United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr Matthew Rudd (of Counsel) Instructed by: Messrs Chadwick Lawrence LLP Solicitors 13 Railway Street Huddersfield West Yorks HD1 IJS
For the Respondent	Written Submissions


 


Summary

Practice and Procedure – Costs - Appellate jurisdiction

The Employment Tribunal Chairman erred in his consideration of the application for costs. Having decided the Claimant failed to comply with Employment Tribunal orders and conducted the proceedings unreasonably, he erred in taking into account that the claim was not misconceived. This is a separate ground under Rule 40(3) and not relevant when other grounds under Rule 40(3) and (4) are relied on. He also considered there was prejudice to the Claimant and a benefit to the Respondent when the claim was struck out. But these are inevitable consequences of such an order, and not relevant factors on the separate issue of costs. The EAT exercised its own Judgment, there being no attendance by the Claimant, and awarded costs.

On the Respondent's application for costs at the EAT, there was no ground under EAT Rule 34. The Claimant was seeking to uphold an Employment Tribunal Judgment, albeit he did not comply until late with the duty to give a Respondent's Answer.


 


HIS HONOUR JUDGE McMULLEN QC

1. This case is about costs in the Employment Tribunal and in the EAT. I will refer to the parties as the Claimant and the Respondent.

Introduction

2. It is an appeal by the Respondent in those proceedings against a judgment of an Employment Tribunal Chairman, Mr H Forrest, sitting alone at a PHR in Sheffield, registered with reasons on 29 June 2006. The Claimant appeared in person and the Respondent as today was represented by Mr Matthew Rudd of Counsel.
3. The background to the proceedings is irrelevant, for the judgment on the PHR was to strike-out the Claimant's proceedings as he had failed to comply with Tribunal orders and had conducted the proceedings unreasonably. Not surprisingly, the order cast in those terms provoked an application on behalf of the Respondent for its legal costs in defending the case and in seeking successfully to strike it out.
4. The relevant rule provides as follows:-

"40 When a costs or expenses order may be made

(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.

(4) A tribunal or chairman may make a costs order against a party who has not complied with an order or practice direction."

5. The Chairman decided that he would not award costs. He said this:-

"17. Having announced my decision above, the respondents made an application for costs in respect of this strike-out application. The application was made under Rule 40(3) of the Tribunal's Rules of Procedure, that the claimant had conducted these proceedings unreasonably; and, under Rule 40(4), that he had not complied with the Tribunal's Orders. Mr Thomas gave brief evidence as to his means. …

18. I accept that I have power to make such an Order against Mr Thomas, even taking his limited means into account, because of his unreasonable conduct and his failure to comply with the Tribunal's Orders. However, I do not think it appropriate in this case to make such an Order, There is nothing before me to suggest that the claim itself was originally misconceived or unreasonably presented, though I accept that matters are hotly contested between the parties. Mr Thomas has suffered a potentially substantial prejudice as a result of the Strike-Out Order which I have just made, and the respondents received a corresponding benefit. In those circumstances I do not think it would be in accordance with the Tribunal's overriding objective of dealing with matters justly to make a Costs Order. The application is dismissed."

6. It is contended that the Chairman erred in considering whether or not the claim was misconceived. It is further contended that in the light of the findings it was perverse not to award costs. I agree with both of those submissions. First, a claim being misconceived is one of the grounds on which, if upheld, an order of costs can be made. The fact that an application does not satisfy one of the grounds is irrelevant when it satisfies another. Strength is given to the submission because it was never contended by the Respondent that the claim was misconceived. The costs which it sought were of a three day hearing aborted at the instance of the Claimant he having disobeyed tribunal orders and found work in the Cayman Islands. The clock did not begin to run in terms of costs from the Respondent's point of view until that time. Thus it was not an issue before the Chairman that the claim was misconceived. The simple issue was that the proceedings had been conducted unreasonably and that there was a breach of the Tribunal's orders.
7. As to the latter there is no pejorative adverb in Rule 40(4). The characterisation of the wrongdoing is not necessary since breach of orders is assumed to be a ground for costs. So an explanation would need to be given to the Chairman as to why a breach of the Tribunal's orders causing undisputed substantial costs to the Respondent should not be the subject of a costs order. None was and none is cited by the Chairman. In the absence of both, the refusal to award costs actually incurred under Rule 40(4) was wrong in principle.
8. As to Rule 40(3), I cannot uphold his approach based on an argument not addressed to him i.e. that the claim was "originally misconceived". The sole basis which the Chairman relied on is that there was a potential, substantial prejudice to the Claimant as a result of the strike-out order and that the Respondent received a corresponding benefit. I take this to mean that since the issues were hotly contested and since it was not suggested that the claim was misconceived, the Claimant had a case which was worth something. In simple terms to have a case struck-out which has absolutely no value, will not cause prejudice to the Claimant nor will it cause any benefit to the Respondent because it would easily succeed in defeating the claim. But it seems to me that both of those matters are built in consequences of such an order. Once there has been a strike-out there will be prejudice to the Claimant as he or she cannot run it and there will in a sense be a benefit for the Respondent who is relieved from defending what may be a very weak case or on the other hand what may be a very strong case against it. Those are the logical consequences of an order under this rule. It is plainly envisaged by the combination of Rules 13 and 19 that failure to comply with an order, or unreasonable conduct, can attract both a strike-out and a costs order. Losing the chance to put his case is a detriment and thus a sanction. But it says nothing about the other side. Why should a Respondent, put to expense by a Claimant who behaves unreasonably and disobeys the orders made for the management of his claim, not be indemnified?
9. Prejudice is a proper consideration in the exercise of a discretion. It is not necessary for this Judgment to define it but what prejudice generally includes are matters such as an overall view of the relations between the parties, ability to pay, proportionality, justice. It seems to me that particular consideration of the effect of the strike-out in terms of prejudice and benefit is not a relevant factor in the assessment of costs. The balancing of factors, broadly under the heading of prejudice, such as conduct of the parties and fair trial occurs at the first stage when a strike-out is considered. Where, as here, the claim is struck out for unreasonable conduct and refusal to obey orders, there must be something more than that fact to justify a refusal to award costs. In my judgment therefore, the Chairman ought to have considered more carefully the overriding objective to which he makes reference since it does provide for the saving of costs and for proceedings to be conducted expeditiously. In my respectful opinion the Chairman erred in his approach, the reasons he gave being neither relevant nor correct, and there is nothing to gainsay the exercise of a discretion to award costs.
10. Thus I turn to the consequence. I am asked by Mr Rudd to decide the matter myself rather then referring it back. It seems to me that I am in the same position as the Chairman. On this material I see no merit in sending the matter back to the Chairman and I will myself make the order as sought. It is not proportionate or fair to cause further time and costs to be expended. I have no material upon which it could be contradicted that the Respondent has incurred costs of £4,732.45 which is the figure I award.
11. I then turn to the application made for costs in the EAT the appeal having succeeded. Our powers are more or less the same as the Tribunal's except that the words "any proceedings" are relevant and these Mr Rudd submits include proceedings of the Employment Tribunal. He may be right. If he is, I have now awarded the costs below for that and I am now focusing only on the issue in the EAT. If he is wrong then I focus exclusively upon what has happened here.
12. The Claimant has failed to put in a Respondent's answer therefore is in breach of the orders made by HHJ Ansell and the Practice Direction. Nevertheless he has submitted late a letter of 3 October 2006 which is to be taken into account when considering the question of costs which I take it means the question of costs at the Employment Tribunal and it may well include the EAT. I will give him the benefit of the doubt and say it includes both. I will refuse the application. Simply being in breach of an order to produce a Respondent's Answer puts the Respondent at risk in the EAT proceedings. But as of 3 October there was a fully constituted answer. He was entitled to hold on to an order made by a Tribunal Chairman below albeit subject to a direction to a full hearing on appeal. I do not consider the circumstances here cross the threshold for such unreasonable conduct as would justify an award of costs in the EAT and it is refused.
13. I would like to thank Mr Rudd for coming today. The appeal is allowed an order that the Claimant pay costs of £4,732.45 is substituted. Costs in the EAT are refused.