Appeal No. UKEAT/0538/11/ZT

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX

	At the Tribunal
	On 9 March 2012
	   Judgment handed down on 16 May 2012

Before
HIS HONOUR JUDGE PETER CLARK
MRS J M MATTHIAS
MRS L S TINSLEY

MR K BAKER	APPELLANT

TOTE BOOKMAKERS LTD T/A TOTESPORT	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR P NICHOLLS
(of Counsel)
Instructed by:
Gateley LLP Solicitors
One Eleven Edmund Street
Birmingham
B3 2HJ	
For the Respondent	MR B McCLUGGAGE
(of Counsel)
Instructed by:
McGrigors LLP Solicitors
Century House
5 Old Bailey
London
EC4M 7BA	

SUMMARY
PRACTICE AND PROCEDURE – Costs

75 per cent of Respondent’s costs awarded to reflect the proportion of Claimant’s case which fell within the trigger criteria for awarding costs.  No error of law.  Yerrakalva (CA) and Arrowsmith (CA) considered and applied.

HIS HONOUR JUDGE PETER CLARK 

1.	This is the full hearing of a costs appeal for which I gave permission on the paper sift.  The parties before the Birmingham Employment Tribunal were Mr Baker, Claimant and Tote Bookmakers Ltd t/a Totesport, Respondent.  We shall so describe them.  The Claimant brought various claims against the Respondent, his former employer.  All claims were disputed.  The substantive hearing of those claims took place before an ET chaired by Employment Judge Pauline Hughes between 13-21 September 2010.  By a Judgment with Reasons promulgated on 3 November 2010 the claims of unfair dismissal, disability discrimination and for a protective award were dismissed.  A claim for breach of contract succeeded, with remedy adjourned.  An appeal by the Claimant against those findings adverse to him was rejected by HHJ David Richardson on the paper sift under EAT rule 3(7).  Accordingly, that judgment (“the Liability Judgment”) stands.

2.	The Respondent applied for its costs, limited to 75 per cent of costs incurred in the proceedings.  The total costs are estimated at about £120,000.  The ET made the order as asked, subject to a detailed assessment in the County Court, by a costs judgment dated 15 July 2011, following a costs hearing held on 21 March.  That assessment has yet to take place, given the present appeal, however we proceed on the basis that, under the ET costs order, the Claimant faces a bill of approximately £90,000.

Background
3.	The Claimant commenced his employment with the Respondent on a permanent basis in 1997.  Later he was appointed Head of Machine Operations, notionally based at their head office in Wigan but in fact working from home in Solihull.  He travelled the country on business extensively, covering some 30,000 miles each year.

4.	In 1998 he had major intestinal surgery and in 1999 bowel surgery.  At about that time he was diagnosed with MS (multiple sclerosis).  That affected his driving ability.  On 4 October 2000 Linda Bellis, HR Director, following a meeting between them on 28 September, wrote to the Claimant.  She confirmed, as permanent, the arrangement whereby he used his home as an office.  She also addressed his driving difficulties and the temporary arrangements made to resolve that problem.  

5.	In 2004 and 2006 he was hospitalised due to cardiac problems.  However, the medical evidence was that his MS did not present significant problems at work.  He continued working as before, clocking up the same annual mileage.

6.	In June 2007 Mr Beaumont, the Respondent’s Chief Executive decided that a review of the Machine Operations should be undertaken against a background of a potential buy-out of the Tote.  The upshot was that the Head of Machine Operations would henceforth be physically based at the Wigan head office.  It was the Claimant’s case that here the driver was Mr Beaumont’s antipathy to home-working and the ET noted (Liability Judgment (LJ) para. 15.15) an email from Mr Scanlon, his then line manager, to the Claimant dated 14 August 2007, in which Mr Scanlon stated that Mr Beaumont “is dead against the principal (sic) of anyone working from home”.  Mr Paul Nicholls, now appearing on behalf of the Claimant, drew particular attention to that email during the course of his submissions to us.

7.	The Claimant was not prepared to be based at Wigan.  The Respondent insisted.  In the event, he was dismissed, on grounds of redundancy, on 5 March 2009.  He left with a severance package worth in the order of £70,000.

The Liability Judgment
8.	Material to the subsequent costs judgment the ET found:
(1)	That at the forefront of the Claimant’s case was the contention that his dismissal came about as a result of a conspiracy orchestrated by Mr Beaumont due to his dislike for home-working and due to the Claimant’s disability.  The ET firmly rejected the Claimant’s case on this aspect of the matter (LJ, para. 8).

(2)	They did not find the Claimant to be a credible witness; he had a propensity to distort the facts to suit his arguments (para. 9).  By way of example, they rejected his evidence that requiring him to work from Wigan involved removing a reasonable adjustment (working from home) to take account of his MS.

(3)	Whilst it was common ground that the Claimant was disabled by reason of his cardiac condition and MS, an issue arose as to whether he was also disabled by reason of depression, a mental impairment, following the Respondent’s decision to move his base to Wigan.  The ET resolved that issue in favour of the Claimant.

(4)	The Claimant was fairly dismissed by reason of redundancy (LJ, para. 51).

(5)	All claims of direct/disability-related discrimination, victimisation and of failures to make reasonable adjustments contrary to the Disability Discrimination Act 1995 were dismissed.

(6)	The protective award claim was abandoned by the Claimant and the Respondent conceded that by making a payment in lieu of notice rather than giving contractual notice it was in breach of contract.  The resulting loss consisted of (a) loss of health care cover (conceded by Respondent) and (b) pension loss; the only remaining issue as to remedy.

The Costs Judgment
9.	The Respondent limited its costs application to 75 per cent of the costs incurred to cover all of the disability discrimination complaints (but not the fact of disability) and so much of the unfair dismissal complaint as related to the Claimant’s conspiracy theory (which put in issue the redundancy reason for dismissal advanced by the Respondent).

10.	The ET was referred to a number of authorities including Marler v Robertson [1974] ICR 72 (NIRC), and Yerrakalva v Barnsley MBC (EAT/0231/10 Underhill P); see now the later judgment of the Court of Appeal [2012] IRLR 78 and Daleside Nursing Home v Matthew (EAT/0519/08 Wilkie J).

11.	Applying ET rules 40-41 the ET held:
(1)	The Claimant had advanced allegations in support of his allegations of conspiracy and disability discrimination which were, as he knew or ought to have known, untrue.  Some of the allegations made were vexatious: overall these allegations were wholly unreasonable.

(2)	The Claimant’s evidence as to his means was wholly inadequate.  Someone with his background (the ET noted; LJ para. 8; that he had worked at a senior level in an international bank prior to working for the Respondent; Mr McCluggage, who has represented the Respondent throughout, told us that he had been Vice-President and Managing Director of a merchant bank in the City of London) would have a substantial portfolio of investments.  The ET took into account his redundancy package from the Respondent and the fact that he could deploy £50,000 worth of legal representation in these proceedings through a legal insurance policy.

(3)	In conclusion, it was unacceptable that parts of the Claimant’s evidence given at the main hearing was untruthful; he had behaved unreasonably in the conduct of the proceedings; it was appropriate to make an order for costs in favour of the Respondent.

(4)	As to the amount of that award, the ET entirely accepted the Respondent’s case that only 25 per cent of its costs were attributable to defending the tenable parts of the Claimant’s case, indeed that apportionment was, in their view, generous to the Claimant.  Accordingly the ET awarded 75 per cent of the Respondent’s costs, subject to a detailed assessment in the County Court.

The Costs Appeal
12.	It remains the position that costs orders in the ET are exceptional: see Lodwick v Southwark LBC [2004] ICR 884.  However, the power to order costs is provided for in ET rules 40-41 and an appeal against a costs order will be doomed to failure unless that order is vitiated by an error of legal principle (per Mummery LJ Yerrakalva (CA) para. 9).

13.	In challenging this ET costs order Mr Nicholls first seeks to unpick the ET’s reasoning in the Liability Judgment.  He contends that the ET there overstated the Claimant’s reliance on the so-called conspiracy theory.  We disagree.  Mr McCluggage has taken us to the Claimant’s witness statement put before the ET at the main hearing, in which he speaks of a “totally sham process” (para. 43); “the entire (pre-dismissal) consultation process… was a premeditated act by Respondent… (and) was a sham” (para. 53); “part of the conspiracy I was facing” (para. 92); the Respondent engaged in a ‘duplicitous’ process (para. 115).  In these circumstances the ET was entitled to make a judgment on the case expressly advanced by the Claimant and, as the judges of fact, to reject it.

14.	In relation to the direct/disability related/victimisation claims Mr Nicholls seeks to draw a distinction between those allegations which failed at the first Igen v Wong hurdle (LJ para. 41) and those which the ET found failed in the light of the explanation given by the Respondent (LJ para. 42), thus indicating that the Claimant at least raised a prima facie case so far as those three allegations were concerned.  We think that is a misreading of para. 42; the ET found that, in the light of their findings of fact, there was no less favourable treatment of the Claimant on the prohibited grounds.

15.	As the Claimant’s credibility, there are a number of findings in the Liability Judgment (see paras. 8, 9 and 15.2, 15.32 and 15.42 and 15.40) where the Claimant’s evidence was rejected by the ET.  At Costs Judgment para. 12 the ET articulated the basis on which they had, implicitly rejected his evidence in those respects.  This was not a case of a party holding a genuine but mistaken belief.  

16.	We bear in mind the recent observations of the Court of Appeal in Arrowsmith v Nottingham Trent University [2012] ICR 159 (per Rimer LJ, paras. 32-33) that Daleside lays down no point of principle of general application; that where a party lies about a central allegation in the case an award of costs must follow.  Each case will be fact-sensitive.

17.	In the present case we are satisfied that the ET took into account, as it was entitled to do, its earlier findings as to the Claimant’s credibility, but did not fall into the legal error of concluding that an award of costs necessarily followed.  Its conclusion in the present case cannot be characterized as being obviously wrong.

18.	An ET is not bound to take into account a party’s means to pay costs but in the present case such evidence as the Claimant saw fit to give was taken into account.  That the ET was correct in finding the Claimant’s evidence as to means wholly inadequate (CJ para. 15) is borne out by the Claimant’s own original grounds of appeal (Mr Nicholls subsequently prepared summary grounds).  At para. 20.15 he states that he has two large mortgages, one for £451,367 (on his UK home) and a second from Santander for £400,000 on his property in Spain.  Those mortgages were taken out, Mr Nicholls told us on instructions, in 2004 and 2006 respectively, when interest rates were higher than today.  In these circumstances, given the Claimant’s employment before joining the Respondent, it is unsurprising that the ET inferred that he had a substantial portfolio of investments.  It seems to us inherently unlikely that, even in the more liberal lending regime of those pre-Lehman Brothers days, the banks would advance loans totalling £850,000 on the basis of a salary which, following complaints by the Claimant, ranged from £45,675.17 on 1 October 2004 to £61,920 on 1 October 2006 (according to the Claimant’s own chronology in this appeal).

19.	In summary, we are not persuaded by Mr Nicholls that any error of law is shown in the ET’s approach to costs.  The ET was careful not to take a retrospective view of the Claimant’s case, save insofar as their primary findings of fact were based on the whole of the evidence which they heard and those findings permissibly informed their judgment as to whether in part although not in whole, the bringing and conducting of these proceedings was unreasonable.  Based on those findings, an award of 75 per cent costs was a permissible conclusion, bearing in mind what they had heard (and not heard) from the Claimant about his means.  It is not for us to tinker with such an apportionment: see Yerrakalva, para. 49, per Mummery LJ.

Disposal
20.	It follows that this appeal fails and is dismissed.