THE HONOURABLE MRS JUSTICE COX
Introduction
1.
This is the full hearing of an appeal by HCA International, the
Respondents below, against the judgment of the London Central Employment
Tribunal, promulgated with reasons on 5 July 2010, dismissing their application
for costs. This judgment was, by agreement of the parties, arrived at on the
basis of written submissions only from both sides. On appeal the Respondents
contend, essentially, that the Tribunal erred in law in misstating the relevant
legal principles; in failing to provide any or sufficient reasons for their
conclusion on one matter of alleged unreasonable conduct of the proceedings by
the Claimant; in arriving in a number of respects at what are said to be
perverse conclusions; and in taking into account irrelevant considerations.
2.
The Claimant contends that no error of law or insufficiency of reasoning
is disclosed in the judgment; and that the Tribunal’s decision, that there was
no unreasonable conduct of the proceedings and that an award of costs would not
be appropriate in all the circumstances, was a decision well within the range
of decision-making legitimately open to them on the facts.
3.
We should say at the outset that Ms Steinhardt, appearing for the
Claimant, made it clear at the start of the hearing that the potential, preliminary
issues referred to in the papers, concerning a possible application by the
Claimant to call fresh evidence and for a review of the Tribunal’s decision,
are no longer pursued. We shall therefore say nothing further about them.
The Background
4.
The background to this appeal, in summary, is as follows, as appears
from the Tribunal’s substantive judgment on the merits and other documents in
the bundle before us.
5.
The Respondents supply healthcare services. Owning and operating a
number of hospitals in London, they employ almost 3,000 employees and have
substantial administrative resources, including detailed policies and a Human
Resources function.
6.
The Claimant commenced employment with them on 31 August 2004, initially
as a weekly Payroll Administrator. In August 2006 she was appointed as the Central
Temporary Staffing Co-ordinator, working in the office responsible for “bank”
staff, i.e. staff who are generally not employees of the Respondents but who enter
into bank agreements, under which they are available to work shifts from time
to time. In March 2007 the Claimant took up the role of Finance Co-ordinator
in that branch.
7.
Between July 2007 and January 2008 difficulties arose following the
Claimant’s expressed concerns to her employers as to the use by other employees
of her login and password information, and as to what she alleged to be resulting
breaches of security, alleged financial irregularities and, ultimately, fraud.
Investigations into these allegations ensued.
8.
In August 2007 the Claimant became extremely unwell, being found at home
by London Ambulance Service personnel in a very distressed and paranoid state
with delusions of persecution. She was admitted to hospital and assessed as
suffering from a severe depressive illness. Although she was soon discharged
home, the Claimant did not in fact return to work because of her ill health. Discussions
with the Respondents were apparently conducted thereafter by the Claimant’s
husband on her behalf.
9.
On 17 January 2008 the Claimant submitted her resignation. She alleged
that her serious ill health had developed as a result of her treatment at work
and that she had no option but to resign. Her resignation was accepted on 23
January. On 15 April 2008 the Claimant issued her claim in the Employment Tribunal
complaining of disability discrimination, detriments on the ground that she had
made protected disclosures, and unfair constructive dismissal, including a claim
that the reason or principal reason for her dismissal was the making of a
protected disclosure. All her claims were vigorously resisted.
10.
At a pre-hearing review the claims of disability discrimination were
dismissed on the basis that there was no jurisdiction to consider them. The
other claims were then listed for ten days for a liability hearing, which
commenced on 24 September 2008. Unfortunately, on the second day of that
hearing, whilst giving her evidence the Claimant broke down and became unable
to continue. The hearing was therefore adjourned to 11 March 2009, to enable
the Claimant to obtain further medical evidence.
11.
Following that adjournment, the Respondent wrote to the Claimant’s
solicitors on 26 September 2008. In this letter, headed “Without prejudice
save as to costs”, they suggested that there were no reasonable prospects of
success for the claims, setting out their contentions in support. They also
offered a sum of £2,500 in full and final settlement of the claim and stated
that, if the claims were dismissed in their entirety, they would apply for
their full costs. These were said to be expected to amount to approximately
£14,500 by the end of the adjourned hearing.
12.
Responding to this letter on the Claimant’s behalf, on 10 November 2008,
her solicitors rejected the offer and took issue with the Respondents’
contentions as to the merits of her claims, responding in some detail on the
facts and rejecting any suggestion that the claim was misconceived. They
observed that the matters raised were all essentially questions of fact, which
would need to be determined by the Tribunal on hearing all the evidence.
13.
In January 2009 there was a further development. The Employment Judge
hearing the case sadly suffered a heart attack and was therefore absent on sick
leave for a lengthy period of time. It was subsequently determined that it
would no longer be practicable simply to resume the hearing, and that the
matter would have to be relisted to commence afresh. The case was therefore re-fixed
to commence on 25 November 2009.
14.
Before that date, the Respondents applied for the claims to be struck out
or, alternatively, for the Claimant to be ordered to pay a deposit. These
applications were rejected by the Regional Employment Judge, after a pre-hearing
review, in a judgment promulgated with reasons on 27 August 2009.
15.
The liability hearing therefore went ahead on the fixed dates, both
parties being legally represented. The Tribunal heard from eight witnesses,
including the Claimant, and considered a great deal of oral and documentary
evidence, before reserving their judgment. We note that, as a result of
medical evidence from a consultant psychiatrist, Dr Brenner, on the Claimant’s
condition, some adjustments were made at the hearing, by agreement between the
parties, to ensure that the Claimant was able to give her evidence without
becoming unwell. There were regular breaks during the Claimant’s evidence for
example, and she was permitted to revisit matters that she had dealt with
previously when giving evidence. It is clear from the judgment that this
Claimant’s ill health was not in dispute below; and the Respondents had been
paying her statutory sick pay before her employment came to an end. It appears
that Dr Brenner was jointly instructed by both parties.
16.
The Employment Tribunal set out their conclusions by reference to an
agreed list of issues on liability, annexed to their judgment. This was a
lengthy list reflecting, in our view, the many factual issues to be determined,
in addition to questions of legal liability.
17.
Amongst the many findings of fact in their judgment, the following seem
to us to be of some significance in this appeal.
(1) When the Claimant was expressing
and pursuing her concerns as to computer misuse and financial irregularities,
managers considered her to be a valued employee who was acting entirely out of
character, and they were becoming increasingly concerned as to her state of
health.
(2) When the Claimant voiced fears
about possible disciplinary action being taken against her, she was repeatedly
reassured that she had done the right thing by raising her concerns through the
proper channels; and that staff who raised genuine concerns would not be
subject to disciplinary action. In fact, her initial concern as to the misuse
by others of her personal details, as opposed to her subsequent allegations of
fraud or financial irregularities, was justified on the evidence.
(3) She was assessed as someone who
was suffering from a high level of anxiety and was then admitted to hospital on
the night of the 2 August 2007, after being found to be extremely unwell at her
home by attending ambulance personnel.
(4) After her discharge home, matters
reached an impasse. The Claimant felt too unwell to communicate directly with
the Respondents, and the Respondents could not properly continue to investigate
her concerns until they had met her and had been able properly to comprehend
them. The basis upon which she was suggesting fraud or other irregularities
was simply not understood by her employers.
(5) Dr Brenner’s report, dated 3
January 2008, described the Claimant has having suffered from a major
depressive illness precipitated by events at work, which would hopefully
improve once these matters had been resolved. In fact, the Claimant submitted
her resignation on 17 January.
(6) At the hearing in November 2009
the Claimant produced, very late in the day, a supplementary statement in which
she sought to explain a document which she considered to be of some
significance in her case; namely a “verification report” for the month of April
2007. Although produced late, it appears from the judgment that the
Respondents withdrew their initial objection to the statement being adduced.
The Claimant therefore adduced it and relied upon it. The Tribunal stated that
they had some difficulty in following this report. However, on analysis, they
found that it contained a number of errors, which rendered invalid the
conclusions that the Claimant sought to draw from it. It is not necessary, in
this judgment, to go into any of the detail.
The Tribunal’s Decision on the Claims
18.
It will be helpful to summarise the key findings, so that the issues
arising in this appeal can be properly understood.
19.
In relation first to protected disclosures, the Tribunal accepted that, in
disclosing information as to members of staff using her user name and password
to book shifts, in breach of their confidentiality and security agreements, the
Claimant was making disclosures of information which, in her reasonable belief,
tended to show a breach of a legal obligation and were therefore protected
disclosures. This appears not to have been in dispute. In respect of the
disclosures of information relating to fraud and financial irregularities,
however, although the Claimant genuinely believed in the allegations she was
making, the view she had formed was found not to be an objectively reasonable
one in the circumstances. Those disclosures were therefore not protected.
20.
We emphasise that it was not in dispute below that this Claimant was
anything other than honest and genuine in her beliefs and in her allegations.
The Respondents accepted that she was genuine, as the Tribunal record at
paragraph 159 of their judgment on liability.
21.
In relation to the alleged detriments, the Tribunal dealt separately
with each allegation and, with one exception, dismissed each one. This was
either on the basis that detriment had not been made out on the facts, or that
the treatment complained of was not on the ground that she had made a protected
disclosure.
22.
The one exception was that the Tribunal found that the Claimant was
subjected to a detriment when her statutory sick pay was stopped at one point.
However, they found on the evidence that this was a genuine administrative
error, rather than an attempt to punish her for making protected disclosures.
It was in any event rectified prior to her resignation. As regards fundamental
breach of contract, the Tribunal found that the stopping of her sick pay was
not in the circumstances a breach of the implied term of trust and confidence. In
any event, the Claimant had not resigned in response to her employers’ delay in
making these payments.
23.
Secondly, in relation to the misuse of her login and password
information, the Tribunal held that the Respondents had taken reasonably swift
action to deal with her concerns, and that they had sought to investigate the
matter as fully as they could, in circumstances where they were unable to meet
her and discuss the concerns with her personally. There was, in these
circumstances, no fundamental breach of contract. Further, they found that the
Claimant did not resign in response to such breach without having affirmed her
contract. The Claimant was not dismissed, and therefore could not have been
unfairly dismissed.
The Costs Application
24.
Following promulgation of this judgment, by letter dated 19 January 2010,
the Respondents applied for their costs pursuant to rule 40 of the Employment
Tribunal (Constitution and Rules of Procedure) Regulations 2004, as
amended. Inviting the Tribunal to consider the application on the basis of
written submissions only, the Respondents relied essentially on the following
six factors in support of their application:
(i) The without prejudice offer of
settlement made on 26 September 2008, the non-acceptance of which was said to be
unreasonable.
(ii) Comments made by the Regional
Employment Judge at the strike-out hearing on 13 August 2009, in referring in
particular, in her judgment, to the costs sanction available in respect of weak
claims at the conclusion of a hearing.
(iii) The fact that the central
foundations of the Claimant’s claim were rejected by the Tribunal. Her
credibility was said to have been seriously damaged by the Tribunal’s
decision.
(iv) The Claimant’s unreasonable
conduct in reporting her allegations to a number of external agencies,
including the Serious Fraud Office and the Metropolitan Police, which it was
said had continued throughout the proceedings.
(v) Other unreasonable and allegedly
“pervasive” conduct of the claim by this Claimant, including: (a) serving her
supplemental statement addressing the verification report very late in the day,
and in respect of which the Tribunal rejected all her claims; and (b) requiring
two of the Respondents’ employees, one of whom was a senior employee, to attend
the Tribunal and give evidence which, in fact, added no value whatsoever to her
claim.
(vi) The overriding objective, given
the significant time and cost to the Respondents of defending these unsuccessful
proceedings.
25.
The Claimant’s solicitors then served a detailed response to this
application for costs, dated 26 January 2010, addressing each of the six
factors and contending that there should be no order for costs in this case.
The Tribunal’s Costs Decision
26.
The Tribunal correctly directed themselves to the provisions of rule 40
of the 2004 Regulations and stated (a) that the decision as to whether to award
costs is a matter for the Tribunal’s discretion, which much be exercised
judiciously; and (b) that awards of costs by the Employment Tribunal remain the
exception rather than the rule, although the introduction of the concept of an
award of costs where proceedings are misconceived was said to suggest a lower
degree of certainty of failure than was required under the previous test of
frivolous conduct.
27.
The Respondents’ grounds were considered to overlap to an extent. The
Tribunal said that, although they had determined each discrete issue, the
application had been considered as a whole and their reasoning should therefore
also be considered as a whole. The key paragraphs of the judgment are those at
paragraphs 8 to 15, which read as follows:
“8. The first ground upon which the Respondent sought costs was
that the Claimant had refused a without prejudice save as to costs offer made
on 26 September 2010. The fact that a Claimant has not recovered sums offered
by way of settlement does not necessarily lead to an award of costs. It is a
factor that may be considered in determining whether the Claimant has acted
unreasonably: see Kopel v Safeway Stores Ltd [2003] IRLR 753. The
Claimant was offered a small sum by way of settlement. If she had succeeded in
her claim she would have recovered a vastly greater sum in all probability. In
the context of this case, as set out below, we do not consider that the refusal
of the offer merits an award of costs.
9. The second ground relied upon is the mention of the
possibility by the Regional Employment Judge at a PHR. We take this into
account insofar that the Claimant was aware of the possibility of an award of
costs. However, as set out below, we do not consider that such an award is
appropriate in this case.
10. The third ground relied upon relates to recent authorities
in which decisions not to award cost have been overturned on the basis that
they were perverse. For example, in Daleside Nursing Home Ltd v Matthews
[2009] UKEAT Mr Justice Wilkie overturned a decision of an Employment Tribunal
on perversity grounds where they had failed to award costs in circumstances in
which they had determined that the central allegation in a race discrimination
complaint was a lie. It was referred to as a deliberate and cynical lie. The
Employment Appeal Tribunal held that the failure to make an award for costs
where there was a clear cut finding of the central allegation of racial abuse
was a lie was perverse. It was so much at the heart of the case that there was
an overwhelming case that the tribunal had failed to properly address the
point. However, in giving the judgment, Mr Justice Wilkie stated:
‘Mr Prescott QC, who has addressed us briefly and at great
length in a written skeleton argument has indicated that this is a case which
raises an important issue of principle for employers. We understand that may be
so; however the actual case itself does not raise any issue of legal principle
of general application, and we want to make it clear that we have approached
this appeal on the basis of the particular clear cut facts of this case and
that nothing that we say is intended to set out any more general statement of
legal principle.’
11. Nonetheless, the case was quoted by the Employment Appeal
Tribunal in Dunedin Canmorwe Housing Association v Donaldson
[2009] EAT, where again the central allegation in the case was established to
be a lie. The Employment Appeal Tribunal found that the Employment Tribunal had
been perverse not to make an award of costs.
12. We do not accept that there is a legal principle to be
derived from those and other recent cases on the point. Costs remain
discretionary. Where a central allegation is found to be a lie this may support
an application for costs and, in extreme circumstances, a failure to award cost
may be perverse. This does not mean that every time a Claimant has failed to
establish an important element of her claim an award for costs must follow.
Here it was accepted by the Respondent that certain of the Claimant's
disclosers were protected and that others, though not based on objectively
reasonable grounds, were genuinely held. The Tribunal held that the Claimant
had not established that she had been subject to detriments done on the grounds
that she had made the disclosures. These were determinations reached on a full
consideration of the evidence. This is not a case in which the central
allegations of the Clamant were a blatant lies. Far from it, the Claimant
believed in her case and we do not consider that her failure to establish the
claim should found an award of costs.
13. The fourth ground relates to the reporting of the Respondent
to external bodies. We do not consider that amounts to conduct of the
proceedings that could found an award for costs.
14. The fifth ground is described as miscellaneous. It is
contended that time was expended by the Claimant producing a supplementary
witnesses statement. We do not accept that this conduct was unreasonable. The
Claimant was seeking to explain her rather complex rationale as to why she felt
the Respondent was guilty of financial irregularity. The witnesses who attended
under witness orders were called as the Claimant believed they could assist
their case. They did not add significantly to costs.
15. We do not accept that the Claimant’s conduct of the
proceedings has been unreasonable or that they were misconceived in the sense
of having no reasonable prospects of success. Furthermore, looking at the
matter as a whole and taking into account the overriding objective we would not
exercise our discretion to award costs. The Claimant has been unwell. She has
put forward a case that she believes in, although we did not accept it. These
unhappy claims might have been avoided had the Respondent applied its own email
security provision and not allowed other employees to use the Claimants email
address which was the start of the problems. In the circumstances we do not
consider an award of costs would be just.”
The Appeal
28.
So far as is relevant, rule 40 provides as follows:
“(2) A Tribunal or Employment Judge shall consider making a
costs order against a paying party where, in the opinion of the Tribunal or
Employment Judge (as the case may be), any of the circumstances in paragraph (3)
apply. Having so considered, the Tribunal or Employment Judge 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.”
29.
Paragraph 2 therefore mandates the Tribunal to consider making a costs
order where, in the Tribunal’s opinion, any of the circumstances in paragraph 3
apply. Where it is found that any of those circumstances do apply, the
Tribunal has a discretion and may make a costs order if they consider it
appropriate to do so. In McPherson v BNP Paribas [2004] ICR 1398 Mummery LJ summarised the general position as follows, in relation to the
predecessor provision to rule 40.
“Although Employment Tribunals are under a duty to consider
making an order for costs in the circumstances specified in Rule 14(1), in
practice they do not normally make orders for costs against unsuccessful
applicants. Their power to make costs orders is not only more restricted than
the power of the ordinary courts under the Civil Procedure Rules, it has also
for long been generally accepted that the costs regime in ordinary litigation
does not fit the particular function and special procedures of Employment
Tribunals.”
30.
As the Tribunal therefore correctly observed, awards of costs are not
inherently inappropriate in tribunal proceedings. Equally, however, costs do
not follow the event.
31.
On behalf of the Respondents, Mr Beyzade’s first ground of appeal is
that the Tribunal erred in stating at paragraph 12 that there was no legal
principle to be derived from the cases of Daleside Nursing Home Ltd v
Mathews [2009] UKEAT/0519/08/1802 RN and Dunedin Canmore Housing
Association Ltd v Mrs Margaret Donaldson [2009] UKEATS/0014/09/0807BI, BAILII: [2009] UKEAT 0014_09_0807,
and indeed in other recent cases in addition. Mr Beyzade cites in particular Nicolson
Highlandwear Ltd v Gordon Nicolson [2010] IRLR 859 and Annapoornamma
Yerrakalva v Barnsley Metropolitan Borough Council and the Governing Body of Dearne Carrfield Primary School UKEAT/0231/10/RN, BAILII: [2010] UKEAT 0231_10_0812.
32.
The clear principle to be derived from these cases, in his submission,
is that it will be perverse not to award costs to the successful party where
there is a finding that the losing party’s central allegation is untrue, or
where the central allegation has not been established at trial and is held to
be wrong. In the present case he submits that this Claimant failed to
establish the central allegation of her case, namely that she had been
subjected to detriments on the ground that she had made protected disclosures.
Further, she failed entirely to establish the allegations made in her
verification report. The Tribunal’s decision not to award costs was therefore
perverse and arrived at after a misdirection as to the effect of these
authorities.
33.
In our view, Mr Beyzade seems to be seeking, impermissibly, to extract
from these cases a principle that an award of costs must follow when a party
fails to establish a central allegation in their case. We reject this
submission and we do so without hesitation.
34.
It is correct that, in a number of the cases cited, appeals against
decisions not to award costs were upheld on the basis that the decisions were
perverse. However, on an analysis of each case, it is clear that the EAT concluded
only that it was in light of the specific facts found by the Tribunal that
their decision that the Claimant had not behaved unreasonably was one which was
unsustainable.
35.
In Daleside, the EAT noted that there was “a clear-cut
finding that the central allegation of racial abuse was a lie”. The central
allegation in that case was that the Claimant was saying she had been called a
“black bitch” and the Employment Tribunal found that this was a deliberate and
cynical lie in the circumstances. In their judgment at paragraph 20 the EAT
said as follows:
“In our judgement, in a case such as this where there is such a
clear-cut finding that the central allegation of racial abuse was a lie it is
perverse for the Tribunal to fail to conclude that the making of such a false
allegation at the heart of the claim does not constitute a person acting
unreasonably. Whatever may be their genuine feelings about the other matters
of which complaint is made, on the particular facts of this case it was the
fact that the lie was explicit and so much at the heart of the case that in our
judgment it is appropriate for us to conclude that this was an overwhelming
case where the Tribunal has failed properly to address the point and as a
result has come to a perverse conclusion.”
36.
In the Dunedin case the Claimant was found to have sought
compensation “on a basis which she must have known to be a false one” (see
paragraph 24). It is correct, as Mr Beyzade points out, that in their decision
the EAT did refer to the decision in Daleside but once again,
reading the case, it is clear that the Employment Tribunal had found that this
Claimant’s entire case depended on a lie which was central to the claim. In Nicolson
the Claimant was said to be guilty of conduct that was blatant and that he was
unrepentant (see for example paragraph 29). The Tribunal found explicitly that
he had lied on oath. In all these cases the EAT had little difficulty in
concluding that, given these clear findings of fact, a conclusion that the
Claimant’s conduct was not unreasonable was one which was simply unsustainable.
37.
In the case of Yerrakalva the Employment Tribunal had
found that the Claimant had lied in two specific respects at the pre-hearing review,
prior to the withdrawal of a discrimination claim. In that case the Employment
Tribunal did in fact make an order for costs against the Claimant, but on
appeal that decision was overturned. At paragraph 16 of his judgment Underhill
P said this, on the basis that the Claimant had lied:
“It may be debatable whether that constituted an
abuse of process but it was certainly unreasonable conduct for the purposes of
rule 40 (3). But it was necessary for the Judge in deciding whether to
make an award, and if so what the amount should be, to take into account
"the nature, gravity and effect" of that conduct: see the passage
from the judgment of Mummery LJ in McPherson v BNP Paribas [2004] ICR 1398 set out below. The Judge did not attempt to
carry out that exercise. He seemed to think that once he found an abuse of
process, then -- subject to the question of means -- he ought to make a 100%
order.”
38.
A little later, Underhill P set out the extract from Mummery LJ’s
judgment at paragraph 40, where he said as follows:
“In my judgment, [rule 40] does not impose any such causal
requirement in the exercise of the discretion. The principle of relevance
means that the tribunal must have regard to the nature, gravity and effect of
the unreasonable conduct, as factors relevant to the exercise of the
discretion, but that is not the same as requiring [the party claiming costs] to
prove that specific unreasonable conduct by [the potential paying party] caused
particular costs to be incurred [my emphases].’
Thus, while there does not have to be a precise causal
relationship between the unreasonable conduct and the costs claimed, any award
of costs must, at least broadly, reflect the effect of the conduct in
question. That indeed inevitably follows from the principle that the purpose
of an award of costs under rule 40 is compensatory and not punitive: see, e.g.,
Lodwick v London Borough of Southwark [2004] ICR 884, per Pill LJ at para. 23 (p. 892B).”
39.
Thus, a lie on its own will not necessarily be sufficient to found an
award of costs. It will always be necessary for the Tribunal to examine the
context and to look at the nature, gravity and effect of the lie in determining
the unreasonableness of the alleged conduct.
40.
As this last case makes abundantly clear, no point of principle of
general application is established in any of the cases being relied upon by Mr
Beyzade. In our judgment the Employment Tribunal’s reasoning in the present
case, at paragraph 12 of their judgment, is unimpeachable. Where, in some
cases, a central allegation is found to be a lie, that may support an application
for costs, but it does not mean that, on every occasion that a Claimant fails to
establish a central plank of the claim, an award of costs must follow.
41.
In this case there were no findings at all that the Claimant’s central
allegations, or indeed any allegations made by her, were lies, or that she had
deliberately persisted in pursuing complaints that she knew to be untrue. On
the contrary, it appears that the Respondents had accepted that a number of her
disclosures were protected. It seems that some four of the nine disclosures
relating to misuse of her login and password information were accepted to be protected
disclosures.
42.
There was only one disclosure making an express allegation of fraudulent
activity. The other disclosures related to complaints as to the misuse of her
login details or to various suspicions of financial irregularity. Whilst the
protected disclosures relating to fraudulent activity were ultimately found not
to be based on objectively reasonable grounds, they were nevertheless found and
accepted to be based on genuinely held beliefs. As Ms Steinhardt correctly
observes, the objective unreasonableness of genuine belief, and a consequent
failure on a Claimant’s part to establish the necessary legal elements of the
claim, does not equate to unreasonable conduct of the proceedings.
43.
Further, what is also abundantly clear in the present case is that this
Tribunal’s conclusions, that the Claimant had not been subjected to detriments,
were conclusions arrived at only after careful consideration by the Tribunal of
all the evidence adduced over a period of some 12 days. We can identify no
error of law in their reasoning and the Tribunal’s decision cannot therefore be
said to be perverse on this basis.
44.
Mr Beyzade’s second ground of appeal is that the Tribunal did not
provide sufficient reasons for the decision, at paragraph 13, that the
Claimant’s reports to external agencies did not amount to unreasonable conduct
such as to found an award of costs.
45.
In our view, however, the Tribunal cannot fairly be criticised for the
brevity of their conclusion on this point, since no basis for suggesting that
this constituted grounds for a costs order had in fact been identified in the
Respondents’ written application. There is no suggestion that this Claimant
had improperly spoken to any external body during her evidence on oath or had otherwise
behaved inappropriately or in breach of any directions of the Tribunal.
46.
In her judgment of 27 August 2009, after the pre-hearing review, the Regional
Employment Judge referred to matters which, even before the previous hearing
began in September 2008, had been reported to the police, the Serious Fraud
Office and the NHS Counter Fraud Service. These reports, and the tensions
surrounding them, were noted to have impacted significantly on the parties’
approach to the litigation; and to have created “an unusually charged
situation”. However, the Judge also noted that, while some of the references
to these external bodies had been made by the Claimant, there had also been
references by the Respondents themselves, for example to the Information
Commissioner. Further, that pursuit of external avenues of redress on the part
of the Respondents was found to be still active at that stage, as evidenced by
the Respondents’ stated intention to appeal against the decision of the
Commissioner not to investigate the matter further.
47.
Against this background, and with no specific grounds or evidence in
support being identified in the written application for costs, we consider
there can be no legitimate criticism of the Tribunal’s decision to reject it, and
no complaint of any insufficiency of reasons in holding that this was not
“conduct of the proceedings”, such as could found an award of costs in the
circumstances.
48.
In his third ground of appeal, Mr Beyzade raises a perversity challenge
to the Tribunal’s other findings in relation to the following: the offer in settlement
made in September 2008; the observations of the Regional Employment Judge at
the pre-hearing review as to the availability of the costs sanction; and the
alleged, unreasonable conduct of the Claimant in producing a supplemental
witness statement late and requiring two of the Respondents’ witnesses to
attend to give evidence. He also submits that the Tribunal erred in having
regard to irrelevant considerations, namely the fact that the Claimant had been
unwell; and in referring incorrectly to alleged “email security provision”,
both mentioned in paragraph 15.
49.
We have considered Mr Beyzade’s submissions carefully, but none of them
seems to us to begin to cross the very high threshold required for a perversity
challenge, having regard to the test to be applied (see Yeboah v Crofton
[2002] IRLR 634), and the need for an overwhelming case to be made out.
50.
In relation to the settlement offer, the Tribunal correctly identified
the relevant legal principles at paragraph 8 of their judgment. The fact that
a Claimant does not accept an offer will not lead inexorably to an award of
costs. It is certainly a factor to be taken into account in deciding whether a
Claimant’s conduct has been unreasonable, and the Tribunal considered it here on
that basis.
51.
As the Claimant’s solicitors pointed out in their written submissions on
costs, when the offer was made the Claimant had to assess the total value of
her claim, as well as the prospects of success, in order to decide whether it
was a reasonable offer. The Tribunal’s decision that this was a small sum, and
that her refusal of that offer, in the context of this case, could not be said
to merit an award of costs, was clearly a decision they were entitled to make.
The Claimant had lost her job and, on the evidence before them, her ill health
meant that she would be unlikely to be able to work again for a further period
into the future. This experienced Tribunal were clearly entitled to have regard
to the potentially high value of claims made under this legislation, if they
succeeded.
52.
The observations of the Regional Employment Judge as to the availability
of a costs sanction need to be seen in the context of her judgment as a whole.
They were made without knowledge of the full facts, as she herself made clear.
She described the Respondents’ strike-out application as an ambitious one in
the circumstances. Further, she noted as follows as paragraph 15 of her
judgment:
“The factual matrix was admitted misuse of the Claimant’s log in
and admitted whistle-blowing by the Claimant in response to that situation. In
those circumstances a key feature of the case was the scrutiny of the
Respondents’ actions in response to those events. It had not been suggested
before the first hearing of the matter that the claim was so weak that a strike-out
or deposit order was warranted, nor were there such suggestions made immediately
after the conclusion of the first hearing. These matters were raised in
response to the aggravating external circumstances cited earlier in the
decision.”
53.
In respect of the constructive dismissal claim, the Judge noted that it
was scrutiny of the Respondents’ conduct that was at the heart of the case. In
relation to the whistle-blowing claim, acknowledging that the issues were more
finely balanced, she said this at paragraph 19:
“….some of the Claimant’s allegations were ambitious, for
example, in relation to cursors moving across her screen, the bugging of phones
and the searching of waste bins. It appeared possible that some of these
allegations were related to the Claimant’s ill health at the relevant time. However,
it was not appropriate to pick and choose these more extreme and colourful
allegations to say that the whole of the case had little reasonable prospect of
success, when at the root there were the key components of admitted
inappropriate access to the Claimant’s computer and admitted whistle-blowing by
her in relation to such matters.”
54.
Further, her conclusion at paragraph 22 included the following:
“…the overall conclusion …is that the interests of justice point
to the appropriate course being for the two parties in this case to go back
into a trial on a level playing field, with no one party put at a disadvantage.
[I] take into account that if the Respondents’ contentions as to the weakness
of the Claimant’s case are ultimately established at trial, there is a costs
sanction that can be used in those circumstances. In the very particular and
odd circumstances of this case, use of that costs sanction at the end, when the
facts have been established is more appropriate than a pre-judging of the
circumstances of the case.”
55.
Those observations, however, do no more than alert both the Claimant and
the Respondents to the possibility of a costs award at the conclusion of the
case, as the Tribunal in this case held. They do not impact upon this Tribunal’s
duty, having heard all the evidence, to consider any subsequent application for
costs on its own, individual merits.
56.
This Tribunal had heard evidence in this case over a number of days.
Their finding that the Claimant’s conduct, in producing a supplemental
statement to explain her complex rationale as to financial irregularity, was
not unreasonable cannot, in our view, be even arguably categorised as perverse,
having regard to their analysis at paragraph 138 of the judgment and the fact
that no objection was made, in the event, to this supplemental statement being
adduced in evidence.
57.
Nor can their decision that she did not unreasonably consider the two
witnesses called as capable of assisting her case. The Tribunal’s finding that
the attendance of these witnesses did not add significantly to the costs of the
case is not something we can even begin to unpick in this appeal. This
Tribunal had heard all the evidence over the course of 12 days and were clearly
entitled to have regard to that evidence in coming to this conclusion.
58.
Mr Beyzade submits, finally, that the Tribunal erred at paragraph 15 in
having regard to irrelevant considerations in determining the question of
unreasonable conduct and whether to award costs. He refers in this respect to
the findings as to the Claimant being unwell, and to errors in what the
Tribunal incorrectly referred to as the Respondents’ “email and security
provision”.
59.
It seems to us that, at paragraph 15, the Tribunal first set out their
conclusion on the first part of the rule 40 procedure, finding that they were
not persuaded that this Claimant’s conduct of the proceedings had been
unreasonable, or that the proceedings were misconceived in the sense of having
no reasonable prospect of success.
60.
They then proceeded to look at the matter as a whole and stated that, having
regard to the overriding objective, they would not exercise their discretion to
award costs against the Claimant in this case. This was plainly a reference to
the second stage of the rule 40 procedure. At that point they took into account
a number of factors, in considering the exercise of that discretion, including
the fact that the Claimant was unwell, something which had not been in dispute
below; and the fact of her genuine belief in the allegations.
61.
We can identify no error in that reasoning. A party’s ill health can
certainly be a factor to be taken into account in the exercise of the
discretion. It was certainly not perverse to take it into account in this
case. Mr Beyzade suggests that there was no opportunity afforded to the
Respondents to make submissions about this, but we repeat that the question of
this Claimant’s ill health was never in dispute below and the Tribunal were clearly
entitled to have regard to it.
62.
So far as the Tribunal’s reference to “email security provision” is
concerned, this cannot sensibly be said to amount to an error of law. In the
context of this judgment it was no more than a minor mis-description of the
relevant technology, the Tribunal clearly intending in our view to refer to use
of the Claimant’s login details, rather than to email security. On the substantive
point being made in the penultimate sentence in paragraph 15, the Tribunal had
found, at paragraph 32 of their liability judgment, that in fact this Claimant
did report the use of her log-in details to the Respondents, and that her
manager did not take any action to prevent it. This minor, factual error does
not therefore in any way vitiate the exercise of the Tribunal’s discretion at this
stage. The Tribunal were fully entitled to have regard, in making this
observation, to their conclusions in the liability judgment.
63.
In conclusion, therefore, we find that no error of law is disclosed in
this Tribunal’s judgment and their decision has not been shown to be perverse.
These grounds of appeal therefore fail and the appeal must be dismissed.
