THE INDUSTRIAL TRIBUNALS

CASE REF:	434/13

CLAIMANT:			Martin Sheil

RESPONDENT:		Stena Line Irish Sea Ferries Ltd

WRITTEN REASONS FOR COSTS DECISION 

The tribunal reserved written reasons in accordance with Rule 30(2) of the Rules of Procedure after determining that costs should not be awarded in this case.  These are the written reasons.

Constitution of Tribunal:
Vice President:	Mr N Kelly
Members:		Mr J Barbour
			Ms T Hughes

Appearances:
The claimant was represented by Mr M McEvoy, Barrister-at-Law, instructed by Equality Commission for Northern Ireland.
The respondent was represented by Mr B Mulqueen, Barrister-at-Law, instructed by Crawfords, Solicitors.

1.	The claimant had been employed by the respondent as a driver.  He was dismissed on 12 December 2012 for gross misconduct following an incident on 2 November 2012 which involved an alleged assault on a fellow employee.

2.	The claimant lodged a claim alleging unfair dismissal, trade union detriment and discrimination, victimisation and harassment on the ground of sexual orientation.

3.	The original tribunal sat between 7 – 11 October 2013.  It upheld the claims of unfair dismissal and unlawful harassment on the ground of sexual orientation.  It dismissed the claims of unlawful trade union detriment, and of discrimination and victimisation on the grounds of sexual orientation.

4.	The original tribunal awarded compensation of £37,513.32 in respect of unfair dismissal and £7,500.00 in respect of unlawful harassment on the ground of sexual orientation.

5.	The respondent appealed to the Court of Appeal against both findings but proceeded only with the appeal against the unfair dismissal finding.

6.	The Court of Appeal allowed that appeal and remitted the unfair dismissal part of the original claim to be heard by a differently constituted tribunal (this tribunal).

7.	This tribunal heard the unfair dismissal claim between 2 – 4 March 2015.  

8.	A written decision was issued on 9 April 2015 dismissing the claim of unfair dismissal.

9.	The respondent applied for a Costs Order.  It argued that the findings of this tribunal indicated that it had found that the evidence of the claimant had been false, that the claimant had lied on oath and that he must have known that his claim had been unmeritorious.  The respondent argued that the pursuit of the unfair dismissal claim after the Court of Appeal judgment had been misconceived and that the claimant had acted unreasonably.  The respondent sought £10,000.00 costs in respect of the hearing between 2 – 4 March 2015.  

10.	The claimant argued that the claim of unfair dismissal had been successful at first instance.  The Court of Appeal had not ruled out the prospect of success or partial success before a differently constituted tribunal.  The claimant’s actions were not unreasonable and could not be described as misconceived.  In any event, he argued that it was not an appropriate case for costs.

11.	After hearing from both parties, the tribunal rose to consider the matter and returned after a period of deliberation to conclude that costs should not be awarded in this case.  It reserved the reasons for that decision in accordance with Rule 30(2) of the Rules of Procedure.  These are the written reasons.

Relevant law

12.	The tribunal’s power to award costs is contained in the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 (‘the Rules’).  The general power is outlined at Rule 38.  The two specific rules invoked by the respondent were Rule 40(2) and rule 40(3) which state as follows:-

“40(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.”
	
13.	‘Misconceived’ is defined at Regulation 2 of the Rules as follows:-

			“misconceived includes having no reasonable prospect of success”. 

	The tribunal’s jurisdiction in relation to costs is outlined in Harvey on Industrial Relations and Employment Law at Division P1 Paragraphs 1044 – 1120 and at Division T Practice and Procedure at Paragraphs 1026 - 1080.  Harvey suggests that the test is more than a simple objective assessment of whether the claimant knew or ought to have known that his case lacked substance or merit.  The tribunal must look at not just the proceedings themselves but the claimant’s conduct in bringing or conducting the proceedings and one potential factor can be the respondents’ failure to apply to strike out the claim or to apply for a deposit at an earlier stage.  It must also be the case that success before an original tribunal and the absence of discouragement from the Court of Appeal can also be potential factors to be taken into account.

14.	Harvey states at Division P1 Paragraph 1083:-

“When considering whether to award costs in respect of a party’s conduct in bringing or pursuing a case that is subsequently held to have lacked merit, the type of conduct that will be considered unreasonable by a tribunal will obviously depend on the facts of the individual case, and there can be no hard-and-fast principle applicable to every situation.  In general, however, it would seem that the party must at least know or to be taken to have known that his case is unmeritorious (see Cartiers Superfoods Ltd  v  Laws [1978] IRLR 315).”

15.	The tribunal must go through a two-stage process in determining whether to award costs.  Firstly, a tribunal must determine whether the respondent in bringing or conducting the proceedings acted vexatiously or unreasonably or whether the claim was misconceived.  This is the threshold test.  Secondly, the tribunal must decide whether or not it is appropriate to exercise its discretion to award costs in the particular circumstances of the case.  (See Criddle  v  Epcot Ltd [UKEAT/0275/05] and Khan  v  Kirklees BC [2007] EWCA Civ 1342.)

16. 	Costs Orders are exceptional in nature in the tribunals where costs do not normally follow the event as in the civil courts.  In Gee  v  Shell UK Ltd [2003] IRLR 82 Sedley LJ stated:-

“It is nevertheless a very important feature of the employment jurisdiction that it is designed to be accessible to ordinary people without the need of lawyers, and that – in sharp distinction from ordinary litigation in the UK – losing does not ordinarily mean paying the other side’s costs”.

17. 	An Order for Costs must be compensatory and not punitive.

18. 	The tribunal must have regard to the overriding objective and to the comments of Girvan LJ in the case of Peifer  v  Castlederg High School and Western Education & Library Board & Another [2008] NICA 49 where Girvan LJ stated as follows:-

		“Tribunals should be encouraged to use their increased costs powers set out in the Rules of Procedure to penalise time-wasting or the pursuit of cases in a way which unduly and unfairly increases the costs falling on opponents.	...
	
		When parties before the Tribunal appear in person, without the benefit of legal representation, the lack of legal experience on the part of an unrepresented party may lead to the pursuit of irrelevancies and unnecessary lengthy proceedings.  Whilst Tribunals must give some latitude to personal litigants who may be struggling in a complex field they must also be aware that the other parties will suffer from delay, incur increased cost, be exposed to unstructured and at times irrelevant cross-examination.  While we must have sympathy for a Tribunal faced with such a situation the Tribunal remains under the same duty to ensure that the overriding objectives and Regulation 3 are pursued.”

19.	One of the leading cases in relation to the exercise of the discretion is the case of McPherson v BNP Paribas [2004] EWCA Civ 569 where the Court of Appeal held that there was no necessity for a causal link between the party’s unreasonable behaviour and the costs incurred by the receiving party. The Court stated:-

“In exercising its discretion to award costs, the tribunal must have regard to the nature, gravity and effect of the unreasonable conduct.  However, the discretion is not limited to those costs that are caused by or attributable to the unreasonable conduct.  The unreasonable conduct is a pre-condition of the existence of the power to order costs and it is also a relevant factor to be taken into account in deciding whether it makes an order for costs and the form of the order, but that is not the same as requiring a party to provide that  specific unreasonable conduct caused the particular costs to be incurred.”

20.	In a decision of the EAT in the case Peat & Others  v  Birmingham City Council [UKEAT/0503/11], Supperston J noted that for a party to succeed in arguing for costs on the basis of unreasonable conduct, it was not necessary to show that the other party had no reasonable prospect of success.  He held that if the claimant’s side had engaged with the issues and the costs warning letters they likely would have appreciated that the claimant’s reasonable prospects of success was so thin that it was not worth going to the hearing.  

21.	The classic definition for vexatious claims is found in the case of ET Marler Ltd  v  Robertson [1974] ICR 72, as follows:-

“ … 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.”  

22.	The Court made clear that this was a high hurdle for a party to show, stating:-

“ … it is a serious finding to make against an applicant, for it will generally involve bad faith on his part and one would expect that discretion to be sparingly exercised … .”

23.	In the case of HM Attorney General  v  Bentley [2002] (UKEAT/0556/11) the EAT referred to the judgment of Bingham CJ in the case of HM Attorney General  v  Barker [2002] SCR 1, as follows:-

“The hallmark of a vexatious proceeding is in my judgment that it has little or no basis in law (or at least no discernible basis); that, whatever the intention of the proceedings may be, its effect is to subject the defendant to inconvenience, harassment and expense out of all proportion to any gain likely to accrue to the claimant, and that it involves an abuse of the process of the Court, meaning by that a use of the Court process for the purpose or in a way which is significantly different from the ordinary and proper use of the Court process.” (emphasis added)

Reasons

24.	It is important to remember that the only case before this tribunal for hearing between 2 – 4 March 2015 was a claim of alleged unfair dismissal.  As indicated in the written decision issued on 9 April 2015, the proper focus of the tribunal was on the reason for the dismissal, the procedural fairness or unfairness of the investigation and disciplinary procedures and on whether or not the decision to dismiss was a decision which a reasonable employer could have taken.  

25.	The tribunal was nevertheless faced with the unique set of circumstances in this case.  The Court of Appeal had sent the unfair dismissal claim back for re-hearing and had directed the attention of this tribunal to both the alleged pattern of homophobic abuse and to the possibility of contributory conduct and Polkey deductions.  

	The Court of Appeal stated at Paragraph 44 of their decision:-

“ ... in any event, the question of whether or not and, if so, to what extent and/or with what effect the respondent was subjected to homophobic comments is likely to remain a live issue.”

	The Court of Appeal also stated at Paragraph 43 of its decision:-

“In addition, the Tribunal reached percentage assessments for contributory fault and the Polkey chance of dismissal without attempting to resolve the clear factual conflict between Mr Gilmour and the respondent as to what had taken place on 2nd of November.  In such circumstances, after careful consideration and not without a degree of reluctance, we consider that the appeal should be allowed and the matter remitted for consideration by an alternative tribunal.”

26.	This tribunal considered the credibility of the witnesses and it is notable that it did not in its decision criticise only the claimant.  It also had significant doubts about the credibility of the two witnesses whose testimony had been relied upon by the respondent in its decision to uphold the disciplinary charge and in its decision to dismiss the claimant.  In the tribunal’s view neither the claimant nor the two witnesses to the incident on 2 November 2012 was re-calling events accurately.  Given the heated nature of the incident, the unfortunate passage of time in this case and the difficulty with observation evidence generally, that may not be entirely surprising.

27.	Ultimately, the tribunal directed itself to the correct statutory tests for determining unfair dismissal.  It found that the dismissal was fair for the purposes of the Employment Rights (Northern Ireland) Order 1996.  The findings in relation to the credibility of the claimant, the credibility of Mr Gilmour and the credibility of Mr English were not directly relevant to those tests.  While the tribunal was not impressed with the performance of any of those three witnesses under                                 cross-examination, it concluded that the employer had been entitled to uphold the disciplinary charge on the evidence before it and had been entitled to dismiss the claimant on that basis.  It did not have to consider Polkey or contributory conduct deductions.

28.	It is important to remember that costs do not automatically follow the event in this jurisdiction.  They are a relatively rare event.  Even taking into account the remarks of the Court of Appeal in Peifer, it is important for this tribunal to remember that it is a statutory tribunal to resolve employment disputes in accordance with the legislation and that costs are reserved for particular circumstances.  The fact that the evidence of the claimant, as with the evidence of the other two witnesses put forward by the respondent in relation to the assault, did not impress the tribunal does not mean that costs should therefore be awarded automatically against him, or indeed against the respondent.  

29.	The unfair dismissal claim had succeeded at first instance before the first tribunal.  Substantial compensation had been awarded.  The Court of Appeal allowed the appeal but expressly did so with some reluctance.  Far from simply overturning the finding of unfair dismissal, it ‘reluctantly’ ordered it to be re-heard by a new tribunal.  It did not discourage the claimant from proceeding further.

	It cannot therefore be reasonably argued that the decision of the claimant to pursue the unfair dismissal claim to a new hearing that had been directed by the Court of Appeal was a misconceived decision; ie a decision having little reasonable prospect of success, or a decision attracting the ordinary meaning of the word ‘misconceived’.  

30.	It is also difficult to argue that the claimant was acting unreasonably in doing so.  Even if this tribunal’s view of his evidence was fully correct, its view was no more favourable in relation to the evidence put forward by the respondent of the assault.  Furthermore, the issue to be determined by this tribunal ultimately related to the statutory tests for unfair dismissal.  Using a different formula, the question for this tribunal proved to be:-

“Did the respondent form a reasonable belief in guilt after a reasonable investigation (and disciplinary procedure) and, if so, whether dismissal was a reasonable penalty?”

In a situation where the tribunal’s view was that none of the three participants/witnesses to the assault was an impressive witness, it would be harsh to single out the claimant for criticism and costs.  

31.	Whatever view is taken of the credibility of the claimant or of the respondent’s witnesses, there clearly was an issue to be tried here as directed by the Court of Appeal.  The claimant was, in a real sense, complying with that direction in participating in the hearing between 2 – 4 March 2015.  While he could have, in theory, withdrawn his claim after the Court of Appeal decision, it is difficult to see why that would have been regarded as the only reasonable decision on his part.  While there was clearly a conflict in evidence between the parties, the issue for this tribunal was not whether the claimant had been subject to homophobic abuse or to what extent or indeed whether the claimant had in fact assaulted, and to what extent, Mr Gilmour.  As the hearing progressed, the issue for this tribunal to determine was whether or not the statutory tests for a fair dismissal for the purposes of the 1996 Order had been met.  

32.	Even if it could be determined that the claimant’s conduct in proceeding with the unfair dismissal hearing between 2 – 4 March 2015 had been unreasonable conduct on his part, only the first part of the test, the ‘threshold test’ would be satisfied.  The tribunal would then have to exercise the second part of its determination, ie the question of whether or not it would be reasonable to then award costs.  

33.	The claimant had clearly suffered a level of homophobic abuse while in the employment of the respondent.  While the duration and pattern of that abuse may well have been open to question, there was still abuse of some degree.  In a costs application the tribunal must consider all the relevant circumstances.  This was a situation of homophobic abuse to which the claimant reacted.  The assault seems to this tribunal to have been an episode of pushing and shoving rather than the exculpatory version put forward by the claimant or indeed the florid version put forward by Mr Gilmour and Mr English.  In these circumstances, given the initial homophobic abuse, the heated nature of the event, the original decision in the claimant’s favour, and the inaccurate recollections of all three participants or witnesses in relation to the assault, this would not be a reasonable case to award costs, even if the threshold test had been passed.

34.	The tribunal therefore declines to award costs in this matter.

Vice President

Date and place of hearing:	6 July 2015, Belfast

Date decision recorded in register and issued to parties: