THE INDUSTRIAL TRIBUNALS

CASE REF:	214/10

CLAIMANT:			Wesley Cousins

RESPONDENT:		NFU Mutual Insurance Society Ltd

DECISION ON COSTS
The unanimous decision of the tribunal is that the application for costs is dismissed.

Constitution of Tribunal:
Vice President:		Mr N Kelly
Members:			Mr A Crawford
				Mr J Smyth

Appearances:
The claimant was represented by Mr M O’Brien, Barrister-at-Law, instructed by Patrick Fahy & Company, Solicitors.
The respondent was represented by Mr B Mulqueen, Barrister-at-Law, instructed by Millar McCall Wylie, Solicitors.

Background

1.	After a four day hearing, a reserved decision (‘the substantive decision’) was issued  to the parties on 26 July 2010.  The claimant’s claim of unfair dismissal was dismissed and that substantive decision should be read together with this costs decision.  The respondent applied for costs by letter dated 9 August 2010 and, after some delays, a costs hearing was arranged for 9 November 2010.  

Respondent’s application

2.	Mr Mulqueen sought an award of costs under Rule 40(3) of Schedule 1 of the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 on two grounds:-

(i)	That the claimant in conducting the claim had acted unreasonably; ie he had lied to the tribunal.

(ii)	That the bringing and conducting of the proceedings by the claimant had been misconceived.

3.	Mr Mulqueen argued that:-

(i)	The claimant had been fully aware of the standards of behaviour expected of him as a Financial Consultant employed by the respondent.  The respondent was rightly concerned about the serious potential damage that could be caused to its reputation.  The claimant, at the relevant time, had already received a verbal warning and a final written warning.

(ii)	The tribunal had concluded that each of the three disciplinary charges concerning Clients C, D and E, considered in isolation, might not have been sufficient to justify dismissal; but the charge in relation to Client F had been found sufficient to justify dismissal and was in fact the kernel of the case.  

(iii)	He referred to Paragraphs 19 – 35 of the substantive decision and pointed to the clear conflict in evidence between the claimant and the respondent in relation to the second meeting which had taken place between the claimant and Mrs F, at which the signed bare loan trust had been collected by the claimant.  

(iv)	The only realistic interpretation of those paragraphs was that the tribunal had, in fact, reached a clear finding that the claimant had lied in his claim form and on oath before the tribunal about that meeting.  

(v)	If that was incorrect (and during the costs hearing, the Vice President stated that it was incorrect) he asked the tribunal to make such a finding of fact in the costs application.

(vi)	The claimant had lied to his employer and to the tribunal.  This had continued up to the closing submissions made on his behalf by counsel.  

(vii)	The case as pleaded and presented was based on a lie and therefore misconceived.

(viii)	The claimant’s conduct was a very serious matter which, involving perjury, could lead to criminal proceedings.  

(ix)	He referred to the Employment Appeal Tribunal decision in Daleside Nursing Home  v  Mathew [UKEAT/0519/08], two Northern Ireland Tribunal decisions – Case Reference No: 9610/03 and Case Reference No: 423/08 – and extracts from Harvey, including Paragraphs 1052 – 1062. 

Claimant’s response

4.	Mr O’Brien argued:-

(i)	The respondent’s current focus on the disciplinary charge relating to Client F only emerged as the case progressed through the hearing.  The response form lodged by the respondent in the Office of the Tribunals, did not mention Client F by name and did not focus on the charge relating to that client to the exclusion of the three charges relating to Clients C, D and E.  

(ii)	There were substantial holes in the respondent’s decision-making process in relation to the charges which related to Clients C, D and E.  As those holes emerged, the respondent’s focus shifted to the charge relating to Client F.  

(iii)	The respondent’s concern about their reputation, insofar as it concerned the Client F allegation, was misplaced because Client F had not complained about the claimant and in fact had been supportive of the claimant’s position.  

(iv)	It was clear from the tribunal’s findings that the claimant had substantial points to make about the charges which related to Clients C, D and E and he had been entitled to make those points.  

(v)	The tribunal had not made any findings of fact that the claimant had lied in his claim or on oath in relation to his second meeting with Mrs F or in relation to any other matter.  

(vi)	That lack of a finding of fact that the claimant had lied distinguished the present case from the EAT decision and the Northern Ireland Tribunals decisions referred to by the respondent.

Costs hearing

5.	The parties were referred by the Vice President to the case law summarised in the tribunal case, Case Reference No: 220/08 and were given time to consider those references.  

6.	The Vice President explained that the tribunal had not made a finding of fact in the substantive decision that the claimant had lied either in the claim form or before the tribunal.  The tribunal had been very careful not to do so because it had been operating within the limited jurisdiction given to it in relation to unfair dismissal and was conscious of the danger of ‘substitution’ as highlighted in the decision of the GB Court of Appeal in London Ambulance Service NHS Trust  v  Small [2009] EWCA Civ 220.  The tribunal had concluded at various points in the substantive decision that the respondent had been entitled to reach the conclusions that it had reached, including the conclusion that the claimant had lied about the second meeting between the claimant and Mrs F.  That fell a long way short of a finding by the tribunal that it agreed with the respondent’s conclusion that the claimant had lied on this or any other occasion.  

7.	The tribunal is not prepared to reach that finding of fact at this stage in the proceedings.  As Mr Mulqueen has rightly stated, such a finding could have serious implications for the claimant, not least in career terms.  The evidence before the tribunal, in relation to the Client F charge, was the direct evidence of the claimant to the effect that he had not lied in relation to the second meeting between him and Mrs F.  Against that, the tribunal heard Mr Priestley’s evidence of a meeting which had taken place subsequently between Mr Priestley and Mrs F.  The tribunal was satisfied that Mr Priestley made relatively contemporaneous notes of that meeting.  Mr Priestley recorded that Mrs F’s version of events differed from that of the claimant, but that evidence was nevertheless hearsay.  Mrs F was not called to give evidence at either the substantive hearing or the costs hearing and the tribunal did not have the benefit of hearing her, first hand, version of events.  In those circumstances, the tribunal declines to make the finding of fact as invited by Mr Mulqueen.  There is insufficient evidence to make such a finding on the balance of probabilities.

Relevant law

8.	Rule 40(2) and Rule 40(3) of the Industrial Tribunals Rules of Procedure 2005 contained in Schedule 1 to the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 provides as follows:-

“40(2)	A tribunal or chairman shall consider making a costs order against a paying party where, in the opinion of the tribunal or chairman (as the case may be), any of the circumstances in paragraph (3) applies.  Having so considered the tribunal or chairman may make a costs order against the paying party if it or he considers it appropriate to do so.

40(3)	The circumstances referred to in paragraph (2) are where the paying party has, in bringing the proceedings, or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or the conducting of the proceedings by the paying party has been misconceived.”

9.	The Court of Appeal in Lodwick  v  London Borough of Southwark [2004] IRLR 554, stated that:-

“Costs are rarely awarded in proceedings before an employment tribunal – costs remain exceptional (Gee  v  Shell United Kingdom Ltd [2003] IRLR 82) and the aim is compensation of the party which has incurred expense in winning the case, not punishment of the losing party.”

10.	In assessing whether a party has acted unreasonably, the tribunal has to be careful to acknowledge that the merit, or the lack of merit, of some cases may not become apparent until after the conclusion of the hearing.  In ET Marler Ltd  v  Roberts [1974] ICR 72 the court held:-

“Ordinary experience in life frequently teaches us that which is plain for all to see once the dust of battle has subsided was far from clear to the contestants when they first took up arms.”

11.	The tribunal need not attribute costs to any specific unreasonable conduct on the part of the paying party.  The Court of Appeal in McPherson  v  BNP Paribas [2004] ICR 1398 stated:-

“[39]	Ms McCaffrey submitted that her client’s liability for the costs was limited, as a matter of the construction of [equivalent GB provision], by a requirement that the costs in issue were ‘attributable to’ specific instances of unreasonable conduct by him.  She argued that the tribunal had misconstrued the Rule and wrongly ordered payment of all the costs, irrespective of whether they were ‘attributable to’ the unreasonable conduct in question or not.  The costs awarded should be caused by, or at least proportionate to, a particular conduct which has been identified as unreasonable.

 [40]	In my judgment, Rule 14(1) does not impose any such cause or requirement in the exercise of the discretion.  The principle of relevance means that the tribunal must have regard to the nature, gravity and effect of the unreasonable conduct as factors relevant to the exercise of the discretion, but that is not the same as requiring BNP Paribas to prove that specific unreasonable conduct by Mr McPherson caused particular costs to be incurred.  As                  Mr Tatton-Brown pointed out, there is a significant contrast between the language of Rule 14(1), which deals with costs generally and the language of Rule 14(4) which deals with an order in respect of the costs incurred ‘as a result of the postponement or adjournment’.  Further the passages in the case as relied on by Ms McCaffrey – are not authority for the proposition that Rule 14(1) limits the tribunal’s discretion to those costs that are caused by or attributable to the unreasonable conduct of the applicant.

[41]	In a related submission, Ms McCaffrey argued that the discretion could not be properly exercised to punish Mr McPherson for unreasonable conduct.  That is undoubtedly correct, if it means that the indemnity principle must apply to the award of costs.  It is not, however, punitive and impermissible for a tribunal to order costs without confining them to the costs attributable to the unreasonable conduct.  As I have explained, the unreasonable conduct is a          pre-condition of the existence of the power to order costs and it is also a relevant factor to be taken into account in deciding whether to make an order for costs and the form of the order.”

12.	The Rules provide at Rule 41(2) that:-

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

The EAT in Jilley  v  Birmingham & Solihull Mental Health NHS Trust [UKEAT/0584/06/DA] held:-

“[53]	The first question is whether to take the ability to pay into account.  The tribunal has no absolute duty to do so.  As we have seen, if it does not do so, a 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 a paying party has not attended or has given unsatisfactory evidence about means.”

13.	In the case of Daleside Nursing Home Ltd  v  Mathew [UKEAT/0519/08], the EAT stated that the Employment Tribunal, at first instance, had found that:-

		(i)	an allegation of ‘explicit and offensive racial abuse’ had been false;

(ii)	that the allegation had been a ‘method of deflecting attention from disciplinary matters which the claimant was anticipating’; and

(iii)	it ‘was a deliberate and, to an extent, a cynical lie’.”

14.	The EAT stated that:-

“In our judgment, in a case such as this, where there is such a clear cut finding that the central allegation of racial abuse was a lie, it is perverse for the tribunal to fail to conclude that the making of such a false allegation at the heart of the claim does not constitute a person acting unreasonably.  Whatever may be their genuine feelings about the other matters of which a complaint is made, on the particular facts of this case it was the fact that the lie was explicit and so much at the heart of the case that, in our judgment, it is appropriate for us to conclude that this was an overwhelming case where the tribunal has failed properly to address the point, and as a result has a come to a perverse conclusion.”

Decision

15.	(i)	In relation to Mr Mulqueen’s first submission, ie that the claimant had lied, particularly in relation to the second meeting with Mrs F, the tribunal did not make that finding of fact in the substantive decision and, on the evidence before it, does not make that finding of fact in the costs decision.  The tribunal therefore does not find that the claimant acted unreasonably for the purposes of Rule 40(3).	
			
	(ii)	The tribunal is not able to conclude that the claimant’s actions in bringing or conducting the proceedings were misconceived.  It has to be remembered that the claimant did have significant points to make in relation to the disciplinary charges which concerned Clients C, D and E.  For example, he made the point that Fact Find documents had been signed by the relevant individuals and that those documents clearly indicated the nature of the relevant investments.  Given that those disciplinary charges, which had been upheld against him, concerned financial mis-selling and given his chosen profession as a Financial Consultant, it cannot be the case that a tribunal should too readily conclude that he was not entitled to bring proceedings to test the respondent’s findings in this regard, particularly when he had substantial points to make.  Furthermore, since there has been no finding of fact that the claimant lied in the second meeting with Mrs F, it cannot be said that the actions of the claimant in bringing and conducting the proceedings was misconceived in that regard.  

16.	The application for costs is therefore dismissed.

Vice President:

Date and place of hearing: 9 November 2010, Belfast

Date decision recorded in register and issued to parties: