Appeal No. UKEAT/0553/11/ZT
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX
At
the Tribunal
On
10 September 2012
Before
HIS
HONOUR JUDGE McMULLEN QC
(SITTING ALONE)
MISS
K O OLATUNJI APPELLANT
NETWORK
RAIL INFRASTRUCTURE LTD RESPONDENT
Transcript of Proceedings
JUDGMENT
SUMMARY
PRACTIC AND PROCEDURE – Costs
The Employment Tribunal struck out the
Claimant’s case after she did not appear. It ordered her to show cause why she
should not pay £10,000 costs. She submitted details of her ability to pay.
The Employment Judge held without reasons that she had failed to show cause.
This was an error. On the Claimant’s appeal, the Respondent made no submission
and the parties consented to the EAT deciding the issue without remission.
£750 costs ordered.
HIS HONOUR JUDGE McMULLEN
QC
1.
This case concerns the amount of costs ordered by an Employment Tribunal
to be paid by a party. I shall describe the parties as the Claimant,
Miss Olatunji, and the Respondent, Network Rail Infrastructure Ltd. The
Claimant was not represented until the proceedings before me, where she has the
advantage to be represented free by Mr Jake Davies of counsel; the
Respondent had been represented by counsel.
Introduction
2.
The Claimant brought a number of claims, set up to be heard at London
Central Employment Tribunal under the chairmanship of Employment Judge Lewzey
over some 20 days; on the first day, the claim was struck out. The Tribunal
went on to order costs in the following circumstances:
“16. There remains the application for costs made by Ms Shepherd
on behalf of the Respondent. This is an application for an award of costs of
£10,000 which is the maximum the Tribunal can award without assessment,
although we are told that the Respondent’s costs exceed £60,000.
17. The application is made under Rule 38 and
Rule 40. Rule 40(3) provides that:
‘The circumstances referred to in paragraph (2) are
where the paying party has in bringing the proceedings or he 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.’
18. We have already analysed the Claimant’s conduct in relation
to the strike out application and we rely on those matters. This is a
situation where the Tribunal does have jurisdiction to make an award of costs
for the same reasons that we have given in relation to strike out, it is a
situation where the Tribunal would exercise its discretion to make an award of
£10,000. However, the provisions of Rule 38(9) provide:
‘No costs order shall be made unless the Secretary has sent
notice to the party against whom the order may be made, giving him the
opportunity to give reasons why the order should not be made.’
We give notice to the Claimant that she should give reasons why
such an order should not be made within 14 days from promulgation of this
decision.
19. It is not the Tribunal’s intention to incur further
unnecessary costs to the public purse or the Respondent by holding a further
hearing in relation to costs. The matter will therefore be determined in
writing only.”
3.
The Claimant appealed. The matter was considered first by
HHJ Peter Clark on the sift, who sent the matter to a preliminary hearing
conducted by HHJ Shanks. Judge Shanks dismissed the substantive
elements of the claim, and in particular the appeal against the decision to
award costs at all, but did consider that there were substantial prospects of
success in the Claimant’s contention that the Tribunal had not considered the
Claimant’s ability to pay. The Tribunal, as it is clear from the extract
above, was presented with a bill by the Respondent for £60,000. It was minded
to award £10,000, which is within its jurisdiction.
4.
The claims were struck out because of the conduct of the Claimant in
failing to carry out orders of the Employment Tribunal, and it was that that
triggered the application for and the award of costs. In the exceptional
jurisdiction of the Employment Tribunal, the conduct of the party under rules 38 and 40
is relevant, but so is the ability to pay, which is not cited in the extract
from the Rules given by the Employment Tribunal.
5.
The matter as it developed before Judge Shanks therefore came down
to the single issue of the ability to pay. The case was then sent for a full hearing
before a single Judge.
The appeal
6.
The court has a skeleton argument from Mr Davies; the Respondent
indicated it was not prepared to spend any more money on this case and would,
while not consenting to the order, continue to present opposition to the appeal
based upon the Tribunal’s judgment itself.
7.
That being so, Mr Davies appears without any human opposition today and
raises two issues. In case management of this matter I invited the parties to
consider what would be the position if I allowed the appeal, and both sides
agree that there is no point in sending the matter back to an Employment
Tribunal and I should decide it myself. That is a sensible way forward.
8.
The second issue I put to the parties related to Mr Davies’
proposition in his skeleton argument, which is that since there is no challenge
to the jurisdiction to make an award of costs no costs order should be made or
one for a much lower sum than £10,000. Having taken instructions,
Mr Davies accepts and puts to me that his client could pay £750 given
time, and the time would be 10 March 2013; that is, six months from
today.
9.
A jurisdictional issue that I referred to might have arisen because this
could be considered to be a decision of the three‑person Employment Tribunal,
but in my judgment this appeal is correctly made against the two orders of the
single Employment Judge. When the Tribunal decided that it would order costs it
invited the Claimant to show cause why she should not pay the £10,000. The
Judge herself considered an application for a review and dismissed that on
10 June 2011. The order she also made on that day is in the
following terms:
“The Claimant having been given 14 days from the
promulgation of the Judgment made on 14 March 2011 and promulgated on
17 March 2011, to show cause why an order for costs in the sum of £10,000
should not be made against her, and the Claimant having failed to set out
reasons why such an order should not be made in either of her two letters both
dated 28 March 2011:
The Claimant is ordered to pay the Respondent’s costs in the sum
of £10,000”
10.
This Judgment contains no reasoning. The reasoning has to be that of
the Judge alone, because there is no indication here that the Claimant’s
response has been considered by the lay members. The Claimant responded in a
lengthy letter expressly setting out the difficulties she had with ability to
pay. There is no mention of any aspect of this lengthy “show cause” letter by
the Judge. The material she put forward was bound to elicit some form of
reasoned Judgment. In short, she simply was not in a position by way of income
or capital to meet the sum, and that was a matter that had to be dealt with by
a Judge.
11.
This I consider to be an error. I will set aside the decision of the
Judge on 10 June 2011 holding that the Claimant had failed in either
of her two letters to set out reasons why such an order should not be made. As
a matter of construction of both of those letters, reasons are put forward;
whether they are substantial or not was a matter that required a decision by
the Judge and reasons given.
Conclusion
12.
It is plain to me that one of the substantial reasons here is inability
to pay, and so it is correct to set aside the Judge’s order. By consent of the
parties, the matter is now before me. Costs orders in the Employment Tribunal
are exceptional, but in a case where there has been unreasonable conduct or
disobedience and very substantial costs incurred it is open to a Tribunal to
make such an order. It is also open to a Tribunal to invite the Claimant to
show cause; she was not at the hearing, so she had to be given an opportunity,
and when she does make responses she has to say why. In my judgment, the
Employment Tribunal was correct, as held by Judge Shanks, in making the
criticism that it did of the Claimant’s conduct and the waste of time and money
that had occurred as a result of her conduct, so that it was open to it to make
a costs order.
13.
I then turn to the value. The material before me, which I need not
descend to in detail, indicates very difficult circumstances for the Claimant;
fortunately, she is still employed. I accept that this is not a punitive
regime but is simply compensatory, and that the Respondent has not come forward
with any argument as to the value except to uphold the Tribunal’s order. The
solution to this matter is to take Mr Davies’ very helpful approach. I
note that the Claimant’s primary position is that she should not pay anything;
I reject that. She has wasted a lot of money. But in my discretion I consider
her ability to pay extends only to the sum of £750, which, having canvassed the
matter with Mr Davies, and he having taken instructions, she can clearly meet
by an order that it be paid on or before six months from today.
