Mark Shulman, Consultant Solicitor at Keystone Law

COSTS
Withdrawal of claims
Did a Claimant act unreasonably in withdrawing his claims of constructive dismissal, disability discrimination, race discrimination and unlawful deductions of wages only one day before a PHR? No, said the EAT in [National Oilwell Varco (UK) Ltd v Van de Ruit ]()UKEATS/0006/14/JW.

The ET1 was lodged on 28 February 2013. A CMD was held on 29 April, and a PHR was fixed for 19 June to consider the issue of time bar and the Claimant's status regarding disability. On 18 June the Claimant's solicitors intimated by e-mail that the Claimant wished to withdraw his claim. They stated:

"This is not the course of action our client wished to take. However after receiving two letters from the Respondent's solicitor threatening to seek an award of expenses against our client…our client has weighed up his options and decided that, although this is a remote risk due to the fact that he did not raise these proceedings in a vexatious, abusive, disruptive or otherwise unreasonable manner for the sake of his own health and family life, he will withdraw his claim."

The employer argued that the Claimant's conduct had been unreasonable and sought an order for costs. However, the EJ refused to make such an award against the Claimant and the employer appealed that refusal.

The EAT (sitting in Scotland) referred to the fact that unlike cases in the courts, expenses are broadly speaking not ordered by ETs in favour of the successful party. There is a balance to be struck between people taking a "cold, hard look" at a case very close to the time when it is to be litigated and withdrawing, on the one side of the scale and on the other side of the scale, those who raise a "speculative action", keeping it going and hoping that they will get an offer of settlement.

The EAT dismissed the employer's appeal.

Under Rule 40 of Schedule 1 to the Employment Tribunals (Constitution & Rules of Procedure Regulations 2004 (now Rule 76 in Schedule 1 to The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013), there was a two-stage test. First, it was for the EJ to see whether there was unreasonable conduct (such word to be construed its normal English construction and not taking colour from the words which appear before it in the Rule (i.e. where a litigant has acted "vexatiously, abusively, disruptively")). Second, if there was unreasonable conduct, the EJ should then decide whether, even if there has been unreasonable conduct, it was appropriate to make a costs order. The Rules were looking at overall behaviour and so it might be possible that there was one piece of behaviour which was in itself unreasonable, but overall the behaviour was not unreasonable.

The EJ had taken into account various matters as to why the Claimant had withdrawn, including that continuing with the claims could:

* possibly prejudice the Claimant's new employment; * impact on his family; * risk an award of expenses against him were he to be unsuccessful.

It seemed to the EAT that those were all matters that it was reasonable for a person to take into account when considering whether or not to go ahead with litigation. Whilst the EAT agreed with the EJ's view that these were valid and understandable reasons for withdrawal, it shared his concern at the lateness of that withdrawal, but found that the EJ's view was one he was entitled to come to.

EAT costs
Has the introduction of EAT fees changed the landscape so that the general expectation must now be that a successful appellant will be entitled to recover the Appeal Tribunal fees paid? Yes, said the EAT in [Horizon Security Services Ltd v Ndeze and The PCS Group ]()UKEAT/0071/14/JOJ.

Horizon had applied for an award of costs against PCS in the sum of £1,600, to represent the fees it had paid in pursuit of its appeal, limited to the fees that it had to incur when lodging its appeal (£400) and when the matter was listed for a full hearing of the appeal (£1,200).

That application was made under Rule 34A(2A) of the Employment Appeal Tribunal Rules 1993 (as amended), which provides that:

"If the Appeal Tribunal allows an appeal, in full or in part, it may make a costs order against the respondent specifying the respondent pay to the appellant an amount no greater than any fee paid by the appellant under a notice issued by the Lord Chancellor."

Horizon placed reliance on the EAT authority of [Portnykh v Nomura International Plc ]()UKEAT/0448/13/LA in which His Honour Judge Hand QC had awarded the successful Appellant his fees as costs on the general principle that:

"... subject to specific exceptions arising from the particular circumstances, ... where a party had succeeded, the unsuccessful party, after consideration of, and subject to, the means of the paying party to make such a payment, should pay the fees incurred by the successful party."

Horizon also noted support for that statement of general principle in the Judgment of Moses LJ (sitting in the High Court) in R (on the application of Unison) v Lord Chancellor [2014] IRLR 266, where it was observed, (albeit strictly in respect of fees in ETs), as follows:

"At the time these proceedings were launched there was no stated presumption that an employer would pay the costs of the issue of the proceedings or the hearing fee, in the event that a claimant was successful… By the time of the adjourned hearing the Government had, however, relented, and has amended [its] Guidance to say 'the general position is that, if you are successful, the respondent will be ordered to reimburse you."

The EAT pointed out that the introduction of fees in the Employment Appeal Tribunal in 2013 was a very significant change. It introduced for the first time a requirement that an Appellant must (unless they were entitled to fee remission) pay a fee to bring an appeal and an additional fee for that appeal to go to a full hearing. If successful, the Appellant might well feel aggrieved at having had to pay for the correction of an error of law on the part of the ET. That sense of grievance might be all the greater if the appeal had been resisted by the other party, which had not had to pay any fee to respond to or be heard on the appeal.

Although it remained the case that the EAT is generally a "no-costs" jurisdiction, the EAT has the power to award costs in particular circumstances, including as set out in Rule 34A of the EAT Rules 1993. That Rule was specifically amended to take account of the introduction of fees (see Rule 34A(2A)), which was now expressly identified as a potentially relevant consideration for the exercise of the EAT's discretion to make a costs order. There is no requirement that the thresholds laid down under Rule 34A(1) need to have been crossed by the Respondent before such an award is made (i.e. where it appears to the EAT that the proceedings were unnecessary, improper, vexatious or misconceived or that there was unreasonable delay or other unreasonable conduct).

The jurisdiction in Rule 34A(2A) was quite separate from the discretion afforded to the EAT to award costs under Rule 34A(1).

The introduction of Tribunal fees had changed the landscape. However, that statement of general principle might need to be tempered to take account of the particular facts of an appeal. The issue may not be so clear-cut where, for example:

* the Appellant has only been partly successful; or * where it was inappropriate or unjust to make such an award because the Respondent's means were such that they could not pay the sums in question.

The EAT retained a broad discretion in such matters. In the present case, there was no doubt that Horizon achieved substantial success on its appeal. The application was made solely against PCS, which had sought to resist the appeal on all grounds.

Therefore, in the circumstances the EAT ordered PCS to pay the costs in the sum of £1,600 to Horizon.

Costs orders - reasons
Does an ET need to provide reasons for making a costs order? Yes, said the EAT in [Geere v Worcester Citizens Advice Bureau & Whabac & Ors ]()UKEAT/0114/13/RN.

The Claimant brought claims to the ET and requested that a panel of 3 be present at a PHR. His request was granted but due to an administrative error, the hearing was listed for a Tribunal comprising only a legally qualified Employment Judge. The EJ struck out and dismissed all of the claims against the CAB and the other Respondents and also made a costs order against the Claimant to pay costs totalling £16,800 to 6 of the Respondents, (£2,800 per case)  and in respect of other Respondents, costs in the sum of £7,500 plus VAT.

The Claimant appealed arguing that it was a fundamental error to have the case decided by a Tribunal other than one comprising three persons. Further he argued that the reasons were insufficient to explain the costs decisions made.

In relation to costs, the Claimant argued that in relation to his financial means, the EJ was not accepting that they were meagre because if he had accepted that contention, he would simply have said "I find that his means are meagre", or he would say, "His means are meagre", whereas he had actually recorded that the Claimant's means "were said to be meagre", thereby indicating that he did not quite believe it. The Claimant's counsel argued that there was no basis for the EJ not to believe it, because the written submissions that had been put in by the Claimant did say that his income and any capital was very meagre and there was no reason for the EJ to doubt what was said.

Secondly, the EJ had stated in his decision that "I have regard to his circumstances - but they do not in themselves justify not making an order". The Claimant submitted that there was nothing in that sentence to tell the disappointed litigant why he had lost, because it did not say what circumstances the EJ had had regard to and it did not say what the EJ thought about any circumstances that he had considered. It was said that these reasons were not sufficient after an important decision had been made, to tell the losing litigant why he had lost and therefore that failure amounted to an error of law.

Thirdly, the Claimant referred to the fact that the various claims had been consolidated because they were principally about the same thing. Although there were various different Respondents who were said to have done different things, the claims were basically about the same thing (the CAB and associated private individuals connected with the CAB) and, so it was argued, the amount of work to be done was not as it would be if there had been six entirely different claims. The EJ had not given reasons why he thought that each costs claim should come up to a figure of £2,800 per Respondent. Further, in connection with the costs awarded in respect of some other Respondents, the order simply did not make sense because the EJ had awarded more than those Respondents had sought.

The Claimant argued that for these reasons, the judgment could not stand, because it did not comply with the test for providing reasons as set out in the case of Meek v City of Birmingham District Council [1987] IRLR 250 for reasons; nor did the judgment make sense when looked at in detail.

The Respondents argued that enough had been said by the EJ to make it perfectly plain why he had made the order that he had made. Further, the EJ was not obliged to consider the means of the payer of any costs order, although he could consider that if he so wished when deciding on the amount. Even though a Schedule of Costs had not gone out which it should have done so as to enable the Claimant to make representations on costs, this had made no difference because the Claimant's position was that he was unable to read things because of his health.

The EAT upheld the Claimant's argument that the reasons given by the EJ in relation to costs were not sufficient to comply with the test set out in the case of Meek. Therefore the EJ's decision needed to be reconsidered.

However, the EAT took the opportunity to explain that whilst its decision was "because of a fundamental legal difficulty with procedure" it may nevertheless "…be helpful to [the Claimant] if he thinks as carefully as he can and if he considers taking advice on matters", when considering the ultimate prospects of success of his claims.

CPR costs
CPR 44.2(8) (which came into effect in April last year with other changes to the costs regime in the civil courts) provides that:

"Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so" (emphasis added).

Therefore, there is now an assumption that an interim payment in respect of costs will be ordered, rather than the previous provisions which enabled the court to decide, as a matter of discretion, whether to order such a payment to be made at all.

In [Crossland v OCS Group UK Limited & A]()nor [2014] EWCA Civ 678 the Court of Appeal decided that there was no "good reason" preventing an Order being made.

The Claimant, Mr Crossland, brought claims of race discrimination against two Respondents. The claim was thought by the ET to have little prospect of success and the Claimant was ordered to pay a deposit of £250 if his claims were to go ahead.

Mr Crossland deliberately did not pay on the basis that he was concerned that, if he paid it and then lost his case at the full hearing, he might be at risk of being made to pay the costs of the proceedings on the basis that he had unsuccessfully pursued a claim that had little reasonable prospect of success. He did not appeal the strike out order, but instead chose to follow what the Court considered "might be regarded as the high risk strategy" of allowing the strike out to take place and to embark instead on an appellate challenge to the making of the deposit order.

At the Court of Appeal, the Respondents asked for orders providing for the dismissal of the appeal, the payment by Mr Crossland of their costs (to be the subject of a detailed assessment if not agreed) and for Mr Crossland to make a payment on account of costs of £3,000. Mr Crossland's case was that the question of costs should be deferred for determination by the EJ at the final hearing of his claims. He also contended that such a course would be appropriate because he currently had no money with which to pay any costs.

The Court was of the view that there was no justification for referring the question of costs to the tribunal. Mr Crossland's appeal raised a discrete issue as to the correctness or otherwise of the making by the EJ of an order that Mr Crossland pay a deposit of £250 as a condition of being allowed to continue his disability discrimination claim against the Respondents. The starting point in the exercise of the Court's  discretion as to what costs order to make was that the loser should pay and although that was not necessarily the finishing point, the Court could see no reason why Mr Crossland as the losing Appellant, should not pay the successful Respondents' costs.

And that is what the Court ordered, together with a direction for Mr Crossland to make a payment of £3,000 on account of those costs. The making of such an order was described by the Court as "usual" and there was no good reason not to make such an order in the present case.
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**Summary of key points
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National Oilwell Varco (UK) Ltd v Van de Ruit UKEATS/0006/14/JW

* when considering costs on withdrawal, a balance is to be struck between people taking a "cold, hard look" at a case very close to the time when it is to be litigated and withdrawing, on the one side of the scale and on the other side of the scale, those who raise a "speculative action", keeping it going and hoping that they will get an offer of settlement.

Horizon Security Services Ltd v Ndeze and The PCS Group UKEAT/0071/14/JOJ

* the introduction of EAT fees had changed the costs landscape so that the general expectation must now be that a successful appellant will be entitled to recover the EAT fees paid.

Geere v Worcester Citizens Advice Bureau & Whabac & Ors UKEAT/0114/13/RN

* costs orders need to comply with the test for providing reasons as set out in the case of Meek v City of Birmingham District Council [1987] IRLR 250.

Crossland v OCS Group UK Limited & Anor [2014] EWCA Civ 678

* Where the court orders a party to pay costs subject to detailed assessment under the CPR, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so (CPR 44.2(8)).

Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator. His blog on new employment legislation can be found here.