1. I would refer to the recent decisions of this Tribunal in the cases of [City of Edinburgh Council v Lauder]() UKEATS/0048/11/BI and [South Manchester Abbeyfield Society Ltd v Hopkins]() [2011] ICR 254 (handed down on 30 November 2010). Both appeal decisions confirmed that, put shortly, as had been determined by the Inner House in Scottbridge Construction Ltd v Wright [2003] IRLR 21 and the Court of Appeal in British Nursing Association v Inland Revenue [2003] ICR 19, in "on call" cases, the exceptions provided for in paragraphs 15(1A) and 16(1A) of the NMW Regulations 1999 apply so that workers are only to be treated as being on time or salaried hours work during such period(s) within the 'on call' period as they are actually "awake for the purpose of working".

1. On the face of the forms ET1, these claims were claims for payment of the NMW during periods when the Claimants were 'on call'; their claims appear to be on all fours with the 'on call' circumstances referred to in the above authorities. Accordingly, the issues that required to be addressed were (a) during what periods, if any, were they, when 'on call', actually awake for the purpose of working, and (b) whether, once any such periods were added to their normal hours, they had been paid at least the NMW?

1. Although the Working Time Regulations 1998 are referred to in the ET1's the Claimants' claims were, manifestly, not claims for any remedy that is available under those regulations, as Ms Forrest accepted was the case.

1. The Employment Judge considered that he was constrained by the wording of rule 38(2) so as to disable him from making any award of expenses because, the claims having been withdrawn, they had not been "determined". At paragraph 27, he stated:

"27. It appeared to me that taking the ordinary meaning of the word determine involves in the context of the Employment Tribunal proceedings the Tribunal (whether consisting of one or three members) making a decision which ends the case."

1. He added, at paragraph 33, that since the Respondents had not sought dismissal of the claims (as they could, under rule 25(4), have done), there had been no determination of the case. He said:

"Once the claim has been dismissed there has been a determination of the case and the terms of section 38(2) are met.…..Withdrawal does not conclusively end the case. A claimant has the right to raise proceedings again (subject to any time bar issues) unless the claim is being dismissed. That would clearly not be the case if withdrawal was seen as determining the case."

1. It was "with some regret" that he reached that conclusion.

1. The Employment Judge also provided his views as to whether or not, had the claim for an award of expenses been competent, it ought to have been acceded to and concluded that he would have refused it. His reasoning was that he could not, there having been no hearing, determine whether or not the spreadsheets were correct, that he had not seen the Claimants' contracts and

"36….it might well be that the claimants believed that a claim that sleepovers be treated as core working time night result in them being entitled to some additional contractual payment even if the spreadsheets were correct in showing that they had been paid over the national minimum wage when all hours worked (including sleepovers) were taken into account."

1. He then continued:

"37. On the basis of the information before me it was therefore not possible for me to come to any view as to whether the claimants would in fact have lost their claim had it gone to a hearing. There was evidence which, if accepted, would have defeated part of their claim. The part of the claim that alleged a failure to pay national minimum wage (whether categorised as unlawful deductions from wages or breach of contract) would have failed if this evidence had been accepted. I cannot really say anything about any other part of this breach of contract claim as I never saw any specification of it."

1. Further, the Employment Judge took the view that the Claimants and their solicitor had carried out as much checking as it was reasonable for them to prior to lodging their claims (paragraph 41). He considered that:

"40…it would not be appropriate to impose upon claimants an obligation to investigate the precise factual circumstances before lodging their claim when the time taken for them to carry out such an exercise amounts to longer than the 3 months within which they can lodge their claim."

1. That conclusion about the time to investigate the facts was based on the Respondent having intimated the spreadsheets on 18 May, which was more than four months after the claims were lodged. There are, however, no findings in fact as to how long it took the Respondents to prepare them and the Employment Judge does not refer to the fact that when the form ET3 was presented, within 28 days of the presentation of the forms ET1, they were in a position to positively assert that the Claimants had been paid more than the NMW, even if the Claimants were correct in their assertions as to the hours that they had worked. Indeed, simply carrying out a rough calculation on the basis of the salaries and hours averred in their forms ET1, the proposition that the Claimants were not paid the NMW seems questionable, particularly in the case of the Second Claimant, who was paid at a supervisory rate.

1. Further, at paragraph 41, the Employment Judge stated:

"41. In my view the claimants and their solicitor carried out as much checking as it was reasonable for them to do prior to lodging the claim."

1. He did not, however, make any findings in fact at all about the Claimants or their solicitor having carried out any checking prior to presenting their claims. With regard to that aspect of the claims that referred to the Claimants having a breach of contract claim, the Employment Judge accepted, at paragraph 36, that that claim was not specified by them. He dealt with that by stating that he had not seen their contracts of employment and that:

"….it might well be that the claimants' believed that a claim that sleepovers be treated as core working time might result in them being entitled to some additional contractual payment even if the spreadsheets were correct in showing that they had been paid over the national minimum wage amount when all hours worked (including sleepovers) were taken into account."

and adding, at paragraph 37, that it was "therefore not possible" for him to come to a view as to whether or not the Claimants would have lost their claim if it had gone to a hearing. That is, he seemed to be saying that whilst he could not tell from the forms ET1 or from any submission made to him, whether or not the Claimants had a reasonable claim for breach of contract, he could not rule that out and therefore the paucity of specification of that claim ought not to count against them when considering the claim for expenses.

1. Finally, judging by a subsequent reference to the Working Time Regulations (in paragraph 37) the Employment Judge seemed to think that the application of those regulations might affect the validity of the Claimants' claims. However, as above noted, their claims were not claims under those regulations. The Employment Judge does not appear to have appreciated that.

Submissions for the Respondents

1. Mr Cameron presented the Respondents' appeal in a clear and cogent submission that (a) the Employment Judge had erred in concluding that it was not competent to make an award of expenses because the claims were not dismissed, and (b) the Employment Judge had erred in concluding that the circumstances could not, in any event, justify an award being made; it was perverse to make that finding.

1. Regarding (a), he submitted that "determine" in rule 38(2) simply meant the end of the proceedings. The Employment Judge was wrong to have concluded that there needed to be a judicial decision. He was wrong to have concluded that proceedings could only be determined if there was a dismissal. That was not the plain meaning or import of the rules, as properly understood. He referred, in support of his submission to the reliance of this Tribunal on the case of Khan in Downing v McAllister UKEATS/0040/08 and to the case of Verdin. He also referred to Harvey at para 628 in section P1.

1. Regarding (b), having referred to the chronology as set out in the background section above, Mr Cameron submitted that it was plain that these claims were not properly pursued, that the Claimants' claims were unreasonable and that they were misconceived. It was unreasonable for claims which were plainly unmeritorious to have been pursued. It was not enough to point to the claims being genuinely brought; that did not mean that they were properly pursued: NPower Yorkshire Ltd v Daly UKEAT/0842/04/ ILB at paragraphs 27 and 29. The Respondents had made their position clear in the ET3's and at the hearing before the Employment Judge, namely that even if the Claimants were correct in their assertion as to the number of hours they had worked, there was no NMW shortfall. The Employment Judge's approach had been to say, in effect, that it was enough that the Claimants believed that they might have a claim, given the shortness of tribunal time scales. That was wrong in law. Claimants had a responsibility to ascertain whether or not their claims were properly based and justifiable. He referred to Marler Ltd v Robertson [1974] ICR 72 at p.76, Cartiers Superfoods Ltd v Laws [1978] IRLR 315 at para 17, Keskar v Governors of All Saints Church of England School and another [1991] ICR 493 at p.500 and Beynon v Scaddon [1999] IRLR 700 at para 8. Here, the Claimants did nothing to obtain the relevant details which were, simply those of what hours had they actually worked and what had they been paid, all of which was within their own direct knowledge. The Claimants did not address these fundamental issues, even when pressed by the Respondents and by reason of the Tribunal's order of 31 March. If, somehow, they had a problem with checking the basic facts, they could have sought orders for information but had not done so. The law was not in a state of flux – the South Manchester case clearly confirmed the position and was not appealed (as could have been readily ascertained) – and even if it had been, that was no excuse. Counsel's advice was not taken until instructed on 21 March 2011; it could and should have been sought earlier. There was no excuse for the Claimants' inaction particularly in the face of the costs warning that was sounded in the forms ET3. Overall, whilst the tenor of the Employment Judge's approach was that the Respondents were at fault – at paragraph 43, for instance - how could that be so? The only criticisms to be lodged were those which could properly be directed at the Claimants on whom the onus had lain.

1. Further, the Employment Judge was, he submitted, wrong to link the timing of the Respondents' production of spreadsheets showing the hours worked by the Claimants and pay received by them. He was wrong to have ignored the feature of the First Claimant not having been at work since January 2010 and to ignore that the level of the Second Claimant's salary very clearly raised the issue of whether there could, even on her hypothesis of her working hours, possibly have been an NMW shortfall.

1. As to disposal, Mr Cameron submitted that the appeal should be upheld, that I should find that the Claimants had brought claims that were misconceived and acted unreasonably in bringing and conducting their claims, to find that there should, accordingly, be an award of expenses and thereafter to remit to the Employment Tribunal to determine the amount.

Submissions for the Claimants

1. For the Claimants, Ms Forrest adopted the approach of the Employment Judge to the issue of competence. She submitted that the purpose of rule 25(3) was to indicate to parties who are behaving so as to merit a costs order that they will not be able to escape it simply by withdrawing their claim but that was as far as it went. Withdrawal did not of itself prevent fresh proceedings. For there to have been a determination, the Respondents required to have applied for dismissal. Only then could there be an award of expenses. She suggested that it was usual practice for dismissal to be applied for but accepted that did mean that the Respondents would thereby be required to engage in further possibly protracted procedure.

1. As regards the merits of the application for expenses, she accepted that the authorities relied on by Mr Cameron were all relevant and added a reference to the case of [Barnsley Metropolitan Borough Council v Yerrakalva]() [2011] EWCA Civ 1255 at paragraphs 39 to 41, where Mummery LJ sounded a reminder that there was a broad discretion involved when awarding costs and what was required was to look at the "whole picture" and not to lose sight of the "totality of the relevant circumstances".

1. Otherwise, she submitted that the Employment Judge had been correct to say that there was nothing misconceived about the claims. Whilst it was fair to say that the Claimants could have been expected to retain and consult their own wage slips, it would, she suggested, have been easier for the Respondents to identify the relevant information; that said, she did seem to accept that where, as in this case, the respondent was an employer with a large number of employees, it might not be such a simple task after all.

Competency

1. I am satisfied that the Employment Judge has fallen into error. There would seem to be three causes of his erroneous conclusion.

1. First, he has conflated the concept of an employee's claim – or "case" – and that of a set of "proceedings". He has failed to note that they are different concepts. If he had done, he would, as I have explained above, have recognised that it is quite possible for a set of proceedings to be concluded but their subject matter be made the basis of a fresh claim (if there has not been a order for dismissal). The Employment Judge has had no regard to that being the position as a matter of law. If he had done, he could not, in my view, have concluded that it was not competent to award expenses.

1. Secondly, he has construed the term "determine" too narrowly. There is nothing in the rules to show that its interpretation requires to be limited to circumstances where there has been judicial consideration and conclusion on the merits of the claim. The natural and ordinary meaning of the word is such as to encompass conclusion or the putting to an end of a matter. Further, even if "determine" is to be taken as connoting only the making of a decision which ends the case (see paragraph 27 of the Employment Judge's reasons) he has failed to take account of the possibility of the decision in question being the decision of the claimant to withdraw the claim, thereby putting an end to those proceedings.

1. Thirdly, he has, I consider, misinterpreted rule 38(2). The purpose of that provision is plainly to make it clear that if a party has not had legal representation then he cannot apply for costs/expenses; he can only apply for a preparation time order. It is not a provision to limit the circumstances in which a legally represented party can apply for expenses in what would be a wholly artificial manner, particularly since, on the Claimants' interpretation, if the Respondents had not been legally represented they could have applied for a preparation time order even if they had not sought dismissal. That would follow from their approach since the reference to proceedings being determined does not appear in the sentence that deals with circumstances where the receiving party has not been legally represented.

1. Further, it seems to me to be plain from the last sentence of rule 25(3) that in no circumstances can the fact of withdrawal of a claim prejudice a party's right to seek expenses. There is nothing in that rule or in the rules relating to expenses to suggest that a respondent must go to the length (and potential time, trouble and expense) of seeking dismissal before he can secure an award of expenses.

Expenses - Merits

1. I am readily persuaded that the Employment Judge's conclusions on the merits of the Respondents' claim for expenses are not tenable when the totality of the circumstances are properly considered. Mr Cameron was justified in his criticisms and I accept all his submissions on the matter as being well founded. What stands out is that there was nothing before the Employment Judge to demonstrate that the Claimants had taken any steps to check whether their NMW claims (which is what these claims were – they were not claims under the Working Time Regulations) were soundly based as a matter of fact, let alone law. There was nothing to show that they had done so prior to presentation of their claims and nothing to show that they did so thereafter. The Employment Judge, instead, focussed on the matter of spreadsheets that the Respondents produced for the purposes of the expenses hearing but that was not the point. Any employee who makes a NMW claim ought themselves to know from their own knowledge and from their payslips what it is they have to say about the hours they actually worked and what they were paid. Where they are legally represented, as in the present case, these are obvious questions for the lawyers to investigate. It is not unreasonable to expect them to have done so before presenting claims such as these and, at the very least, in prompt response to any challenges to their assertions that are intimated in the ET3, particularly where a costs warning is included.

1. As above noted, the hours alleged and salary figures stated in these cases of themselves raised questions as to whether or not there could possibly have been a failure to pay the NMW, particularly in the case of the Second Claimant and in the case of the First Claimant, the fact of her not having been at work at all since January 2010 raised obvious questions of time bar which her ET1 did not begin to address. Then, once the forms ET3 were lodged, the Claimants were put very clearly on notice that not only did the Respondents not accept that their relevant working hours were as they stated they were but even if they were, there was no NMW shortfall. None of this was the Respondents' fault, contrary to the approach of the Employment Judge. At no time did they fail to respond to any request for information – no such requests were ever made whether before the institution of proceedings or thereafter. Further, at no time did the Claimants face up to the need to provide specification of the hours they were saying that they had worked and what they said they had been paid for them. They – or their solicitors – dealt with that fundamental issue by repeatedly stating that 'Schedules' would be produced but they never did so and there was no suggestion that any such schedules had ever been prepared.

1. The Employment Judge has approached matters on the basis that it is not appropriate to impose on Claimants "an obligation to investigate the precise factual circumstances before lodging their claim when the time taken for them to carry out such an exercise amounts to longer than the 3 months within which they can lodge their claim" (para 40) but there was nothing about this case to demonstrate that the Claimants needed more than three months to investigate their claims. Further, the Claimants did nothing to address the fundamental factual matters on which they were challenged even when they were called on to do so by the Respondents. They ought, sensibly, to have done so. As Phillips J, as he then was, observed in the case of Cartier Superfoods, when considering the matter of costs "it is right to look and see what the party in question knew or ought to have known if he had gone about the matter sensibly" (at para 18).

1. In these circumstances, it should have been plain at the outset that there were very real factual difficulties with the Claimants' cases, irrespective of their legal basis. Then, so far as the law was concerned, the South Manchester **case had provided an up to date review of the relevant law before these claims were lodged demonstrating that, on the face of matters, the NMW was not automatically payable for the whole of their sleepover periods – it only applied to those hours when they were awake for the purpose of working. The time for appealing had expired when these claims were lodged and it had not been appealed as could easily have been confirmed by, for instance, a telephone call to this Tribunal. Then, the Claimants delayed until 21 March 2011, over two months after the presentation of their claims, to instruct counsel for an opinion; that was in circumstances where they had solicitors acting for them from a date in December 2010. All in all, their approach was such as to fail throughout to engage properly and appropriately with the central issues in these claims until they had the advice of counsel which would appear to have been that these claims had no reasonable prospects of success.

1. The observations of Lindsay J, in the case of Beynon seem apt:

"A party who, despite having had an apparently conclusive opposition to his case made plain to him, persists with the case down to the hearing in the 'Micawberish' hope that something might turn up and yet who does not even take such steps open to him to see whether anything is likely to turn up, runs a risk, when nothing does turn up, that he will be regarded as having been at least unreasonable in his conduct of his litigation."

1. Those observations also show that the Employment Judge's approach to the breach of contract aspect of the claims was also ill founded; it was nothing less than to say that something might have turned up to support that bare claim at some point in the future and therefore the Claimants could not be criticised for it.

1. It seems clear to me that the only reasonable conclusion open to the Employment Judge was that these claims were misconceived, it was unreasonable to raise them and they were conducted in an unreasonable manner.

1. In these circumstances, I will pronounce an order upholding the appeal, finding that the Claimants' claims were misconceived, that it was unreasonable to raise them and that they were conducted unreasonably. I will direct that the Employment Tribunal find the Claimants liable to the Respondents in the expenses incurred by them in relation to their claims and remit the cases to the Employment Tribunal to determine the amount of the award under and in terms of rule 41 of the Employment Tribunal (Constitution and Rules of Proceedings) Regulations 2004, Schedule 1.