THE INDUSTRIAL TRIBUNALS

CASE REF:  01116/06

CLAIMANT:			George Drury

RESPONDENT:		Larne Borough Council

DECISION
The decision of the tribunal is that the respondent’s application for costs is refused.

Constitution of Tribunal:
Chairman:		Mr B Greene
Panel Members:	Miss E Kennedy
			Mr J Nicholl

Appearances:
The claimant appeared in person.
The respondent was represented by Mr G Grainger, of counsel, instructed by Jones, Cassidy & Jones, Solicitors.

THE CLAIM

 1.	A decision of the industrial tribunal was issued on 3 August 2009 dismissing the claimant’s claim of discrimination on the grounds of sex.  By letter of 1 September 2009 the respondent made an application for costs against the claimant.  

THE ISSUES

 2.	The issue for the industrial tribunal was whether an order for costs should be made against the claimant in favour of the respondent.  The respondent quantified its costs at £85,182.49.  The respondent invited the industrial tribunal to declare that the claimant should pay costs and then refer the matter to the County Court in order that the amount of the costs be determined.  

THE FACTS

 3.	(i)	The respondent sought costs against the claimant on 1 September 2009 on the grounds that the bringing or conducting of the proceedings by the claimant had been misconceived or that in bringing or conducting the proceedings the claimant had acted unreasonably (Regulation 40(3), Schedule 1, The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005).

	(ii)	The substantive claim was listed for hearing to commence on 2 December 2008.

	(iii)	By letter of 18 September 2008 the respondent sent a ‘Calderbank type letter’ to the claimant with “Without prejudice save as to cost” written across the top.  In that letter the respondent offered to pay to the claimant £8,579.07, which represented the back pay element of the claim the claimant was seeking and a gratuity of £4,000 in full and final settlement of his claims.  

		The letter invited the claimant to take legal advice or to consult the Labour Relations Agency in this matter and that if the offer were acceptable to him it could be the subject of a conciliated agreement.  

		The letter also made the point that the respondent estimated, at that time, that the further costs of the claim to the respondent would be £30,000 +VAT.  

		The offer of settlement was limited for 14 days from the date of the letter.  The claimant was further informed that after 14 days had expired if the offer had not been accepted there would be no further offers and that if the respondent were successful in total or if the claimant failed to win damages in excess of this offer that an application would be made for costs on the basis that by refusing the offer the claimant was acting vexatiously, abusively disruptively or otherwise unreasonably and contrary to Rule 40 of the 2005 Regulations.

(iv)	By letter of 11 November 2008 the claimant rejected the respondent’s offer.  Instead he reiterated a number of points from his claim.  He valued his claim at £121,608.

(v)	By letter 28 November 2008 the claimant wrote again to the respondent.  In the letter he reiterated his case and his reasons why he believed it would be successful and reiterated his calculation that he was owed £121,608.

THE LAW

 4.	(i)	The industrial tribunal may make an order for costs (Regulation 40(1), Schedule 1, The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005).

	(ii)	The industrial tribunal shall consider making an order for costs where the bringing or conducting of the proceedings has been misconceived by the paying party or that in bringing or conducting the proceedings the paying party has acted unreasonably (Regulation 40(2) and (3), Schedule 1, The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005).

(iii)	The maximum amount of costs that the industrial tribunal can order is £10,000.  If a party is seeking costs in excess of that, the quantum needs to be assessed by the County Court (Regulation 41, Schedule 1, The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005).

	(iv)	Misconceived includes having no reasonable prospect of success (Regulation 2(1), The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005).

	Misconceived seems to require an objective test relating solely to the substance of the case as pleaded and presented.  However, as misconceived applies also to the bringing and conducting of the proceedings it suggests factors other than a purely objective appraisal of the case can and perhaps should be taken into account before making an award of costs (Harvey on Industrial Relations and Employment Law T [1059]).

	(v)	The tribunal has a discretion whether or not to award costs on the misconceived ground if it considers that in all the circumstances the award of costs is inappropriate (Harvey on Industrial Relations and Employment Law T [1060]).  

	(vi)	Tribunals have a wide discretion to award costs where they consider that there has been unreasonable conduct in the bringing or conducting of proceedings.  Every aspect of the proceedings is covered, from the inception of the claim or defence, through the interim stages of the proceedings, to the conduct of the parties at the substantive hearing.  Unreasonable conduct includes conduct that is vexatious, abusive or disruptive.  When making a costs order on the ground of unreasonable conduct, the discretion of the tribunal is not fettered by any requirements to link the award causally to the costs incurred as a result of the conduct that has been identified as unreasonable. … In McPherson  v  BNP Paribas (London Branch) [2004] ICR 1398, Mummery LJ stated (at paragraph 40);-

			“The principle of relevance means that the tribunal must have regard to the nature, gravity and effect of the unreasonable conduct as factors relevant to the exercise of the discretion but that is not the same as requiring the receiving party to prove the specific unreasonable conduct by the paying party caused particular cost to be incurred”.  (Harvey on Industrial Relations and Employment Law T [1043]).

	(vii)	When considering whether to award costs in respect of a party’s conduct in bringing or pursuing a case that is subsequently held to have lacked merit, the type of conduct that will be considered unreasonable by a tribunal will obviously depend on the facts of the individual case, and there can be no hard-and-fast principle applicable to every situation.  In general, however, it would seem that the party must at least know or be taken to have known that his case is unmeritorious.  (Harvey on Industrial Relations and Employment Law T [1047]).

	(viii)	“Where a party makes an effort to settle a case, which is refused by the other side, costs can be awarded if the tribunal considers that the party refusing the offer has thereby acted unreasonably (Kopel  v  Safeway Stores Plc [2003] IRLR 753, EAT).  It is important to recognise, however, that the principle applicable in matrimonial proceedings by virtue of the decision in Calderbank  v  Calderbank [1975] 3 All ER 333, Court of Appeal – viz, that a party can protect himself against costs in a case involving a money claim by making an offer marked “without prejudice save as to costs”, with the result that a failure by the other side to beat the offer normally mean that an award of costs will be made against that party - does not apply as such in proceedings before employment tribunals.  … 

		… In employment tribunals, therefore, it does not follow that a failure by a party to beat a Calderbank offer will, by itself, result in an award of costs against him.  In Kopel, Mitting J stated that the tribunal ‘must first conclude that the conduct of an appellant in rejecting the offer was unreasonable before the rejection becomes a relevant factor in the exercise of its discretion …” (Harvey on Industrial Relations and Employment Law T [1055]).

	(ix)	Sir Hugh Griffiths in Marler v  Robertson [1974] ICR NICR warned, 

			“Ordinary experience of life frequently teaches us that what is plain for us all to see once the dust of battle has subsided was far from clear to the combatants once they took up arms.”

	(x)	The proof of discrimination in any court or tribunal can often times depend on what inferences are drawn from the findings of primary facts.  A number of the cases have pointed this out to tribunals.  In Igen  v  Wong [2005] 3 All ER 812 in its annex at paragraph 3 the Court of Appeal stated;-

			“It is important to bear in mind in deciding whether the claimant has proved such facts that it is unusual to find direct evidence of sex discrimination.  Few employers would be prepared to admit such discrimination, even to themselves.  In some cases the discrimination will not be an intention but merely based on the assumption that he or she would not have fitted in.”

	A similar warning was issued in the claim of Nagarajan  v  London Regional Transport [1999] ICR 877, 884 where Lord Nicholl said;-

			“… Treatment, favourable or unfavourable, is a consequence which flows from a decision.  Direct evidence of a decision to discriminate on racial grounds will seldom be forthcoming.  Usually the grounds of the decision will have to be deduced, or inferred, from the surrounding circumstances.”

SUBMISSIONS

Respondent

 5.	(i)	The respondent outlined the legal requirements for costs on the grounds alleged by them, i.e. that the bringing and conducting of the proceedings was misconceived or that in bringing or conducting the proceedings the claimant had acted unreasonably.  In support the respondent referred to a number of findings made by the tribunal.

	(ii)	Mr Grainger argued that it should have been clear to the claimant from the receipt of the respondent’s witness statements or by 18 September when the ‘Calderbank type letter’ had been sent to the claimant that to continue with his claim was misconceived or unreasonable.   

(iii)	The respondent argued that the offer made in its letter of 18 September 2008 to the claimant was a reasonable offer by way of settlement, albeit in the context that the respondent disputed the claimant’s case in its entirety.  The respondent further asserted that the amount of money offered took account of the delay that the claimant had experienced in having his job evaluation carried out.  Mr Grainger invited the tribunal to conclude that in not accepting the offer the claimant had acted unreasonably.  

	(iv)	The respondent as a public body had to deal with the claims made by the claimant in a serious fashion and to prepare to meet those claims.

	(v)	Where the tribunal finds the conduct of the claimant unreasonable it has a duty to consider making an order for costs although it retains its discretion whether to make such an order or not.  

Claimant

 6.	(i)	The claimant did not challenge the quantum of the costs incurred by the respondent in dealing with this claim.  In fact he suggested they may be in excess of what is being claimed.

	(ii)	The claimant was convinced, from the beginning of his claim, right through the preparation and throughout the hearing, that he would be vindicated.  He believed that the facts that he established would speak for themselves and would demonstrate that the respondent had committed sex discrimination against him.  At no time did he waiver in that belief.  

	(iii)	Attention should be focused on the actions of the respondent rather than what they stated.  The claimant asserted that the seriousness and detail with which the respondent met this claim, in terms of the number of witnesses, demonstrates that they believed the claim to be a serious claim and one of merit.  

	(iv)	The claimant asserted that he had given the respondent opportunities from April 2006 until September 2008 to resolve this matter.  

	(v)	That at no time was the claimant advised that his claim had no prospect of success.

	(vi)	The tribunal in its decision, although finding that the respondent had not committed sex discrimination against the claimant, had found that the claimant had suffered bad treatment at the hands of the respondent.

	(vii)	The claimant’s letter of 28 November 2008, he asserted, would have indicated his willingness to negotiate about the claim.  However no further negotiations took place.

	(viii)	The claimant reminded the tribunal that the purpose of the tribunals system was to ease the workload of the courts, to reduce legal costs and to speed up the hearings of any claims.  He further asserted that many respondents have adopted a very legalistic approach in dealing with this matter.  

	(ix)	The CMD system is intended, in part, to weed out unmeritorious claims or elements of claims.  Whilst certain matters were excluded from his claim en route at no stage was it suggested at any CMD that his claim was unmeritorious.  

	(x)	The claimant also indicated that were an order to be made, in the sum that the respondent is seeking, that he would become bankrupt.  He indicated that his annual gross income was £40,000 which was approximately £30,000 net.  The claimant set out his monthly outgoings for mortgage; electricity; oil; car; looking after his student son; food and clothes; holidays; and telephone which amounted to just under £2,500 per month.  He further indicated that he was due to retire in August 2009 but that his employment has been extended for a further six months until February 2010 when he expects to retire.  He informed the tribunal that he will be in receipt of a pension of approximately £1,100 per month from the respondent and a state pension of some £400 per month.  He does not possess any shares, stocks or investments.  He will also receive a lump sum of some £36,000 on retirement.

CONCLUSIONS

 7.	The tribunal has carefully considered the matters put before it in this costs application, the applicable law and the submissions of the parties.  It has concluded that it will refuse the respondent’s application for costs.  In so concluding the tribunal had regard to the following matters;-

	(i)	the award of costs is discretionary and not punitive.

	(ii)	It took into account the warning of Sir Hugh Griffiths in Marler  v  Robertson that, “Ordinary experience of life frequently teaches us that what is plain for us all to see once the dust of battle has subsided was far from clear to the combatants once they took up arms.”

	(iii)	Discrimination is often only established by inferences drawn from the primary facts as found.  For that reason it would not have been clear to the claimant in bringing these proceedings or in conducting these proceedings that his claim for sex discrimination was misconceived.

	(iv)	The refusal to accept the offer of settlement in the ‘Calderbank type letter’ is in the tribunal’s view not unreasonable.  In so concluding the tribunal was influenced by the following matters;-

		(a)	whilst the respondent viewed this letter as essentially making an economic offer of settlement the letter did not so state;

		(b)	in arriving at the amount of the offer the respondent referred to part of the claimant’s claim in terms of the back pay that he says that he should have received and it made an additional offer of an ex gratia payment.

		(c)	An inference could be drawn from this letter that the respondent’s believed there was a significant risk to them in not winning this case.  Rather than encouraging the claimant to discontinue the proceedings it could equally well have encouraged him to continue.  

		(d)	Following the decision of the EAT in Kopel  v  Safeway Stores Plc, the rejection of an offer can only be considered as a factor in the awarding of costs if the rejection of that offer is deemed by the tribunal to be unreasonable.  Having concluded that the rejection was not unreasonable then this is a factor which the tribunal can not have regard to in assessing the issue of costs.

	(v)	If the claimant was not unreasonable in rejecting the offer of settlement then that can not have been a factor which should have caused him to consider that continuing with his case would be either unreasonable or would show that his claim lacked merit.

	(vi)	It seems to the tribunal that the more reasonable the offer made by the respondent the more difficult it is to argue that the claimant’s case is without merit.

(vii)	The tribunal is not persuaded that in bringing or pursuing and conducting this claim the claimant has acted unreasonably.  Given the bad treatment that the tribunal found in relation to the respondent’s treatment of the claimant and that discrimination is often times a matter of inferences drawn from findings of fact it was and would not have been unreasonable for the claimant to pursue his claim to conclusion.

 8.	Accordingly, the tribunal refuses the respondent’s application for costs.

Chairman:

Date and place of hearing:	24 September 2009, Belfast.

Date decision recorded in register and issued to parties: