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Employment Appeal Tribunal case on costs

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.

4 comments

  1. Williams

    The Tribunal keep relisting my case due to lack of judges. I and the other side’s representatives always turn up and this is the 4th time that the Tribunal did this to us. Is there any way I can apply for cost order against the Tribunal? Are there any authorities regarding this?

    Thank you

    • Naomi

      Sadly not. It’s a real problem. If parties’ waste tribunal time, they’re liable to get very sharply bawled out – but the tribunals waste parties’ time and money rather freely, sometimes with scarcely an apology.

  2. Lou

    I keep finding plenty of articles regarding employees lying, behaving dishonestly and wasting the tribunals time, but not regarding ex employers who do the same. Are employees who conduct themselves honourably allowed to submit a costs claim against employers who lie and behave dishonestly?

  3. Pretty82

    I took my empIoyer to employment tribunal due to a claim discrimination, bullied , and harassment the judges where so unfair by not giving me enough time to cross examine the respondents but gave them a whole day to cross examine me. Lost the case and have order me for a cost award to the respondent. Point is I represented myself and the judges did not make the process easy for me by always siteing the respondent , my witness was never question he just came in and they told him to sign his statement and live. The respondent submitted a fake document but was never question. Instead they keep accusing me of lying to mislead the court. They lied that I did not attain the meeting that it went on my absent jet again nothing was done am so depressed cos my employer put me on medication while in their employment and now am the one to pay them. I don’t know if I can appeal on the decision please I need help.

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