 406 at 409, paragraph 13.
14. Mr McGrath argues that no Tribunal properly directing themselves to the overriding objective could have come to the same conclusion as the Tribunal did in this case. He points in particular to the following factors:

(i) the Appellant was unrepresented;

(ii) she had not received any response to her letter of 28 May which had asked for further and better particulars of the allegation made against her in respect of costs and also that the Tribunal should list the matter for a hearing date;

(iii) the detailed schedule of costs was only received by her just before the hearing date and was seeking a considerable sum of money.

15. He draws our attention to the practice of this court set out in the Practice Direction paragraph 18

18 (2) "The party seeking the Order must state the legal ground on which the application is based, the facts on which it is based and by a schedule or otherwise showing how the costs have been incurred…"

16. On behalf of the Respondents Mr Jupp argues firstly that there is no requirement for the Tribunal to explicitly make reference to the overriding objective every time it makes a decision, provided that it is clear from their reasons, that the Tribunal had regard to the overriding objective and to the requirement to deal with the case justly. In particular, he makes the following points:

(i) the Appellant already knew of the hearing date of 10 June, had two weeks' prior notice from the Respondent's solicitors of their intention to apply for costs;

(ii) it would have been apparent from the fact that the Respondent's solicitors were seeking a summary assessment in the sum of £10,000 that the costs involved were substantial. This would also have been readily apparent from the length of the substantive hearing in addition to the various interlocutory hearings when the Respondents were always represented by Counsel;

(iii) the Appellant had had ample opportunity if she so wished to arrange for representation for the hearing on 10 June;

(iv) although the Appellant claimed to require witnesses in support of her objection to the costs application, neither the Tribunal at the hearing nor the Appellant at that time or since that time has specifically identified any witness who she did wish to call in respect of the costs application;

(v) he repeats the point raised by the Tribunal, namely that the costs application would normally be a summary application, often made at the end of a hearing, whereas in this case the Appellant had had good notice of the application. There is no requirement under the Employment Tribunal Rules to serve details of the allegations nor indeed a schedule of costs prior to the hearing, although a schedule was submitted in this case.

17. We agree with the Respondent's submissions and are quite satisfied that the Tribunal dealt with this issue fairly, particularly in the light of the fact that the Appellant had had two week's notice to prepare for the hearing.

Decision on Costs

18. The Tribunal dealt with the decision on costs in paragraphs 60 to 62 of their decision as follows:

60 "We are satisfied that many aspects of Dr Vaidyanathan's claims were misconceived. We accept Mr Jupp's submissions on this score. In particular, Dr Vaidyanathan has sought to pursue claims which originated in earlier Applications which have been dismissed on withdrawal. She has in particular sought to pursue her complaints about an alleged lack of promotion, set out in the complaints issued in January and October 2000, notwithstanding the withdrawal of those complaints in May 2001, and the Tribunal's refusal of leave to amend to re-introduce such an allegation on 22 October 2002. She has asserted time and time again her case that there was an active conspiracy on the part of the Respondents and their employees to discriminate against her on the grounds of her race: an allegation which has not been supported by a shred of evidence.

61 Dr Vaidyanathan has repeatedly challenged the Interlocutory Decisions made by the Tribunal. The Interlocutory Decision promulgated on 20 March 2003 following the commencement of the substantive hearing in the present claim, records the Tribunal's refusal of Dr Vaidyanathan's Application for a postponement, then the further refusal of her Application for a review of the Tribunal's Decision refusing the postponement. This present Decision records Dr Vaidyanathan's Application for a review of the Decision refusing her Application for a review of the primary substantive Decision.

62 We are satisfied that Dr Vaidyanathan and her husband have conducted her case in a vexatious and unreasonable manner. She has made allegations of racial bias against both the Respondents and the Tribunal itself. In her Application for a Review she has continued to repeat those allegations. Her comparison of the Respondents to Hitler was simply offensive. Mr Vaidyanathan made further allegations of racial bias against the Tribunal in today's proceedings. The two lay members have long experience of sitting in Employment Tribunals. They are used to being the butt of the occasional remark from a party who is distressed or disappointed at the outcome of the proceedings. They have neither of them experienced the direct and sustained barrage of criticism and allegations of bias that this Tribunal has had directed towards it from Dr Vaidyanathan and her husband."

19. The Tribunal were therefore satisfied that the Respondents had made out their case under Rule 14 (1). They then went on to remind themselves that costs do not follow the event in the same way as they do in the County or High Court and continued as follows:

64 "It is however intended both to compensate a party who has been subjected to misconduct by the other party, and to mark the Tribunal's disapproval of that misconduct."

20. They held that there were a limited number of issues occurring on and after 9 December 2001 which were legitimate issues for determination but held that all the other ancillary issues were largely irrelevant, if not wholly misconceived and found that the manner in which the proceedings were conducted by the Appellant and her husband was vexatious and unreasonable.
21. In paragraph 66 they then carried out their summary assessment as follows:

66 "We are therefore satisfied that there should be a significant award of costs. We accept that there are arguments for an award of, say, 75% of the Respondent's costs. On the basis of the summary that we have been shown by the Respondents, totalling £20,206, that would amount to about £15,000. However, the preparation of a detailed bill for assessment would incur further costs for the parties, both in respect of the preparation of the bill and the Court fees that would be charged, amounting overall (in our estimate) to an additional cost of the order of 10% of the bill. More significantly, any order for a detailed assessment would take up yet further time in this matter. We think that it would be wrong for us to make an order which involved either party in further significant expenditure of time or costs.

67 We have therefore come to the view that the appropriate order for us to make is a round figure order under the provisions of Rule 14 (3) (a) in the sum of £10,000."

22. Mr McGrath criticises this decision on a number of grounds which we shall deal with in order.

(1) Overriding Objective

He again contends that the Tribunal misdirected themselves in that they made no express or implied reference to the overriding objective. We repeat our comments above, that there is no requirement for the objective to be set out expressly, provided it can be seen that the Tribunal have dealt with each issue in accordance with the objective.

(2) The Tribunal were wrong to criticise the Appellant for seeking to pursue matters which originated in earlier applications which were dismissed on withdrawal. Within the substantive hearing the Appellant had sought, particularly in cross-examination, to rely on matters which had been the subject of complaints that she had brought in 2000 and which were withdrawn by her on 1 June 2001. At an earlier hearing the Tribunal had determined that she had intended to abandon those claims within the parameters set down in the decision of Rothschild Asset Management v Ako [2002] ICR 899. At the commencement of the substantive hearing the Respondent had sought to exclude the material entirely but the Tribunal had refused to take this course and decided to hear all the evidence before determining what material should not be properly adjudicated upon.

Mr Jupp submits that whilst there may not have been a formal order prohibiting her from raising these issues, she was so doing at her own risk, i.e. that at a later stage the Respondents could contend that costs were thereby wasted in that she was making allegations which were not supported by a shred of evidence.

Mr Jupp also reminds us that in his closing submissions he had asserted that the Appellant's case had been pitched before the Tribunal at the highest possible level, i.e. that there had been a concerted, calculated and sustained course of discriminatory action over many years which has involved pre-meditated acts and the fabrication of documents by a large number of individuals employed by the Respondent Council.


The Tribunal in paragraph 60 clearly accepted that submission and rejected the notion of this "active conspiracy".

(3) The Appellant then challenges the Tribunal decision while relying on the repeated challenges to the interlocutory decisions and submits that such challenges could have been dealt with by interlocutory costs orders.

Mr Jupp, however, reminds us that the Appellant's behaviour involved, for example, her ignoring every attempt by the Tribunal to define the parameters of the matters in dispute and repeatedly challenging the decisions of the Tribunal by amongst other things seeking reviews of reviews.

Indeed, on the first morning of the substantive hearing immediately following the announcement of the Tribunal's decision on four interlocutory matters the Appellant indicated that she was not prepared to start her case and it took a great deal of persuasion from the Tribunal Chairman to eventually encourage her to commence giving her evidence.

(4) The Appellant then submits that the Tribunal, in highlighting in paragraph 62 the comparison of the Respondents to Hitler made by the Appellant and also the remarks directed at the Tribunal members and referring in paragraph 64 to seeking to "mark the Tribunal's disapproval of that misconduct, has sought to adopt a punitive rather than compensatory approach to the issue of costs.

He refers us to the judgment of Chadwick LJ in Kovacs v Queen Mary and Westfield College [2002] ICR 919, where at paragraph 35, in dealing with the cost rules, he said thus:

35 "For my part, I think that the power conferred by paragraph (a) is intended to be exercised in cases where the tribunal feels able to make a summary assessment; and is satisfied that a summary assessment in an amount which does not exceed the specified sum would compensate the party for the costs attributable to the vexatious, abusive, disruptive or unreasonable conduct which has led the tribunal to decide, under sub-rule (1), to make an order for costs."

At paragraph 15 Simon-Brown LJ had referred to the matter as follows:

15 "I see no reason why the misbehaving party should not be required to compensate his opponent for costs which plainly he should not have had to incur."

23. Mr Jupp argues that the assertion that any costs awarded must be directly attributable to the conduct which the Tribunal is concerned is misconceived. He submits that Rule 14 requires a two-stage approach: firstly, the Tribunal has to be satisfied that there is a reason for departing from the usual rule that there should be no order for cost and, secondly, if, and only if, it is so satisfied, the Tribunal has no discretion, it shall consider making the costs order.
24. He submits that there is no restriction on the costs that are payable, save of course that they have actually been incurred and no requirement those costs have to be linked directly to additional costs occurred. For example, he submits that there might be abusive conduct which falls within Rule 14, such as abusively offensive cross-examination, which may not add to the cost of the proceedings in that it may take the same length of time as proper cross-examination. Yet he submits that it would be quite in order for a Tribunal to order costs in such circumstances. He argues that in the civil courts an order for assessment of costs on an indemnity basis there may mark the court's disapproval of such unreasonable conduct: see Reid Minty v Taylor [2002] 1 WLR 2008 at 2807, paragraphs 27 and 28.
25. Indeed, he argues that since the costs rule has made specific reference to acting abusively then that abusive conduct can be marked by an order for costs, even if the innocent party has not suffered increased costs as a result. Mr McGrath argues that in the case of abusive behaviour which did not result in the other party incurring extra costs a better course of action would be for the Tribunal to invoke its powers of strike out under Rule 15. Again we are persuaded that Mr Jupp's arguments are correct.
26. In the context of this case, it is clear from the Tribunal's decision that they were indeed compensating the Respondents for having to deal with a substantial number of issues which were irrelevant and/or wholly misconceived and to defend allegations of a conspiracy which were not supported by a shred of evidence and not simply for the Appellant's abusive conduct.
27. It may be that there will be isolated cases where the Tribunals would wish to mark abusive conduct during a hearing with an award of costs, even though that conduct has not resulted in any direct loss to the innocent party, although in our experience such conduct would normally also be linked with the pursuit of irrelevant and misconceived allegations, which would have had a more direct result on the length of any hearing.
28. Again, we can find no error in the Tribunal's approach on this issue.
29. Finally, it is argued that the Tribunal have taken a far too "broadbrush" approach to the assessment of costs, failing to apportion with any degree of precision those costs which would have necessarily been incurred, dealing with the issues which were the subject of legitimate complaints as opposed to those matters which the court determined were misconceived and/or irrelevant.
30. Mr Jupp submits that the Tribunal's approach, reducing the costs because of the limited number of issues which were legitimate for determination and further reducing the amount since the parties would not have to incur additional costs in respect of assessment, was indeed the correct approach; and that recommended by the EAT in The Lothian Health Board v Johnstone [1981] IRLR 321, where at paragraph 14 Lord McDonald set out the position thus:

14 "If expenses [Scottish term for costs] are to be awarded there is much to be said for a fixed amount to be set by the Tribunal based upon broad considerations."

31. He submits it is unreasonable to expect the more detailed approach to assessment carried out by the civil courts in respect of summary assessment where their powers are not limited in the same way as the Tribunal with the limit of £10,000. Further, he submits that it is a reasonable assumption to make that the reason why the power of the Tribunal is so limited is because they neither have the training nor the day-to-day experience to assess costs in anything other than a general way, because costs orders are not the norm in a Tribunal.
32. Bearing in mind the substantial number of documents, the number of preliminary and interlocutory hearings and the seven-day substantive hearing, there is, in our view, no real issue. Costs of £10,000 were reasonably incurred and appropriately assessed by the Tribunal.
33. For the reasons that we have stated, we therefore dismiss this appeal.