THE INDUSTRIAL TRIBUNALS

CASE REF:	2761/14

CLAIMANT:			Rita Cavaco

RESPONDENT:		Moy Park Ltd

DECISION ON COSTS
The unanimous decision of the tribunal is that the respondent’s application for costs is refused.

Constitution of Tribunal:
Employment Judge:	Employment Judge Murray 
Members:			Mr J Barbour
				Mr S Pyper

Appearances:
The claimant was represented by Mr S Begley, Solicitor of Begley Swift, Solicitors.
The respondent was represented by Ms A McLarnon, Barrister-at-Law, instructed by Ms K Frazer of the respondent company.

Reasons

1.	By a decision of this tribunal promulgated on 16 June 2015, the claimant’s claims were rejected in their entirety.  

2.	The claimant was dismissed for gross misconduct and her claim to this tribunal was that this dismissal was unfair based on the following main arguments:-

(1)	that there was a delay in questioning a vital witness and in accordance with the case of A  v  B that the decision was therefore rendered unfair;

(2)	whether or not a reasonable management instruction was given to the claimant;

(3)	that the claimant was treated differently to another worker who had committed a similar offence, in that that worker was not dismissed but was disciplined; and

(4)	that the claimant had an unblemished record, was a diligent worker and had lengthy service with the respondent and the penalty was therefore too harsh in the circumstances.

3.	The respondent’s representative relied on two grounds for the costs application.  Firstly, that the claimant acted unreasonably in bringing and conducting the claims; and, secondly, that the claims were misconceived (Rule 40(3)).  The sum claimed in respect of solicitors and counsel fees was £4,140.00.

The law

4.	The tribunal’s power to award costs is contained in 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 applies.  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.  

40(3)	The circumstances referred to in paragraph 2 or 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 the conducting of the proceedings by the paying party has been misconceived.”
	
	‘Misconceived’ is defined at Regulation 2 as follows:-

			“Misconceived includes having no reasonable prospect of success”.  

5.	The tribunal’s jurisdiction in relation to costs is outlined in Harvey on Industrial Relations in Employment Law Division P 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. 

6.	Harvey states at paragraph 1047:-

“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).”

7.	The relevant principles derived from the case law are set out below.

8.	The tribunal must go through a two-stage process in determining whether to award costs.  Firstly, a tribunal must determine whether the respondent in conducting the proceedings acted unreasonably.  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.)

9.	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”.

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

11.	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.”

12.	In our view, the following observation is very important to bear in mind in this case:-

		“The ordinary experience of life frequently teaches us that what is plain for all to see once the dust of battle has subsided is far from clear to the combatants when they took up arms.”  (Per Sir Hugh Griffin in E T Marler Ltd  v  Robertson [1974] ICR 72).

13.	The case of Jilley [UK EAT/0584/06/DA] emphasises the importance of taking account of the claimant’s means although a lack of means to pay is not a bar to a costs order being made.

14.	One of the leading cases in relation to the exercise of the discretion is the Macpherson case 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.”

15.	In the case of Barnsley Metropolitan Borough Council  v  Yerrakalva [2011] EWCA Civ 1255, Mummery LJ reviewed the authorities in relation to the issue of costs and repeated that costs are in the discretion of the Employment Tribunal; the Employment Tribunal’s powers to order costs are more sparingly exercised and are more circumscribed by the Rules of Procedure than those of the ordinary Courts; and that an Employment Tribunal Costs Order is the exception rather than rule.  He stated:

	“The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by a claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had.”

16.	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 solicitors 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.  

17.	In the case of Arrowsmith  v  Nottingham Trent University [2011] EWCA Civ 797, ICR 159, the Court of Appeal held that lying in evidence can found an Order for costs as this is one of the factors the tribunal can take into account.  Lying in evidence does not, however, of itself, mean that an Order for Costs is inevitable if the lying party loses.

Conclusions

18.	The respondent handed a letter, on the first morning of the hearing, to the claimant’s representative making an offer of settlement in the sum of £2,000.00 on an economic basis, stating that the offer was a ‘Calderbank’ offer and stating that this would be pursued on the basis that the claimant’s claim was frivolous, vexatious, unreasonable or otherwise abusive and misconceived.  The claimant was warned in that letter as to the costs to be pursued in the event of her losing the case.

19.	At the costs hearing, the respondent’s representative relied on two bases for the application, namely that the claimant in bringing and conducting the proceedings acted unreasonably; and, secondly, that the claim was misconceived.

20.	We are not persuaded that the threshold test has been met for unreasonable behaviour nor are we persuaded that the claim was misconceived.  Our principal reasons for so finding are set out below.  

21.	The claimant lost her case but that is not of itself enough to connote unreasonable behaviour nor that the claim was misconceived.  It is clear from the decision there was a lot of debate in relation to the main points made in the claim and, in particular, legal submissions had to be made in relation to the A  v  B case.  

22.	We are mindful of the following statement in Harvey which strikes a note of caution to tribunals:-

“Otherwise parties could end up being penalised for not assessing the case at the outset in the same way as the tribunal may do following a hearing and the evidence.”						(Paragraph 1084)

23.	We note the statement in Blackstone’s Employment Law Practice 2009 as follows:-

	“The tribunal ought however to be wary of the dangers of hindsight.  The fact that a party loses before the tribunal does not mean that the case was misconceived or vexatious.  What becomes clear to the parties, for example after cross-examination, at the end of proceedings may not have been clear at the start”. 							(Paragraph 12.18)

24.	The fact that the claimant conceded that she had been guilty of misconduct but that that concession was only made during cross-examination in this case does not connote unreasonable conduct prior to that point.  In this regard we note that the Court of Appeal has held that even if a party lies in his evidence (see the case of Arrowsmith cited above) this is no more than one element to be weighed up by the tribunal in assessing whether costs should be payable on the grounds of unreasonable conduct.  By analogy, we regard the fact that the claimant conceded this point in cross-examination as no more than one element to be considered.

25.	There were issues to be determined by us after assessing all of the evidence and the submissions.

26.	Whilst we note that no application was made for a strike-out nor for a Deposit Order pre-hearing review at any stage, we accept the point made by the respondent’s representative that in many cases a respondent reasonably takes the view that to make such an application simply increases costs and is therefore often not pursued on an economic basis.  We therefore do not hold that against the respondent in this case.

27.	We are mindful that costs are the exception rather than the rule in tribunals.

28.	In relation to the misconceived issue, the test is whether the claimant knew or ought to have known that she had no reasonable prospect of success or that her claim was without merit.  In that regard, we note that in an unfair dismissal claim it is for the respondent to show the reason for dismissal.  The claimant had a claim for unfair dismissal on various grounds and it was not unreasonable for her to ask a tribunal to determine it.  The fact that, after weighing up all the evidence, we did not agree with her case does not mean that it was unreasonable for her to pursue it to determination by a tribunal.  For the same reason we do not find that it was misconceived for her to bring, or to continue with, her claims.

29.	We are also mindful of the decision in the Court in Yerrakalva at Paragraph 15 above and we also bear in mind the dicta of Sir Hugh Griffith in the case of ET Marler Ltd  v  Robertson (Paragraph 12 above).

30.	In summary, we do not find that in this case the claimant acted unreasonably in bringing or conducting her case nor do we find that the bringing or conducting of her claim was misconceived.  The application for costs is therefore refused.

Employment Judge

Date and place of hearing:	26 August 2015, Belfast

Date decision recorded in register and issued to parties: