Appeal No. UKEAT/0025/11/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 11 May 2011

Before
MR RECORDER LUBA QC
(SITTING ALONE)

MISS T MIRIKWE	APPELLANT

(1) WILSON & CO SOLICITORS
(2) MRS A SOYER
(3) MR K VINCENT	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR RAD KOHANZAD
(of Counsel)
Instructed by:
VLS Solicitors
Gibson House
800 High Road
Tottenham
London
N17 0DH
	
For the Respondents	MS KATHERINE NEWTON
(of Counsel)
Instructed by:
Wilson & Co Solicitors
697 High Street
Tottenham
London
N17 8AD

SUMMARY
UNFAIR DISMISSAL

Costs. Award made without taking account of paying party’s means because (1) she did not attend the costs hearing (although in the court building) and (2) her conduct of the proceedings throughout had been ‘outrageous’.  Held, on appeal: the decision was well within the wide ambit of the Tribunal’s discretion on costs.

MR RECORDER LUBA QC

1.	This is an appeal against an order for costs made by the Employment Tribunal sitting at East London.  By its order the Employment Tribunal required Ms Mirikwe, the unsuccessful Claimant in proceedings before it, to pay the Respondents’ costs of those proceedings, to be assessed in the County Court on an indemnity basis.

2.	By way of general background I should record that the Appellant, Ms Mirikwe, is a law graduate in her mid‑20s.  Since graduating in May 2006 she has been in the employment of a number of law firms in a variety of posts.  In June 2008 she was employed by the First Respondent as a case worker in its family law department.  The First Respondent is a substantial legal aid firm with over 50 fee earners.  The Appellant was dismissed in December 2008 having achieved a little under six months of service with the Respondent.

3.	Ms Mirikwe brought claims of race discrimination, sex discrimination and breach of contract before the Employment Tribunal.  The Tribunal conducted a hearing of those claims which extended over six hearing days.  On the morning of 8 February 2010 the Employment Tribunal announced that it rejected all of the claims that Ms Mirikwe had made and, further, it awarded the Respondents the small sum of £65.00 on its own counterclaim.

4.	After announcement of the result, counsel for the successful Respondents made an application for their costs.  The Employment Tribunal then indicated that it would hear argument on the costs application after the lunch adjournment.  Ms Mirikwe was present at the Employment Tribunal building on 8 February 2010 and had been present in the Tribunal room when the outcome of her claims was announced; that is to say in the morning session.  She did not return to the hearing room in the afternoon for the hearing of the costs application, but she was represented, as she had been throughout the proceedings, by her father, Mr Mirikwe, who has been described in the documents before me as a trainee solicitor.

5.	Having heard argument that afternoon from both parties, the Employment Tribunal later made the order for costs that I have summarised at the outset of this Judgment.  The Employment Tribunal subsequently gave full written Reasons for its decisions, both on the substantive claims/counterclaim and on the order for costs.  That was done in a Judgment promulgated on 5 March 2010.  The Tribunal’s reasoning in relation to costs occupies paragraphs 115 to 130 of its written Reasons.

6.	The appeal from the order for costs comes before me, pursuant to an earlier order made by Wilkie J of this Tribunal, confined to a single ground which relates to the Employment Tribunal’s treatment of Ms Mirikwe’s non‑attendance on the hearing of the costs application.  That single ground was contained in an earlier skeleton argument prepared by Ms Mirikwe’s counsel and appeared at paragraph 13 thereof.  It is in these terms:

“The Tribunal erred in treating her non‑attendance punitively.  In essence, they punished her for her non‑attendance by not taking her means into account.”

7.	That single ground, as elaborated before me today by counsel for Ms Mirikwe, has two elements.  Put shortly, the contention is firstly that the Employment Tribunal gave improper weight in exercising its discretion on costs, and particularly whether to take into account the means of the paying party, to the fact that Ms Mirikwe had not returned to the Tribunal hearing room on 8 February 2010.  Secondly, or alternatively, that it had taken that matter into account in a punitive sense; that is to say as a punishment for her non‑attendance.

8.	That single ground and its two dimensions were fully developed in the skeleton argument of Mr Kohanzad.  It is not a mere judicial aside to indicate that Mr Kohanzad has both written and said all that could possibly and properly have been written and said on behalf of the Appellant on this appeal.  I have benefited greatly from his submissions in reaching the Judgment which I am now delivering.

9.	Before I outline the competing submissions of the two parties, it is as well to set out the relevant law.  The jurisdiction of an Employment Tribunal in relation to costs is dealt with in the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004.  Schedule 1 to those Regulations contains the Rules of Procedure and those dealing with costs are to be found at rules 38 to 41 inclusive.

10.	The discretion of the Tribunal to award costs is available in one of two circumstances described in rule 40.  Put shortly, the first circumstance is that the conduct of a party has occasioned a postponement or adjournment leading to costs being thrown away.  The second circumstance arises where the Tribunal considers that in relation to the proceedings themselves the bringing or conduct of those proceedings has been, on the part of a party, unreasonable.  It is plain from the terms of the Tribunal’s Judgment in this case, to which I shall shortly come, that the Tribunal were here exercising the second of those two jurisdictions in relation to costs.  The extent to which this Employment Tribunal found the present Appellant had conducted the proceedings unreasonably amply appears from the terms of their Judgment as will shortly be seen.

11.	The question of the amount of any costs to be paid pursuant to an order of the Tribunal is dealt with in rule 41.  Rule 41(1) provides:

“The amount of a cost order against the paying party shall be determined in any of the following ways - 
(a) the Tribunal may specify the sum which the paying party must pay to the receiving party, provided that sum does not exceed £10,000;
(b) […];
(c) the Tribunal may order the paying party to pay the receiving party the whole or a specified part of the costs of the receiving party with the amount to be paid being determined by way of detailed assessment in a County Court …”

12.	Rule 41 continues with a provision in sub‑rule (2) as follows:

“The Tribunal […] may have regard to the paying party’s ability to pay when considering whether it shall make a costs order or how much that order should be.”

13.	The ability of the Tribunal to have regard to the paying party’s ability to pay when exercising its discretion in relation to costs is a relatively new provision introduced under a relatively recent adjustment of the Tribunal’s procedural rules.  Prior to the making of what is now rule 41(2), the question of the paying party’s means would not have been relevant to the exercise of the discretion in relation to costs.  It is perhaps for that reason, that is to say the relatively recent enactment of this power, that there is only modest authority available as to the way in which it should be exercised.

14.	The parties have been able to jointly find only one Judgment of an appellate court considering the ambit of rule 41(2), and that is the decision of this Appeal Tribunal given on 21 November 2007 in the case of Jilley v Birmingham and Solihull Mental Health NHS Trust UKEAT/0584/06 & UKEAT/0155/07.  The Judgment in that case on behalf of the Tribunal of three members was given by its legal chairman, HHJ Richardson.

15.	The parties are also agreed that not only is that Judgment the only authority of direct relevance but further that the passage from it, which is most relevant to the present case, is that contained in paragraph 53 of the EAT’s Judgment which reads as follows:

“The first question is whether to take ability to pay into account.  The Tribunal has no absolute duty to do so.  As we have seen, if it does not do so, the County Court may do so at a later stage.  In many cases it will be desirable to take means into account before making an order; ability to pay may affect the exercise of an overall discretion, and this course will encourage finality and may avoid lengthy enforcement proceedings.  But there may be cases where for good reason ability to pay should not be taken into account: for example, if the paying party has not attended or has given unsatisfactory evidence about means.”

16.	Against the background of that description of the relevant law I shall shortly turn to the instant case and the submissions of the two parties.  Before doing so, however, and as a matter of self‑direction, it is sensible for me to set out the guidance given by Mummery LJ in the case of McPherson v BNP Paribas [2004] EWCA Civ 569, reported at [2004] ICR 1398.  In the helpful resume of the relevant law set out in the Court of Appeal’s Judgment, this appears 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.”

17.	I now turn to the submissions of the parties relating to the instant case.  Of course, those submissions must be taken against the background of a full appreciation of the reasoning of the Tribunal on the question.  I shall not extend this Judgment by reading in the full terms of paragraphs 115 to 130 of the Employment Tribunal’s Judgment, but it is important to indicate that I have taken the whole content of them into account as forming the essential background to considering the submissions of counsel for the Appellant and the Respondents.  Moreover, as is plain from the self‑direction as to the law that the Tribunal set out in paragraphs 118 to 123 of that part of their Judgment, they have had regard to the correct relevant rules, that is to say the rules contained in rules 40 and 41 of the Employment Tribunal Rules and they have referred at paragraph 122 in particular to the Judgment in Jilley, which they were clearly shown or referred to.

18.	I now come to the central question on this appeal and that is whether the Tribunal have or have not correctly dealt with the exercise of their discretion on whether to take into account the means of the paying party.  As to that the Tribunal expressed themselves succinctly in paragraph 128.  They say this:

“With those matters in mind, that is the Claimant’s failure to return this afternoon and the extent of the unreasonableness of her conduct of this litigation, we consider it inappropriate to take into account the Claimant’s means and we exercise our discretion for those reasons not to do so.”

19.	In that single sentence the Tribunal state their conclusion on the exercise of their discretion, that is to say that they are not going to take into account the means of the paying party and they give their reasons.  Those reasons are to be understood in the context of their earlier paragraphs of Judgment as being, firstly, the failure of Ms Mirikwe to return to the hearing and, secondly, the extent of her unreasonable conduct generally in the litigation.

20.	The essence of Mr Kohanzad’s submissions is that the Tribunal has there, in paragraph 128, and not exclusively there, taken into account the Appellant’s failure to return to the hearing to participate in the determination of costs as an important factor.  It has, he submits, done so only because it has wished to punish her for that conduct, by which conduct it can be inferred that the Tribunal was displeased.

21.	The Employment Tribunal had indeed earlier in its Judgment referred to the fact of that non‑attendance.  Mr Kohanzad drew my attention to the relevant passages and in particular the second sentence of paragraph 126 in which the Tribunal say in terms:

“We observe the Claimant has chosen not to return to the Tribunal this afternoon knowing that she faced a costs application.”

22.	Further, in support of his contention that the Tribunal had mishandled the question of non‑attendance in its relationship to the issue of whether means should be taken into account, he pointed to the fact that in dealing with Jilley at paragraph 122, the Tribunal, in its summary of that case, has elected to make mention only of non‑attendance as an example of a situation in which a party may not have their means taken into account without mentioning the other, that is to say the giving of unsatisfactory evidence.  Those two examples appear in paragraph 53 of HHJ Richardson’s Judgment.

23.	Mr Kohanzad submits that the Tribunal is there alighting on only one of the two examples mentioned by the learned Judge, emphasising the particular significance it was attaching to that matter.  Mr Kohanzad submits that non‑attendance may indeed be a relevant and proper factor when it goes to the ability of an Employment Tribunal  to identify the means or otherwise of a paying party to pay.  He submits that here it was being used as a matter in respect of which the Tribunal was punishing the Appellant by not taking her personal financial means into account at all.  Taking such significant or disproportionate account of that factor was, he submits, a simple reflection of its displeasure at her conduct, rather than a matter genuinely relevant to the question of whether her means should be considered.

24.	Mr Kohanzad further submits, and I hope I do justice to his submissions in summarising them in this way, that here the non‑attendance of the Appellant could not have been and should not have been treated as significant.  That is because, he submits, the Appellant did attend the costs hearing by her representative; her father.  He had represented her throughout.  Further, information about her circumstances had been made known to the Tribunal, either because her father had told them that she was a full-time student without part‑time employment, or because it was obvious from her relative youth and her previous modest salary commanded from the First Respondent, that she was not of great means.  So, as a matter of law, he submits, the Employment Tribunal gave unreasonable, improper and disproportionate weight to the factor of non‑attendance and accordingly I should set its decision aside.

25.	For the Respondents, Ms Katherine Newton, seeks to uphold the Employment Tribunal’s decision, essentially for the reasons that it gave.  She reminded me that not only are costs themselves in the discretion of an Employment Tribunal, even when the conditions for an award of are satisfied, but further that the rules vest the Employment Tribunal with a complete discretion as to whether to take into account the means of a paying party when exercising the wider discretion of whether or not to make a costs order at all.

26.	She reminds me that there is no presumption either way in the wording of rule 40, or more particularly rule 40(2).  The rule does not say that normally means will be taken into account or should be taken into account, nor does it indicate that it is proper that a Tribunal should routinely or usually leave them out of account.  As Ms Newton put it to me in her oral submissions this is a broad, unfettered discretion.  It contains no checklist of factors which weigh on either side of the balance.

27.	She submits that the non‑return of the Appellant to the Employment Tribunal hearing room on the afternoon of 8 February 2010 was properly relevant to the exercise of that “discretion within a discretion” (my term).  Her absence, submits Ms Newton, disabled the Employment Tribunal from having evidence of her means.  It further disabled the Respondents from cross‑examining the Appellant as to her means in relation to such evidence as she might have given.

28.	Ms Newton submits that the Employment Tribunal was acting within the scope of rule 40(2) and in keeping with the general directions given about the exercise of the discretion in the case of Jilley.  Moreover, she unsurprisingly draws attention to the fact that non‑attendance of a party was one of only two examples given by HHJ Richardson in that case.

29.	I have no hesitation in concluding that, essentially for the reasons given in Ms Newton’s cogent written submissions, this appeal should be dismissed.  There can be no doubt that the non‑attendance of a party can be relevant to the exercise of the discretion by an Employment Tribunal on whether to have regard to that party’s means.  That much is clear, firstly, from the very broad and general terms in which rule 41(2) is expressed.  There is no suggestion in that wording that the matter is irrelevant.  Secondly, the decision in Jilley makes it clear that non‑attendance may be relevant.

30.	In any event, in a case where the primary source of evidence about means to pay would be given by a party in person, such as in the instant case, their non‑attendance may be very or highly relevant to the exercise of the rule 41(2) discretion.  It is likewise not capable of dispute that unreasonableness of the paying party’s conduct may weigh in the exercise of the discretion on whether to have regard to their means or ability to pay.  Where, as here, the non‑attendance by the party is treated by the Employment Tribunal as another instance of unreasonable behaviour, it cannot be irrelevant to the exercise of the discretion whether to have regard to the means of the non‑attending party.

31.	Once it is admitted, as I consider that it must be, that non‑attendance is a relevant consideration, the weight to be given to it on the exercise of this “discretion within a discretion” is, in my judgement, singularly a matter for the body charged with the exercise of that discretion.  That I may have myself given more or less weight to the matter of attendance is neither here nor there.  I can only interfere with the Employment Tribunal’s order if the Tribunal went wrong, to such extent as amounts to an error of law in the terms I have set out from the Judgment of Mummery LJ earlier in my Judgment.  I am without hesitation not so satisfied.  

32.	Of course, if the non‑attendance at a costs hearing had stood alone as a factor in the exercise of the Employment Tribunal’s discretion whether to take means into account in the sense of being the sole or determinative factor, an appellate Tribunal might be persuaded the more easily to disturb the exercise of discretion or to draw the inference that the particular factor has been used disproportionately or punitively.  However, that is not this case.  Indeed, the instant case gets nowhere near that point.

33.	In my judgement a correct construction of the Tribunal’s Judgment runs as follows.  At paragraph 125 they particularise what they describe as the “outrageous way in which the case has been conducted”.  No one holding judicial office could read the sub‑particulars given without echoing the sentiment of the Tribunal as to the particularly outrageous way in which this particular Appellant behaved below in the conduct of her proceedings and in the way she was represented.

34.	In paragraph 126, having said that those matters would be taken into account, the Tribunal made the observation that the Claimant had chosen not to return to the Tribunal in the afternoon.  I take that to be the Tribunal making reference to a further instance of unreasonable conduct on her part.

35.	Paragraph 127 contains a distillation of the finding of unreasonable conduct in the particular context of legislation designed to reduce the evil of discrimination.  It is against that background that one comes to paragraph 128.  That paragraph opens with a reference to “with those maters in mind”.  That, in my judgement, is a reference back to the whole of what has gone before in relation to the conduct of the parties.  However, it continues:

“[…] that is the Claimant’s failure to return this afternoon and the extent of the unreasonableness of her conduct of this litigation”.

36.	There, it seems to me, the Tribunal is not simply treating the non‑attendance as an aspect of unreasonable conduct, as it has done in paragraph 126.  The use of the word “and” demonstrates that the Tribunal is separately dealing with the failure to return to the Tribunal hearing on the question of costs - separate that is from her generally unreasonable conduct.  That can only, in my judgement, be because it believes that her attendance may have assisted on the question of her means and her non‑attendance was relevant to the exercise of its discretion or its ability to exercise the discretion on the question of taking into account her means.

37.	In my judgement, therefore, Mr Kohanzad has not established the proposition that the Tribunal took into account some irrelevant matter.  He has not satisfied me that the weight the Tribunal accorded to the non‑attendance was disproportionate.  I am not satisfied that the proper inference to be drawn from the way in which the Tribunal have expressed themselves is that the factor of non‑attendance was deployed punitively by the Employment Tribunal.

38.	Mr Kohanzad took the opportunity of inviting me to consider whether to give general guidance on the exercise of the rule 41(2) discretion in the course of giving this Judgment.  In my opinion, this is not an appropriate case in which to give general guidance for at least three reasons.  The first is that rule 41(2) is expressed in terms of a general unfettered discretion.  It is not appropriate for a judicial decision to cut down or, in some way, qualify the scope of the exercise of that discretion appropriately by Employment Tribunals.

39.	The second reason is that this case is singularly not a good vehicle for the giving of guidance because no terms for any such guidance are addressed in the written argument of either party’s counsel.  If an appellate Tribunal is to be asked to give general guidance to a lower Tribunal, it seems to me that it is only right that the parties should offer what assistance they can to the appellate Tribunal in that endeavour, perhaps by suggesting a formulation or rubric, or series of factors or pointers, that it would be useful for the Tribunal to address.

40.	The third reason is because such guidance, in very general terms, as might properly be given is, in my view, to be found in the Judgment of HHJ Richardson in the Jilley case.  It might be thought in those circumstances that it would be sensible for that case to be reported, but that is a matter for others.

41.	I close this Judgment by dealing with what Ms Newton, for the Respondents, has called her fallback proposition.  She submits that even if I were to have been satisfied that the Tribunal had erred in this case, I ought not to interfere with the order made because the order can be separately and cogently sustained by reference to the findings of unreasonable conduct that the Tribunal had itself made.  Put another way, Ms Newton’s submission is that the extraordinary conduct of these proceedings by the Appellant and her representative puts one into territory in which no reasonable Tribunal, properly directing itself, could have decided that her means should be taken into account so as to avoid her having to pay the whole of the proper costs of the receiving party.

42.	In my judgment, for the reasons already given, it is not necessary for me to determine this secondary or fallback position.  Suffice it to say that, in the particular circumstances of this case, I find the fallback submission an attractive one.  Had I not otherwise felt it necessary to dismiss this appeal, I might well have been tempted to do so on the alternative basis advanced by Ms Newton.  In the event, that circumstance does not arise.

43.	For all those reasons this appeal is hereby dismissed.