THE INDUSTRIAL TRIBUNALS

CASE REF: 929/05

CLAIMANT:		John Kirk

RESPONDENT:		South Eastern Education and Library Board

DECISION

The unanimous decision of the tribunal is that the claimant is ordered to pay to the respondent the sum of £150.00 by way of costs.

Constitution of Tribunal:

Chairman:	Ms Sheehan

Members:	Mr Currie
		Mr Hanna

Appearances:

The claimant appeared in person.

The respondent was represented by Ms F Lamont, Barrister at Law, instructed by M Brown Solicitor for the Education and Library Boards.

The Claim

A decision of this tribunal was issued on the 4 July 2007 dismissing the claimant’s complaint that he had been unfairly dismissed from his employment with the respondent in February 2005.  On 6 July 2007 the respondent requested in writing that an application for costs be listed before the tribunal as the claim had been pursued unreasonably by the claimant. 

Issues

The issue for the tribunal was whether an order for costs should be made against the claimant and if so, in what amount.

The Facts

Full disclosure of all relevant documents with regard to the claimant’s application to the Industrial Tribunal was completed under cover of a letter dated 6 March 2007 addressed to Sheridan & Leonard Solicitors, including the handwritten note of Mr Mason of his telephone conversation with the claimant and all letters that had passed between the parties. 

On 5 March 2007 the claimant had appeared before a Chairman of the Industrial Tribunals for a Case Management Discussion, where the respondent was also represented.  The tribunal was informed on that date the claimant was representing himself in these proceedings. 

The claimant acknowledged that Sheridan & Leonard Solicitors did forward the disclosed documents to him at some date thereafter in March 2007 but he had difficulty understanding them.

The respondent claims that an order of costs in the sum of £3,000 should be made but could provide no breakdown to the tribunal as to how this sum was made up.

The claimant advised the tribunal at this hearing that the main reason he continued proceedings was that while attending a NILSGCO assessment he understood from them that the Education and Library Board could and should have had him assessed by them first before ending his employment.  It appears that at present the claimant is considered medically fit for employment but is still unemployed and his total annual income marginally exceeds £6,000.

The Law

The matter fell to be dealt with under the Industrial Tribunal (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 as the proceedings had been commenced in June 2005.  Rule 40 states a tribunal may award costs in favour of a legally represented party where “a party in bringing the proceedings has acted vexatiously, abusively or unreasonably; or the bringing or conducting of the proceedings by a party has been misconceived - rule 40(2) and (3).  Misconceived is defined by Regulation 2(2) of the Tribunal Regulations, “includes having no reasonable prospect of success”.  Rule 41 states that the amount of a costs order will be determined in a number of ways.

The tribunal may specify a sum not exceeding £10,000; the parties may agree a sum or the whole or a specified part of the costs incurred may be determined by detailed assessment in a county court.  In deciding whether to make an order for costs, and where appropriate the amount to be awarded, the tribunal is permitted to take into account the paying party’s ability to pay – rule 41(2).

Application of Law to the Facts

A tribunal’s power to award costs under rule 40 is discretionary. As the Court of Appeal in England and Wales reiterated in Gee v Shell UK Ltd 2003 IRLR 82 costs in the employment tribunal is still the exception rather then the rule.  It is a two stage test – the tribunal must ask itself whether a party’s conduct falls within rule 41(3); if so it must then go on to ask itself whether it is appropriate to exercise its discretion in favour of awarding costs against that party and to what amount.

The respondent had submitted to the tribunal that the claimant had been both unreasonable in making his application and that the application was misconceived. Unreasonable has its ordinary english meaning and is not to be interpreted as if it meant something similar to vexatious – Dyer v Secretary of State for Employment EAT 183/83.  Reasonableness is a matter of fact for the tribunal.  Unreasonable conduct is a precondition of the existence of the power to order costs and a tribunal must have regard to the nature gravity and effect of the unreasonable conduct in question as factors relevant to the exercise of its discretion to make a costs award. – McPherson v BNP Paribas (London Branch) 2004 ICR 1398 CA.  The tribunal was also referred to a decision of the Industrial Tribunal for Northern Ireland Montgomery v Western Education and Library Board issued on 15 July 2005 where it was held that the test of “reasonableness” was objective; it was not relevant whether there was a genuinely held belief but whether the belief was one that a reasonable person could have considered as sustainable.  This tribunal considered as it pointed out in its initial decision issued in July 2007 that the lack of a procedure which included requiring staff to confirm in writing any request to be considered for “early “ retirement on the grounds of ill-health might have obviated the need for any hearing before the tribunal.  The claimant appeared limited in his grasp of the relevant contractual documentation at the initial hearing.  The tribunal considered there was a distinct difference between the pre-discovery stage of the proceedings and post discovery.  The nature of the evidence available to the claimant and the nature of the claim may be a relevant factor in determining the issue of costs, in particular the timing of when all disclosure of relevant documents have been made by the parties - see London Borough of Lewisham v Oko-Jaja EAT 417/00.

Misconceived is defined by Regulation 2(2) of the Tribunal Regulations and it “includes having no reasonable prospect of success”.  The key question appears to be not whether the party thought that he was in the right, but whether he had reasonable grounds for doing so” – Scott v Commissioners of Inland Revenue 2004 IRLR 713 CA.  In order to fall within rule 40(3) the misconceived bringing or conducting of the proceedings must have been carried out by the paying party himself and not by his representative.  It appeared clear to this tribunal that any inspection of the number of letters written to the claimant referring to “his request for retirement” without challenge by the claimant at the time placed with the handwritten note of Mr Mason of the initial telephone call, removed from the claimant any reasonable grounds he had for believing that he had a “reasonable prospect of success” in his claim for unfair dismissal. It is clear the continuation of the proceedings from mid March 2007 onwards was carried out by the claimant.  Accordingly the tribunal concluded that the continuation of the proceedings by the claimant once full disclosure was made by the respondent in early March 2007 was “misconceived”, but the tribunal did not consider his actions in regard to the claim initially could be termed “unreasonable” within the context of the 2005 tribunal regulations. 

Rule 41 states that the amount of a costs order will be determined in a number of ways:- the tribunal may specify a sum not exceeding £10,000; the parties may agree a sum or the whole or a specified part of the costs incurred may be determined by detailed assessment in a county court.  The limit laid down of £10,000 applies only to unassessed costs awards determined by tribunals.

Costs are defined as “fees, charges, disbursements or expenses incurred by or on behalf of a party in relation to the proceedings”.  The respondent attended this hearing with no breakdown as to the fees, disbursements or expenses upon which the figure claimed of £3,000 was reached.  Although the tribunal rose to allow the respondent an opportunity to obtain such a breakdown it proved impossible for the information to be gathered on the day of hearing.  In deciding whether to make an order for costs, and where appropriate the amount to be awarded, the tribunal is permitted to take into account the paying party’s ability to pay – rule 41(2).  A tribunal is not obliged to take account of the paying party’s ability to pay – it is merely permitted to do so unless the party concerned has asked the tribunal to consider his or her means when the decision of the tribunal should state whether it has in fact done so and if it has how this has been done – Benjamin v Interlacing Ribbon Ltd EAT 0363/05.  In this case the claimant did not specifically request that we take his means into consideration but did advise the tribunal that he was “relying on us to keep him right”.  The tribunal determined that in those circumstances we should determine the matter before us as if the claimant had requested that his means be taken into account in deciding whether an order for costs should be made and in what amount. 

The respondent had referred the tribunal to the Montgomery decision as authority for the tribunal awarding a set sum without any enquiry into how the sum was made up.  The tribunal considered that case against the authority of Lodwick v Southwark London Borough Council 2004 (IRLR) 554.  The Court of Appeal in England and Wales reiterated as a fundamental principle, in the latter case, the purpose of an award of costs is to compensate the party in whose favour the order is made, and not to punish the paying party.  Richmond v Devon Doctors on Call EAT 0314/06 is authority for the proposition that the reasons for making an order should be adequately detailed in the decision of the tribunal and should include an explanation for how it came to decide upon the amount of costs to be awarded.  Baggs v Fudge ET Case no 1400114/05 is an example where the tribunal reflected the claimant’s ability to pay in the amount of the award of costs as they considered it would have been unduly burdensome if the claimant had to pay the full amount of costs incurred by the employer.  It appeared to this tribunal in light of the ratio decendi of the Lodwick, Richmond and Baggs cases that it is necessary for a tribunal to know or to determine what costs are actually involved or incurred by the receiving party by the bringing or conduct of the proceedings by the paying party.

It appeared to the tribunal the bulk of the legal preparation in this case would have been completed once the documents relevant to discovery had been collated and served on the claimant.  The costs incurred pre-March 2007 cannot be laid at the claimant’s expense.  The respondent was represented at hearing in May 2007 by counsel and there was also a solicitor present from the respondent’s legal branch.  The claimant was unrepresented for the hearing and the respondent was aware from the 5 March 2007 Case Management Discussion that would be the case.  There were no difficult questions of law raised before the tribunal.  The issue was one essentially of fact to be determined against the oral evidence and written documentation placed before the tribunal.  It appeared to this tribunal that the decision to have counsel present at the hearing as well as a solicitor was as a result of the respondent’s actions and not those of the claimant.  While there appeared to be three employees from the respondent board present in the tribunal, only one witness was called to give evidence before the tribunal.  The witness incurred travel expenses in attending the tribunal and was absent from duty to perform the personnel function for which he was employed.  The tribunal was informed at hearing Mr Mason when contacted that morning with regard to the breakdown of expenses incurred by attending the tribunal indicated he preferred to waive any witness expenses.  It appeared to the tribunal Mr Mason was reluctant to disclose wage or expense details to the tribunal.  Six booklets of documents had been prepared for the tribunal hearing and clearly legal representation at the hearing whether by a member of the respondent’s legal branch or counsel are expenses incurred as a result of the claimant’s continuation of the claim to hearing.  While it is the opinion of the tribunal that the respondent should have been in a position to advise the tribunal of those costs and expenses, they were not and so the tribunal was forced to estimate that legal representation at hearing and labour and material costs for copying relevant documents could amount to a figure in excess of £600.00.

It is very clear to the tribunal that the claimant is in receipt of very limited income and any order for costs is not likely to be without financial penalty to the claimant.  At the same time it is clearly inappropriate for any party bringing a claim to hearing to consider that they are impervious to an order for costs should they act in a misconceived, vexatious or unreasonable manner simply because they have limited sources of income.  The tribunal considered that in this case the actions of the claimant did merit an award of costs but the amount of costs would have to reflect the reality of his income.  Like the tribunal in Baggs this tribunal considered that it would be unduly burdensome if the claimant was required to discharge the respondent’s costs in full.  The tribunal calculated that an order for costs in that sum was an award equal to a tenth of the claimant’s annual income.  An award even in the sum of £200.00 was an award of one twenty fifth of the claimant’s annual income.  The tribunal noted that a proportion of the claimant’s annual income was made up of weekly benefit payments and monthly payments of £62.20.  The tribunal concluded that the award of costs which was approximately a quarter of the estimated costs incurred but which could be discharged by less than three months payments of the sum received over and above the claimant’s benefits would not be “unduly burdensome” and adequately reflect the tribunal’s opprobrium of claimant’s pursuing claims where there is “no reasonable prospect of success”.  Accordingly the tribunal makes an award of costs in favour of the respondent in the sum of £150.00.

Chairman:

Date and place of hearing:	29 August 2007, Belfast.

Date decision recorded in register and issued to parties: