The claimant worked with the respondent for several months as a replacement for another colleague who was on maternity leave. After she left, she brought claims of sex discrimination and victimisation against the respondent employer and another worker. The ET decided that all of her complaints were untrue; whilst the claimant had not deliberately lied her perception of reality was damaged and wholly unreliable. The ET subsequently ordered her to pay the respondent's costs, principally on the basis that the claims were misconceived. The claimant appealed.

The EAT dismissed the appeal concluding that 1) the ET were entitled in the exercise of their costs discretion to take into account the claimant's mental health and her refusal or failure to seek medical help; there was no breach of Article 8; the material had been put before the ET by the Claimant; 2) the ET were entitled to take into account the fact that the claimant had not put forward a grievance. Section 207A of the 1992 Act related to a wholly different situation and did not constitute the only circumstances in which failure to put forward a grievance could be relevant; 3) the fact that the ET had concluded that the claimant had not deliberately lied did not prevent the ET from considering that the claim had no reasonable prospect of success or that the claim had been reasonably brought and pursued.

________________

Appeal No. UKEAT/0523/11/MAA

EMPLOYMENT APPEAL TRIBUNAL

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

At the Tribunal

On 19 March 2012

Before

HIS HONOUR JEFFREY BURKE QC, MR D J JENKINS OBE, MR J MALLENDER

MS L BORAS TOPIC (APPELLANT)

HOLLYLAND PITTA BAKERY & OTHERS (RESPONDENTS)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant
MS G HIRSCH (of Counsel)

Instructed by:
Messrs Russell Jones & Walker
50-52 Chancery Lane
London
WC2A 1HL

For the Respondents
MR D CRAIG (of Counsel)

Instructed by:
Kingsley Napley Ltd
Knights Quarter
14 St John's Lane
London
EC1M 4AJ

**SUMMARY**

PRACTICE AND PROCEDURE – Costs

The Claimant claimed direct sex discrimination and victimisation against her employers. The Employment Tribunal decided that all of her complaints were untrue. They subsequently ordered her to pay the Respondent's costs, principally on the basis that the claim was misconceived i.e. had no reasonable prospect of success. They had concluded that the Claimant had not deliberately lied but that, for whatever reason, her perception of reality was damaged and wholly unreliable.

**Held**: on the Claimant's appeal against the award of costs

(1) The ET were entitled in the exercise of their costs discretion to take into account her mental health and her refusal or failure to seek medical help; there was no breach of Article 8; the material had been put before the ET by the Claimant.

(2) The ET were entitled to take into account the fact that the Claimant had not put forward a grievance. Section 207A of the 1992 Act related to a wholly different situation and did not constitute the only circumstances in which failure to put forward a grievance could be relevant.

(3) The fact that the ET had concluded that the Claimant had not deliberately lied did not prevent the ET from considering that the claim had no reasonable prospect of success or that the claim had been reasonably brought and pursued.

**HIS HONOUR JEFFREY BURKE QC****Introduction**

1. This is an appeal by the Claimant, Ms Boras Topic, against the Judgment of the Employment Tribunal sitting at Watford, presided over by Employment Judge Liddington, sent to the parties with reasons on 9 August 2011. By that Judgment the Claimant was ordered to pay the costs of the first Respondent to her claim, Hollyland Pitta Bakery Ltd, in an amount to be determined by way of detailed assessment in the County Court. The Respondents were the Claimant's erstwhile employers and one of their managers, Mr Agathangelou. The Claimant was employed by the first Respondent at their bakery in North London from 1 February 2010 for a fixed term to June of that year, in order to provide cover for the accounts manager who was taking maternity leave over that period. Her employment came to an end when the accounts manager returned. Some two months later she presented to the Tribunal claims that, during her four months with the first Respondent, she had been the victim of direct sex discrimination by the first and second Respondents, harassment by the second Respondent and victimisation by both Respondents; and she also put forward a claim for unpaid accrued holiday pay.

**The Employment Tribunal**

1. After interlocutory hearings, which were to a substantial extent concerned with the identification of the precise acts relied upon by the Claimant, the Employment Tribunal heard the evidence of all parties over three days in February 2011 and sent their Judgment on liability to the parties on 25 February. The Employment Tribunal dismissed all the Claimant's claims. There were eight acts which, through the interlocutory process, had been identified. They were alleged to have occurred between 6 and 25 May 2010. They included allegations against the second Respondent that he had, on one occasion, made highly suggestive remarks to the Claimant and asked personal questions of her, that he had on another occasion approached her physically and made movements towards her which simulated the sexual act, that he had continued to harass her thereafter and that he had falsely accused her of accepting a forged £20 note. The Employment Tribunal found that all of the Claimant's complaints were untrue. At paragraph 14 of their liability Judgment the Tribunal said this:

"It gives the tribunal no pleasure to state that in all instances where there was a dispute in facts, the tribunal, without hesitation, preferred the evidence of the respondent's witnesses, who appeared to the tribunal to be honest and who gave cogent and coherent evidence. The claimant's evidence was, quite simply, unbelievable. It was neither consistent, in itself, nor did it reflect the contents of any of the documentation. For whatever reason, and this is not a matter upon which the tribunal would care to speculate, the claimant's perception of reality, sincerely held as it might be, is damaged and, as a result, utterly unreliable. Whilst the tribunal has sympathy for the claimant, it has also been aware of the extreme difficulties her conduct has caused to the respondent, both during and since her employment, and in particular to the second respondent and, indeed, to Mr Charalambous. Both of these individuals have behaved at all times in an appropriate way towards the claimant and the tribunal can find no evidence of any of the acts of victimisation or harassment which the claimant claims to have suffered."

1. At paragraph 15(9), referring to the alleged movements of simulated sex, the Tribunal said:

"The fact is that, like the CCTV cameras, this entire incident is a pure figment of the claimant's imagination. It simply did not happen. It should be noted that the evidence of all the respondent's witnesses and the photographs which were submitted, are clear: there were no CCTV cameras in the claimant's office nor in the corridor. Indeed, even upon questioning, the claimant could not say where any such cameras were, although during evidence she had said that certain people were positioned in a certain way to avoid the cameras. If she did not know where the cameras were, how could she know that their positioning was in order to avoid the cameras? Typically, and unfortunately, the claimant's evidence simply made no sense and has no rational basis."

1. At paragraph 15(17) the Tribunal said:

"Without going into unnecessary detail, in all of these incidents the claimant was not even criticised, let alone harassed or victimised as a result of these incidents she received no warning of any sort."

1. At paragraphs 15(10) and (13) the Tribunal referred to the fact that the Claimant had been unwilling to give any details of what had supposedly happened to her when asked about it. At paragraph 15(10) the Tribunal described how, when asked by Mr Agathangelou what he had done wrong, the Claimant simply said, "You know what I mean", and refused to give any details; and the Tribunal, at paragraph 15(13), made similar comments about a subsequent incident and said this:

"The Tribunal notes again that the email is remarkable for the lack of detail of any incident which could have been so serious as to result in the claimant having to attend the emergency room at the hospital. It is simply not credible that any victim of such alleged serious discrimination would not be prepared to give details or indeed at the very least to raise the matter formally."

**The costs decision**

1. In the light of that Judgment an application was made by the Respondents for an order for costs against the Claimant on the basis that she had acted unreasonably in bringing or conducting the proceedings, or that the bringing or conducting of the proceedings by the Claimant had been misconceived. That application was heard on 17 May 2011. The Claimant, although she had been represented in the run up to the liability hearing by solicitors, had represented herself at that hearing; and the Respondents were at that hearing represented by Mr David Craig of counsel. At the costs hearing the Claimant was represented by a Law Centre representative, and the Respondents by a solicitor. Today the Claimant has been represented by Ms Hirsch of counsel, and the Respondents, again, by Mr Craig. We are grateful to both counsel for their helpful submissions.

1. At the costs hearing the Respondents put forward a schedule of costs which totalled £64,936, and asked for an order that the Claimant should pay costs to be assessed by the County Court or, if appropriate, to pay costs up to the Employment Tribunal's maximum of £10,000. The Tribunal's conclusions were contained in paragraph 18 of their costs Judgment in these terms:

"18. Having carefully considered the arguments from both parties and taking into account the claimant's ability to pay, the Tribunal concludes as follows:

18.1. The Claimant's bringing of her complaints of sex discrimination was misconceived in that there was a total lack of evidence to support those allegations and hence no prospect of success. There were no witnesses (which is not in itself unusual in such cases) and no supporting documentation of any sort which could have allowed the tribunal to infer a case of sex discrimination (even in contemporaneous documents the claimant refused to specify what exactly it was that Mr Agathangelou had done which caused her to feel that she was being sexually harassed by him. Nor did the claimant raise a grievance or even attend meetings to discuss these issues when invited to do so. The allegations were quite simply untrue, not because the tribunal felt that the claimant was deliberately lying, but because for whatever reason (and the tribunal suspected that the claimant suffers from some sort of mental impairment), she believed things which on any objective basis had no foundation in reality. We had evidence that the claimant was under a doctors' care [sic] although in addition to the medication prescribed by her GP, the claimant was also self medicating with medication she obtained abroad. She had refused to undergo the counselling recommended by her doctor. In addition, she had made similar allegations of sexual harassment against two previous employers.

18.2. The Tribunal also finds that the claimant's conduct of the case was unreasonable in that the further and better Particulars, which were not contained in the ET1 and which were drafted by the claimant's then solicitors on her instructions, inevitably increased the respondent's costs in preparing, or at least considering, rebuttal evidence. The further amended particulars and the Application to Amend shortly before the Hearing left the respondent in the position of having to decide whether it needed to respond to all those allegations or whether it could be confident that that Application would be rejected and the evidence therefore limited to the eight issues which had been identified at the Case Management Discussion. It is not unreasonable, given the serious allegations being levelled against the company itself and virtually everyone who worked in it, specifically but not only Mr Agathangelou, that the company chose to adopt what has been described as a 'belt and braces' approach, which inevitably increased costs. The Tribunal has had regard to the claimant's ability to pay and notes that she owns two properties one of which produces a rental income."

1. The Tribunal had, at paragraphs 15 17, directed themselves as to the statutory provisions which related to costs orders in a manner not said to have been in error. In particular, they directed themselves, at paragraph 16, to rule 40(3) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 Schedule 1, which provides as follows:

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

1. In considering the jurisdiction to award costs where the bringing or conducting of the proceedings by the paying party has been misconceived a Tribunal has to bear in mind that rule 2 of the 2004 Regulations (what in a statute would be called "the definition section") expressly provides that the word "misconceived" includes "having no reasonable prospect of success"; and it is clear from what the Tribunal said in paragraph 18 that they had that in mind. The Tribunal concluded, in brief, that the bringing of the claim was misconceived and ordered the Claimant to pay the Respondents' costs, to be assessed by the County Court. They also found, as an alternative to those findings, as it were, that the Claimant's conduct of the case had been unreasonable in that the Further and Better Particulars, which were provided in circumstances set out in detail in the liability Judgment, and the subsequent production of amended Particulars in an application to amend shortly before the hearing had caused costs which had been unreasonably incurred.

**The grounds of appeal**

1. Ms Hirsch, in the Notice of Appeal, puts forward three grounds of appeal, which we can summarise in this way, although they were, perhaps to a degree, and we say this in no critical spirit, subject to some mutation during the course of argument:

(1) The Employment Tribunal, in deciding that the complaints were misconceived, took into account two irrelevant factors, those being (a) that the Claimant was under medical care and had refused to undergo counselling as recommended by her doctor, and (b) she had not raised a grievance.

(2) The Employment Tribunal erred in law in finding the claim to have been misconceived on the basis that there was no evidence to support the Claimant's case, when she had herself given evidence which had been found to be incorrect but not deliberately mendacious.

(3) The Tribunal failed to consider the narrow limits imposed on them by their jurisdiction to award costs by authority, failed to take into account sufficiently or at all their own conclusions as to the Claimant's mental health and the fact that she was not found to be a liar, and, further, as to paragraph 18.2, had awarded costs under the unreasonable head in relation to a period when the Claimant was unrepresented and not in receipt of legal advice.

**General principles**

1. Before we turn to those grounds of appeal specifically, it is necessary to say something about general principles in response to the submissions made by the parties. We start, in considering general principles in so far as they are relevant to this appeal, with the most recent authority in that area, [Barnsley Metropolitan Borough Council v Yerrakalva]() [2012] IRLR 78, in which the claimant's multiple claims had been serially withdrawn by her, culminating in a final dismissal of her claims upon withdrawal after a three day Pre Hearing Review which was never completed. The Employment Tribunal ordered the claimant to pay the respondent's costs throughout, to be determined by assessment. The Employment Tribunal found that the claimant had been unreasonable in her conduct of the case and had told lies and that she should pay the costs to which we have just referred; but they were also critical in some respects of the respondent's conduct. The Employment Appeal Tribunal allowed the claimant's appeal and set aside the costs order in its entirety. The Court of Appeal allowed the respondent's further appeal and concluded that the Claimant should pay 50 per cent of the respondent's costs. The individual facts of the case are not relevant, but there are in the judgment of Mummery LJ, with whom Patten LJ and Sir Henry Brooke agreed, important statements of principle both about the approach of an Employment Tribunal to costs applications and to appeals against costs decisions. As to the former, Mummery LJ said this at paragraphs 39 42:

"39. I begin with some words of caution, first about the citation and value of authorities on costs questions and, secondly, about the dangers of adopting an over-analytical approach to the exercise of a broad discretion.

40. The actual words of Rule 40 are clear enough to be applied without the need to add layers of interpretation, which may themselves be open to differing interpretations. Unfortunately, the leading judgment in McPherson [ v BNP Paribas [2004] ICR 1398] delivered by me has created some confusion in the ET, EAT and in this court. I say 'unfortunately' because it was never my intention to re-write the rule, or to add a gloss to it, either by disregarding questions of causation or by requiring the ET to dissect a case in detail and compartmentalise the relevant conduct under separate headings, such as 'nature' 'gravity' and 'effect.' Perhaps I should have said less and simply kept to the actual words of the rule.**

41. The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by the claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had. The main thrust of the passages cited above from my judgment in McPherson was to reject as erroneous the submission to the court that, in deciding whether to make a costs order, the ET had to determine whether or not there was a precise causal link between the unreasonable conduct in question and the specific costs being claimed. In rejecting that submission I had no intention of giving birth to erroneous notions, such as that causation was irrelevant or that the circumstances had to be separated into sections and each section to be analysed separately so as to lose sight of the totality of the relevant circumstances.

42. On matters of discretion an earlier case only stands as authority for what are, or what are not, the principles governing the discretion and serving only as a broad steer on the factors covered by the paramount principle of relevance. A costs decision in one case will not in most cases pre-determine the outcome of a costs application in another case: the facts of the cases will be different, as will be the interaction of the relevant factors with one another and the varying weight to be attached to them."

1. He went on to hold that the Employment Tribunal had erred in that, having made a decision which they were entitled to make in finding the claimant to have acted unreasonably, they had failed to factor into their judgment or their discretion the significant criticisms of the respondent. We will return later to paragraph 41 and the important statement that, in exercising a discretion to order costs, the Tribunal must look at the whole picture of what has happened.

1. As to the appellate function Mummery LJ, at paragraphs 5 9, said this:

"5. This is the third round of legal argument about the Council's costs in the ET. The parties were, of course, perfectly entitled to exercise their statutory right of appeal; but, as both sides appreciate, a decision to dispute the exercise of the ET's discretion and to run up even more costs should only be taken after careful thought.

6. The tribunals below did not agree about the exercise of the discretion. That is not surprising. A familiar feature of all litigation is that experienced judges may sensibly differ on how, in the particular circumstances of the individual case, a costs discretion should be exercised. Parties and prudent advisers should take account of that factor when considering whether a costs order is worth appealing.

7. As costs are in the discretion of the ET, appeals on costs alone rarely succeed in the EAT or in this court. The ET's power to order costs is more sparingly exercised and is more circumscribed by the ET's rules than that of the ordinary courts. There the general rule is that costs follow the event and the unsuccessful litigant normally has to foot the legal bill for the litigation. In the ET costs orders are the exception rather than the rule. In most cases the ET does not make any order for costs. If it does, it must act within rules that expressly confine the ET's power to specified circumstances, notably unreasonableness in the bringing or conduct of the proceedings. The ET manages, hears and decides the case and is normally the best judge of how to exercise its discretion.

8. There is therefore a strong, soundly based disinclination in the appellate tribunals and courts to upset any exercise of discretion at first instance. In this court permission is rarely given to appeal against costs orders. I have noticed a recent tendency to seek permission more frequently. That trend is probably a consequence of the comparatively large amounts of legal costs now incurred in the ETs.

9. An appeal against a costs order is doomed to failure, unless it is established that the order is vitiated by an error of legal principle, or that the order was not based on the relevant circumstances. An appeal will succeed if the order was obviously wrong. As a general rule it is recognised that a first instance decision-maker is better placed than an appellate body to make a balanced assessment of the interaction of the range of factors affecting the court's discretion. This is especially so when the power to order costs is expressly dependent on the unreasonable bringing or conduct of the proceedings. The ET spends more time overseeing the progress of the case through its preparatory stages and trying it than an appellate body will ever spend on an appeal limited to errors of law. The ET is familiar with the unfolding of the case over time. It has good opportunities for gaining insight into how those involved are conducting the proceedings. An appellate body's concern is principally with particular points of legal or procedural error in tribunal proceedings, which do not require immersion in all the details that may relate to the conduct of the parties."

1. Until that recent decision, the principal authority as to matters of principle was perhaps McPherson. That was also a case in which the claimant had withdrawn his claims and had been ordered to pay costs. The Court of Appeal held that it was not necessary for it to be proved that the particular acts of unreasonableness which they found to exist caused particular items of cost; it was the way in which that decision should be applied that Mummery LJ clarified in paragraphs 41 and 42 of his Judgment in Yerrakalva, which we have earlier set out. It is important to remember, though, that both McPherson and Yerrakalva were decisions on whether costs should be ordered on the basis that the claimant had behaved unreasonably and not decisions on whether the bringing or conducting of proceedings was misconceived, although there is nothing to suggest, and we certainly do not suggest, that the general principles that those two decisions that the Court of Appeal set out do not apply equally to both.

1. While other decisions are referred to in the parties' skeletons, we have not been referred to most of them, and it is not necessary for us to go further in relation to the general principles upon the basis of which we must approach this appeal and which also provided guidance to the Employment Tribunal below. We turn therefore to the individual heads of appeal.

**Irrelevant matters**

1. The rival submissions can be briefly stated. As to the Claimant's medical circumstances, Ms Hirsch submits that the Claimant's lack of treatment history was a private matter which should not have been taken into account by the Tribunal when considering a costs order; they were matters as to which privacy was protected by Article 8 of Schedule 1 to the Human Rights Act 1998, embodying within domestic law the ECHR right to respect for private and family life. As to the Claimant's failure to pursue a grievance process, Ms Hirsch submits that, if there had been a compensation award made to the Claimant, the Tribunal, pursuant to section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992, as amended, could have deducted up to 25 per cent from such award for that failure, that being the statutorily provided potential repercussion of a failure on the part of a Claimant to comply with the ACAS Code; the Claimant should not be punished for such failure in another way, for example in the guise of a costs award.

1. In the course of her submissions Ms Hirsch has added a further development of these points, which amounts to what was the central thrust of her argument - that the Tribunal had failed to take into account the Claimant's impaired mental ability in reaching the conclusion that they did. We intend to address the arguments as to the Claimant's mental state first. It is necessary to say that there was very little material available to the Employment Tribunal. The Claimant herself, we are told, does not accept that she has any mental health problem; and at the costs hearing the only submission put before the Tribunal as to that was by way of reliance upon what the Tribunal had said at paragraph 14 of their liability Judgment, which we have set out earlier, but for these purposes we can repeat, namely, these words:

"For whatever reason, and this is not a matter upon which the tribunal would care to speculate, the claimant's perception of reality, sincerely held as it might be, is damaged and, as a result, utterly unreliable."

1. However, the Tribunal had seen and heard the Claimant's and the Respondents' evidence and were able from that to say in their costs Judgment what they said at paragraph 18.1: that although the allegations were untrue, that was because the Tribunal felt that the Claimant was not deliberately lying but for some other reason - and they suspected some form of mental impairment but did not find it; for they could not find it without much more evidence - she believed things which on any objective basis had no foundation in reality. There was, during the course of argument before us, discussion as to whether consideration of the Claimant's problems of the type we have just been referring to was relevant to the Employment Tribunal's determination as to whether the bringing or continuation of proceedings by the Claimant had been misconceived. Mr Craig submitted that, particularly because the words of rule 2 provide that "misconceived" includes having no reasonable prospect of success so that the absence of such prospects was sufficient for, although not necessary to, there being a finding that the bringing or conducting of the proceedings was misconceived, subjective matters such as the Claimant's intent or her state of health were irrelevant and that a wholly objective test needed to be applied. Of course, matters such as intention and mental health, if they arose, had to be considered by the Tribunal; but they were factors in the Tribunal's exercise of discretion rather than in their consideration of whether it was proved that the bringing or conducting of proceedings was misconceived.

1. After some debate Ms Hirsch conceded that this was the correct analysis; and we therefore adopt it for the purpose of this appeal, although we should not be taken to be setting out a general statement of law. In the case of [HCA International v May Bheemul]() UKEAT/0477/10, judgment given on 23 March 2011, Cox J presiding, the EAT, at paragraphs 60 and 61, said in relation to consideration of a costs order on the basis of unreasonableness, that the fact that the Claimant had a genuine belief in her allegations and that she was unwell was a factor to be taken into account in the exercise of discretion. However, at whatever stage of the task which confronted the Employment Tribunal in considering the Respondents' application for costs in this case the Claimant's mental state came to be considered, in our judgment it plainly was considered by the Tribunal, who devoted much of paragraph 18.1 of their Judgment to that topic. It having been agreed before us that the Claimant's mental state was a matter for the Tribunal's discretion, the weight given to that factor was a matter for the Tribunal. It is not argued that the Tribunal, in considering that factor, came to a perverse conclusion.

1. The second criticism advanced under ground 1 is the perhaps contradictory criticism that the Tribunal ought not to have considered against the Claimant the fact that her mental state was as they described and that she had refused to undergo counselling as advised by her doctor because, as we have already said, these were private matters, on the basis set out above. We are told that the evidence as to these matters was given by the Claimant without protest or without any invocation of Article 8, whether as incorporated into the law of this country or otherwise; and, in our judgment, once the material to which the Tribunal refer was before them, they were entitled to take it into consideration; and, indeed, had they not done so an argument that they had failed in their duty to consider the whole picture (an argument to which we will come soon), would not have been bound to fail. The evidence was put before the Tribunal without objection; and they were entitled to consider it. Whether they were, in the part of paragraph 18.1 of their Judgment in which they address it, being critical of the Claimant, as Ms Hirsch submits, or were explaining in her favour, as Mr Craig submits, why they believed that she was not deliberately lying or were just neutrally describing the facts, which is also a potential interpretation of paragraph 18.1, does not matter. The objection to this passage of the Tribunal's Judgment based on Article 8 cannot now be sustained.

1. We therefore turn to the third alleged irrelevance; and that is the absence of a grievance. The Claimant's submission here we have already described; it is based on section 207A of the 1992 Act. However, it is only open to a Tribunal to act against a Claimant under section 207A for failure to institute a grievance against her employers if the Claimant has won and been awarded compensation, at least in part. Costs are usually only claimed against a Claimant after a full hearing if that Claimant loses. If the Claimant has lost, section 207A has no relevance. The fact that Parliament has provided for a step to be taken contrary to the interests of a party when that party wins, by way of deduction from that party's compensation if it is regarded as appropriate to do so, in no way indicates that a Tribunal, in considering a costs order, cannot consider that a party has failed to comply with the ACAS Code, whether by instituting a grievance or otherwise. The Tribunal were, in our judgment, entitled to consider whether the Claimant had pursued a grievance as material to the question of whether there were ever reasonable prospects of success. They had in their liability Judgment referred to the Claimant's refusal to give details of her allegations and to her failure to raise those allegations formally with the Respondents as factors relevant to the Claimant's credibility. In making an objective assessment of the prospects of success or lack thereof, the Tribunal were, in our judgment, entitled to take into account both the Claimant's refusal to give details and the absence of the initiation of any grievance process.

**Ground 2**

1. The basis of Ms Hirsch's argument under this ground is that the Tribunal erred in law or made a perverse finding in concluding that there was a total lack of evidence to support the Claimant's allegations and hence no prospect of success and in failing to take into account the fact that she was found not to be lying. The Tribunal, it is argued, could not reasonably have expected the Claimant, bearing in mind the type of allegations which she was making, to have had any supporting evidence in relation to matters which, by their very nature, took place in circumstances of privacy and appear to have forgotten that the Claimant had given evidence herself, evidence which the Tribunal found or perhaps indicated that they felt was not mendacious.

1. In our judgment, the Claimant's argument involves a misunderstanding of what the Tribunal were saying in paragraph 18.1. The Tribunal should not be taken to have been saying that they would expect supporting evidence in a case such as this; indeed, they expressly said that the absence of witnesses to support the evidence of a Claimant in a case such as this was usual. The point which they were making, and were in our judgment entitled to make, was that there was no support for the Claimant's account, and that, without the benefit of that support, the prospects of success, whether such support was likely to be found or not, were less than there would have been if there had been such support. The absence of corroborative evidence did not, of course, lead inevitably to failure; and the Tribunal did not so suggest. There is no reason to suppose they had forgotten the Claimant's evidence: they made multiple findings about the Claimant's evidence. Had there been supporting evidence, that would have substantially enhanced the Claimant's prospects of success; the absence of any supporting evidence was, in our judgment, relevant to the statutory question which arose under rule 40(3) as to whether the bringing or conducting of the proceedings by the Claimant had been misconceived.

1. Ms Hirsch referred under this head too to the Tribunal's conclusions as to the Claimant's damaged perception of reality. Her submission was that, having so found, the Tribunal should not have concluded that a costs order should be made, especially on the basis of their express finding that there was no evidence to support the case and the Claimant had not told lies. However, Ms Hirsch accepted that, in reality, this ground of appeal amounted to a perversity argument. She suggested that, once the primary facts had been found by the Tribunal, the full rigour of the Court of Appeal's decision in Yeboah v Crofton [2002] IRLR 634, in which Mummery LJ said that, for a perversity argument to succeed, it must be shown overwhelmingly that there was perversity, did not apply; when asked whether there was an authority for that proposition, Ms Hirsch frankly told us that the answer was in the negative; and we do not accept her proposition. The Tribunal had to make a secondary conclusion of fact, namely whether the bringing or conducting of the proceedings by the paying party had been misconceived, based on their decision as to the primary facts; but their conclusion was one of fact; and they then had to exercise their discretion. In either case an allegation of perversity can only succeed if an overwhelming case is made out. The Tribunal gave reasons for their decision on both of those issues based on their findings of primary fact; and no perversity has been demonstrated.

**Ground 3**

1. Ground 3 comes in two tranches. First of all, ground 3, put generally, attacks principally the Tribunal's conclusions in paragraph 18.1 on the basis that the Tribunal failed to take into account the guidance of the Court of Appeal in McPherson, and now in Yerrakalva as well, that the power of an Employment Tribunal to make costs orders is not only more restricted than the power of the ordinary courts under the Civil Procedure Rules but it has for long been accepted that the costs regime in ordinary litigation does not fit the particular function and special procedures of Employment Tribunals. That submission cannot succeed, in the face of the fact that, at paragraph 14 of their costs Judgment, the Tribunal expressly said this: "The Tribunal is reminded that Cost Orders are relatively rare and remain the exception rather than the rule". Plainly the Tribunal had that guidance in mind.

1. The argument continues by reference to an EAT decision, Matthew v Daleside Nursing Home [2009] All ER (D) 99 that "where there is a clear cut finding that the central allegation of racial abuse is a lie, it would be perverse not to make a costs order"; in the case of May Bheemul, UKEAT/0477/10 a more nuanced approach to cases where the central allegation is not one of lying was taken; it was said that an award of costs did not automatically follow when a party fails to establish a central allegation in their case, whether by lying or otherwise.

1. What emerges, in our judgment, from the authorities to which we were taken is this: first that the fact that a claimant has based his or her claim on lies does not lead automatically to a finding either that the proceedings have been conducted unreasonably or that they have been commenced and conducted on the basis that they were misconceived; secondly, the fact that there have been no lies, equally, does not mean that there cannot be a finding that the proceedings have been brought or conducted unreasonably or as misconceived; and thirdly, it is a question in each case for the Tribunal, in making their findings within rule 40(3) of Schedule 1 to the 2004 Rules and in exercising their discretion, if they have found as a matter of fact that there has been unreasonableness in conducting the proceedings or that the bringing or conducting of the proceedings has been misconceived, to look at the whole picture, bearing in mind that costs are rarely awarded in the Employment Tribunal and that the ordinary common law principles under the CPR do not apply.

1. The Employment Tribunal in this case have not, in our judgment, been shown to have committed any error either in terms of reaching their findings of fact in paragraph 18.1 or in the exercise of their discretion. They took into account factors which it was open to them to take into account, did not take into account any factors that it was not open for them to take into account, and came to a permissible conclusion on the issue as to whether the proceedings had been commenced as misconceived and in the exercise of their discretion.

1. The second focus of ground 3 was limited to paragraph 18.2, the Tribunal's fallback position (which is one way, perhaps, of describing it). Here, Ms Hirsch submitted, the Tribunal should not have found the Claimant to have acted unreasonably at all at any stage or at least in relation to a period when she was not represented; at the time of the giving of the Further and Better Particulars she was represented, but thereafter she ceased to be represented and was not represented when the further amended Particulars and an application to amend were put forward. Mr Craig's response to this was threefold: first of all, this was not covered by the Notice of Appeal; secondly, without having had notice of these points he was not in a position to accept the facts that we have summarised; and thirdly, in any event there was no error of law.

1. As to the first point, we will assume in Ms Hirsch's favour, without finding, that the Notice of Appeal does, just about, cover this argument. Secondly, we will accept her account of the facts and of the history of what occurred. Thirdly, however, we are unhesitatingly of the view that no error of law is made out. This is, in reality, an attempt to re argue the facts. It was open to the Employment Tribunal to regard the Claimant as acting unreasonably both in the period when she was represented and in the period when she was not. They knew perfectly well when she was and was not represented; the history of what happened is set out to a substantial degree in the first part of their liability Judgment. Eight individual acts of discrimination, harassment and victimisation were eventually identified, yet thereafter the Claimant sought to add further allegations and to amend her claim only a few days before the liability hearing. The fact that the Claimant was unrepresented for part of the relevant period was not an answer to the allegation of unreasonable conduct and is not something which the Tribunal can be shown to have failed to have in mind. That being so, ground 3 in its second incarnation, in our judgment, cannot succeed.

**Conclusion**

1. For those reasons, this appeal fails and must be dismissed.