United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS JANE McCAFFERTY (of Counsel) Instructed By: Messrs Mackintosh Duncan Solicitors 103 Borough High Street LONDON SE1 1NL
For the Respondent	MR DAVID BROOK (of Counsel) Instructed By: Messrs Hall Reynolds Solicitor 18 High Street Bidford on Avon Alchester Birmingham B50 4BU


 


JUDGE PETER CLARK:

1. This is an appeal by Mr Simon, the Applicant before a Tribunal sitting at London (South) under the chairmanship of Mrs F.J. Silverman ("the Silverman Tribunal") against that Tribunal's award of costs in favour of the Respondent to this appeal, Pertemps Recruitment Ltd, in the sum of £7,309 (exclusive of VAT).
2. By way of background, the Appellant commenced employment with the Respondent's predecessor, Kelly Services Employment Agency on 10 June 1999. His employment with the Respondent commenced on 13 September 1999. His services were supplied under contract to British Gas Trading Ltd ("British Gas").
3. He resigned from the employment on 16 February 2001 and on 8 March 2001 presented an Originating Application to the Employment Tribunal, naming both British Gas and Pertemps as Respondents. That lengthy document is described, not wholly unfairly, in Summary Reasons given by an earlier Employment Tribunal under the chairmanship of Ms Carol Taylor ("the Taylor Tribunal") following a preliminary hearing held on 9 August 2001 as "in some part incoherent in other parts unclear". Nevertheless, at that hearing the Taylor Tribunal was able to identify his claims against each Respondent. Against Pertemps they were: constructive unfair dismissal, unlawful deductions from wages and an allegation of direct unlawful race discrimination. The bulk of his racial discrimination complaint was directed towards British Gas.
4. On the same day the Taylor Tribunal held a pre-hearing review at which it found that the Employment Rights Act claims, those of constructive unfair dismissal and unlawful deductions from wages, had no reasonable prospect of success and the Tribunal ordered him to pay a deposit of £50. That Tribunal declined to so characterise his Race Relations Act complaint brought against either British Gas or Pertemps.
5. The matter came on for substantive hearing on 29 May 2002 before the Silverman Tribunal. The Appellant's claim against British Gas was compromised with no order as to costs. This Respondent, Pertemps, offered in full settlement and without admission of liability, the whole of the unlawful deductions money claim. The Appellant declined that offer and proceeded against this Respondent.
6. The hearing went into a second day (30 May) at which point the Applicant withdrew all his claims, indicating that he wished to pursue them in the High Court. Application was then made by the Respondent for their costs in defending the claims against them, those costs being set out in a Schedule which is before us and which costs for the whole of the proceedings totalled £7,309 plus VAT.
7. The Silverman Tribunal awarded the full amount of costs claimed. Their reasons, although described as Extended Reasons, are brief. We shall set them out in full.

"1 These reasons are given in extended form.

2. The Applicant was warned at the pre-hearing review stage that his case was unmeritorious and ordered to pay a deposit of £50.

3. The Applicant was also advised to seek legal advice about his claim but chose to represent himself at the Tribunal.

4. On the first day of the hearing the Second Respondent [Pertemps] offered to meet the Applicant's claims for unpaid wages and holiday pay in full (with no admission of liability). The Applicant refused that offer.

5. The Applicant chose to pursue his claim before the Tribunal and refused advice from the Tribunal as to the relevance of his evidence.

6. In the light of the above the Tribunal considers the Applicant's conduct to be vexatious and unreasonable and in exercise of its power under Regulation 14 of the Tribunal Rules of Procedure orders the Applicant to pay the sum of £7309 to the Second Respondent to meet its costs of preparation and attendance at the hearing as set at (sic) in the Schedule of Costs present (sic) to the Tribunal by the Second Respondent."

8. This appeal was allowed to proceed to a full hearing at a preliminary hearing held before a division presided over by Judge Jeremy McMullen QC on 14 October 2002. On that occasion permission to amend the Notice of Appeal to add additional grounds was apparently given, although that order did not appear in the order which was sent out to the parties. A dispute arose as to the accuracy of certain allegations contained in the original grounds of appeal. That issue has now been rendered academic, since Miss McCafferty does not rely on the disputed original grounds.
9. Based primarily on her amended grounds of appeal Miss McCafferty submits that on their face the Silverman Tribunal's reasons are not Meek compliant, to use the expression coined by Sedley LJ in Tran v Greenwich Vietnam Community Project [2002] IRLR 735, paragraph 17, and substantively that on their findings of fact no reasonable Tribunal could conclude that the Applicant had acted (a) vexatiously or (b) unreasonably, so as to justify an order for costs under Rule 14(1) of the Employment Tribunal Rules of Procedure 2001. It should be noted that Rule 14(7) was not engaged, since there was no final determination of the Appellant's claim.
10. The expression "vexatious" has been usefully analysed by Sir High Griffiths, sitting in the National Industrial Relations Court in E T Marler Ltd v Robertson [1974] ICR 72, at 76, where he said:

"If 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, and likewise abuses the procedure. In such cases the tribunal may and doubtless usually will award costs against the employee."

11. Having considered the Silverman Tribunal's reasons for ordering costs in this case, we can see no finding which could support a conclusion that this Appellant had acted vexatiously in the way described by the Court in E T Marler Ltd v Robertson.
12. Thus, the question is whether the Tribunal was entitled to conclude that the Appellant's conduct was unreasonable and then to go on to exercise its discretion, as the second part of the exercise, in ordering the Appellant to pay the whole of this Respondent's costs in defending the proceedings.
13. As to that, taking care not to dissect the Tribunal's reasons or to apply Lord Russell of Killowen's infamous "fine toothcomb", it is nevertheless necessary to analyse the findings made by the Tribunal in order to understand the Tribunal's conclusion.
14. We begin with the finding at paragraph 2. "The Applicant was warned at the pre-hearing review stage that his case was unmeritorious and ordered to pay a deposit of £50". As we read that finding by the Tribunal, it appears to us that no distinction was made in the mind of the Silverman Tribunal between the Employment Rights Act claims, in respect of which a finding of no reasonable prospect of success was made by the Taylor Tribunal and a deposit ordered, and the Race Relations Act claim where no such finding was made.
15. As to paragraph 3, Mr Brook has sought to persuade us that the Taylor Tribunal, on the face of its reasons at the preliminary hearing, advised the Appellant to seek legal advice. We are unable to accept that submission.
16. At paragraph 9 of the Taylor Tribunal's reasons dated 13 August 2001, under the heading "Directions", they say this:

"9 The Applicant is currently seeking representation from the Commission for Racial Equality. The Chairman directed that no case management directions be given for the time being in order to give the Applicant an opportunity to engage a representative. However, this case will be reviewed in three or four weeks at which time such directions as appear necessary for a fair and expeditious disposal of these proceedings will be given."

17. We do not understand the Taylor Tribunal to be there saying that they have advised the Appellant to seek representation or advice from the CRE or any other body, rather they record that that is what he is doing and, as a result, case management directions were postponed in the hope, presumably, that the CRE would take on the Appellant's case and then be able to contribute to order the directions necessary to bring the matter to trial.
18. As to the fact that the Appellant chose to represent himself before the Tribunal, Miss McCafferty submits that he should not be penalised for doing that which the Industrial Tribunals (now Employment Tribunals) were set up to do, that is, provide justice for those who represent themselves and Mr Brook very fairly accepted that no criticism could or should be made of the Appellant for choosing to represent himself.
19. Pausing there, it follows in our view that the Tribunal have taken into account irrelevant factors, or failed to take into account relative factors, in their assessment of the case at paragraphs 2 and 3 of their reasons.
20. Paragraphs 4 and 5 are a different matter. Mr Brook very fairly conceded that had the Appellant accepted this Respondent's offer in settlement on the first day of the substantive hearing, then no costs would have been ordered, indeed Mr Brook who appeared below would not have made an application for costs. What seems to us to have happened is that the Appellant had the opportunity to reach a sensible compromise in this case, when the offer was first made to him on the first day of hearing and he declined to take that opportunity. Instead, he ploughed on and then withdrew all his claims, apparently under the misconception that he could then reinstate them in the High Court.
21. In these circumstances, it seems to us that there was ample material on which this Tribunal could conclude that his conduct in proceeding, having rejected the offer made by the Respondent, was unreasonable conduct.
22. However, the question then arises as to how that sounds in costs. Given the concession by Mr Brook that no costs would or could have been ordered had the matter been settled on the first day of hearing, it must follow in our judgment that no reasonable Tribunal could have done other than to order costs on the second day of hearing in favour of the Respondent and no earlier costs.
23. Mr Brook has advanced a public policy argument, namely that, if it is to be held against a Respondent that he has made an offer in settlement, that would be a disincentive to make such offers. It is not our intention to dissuade Respondents from making offers to settle cases, nor do we think that the effect of our judgment in this case will be to reach that result. On the contrary, it was perfectly sensible for the Respondent to make the offer that it did. It was not sensible or reasonable for the Appellant to refuse it. As a result a further day's costs were incurred and it is right that he should have to pay those costs. However, nothing that we say should dissuade Respondents from making offers in settlement, even at this late stage. Of course, had the offer that appears on the face of the Tribunal's reasons been made earlier and been turned down, then a larger costs award would, no doubt, have followed.
24. In these circumstances it seems to us that, applying Wednesbury principles, this Tribunal misdirected itself in awarding the whole of the costs incurred by the Respondent on their findings of fact, insofar as those findings were relevant factors to take into account.
25. In the result we shall allow this appeal to the extent that we shall substitute for the costs awarded by the Silverman Tribunal the sum of £1,500 plus VAT, being Counsel's fee incurred for attending on the second day of the substantive hearing. The appeal will be allowed to that extent only.