Appeal No.	EAT/1157/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 17 April 2000

Before
MR COMMISSIONER HOWELL QC
MRS T A MARSLAND
PROFESSOR P D WICKENS OBE

DR I KOVACS	APPELLANT

1) QUEEN MARY & WESTFIELD COLLEGE & OTHER				
2) THE ROYAL HOSPITAL NHS TRUST				RESPONDENTS

Transcript of Proceedings

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	MR T KIBLING
(of Counsel)
Instructed by:
Messrs Denton Wilde Stapte
Solicitors
1 Fleet Place
London
EC4M 7WS	

MR COMMISSIONER HOWELL QC

1	We are going to let this go forward to a full Tribunal hearing on one principal issue, but on one principal issue alone and I am about to explain the reasons and what we are going to do in the form of a short judgment.  

2	In this appeal which is before us today for a preliminary hearing Dr Iren Kovacs seeks to have set aside the decision of the Stratford Employment Tribunal contained in extended reasons running to no less than 65 close typed pages, sent to the parties on 30 July 1999 after hearings occupying the time of the Tribunal and the parties for thirteen days between 14 June and 1 July 1999.  The proceedings before the Tribunal were brought by Dr Kovacs by Originating Application date 20 January 1998 alleging unfair dismissal, sexual discrimination and racial discrimination against two bodies, the Queen Mary and Westfield College which was the successor institution to the St Bartholomew’s Hospital Medical School, and the Royal Hospitals National Health Service Trust.

3	Dr Kovacs held what was described as an honorary position as Lecturer at St Bartholomew’s which she had been given in order to permit her to carry out research at the hospital involving the use of an instrument called a haemostatometer.  At all times it had been expressly agreed that this position would be “unfunded” in the sense that the medical school and the hospital would not be responsible for finding money to pay Dr Kovacs’ remuneration, but that she would arrange this herself by obtaining research funds from other sources and in particular commercial sources.   

4	The appointment at the hospital took the form of a series of fixed term contracts, of which all except the last included an express waiver by Dr Kovacs of her rights to make a complaint of unfair dismissal to an Employment Tribunal when her fixed term appointment came to an end.  The last such contract Dr Kovacs failed to return with a signed waiver.  The hospital failed to spot this or do anything about it, with the consequence that the Tribunal held that when her final fixed term contract came to an end and was not renewed that amounted to a “dismissal” of her by the medical school (the first Respondent) entitling her to a reduced basic award of some £1, 500 from it.

5	However, that was by no means the only, or indeed the major battle ground in what were protracted proceedings by Dr Kovacs against the two institutions.  The result of the Tribunal’s deliberations after as we have said, evidence over a total of thirteen days at the effective hearing of the appeal and lengthy earlier interlocutory hearings at which the issues had been refined and debated, was that all her claims of sexual discrimination and racial discrimination against both of the institutions were dismissed.

6	The appeal before us is not concerned with the Tribunal’s decision that those complaints were unjustified, but only with the order for costs which the Tribunal made at the conclusion of the proceedings, when they directed Dr Kovacs to pay the sum of £500 towards the costs of the first Respondent Queen Mary and Westfield College, and “costs to be taxed if not agreed” as they termed it, by her to the Royal Hospitals National Health Service Trust.

7	The basis on which the order for costs was made by the Tribunal is set out comprehensively in their extended reasons, but for present purposes it can be summarised by saying that the Tribunal concluded that the way in which the Appellant, through her husband Dr Gorog who appeared as her representative at the full hearing of the Tribunal proceedings, had conducted those proceedings was such that it was proper for the Tribunal to make an order for costs against Dr Kovacs as the Applicant in exercise of the jurisdiction in Rule 12 of the Employment Tribunal Rules of Procedure scheduled to the  Employment Tribunals Regulations 1993 SI No 2687.

8	That power to which Mr Kibling who appeared on the Appellant’s behalf before us helpfully drew our attention is in terms that where in the opinion of the Tribunal a party has in bringing or conducting the proceedings acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably, the Tribunal may make an order containing an award against that party in respect of the costs incurred by another party.

9	Under Rule 12(3) an order containing an award for costs may be either an order for the payment of a specified sum not exceeding £500 or an order that the first party should pay to the second party the whole or a specified part of the costs incurred by the second party, as taxed if not otherwise agreed.  By Rule 12(6) it is further provided that any costs required by an order under this rule to be taxed, may be taxed in the County Court according to such of the scales prescribed by the County Court Rules for proceedings in the County Court as shall be directed by the order.

10	On Dr Kovacs’ behalf, Mr Kibling made a number of submissions in support of the contention that the Tribunal’s approach to the costs order in this case was arguably in error in law.  The first was that it appeared from the decision that the Tribunal had failed to take into account or mention in their consideration of the costs issue the fact that, at an earlier interlocutory hearing before a full Tribunal chaired by a different Chairman on 11 December 1998, an application on the part of the second Respondent, the Royal Hospitals National Health Service Trust to strike out the Appellant’s claims altogether on the ground that they were frivolous and or vexatious had not succeeded.

11	We are not persuaded that this gives rise to any arguable ground for saying that the Tribunal which made the costs order in the decision before us erred in law in their approach.  Mr Kibling conceded that the Tribunal after the substantive hearing was in no way precluded from considering whether a case for a costs award under Regulation 12 was appropriate by the fact that a previous interlocutory hearing had declined to make an order striking out the whole application against a party under its power in Regulation 13 of the same rules.

12	It is in our judgment clear that the issues under the two regulations are different. On an initial application to strike out the whole of the proceedings, the question under Rule 13(2)(d) is simply whether the Originating Application or anything in it should be struck out on the grounds that it is “scandalous, frivolous or vexatious”.  That must be a matter to be judged on the nature of the claims made; which distinguishes what has to be looked at from what happens at the conclusion of the proceedings, when all the evidence has been heard and the manner in which the proceedings have been conducted has been seen by the Tribunal at the effective hearing.  It is plain that the additional reference to “or otherwise unreasonably” in Regulation 12(1) gives a broader jurisdiction on the question of costs than the jurisdiction to strike out the proceedings altogether, which is of course a jurisdiction to be exercised with caution at the interlocutory stage of the proceedings before the merits of the claim and the evidence have been gone into.  

13	The second submission Mr Kibling made was that the Tribunal had erred in not differentiating, or as it was put in the course of argument, dealing “discretely” with the questions of whether the conduct of which the Tribunal plainly disapproved had been “vexatious” “frivolous” or “otherwise unreasonable” and dealing with these as separate issues to be determined before the question of what, if any, costs should be awarded in relation to each.  

14	We are not satisfied that this gives rise to an arguable ground for saying that the Tribunal erred in law.  The authority of Marler Ltd –v- Robertson [1974] ICR 72, to which Mr Kibling drew our attention makes it clear that, in the words of Sir Hugh Griffiths as he then was, at page 75D: -

“Costs are a matter of discretion for the Tribunal and an appeal against the exercise of the discretion can only succeed if it can be shown on the face of the decision that the Tribunal has misdirected themselves in law as to the manner in which the discretion should be exercised or, alternatively, that the facts point so overwhelmingly to the exercise of the discretion in one manner that any other decision can only have been arrived at through a failure to exercise the discretion judicially”.  

15	As Mr Kibling rightly conceded, it is a high burden for an Appellant to discharge to show that there is ground for this Appeal Tribunal to interfere with the decision of an Employment Tribunal exercising its discretion under the Costs Rule, in a case where it has heard and dealt with the case on, as exhaustive a basis as this one plainly did.  However, Mr Kibling referred us to the references to the possible ways in which vexatious or frivolous conduct could be shown in the passages in the same judgment at pages 76 D – F in support of his submission that it was an error on the part of this Tribunal not to have specified with more particularity which of those adjectives applied to which aspects of the conduct of the Appellant and her husband in pursuing the proceedings that they felt had between them amounted to an abuse of the Tribunal process.

16	In our judgment as is shown by Marler the issue for a Tribunal is simply whether the facts of the case warrant the conclusion that a party has behaved in such a manner as to amount to abuse so as to justify an order for costs against it.  We are unable to see that it would carry the matter very much further in any direction, if a Tribunal is plainly satisfied that the facts do amount to such an abuse, for a Tribunal to be required to specify with particularity which aspect of the conduct they are concerned about is “frivolous” rather than “vexatious”, and which is neither of those two things but nevertheless “unreasonable.”  We consider that the phrase is to be applied as a whole according to the good sense and judgment of the Tribunal, and a single conclusion reached on whether the conduct justifies an order for costs or not.

17	The third main submission made by Mr Kibling was that the Tribunal had failed to have regard in particular to a finding it recorded in relation to one particular matter, on pages 71 and 72 of the appeal file before us,  a complaint of unlawful direct Sex and Race Discrimination and Victimisation by reference to an alleged comparator, a Dr MacCallum, who had been given a position in the hospital when the Applicant had not.  In referring to the evidence on this issue the Tribunal recorded in paragraph 22.2(ii) of their reasons that they could not be confident whether Dr MacCallum would have been treated in the same way had he been a woman of Hungarian origin, such as the Applicant is.  They said in terms: -

“We concluded that we could not answer this confidently.  We are satisfied that national origin would not have made any difference, but in view of Professor Newland’s answer to the Tribunal about him being “someone in his mid 30s with a young family to support” we are concerned that there may have been some degree of gender stereotypical assumption behind the decision to see Dr MacCallum made financially secure.” 

18	We are not satisfied that this gives rise to any arguable ground for saying that the doubt there expressed invalidates the Tribunal’s exercise of discretion as to the overall costs of the proceedings: This was only one point and in any case as the Tribunal recorded in the immediately following passage, while that question had caused them some concern, they did not consider that it undermined their conclusions in respect of the way the Applicant had been treated by the First or Second Respondent.  Their actual finding on the issue was recorded in the final sentence of the same paragraph in the following terms: -

“That treatment was based on their reasoned assessment of her work, which the Tribunal has accepted as a legitimate, genuine assessment: it would not have been different had she been a man.”

19	On the basis of that as the actual finding of the Tribunal on the relevant issue, we are unable to see that their reference to possible gender stereotyping in relation to Dr MacCallum provides any arguable ground for invalidating their decision as to costs.  As the decision itself makes clear, that was on very much wider and more comprehensive grounds than that one comparison alone.  

20	Fourthly, Mr Kibling drew our attention to certain specific aspects of the case and considerations on the facts against the Second Respondent, which he outlined to us.  We have not been persuaded that any of those factual criticisms gave rise to an arguable ground of appeal in its own right.  All of them, with the exception we are about to mention, appeared to us to be matters of fact and the conduct of the Tribunal proceedings on which it was within the discretion of the Tribunal to determine whether they added up to a case of abuse of the Tribunal process, or not.  

21	That leaves the one matter on which we have been persuaded by Mr Kibling’s able argument that there is an arguable ground which warrants us directing this case to go forward for a full hearing of the Appeal Tribunal.  That is what Mr Kibling said was a failure on the part of the Tribunal to enquire properly into the means of the Applicant to pay the costs which they were awarding against her: this being in the context for an order for costs which (as regards to the Second Respondent) was of an open-ended extent.  

22	He referred us in particular to paragraph 29.2 of the Tribunals stated reasons where the question of Dr Kovacs’ means was referred to: - 

“The Tribunal made enquiry as to the Applicant’s means because this is a matter to which we are directed by precedent when considering an application for costs.”

As the Tribunal recorded: -

“We were informed upon enquiry (without having pressed the Applicant to give evidence, since she had decided not to do so at each previous stage of this hearing) that the Applicant has a pension in the region of £535 per month and that she runs a Harley Street clinic which just breaks even.”

23	The Tribunal then also referred to debts from previous litigation, which was extensively referred to elsewhere in their decision.  She also had a mortgage shared with her husband Dr Gorog who said he also had a small occupational pension.  The Tribunal then continued: -

“We are not satisfied that we have in fact been told everything, but we do not have the resources and it is not intended that this Tribunal should engage on full means enquiry of the sort sometimes undertaken by Magistrates’ Courts.  Not is it intended that issues in respect of nor  means should be binding or overwhelming when we are considering costs applications.  It does not appear, on the face of the relevant Regulations, that it was intended that poor litigants may misbehave with impunity and without fearing that any significant costs order will be made against them, whereas wealthy ones must behave themselves because otherwise an order will be made.  We are satisfied that the Applicant should, if it is otherwise appropriate, pay some costs despite what was said about her restricted finances.”

24	The Tribunal’s comment in that final sentence that an Appellant with restricted finances should nevertheless be made to pay some costs, may we think give some ground for an argument that in making the order they did (which was an order for a fixed sum of £500 against the First Respondents, and an unlimited sum to be taxed if not agreed against the Second Respondent), they failed to direct their minds to the potential effects of the open-ended order in the context of the information they had before them.  We have been told, although no taxation has taken place, that the amount claimed for costs by the Second Respondent is in excess of £60,000.  On that footing Mr Kibling submitted that even though the Tribunal might not have intended it, the effect of the order made had been, as regards the Appellant, punitive; and that that was not part of the proper purpose of the Tribunal’s power to make costs orders under Regulation 12 of their Procedure Regulations.  We consider that Mr Kibling should have the opportunity of taking forward to a full hearing of this Tribunal the issue of whether the Tribunal, in their stated reasoning as recorded there, adequately addressed the question of the Applicant’s means and the potential effect on her of the open-ended order for costs made as regards the Second Respondent.

25	Subsidiary, and to some extent related, to that is a further point taken by Mr Kibling that the Tribunal’s order as recorded failed to comply with the provisions of Regulation 12.6 of the Tribunal Rules, in that it failed to specify the scale on which costs should be taxed if not agreed.  That as we say is to some extent related, since the measure of costs is obviously a material issue for a Tribunal to take into account when considering the effects of an open-ended order such as made by this Tribunal in this case.

26	Those are therefore issues in the proposed amended Notice of Appeal which we shall direct for full hearing of this appeal.  In doing so we record that the disparity in effect between the two orders for costs made in favour of the First and Second Respondents in this case, is in our view relevant to be considered at the full hearing of the appeal on the issues we are directing to be heard, in view in particular of the fact that the Appellant was employed by the two institutions jointly, and of the inevitably close inter-relationship between the two institutions in relation to her appointment and her presence at Bart’s, to which reference is made in one paragraph of the proposed amended Notice of Appeal, even though the more general issues canvassed or intended to be canvassed by that paragraph, do not, we think, give rise to arguable points of law to warrant them being taken forward to full hearing in their own right.  

27	On that basis, and taking Mr Kibling’s draft amended Notice of Appeal, we shall direct that this appeal should go forward only on the paragraphs which are present numbered iv (“failed to have proper regard to the Appellant’s ability to pay.”), v (“failed to make proper or adequate enquiries as to the Appellant’s means.”), viii (“failed to identify the scale”) and xii (but subject to this modification that it is to be amended to read”) “made a costs order having a punitive effect as a consequence of the manner….”[and so forth as in the present draft].

28	On that footing we will direct a full hearing of this appeal.  We will give you leave to amend your Notice of Appeal in that way, but with deletion of all the other paragraphs except the ones that I have just now identified.  All other grounds raised in the original or amended notices of appeal are dismissed.  Estimated length of hearing ½ day, listing category c, skeleton arguments to be exchanged and lodged not later than 14 days before the date for the full hearing of the appeal.  Amended notice of Appeal to be lodged and served within 14 days of today.