United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A C UNEGBU (The Appellant in Person)
For the Respondent	MR James PURNELL (of Counsel) Instructed by: Messrs PJH Law Solicitors 16 Wharf Road Stamford Lincolnshire PE9 2EB


 


SUMMARY

PRACTICE AND PROCEDURE: Costs

Tribunal failed to make sufficient findings to support a costs order. Withdrawal of proceedings by itself was insufficient.


 


HIS HONOUR JUDGE ANSELL

1. This is an appeal against an award of costs made by Employment Judge Miss Lewzey (sitting alone) on a hearing on 11 January with reasons sent to parties on 5 February, ordering that the original Claimant, Mr Unegbu, should pay costs in the sum of £500. That sum was less than had been sought in the application for costs where a figure in excess of £2,000 was being claimed.
2. The award of costs was said to be made under the tribunal rules set out in Schedule 1 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004. The provisions as to the award of costs are set out in Rule 40, and in particular sub rule (3), where an award can be made where in the opinion of the Employment Judge

"the paying party has in bringing 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."

3. I will deal with the reasons given by the learned judge below. The claim itself had been brought on 5 October 2007. That was the last day for commencing proceedings in relation to what was alleged to be racial discrimination, alleged against the Respondent employer, in respect of their practices as a recruitment agency in dealing specifically with the Claimant.
4. Some three days before that the Claimant had sent off a race questionnaire. He had claimed that between 6 July, when the act of discrimination is alleged to have taken place, and the beginning of October, he had been in communication with the Respondents regarding his complaints, but there is no finding about that as far as this application is concerned.
5. The ET3 was filed on 5 November 2007 and a case management directions hearing had been fixed for 13 November. On 8 November the Claimant had withdrawn his ET1. He gave two explanations; one was firstly in the light of the explanation that was given in the ET3 response, and secondly because he was suffering health problems following an incident at the beginning of November when he had been assaulted.
6. Following the withdrawal of proceedings the Respondent recruitment agency applied for costs. They gave a number of reasons in their written application as to why they argued that the Claimant's behaviour fell within the provisions of Rule 40(3). They first of all alleged that the health reasons given, concerning his recent attack, were not genuine and that in fact this Claimant was what they described as a serial litigator trying to obtain compensation from recruitment firms and in particular was using the name of Mike Ian, either as his own name, or as the name of a comparator, to try and set up claims of discrimination. It was alleged that the Claimant was abusing the tribunal process by bringing speculative claims against anyone that he had either sent a CV to and did not get a reply from, or people who failed to put him forward for an interview. Also, it alleged that an inference could be drawn that his motivation in bringing proceedings was out of resentment of not being forwarded, rather than having a legitimate claim for discrimination.
7. That claim for costs was resisted in written submissions by Mr Unegbu, setting out in rather more detail what he had already alleged. He believed originally that he had a legitimate claim but that on reflection, having received the ET3, coupled with health problems, he had decided to withdraw.
8. Those matters were also canvassed at the hearing for costs when Mr Purnell, who appears before me today, on behalf of the Respondents, also appeared and Mr Unegbu was there in person. I am told that the matter was determined purely on the basis of submissions and no evidence was called and there was, in particular, no cross-examination of Mr Unegbu in relation to the allegations made that firstly he was a serial litigator indulging in pure speculation, and secondly that the health problems he had suggested were either bogus or certainly not as serious as he was making out.
9. The decision is brief and the learned Employment Judge, having referred to Rule 40 and the submissions that were made, said this at paragraph 5,

"5. I have first considered the first ground, namely that the bringing of the proceedings was vexatious or otherwise unreasonable. I have no evidence before me as to the nature of the three other claims which Mr Unegbu has brought I can only judge this costs issue by reference to the present claim form and the response to it. Mr Unegbu now says that he withdrew when he had an explanation and to that extent it may be that he was behaving unreasonably."

"6. In relation to the argument that the claim was misconceived the Respondent says there is no evidence of racial motive. That is something that I cannot determine without hearing the claim. The claim has been withdrawn and cannot now be re-opened. I do note that the response was filed on 5 November and the withdrawal was made on 8 November. It is only to the extent that Mr Unegbu withdrew when he had an explanation that this withdrawal can be said to be unreasonable."

10. The appeal is launched on the basis that an award of costs, albeit in reduced amount, cannot be made simply on the basis of the act of withdrawing proceedings. The inference that that withdrawal means that he was a speculator, or had a spurious claim, is not one that should be drawn without the judge making specific findings that that was indeed the case.
11. When this matter was sifted through there was also concern by the sifting judge as to the use of the phrase "may be" in paragraph 5 as to whether or not that even crosses the civil burden of proof required in these matters.
12. The parties in their written submissions have both referred me to guidance given on this type of case in the case of McPherson v BNP Paribas [2004] 3ALLER Page 266. That case concerned a claim to an Employment Tribunal of unfair dismissal that had been made in October 2000 which was not in fact withdrawn until a few weeks before a hearing date which had been fixed in late May 2002. The issue for the Court of Appeal, an order for costs having been made both by the tribunal and affirmed on appeal to this court, was whether a Claimant who withdrew a claim had conducted proceedings unreasonably. The key passage is in the judgment of Mummery LJ who, at paragraph 24, referred to what was the then Rule 14 of the 2001 rules, which is in similar terms to the current rules. He continued as follows at paragraph 26,

"When a costs order made by an employment tribunal is appealed to the employment appeal tribunal or to this court the prospects of success are substantially reduced by the restriction of the right of appeal to questions of law and by the respect properly paid by appellate courts to the exercise of discretion by lower courts and tribunals in accordance with legal principle and relevant considerations. Unless the discretion has been exercised contrary to principle, in disregard of the principle of relevance or is just plainly wrong, an appeal against a tribunal's costs order will fail. If, however, the appeal succeeds, the appellate body may substitute a different order or, if it is necessary to find further facts, the matter may be remitted to the tribunal for a fresh hearing of the costs application.

The tribunal correctly directed itself that the first question was whether, in all the circumstances, Mr McPherson had conducted the proceedings unreasonably. The tribunal appreciated that the issue was not whether the action of withdrawing the complaint was itself unreasonable. As it observed, 'There are many genuine issues and matters which might lead an applicant to that course.'

In my view, it would be legally erroneous if, acting on a misconceived analogy with the CPR, tribunals took the line that it was unreasonable conduct for employment tribunal claimants to withdraw claims and that they should accordingly be made liable to pay all the costs of the proceedings. It would be unfortunate if claimants were deterred from dropping claims by the prospect of an order for costs on withdrawal, which might well not be made against them if they fought on to a full hearing and failed. As Miss McCafferty, appearing for Mr McPherson, pointed out, withdrawal could lead to a saving of costs. Also, as Thorpe LJ observed during argument, notice of withdrawal might in some cases be the dawn of sanity and the tribunal should not adopt a practice on costs, which would deter applicants from making sensible litigation decisions.

On the other side, I agree with Mr Tatton-Brown, appearing for BNP Paribas, that tribunals should not follow a practice on costs, which might encourage speculative claims, by allowing applicants to start cases and to pursue them down to the last week or two before the hearing in the hope of receiving an offer to settle, and then, failing an offer, dropping the case without any risk of a costs sanction.

The solution lies in the proper construction and sensible application of rule 14. The crucial question is whether, in all the circumstances of the case, the claimant withdrawing the claim has conducted the proceedings unreasonably. It is not whether the withdrawal of the claim is in itself unreasonable, as appeared to be suggested at some points in argument and as might be thought was the approach of the tribunal from reading some passages of the extended reasons out of context (see the opening of para 6: 'We turn next to consider whether withdrawing one's complaint in these circumstances is unreasonable.') When read as a whole it is clear from the extended reasons that the tribunal adopted the correct approach to determining whether Mr McPherson had conducted the proceedings unreasonably. The tribunal considered all the circumstances relevant to his conduct. The question was not, as was submitted by Ms McCafferty, whether BNP Paribas had proved that his conduct was so unreasonable that no reasonable applicant could reasonably decide to withdraw the proceedings in the circumstances.

In my judgment the tribunal was entitled to conclude that there was unreasonable conduct of the proceedings on the part of Mr McPherson."

13. That is helpful guidance for tribunals and for this court. My concern about this decision is that on a full analysis of the somewhat brief decision no other reason is given, or suggested at, other than the actual withdrawal of the proceedings. I refer in particular to the use of the words, "It is only to the extent", at the beginning of the final sentence in paragraph 6.
14. I also have concerns, as I have already indicated to the use of "may be" that he was acting unreasonably at the end of paragraph 5. It seems to me that this does not reflect the standard of proof that is required even in civil proceedings. Indeed, it may well be argued on matters of costs the burden of proof in care cases when considering a serious allegation and seeking a high quality of evidence is required but I say no more about that. It seems to me, that the use of the word "may" in paragraph 5 is regrettable and is to my mind not sufficient in giving a clear indication as to whether or not the judge is or is not satisfied about unreasonableness.
15. My principal concern about this decision is that the learned judge has declined expressly to make findings on the allegations that were made on either side. From the Respondent's side they had made allegations that this was speculative, that Mr Unegbu was a serial litigator and that he had used spurious names. None of those suggestions reached the stage of a conclusion in terms of the finding as to costs.
16. From Mr Unegbu's side he had raised two matters; (1) that he had health problems and (2) that he had only seen the light, as it were, once he had seen the response. Again, no findings as to whether or not there was any truth in those suggestions and it seems to me that the single decision given that it was the act of withdrawal does not, and should not, give rise to the inference which Mr Purnell has tried to submit, certainly in his written submissions, that one can then read into it that the learned judge was saying that therefore it was a speculative claim. It seems to me that when there is a requirement for judges to be clear as to why orders for costs are made one cannot rely on speculation and hunches in coming to that conclusion.
17. So, regrettably, I find that this decision is defective it does not begin to satisfy the clear guidance given by Mummery LJ that there has to be something more than simply withdrawal. The learned judge indicated that a full history of the litigation might be sufficient; in this case one does not have that protracted history of litigation that could support a conclusion that this was pure speculation.
18. This order clearly has to be set aside. The issue, for me, is whether or not we send it back for a re-hearing. I am mindful from the background that we are only talking about £500. I understand that from the Respondent's point of view this is important in, as it were, establishing they have acted with the best of intentions throughout. The fact that the proceedings were withdrawn very quickly should go some way to perhaps reassure that that indeed is the situation.
19. A suggestion has been made that I could send it back for, as it were, complete re-hearing but I am not satisfied that at this stage there is really sufficient material for the Employment Judge to be able to come to a view that this was speculative and unreasonable behaviour and I am mindful of the amount of costs involved and it seems to me that this is putting, particularly the recruitment agency, to inordinate expense to try and possibly prove a matter of principle for them and I am afraid I am going to take a practical view and not send it back for a re-hearing. I am not satisfied that a re-hearing would result in any further findings in this matter and my order simply is therefore that the order that was originally made is set aside.