Costs in the Employment Tribunal

Two recently reported decisions on costs Daleside Nursing Home Ltd v Mathew [2009] UKEAT and Verma v. Harrogate & District NHS Foundation Trust & Anor [2009] UKEAT. By way of reminder, the jurisdiction to order costs in the Tribunal arises in the following circumstances:

(i) 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

(ii) the bringing or conducting of the proceedings by the paying party has been misconceived.

The above basis is only the first stage however, and the tribunal then has a discretion on whether or not to order costs. Certainly if (ii) applies there will still be no costs order in the vast majority of cases. Whilst an employment lawyer might look at an ET1 and ET3 and immediately assess the chances of the claim succeeding as low, the Tribunal will always have in mind that the Tribunal is intended to be both a costs free environment in the majority of cases, and also that it should provide  a suitable forum for litigants in person to have their complaints heard.

Mathew is an exception, and a rare case of the EAT overturning a Tribunal’s decision not to order costs against a Claimant following an unsuccessful claim. Mrs Mathew, facing a disciplinary, made an allegation that her manager had called her a ‘black bitch’, and claimed race discrimination. The Tribunal found

“We looked at all the surrounding circumstances and the background to this case and preferred Miss Rankin’s evidence over Mrs Mathew’s evidence. If the claimant had been called “a black bitch” she would not have waited for nearly three weeks to raise the issue and done so only because it looked as though she herself might be taken through a disciplinary process. She raised the issue on 6 June 2007 when she was resigning. Such a phrase is so offensive it is incomprehensible that she would not have made her objection much sooner. Mrs Mathew had no explanation for the delay.”

It then went on to order no costs due to it believing the Claimant to have a ‘genuine’ belief in her claim. This reason has no logic to it – if the phrase wasn’t said then Mrs Mathew made it up and lied about it. Where the central thrust of a claim is based on a lie, the EAT decided it was perverse not to order costs. Expect this case to be waved around by both sides in costs applications, as the Tribunal (like many courts) tries to deftly judge one side to be the winner without calling the other side a big fibber.

Verma confirms that it is acceptable to order costs on an unsuccessful strike-out application by a Respondent, and furthermore describes as ‘perverse’ the first-instance decision to allow counsel’s fee at the hearing but not the solicitors’ costs in preparing for it. The Employment Judge seems to have based his decision on the basis that the work done prior to the hearing would have happened in any event, which is clearly wrong. I have to say that I have myself seen parts of costs allowed and others excluded arbitrarily, and this decision does at any rate require Employment Judges to apply some reasoning to the costs orders they make.

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