In Yerrakalva v Barnsley MBC, the EAT has given a helpful judgment on costs in the employment tribunals.
The claimant had complained of disability discrimination. There had been a pre-hearing review on the disability issue which had been adjourned part-heard after 3 days. After the adjournment, the employment judge had fallen ill, and it had eventually been decided that the hearing would have to be started afresh. Then, before that could happen, the claimant wrote to the tribunal withdrawing her claim.
The respondent applied for its costs, which it said amounted to over £90,000. The employment judge who considered the costs application considered the amount excessive, but awarded costs in favour of the respondent subject to a detailed assessment in the county court. That meant that the claimant was going to have to pay however much of the respondent’s costs the county court thought was reasonably incurred.
Under paragraph 40 of the Employment Tribunals Rules of Procedure, a tribunal can make a costs order 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
In other words, you may be made to pay costs if (a) your claim is so weak that you should never have brought it at all; or (b) you’ve brought it for improper purposes – e.g. just to harass your employer; or (c) even if your case is strong, you’ve behaved really badly in the way in which you have conducted it.
The reason given by the employment judge in Yerrakalva was that the claimant had told two lies in the course of the PHR. The EAT (President Underhill presiding) set aside the costs order: the lies amounted to unreasonable conduct of the proceedings, but were not particularly important, and it could not be said that the respondent incurred any extra costs because of them. Underhill P says at ¶17:
While there does not have to be a precise causal relationship between the unreasonable conduct and the costs claimed, any award of costs must, at least broadly, reflect the effect of the conduct in question.
The judgment also emphasises usefully in passing that withdrawing a claim does not in itself indicate that it is misconceived and should never have been brought:
It is worth emphasising, albeit in passing, that the Judge did not treat the fact that the Appellant had withdrawn as constituting, or tantamount to, an acknowledgment that her case was misconceived or otherwise as in itself giving grounds for an award of costs. While such a conclusion may well be appropriate in the circumstances of a particular case, it is important that there should be no general rule to this effect, not least because such a rule would be a powerful disincentive to parties in an appropriate case taking a sensible and responsible decision to withdraw.
If you want to withdraw and you think the respondent might try for costs, it is safest to try to settle the case either for a notional payment, or else just for a promise not to go after you for costs. If you can’t get that agreement, Yerrakalva may help you head off a costs order.