Benyon & Ors v. Scadden & Ors: Establishing Precedents on Tribunal Cost Orders and Union Conduct

Introduction

Benyon & Ors v. Scadden & Ors ([1999] IRLR 700) is a pivotal judgment delivered by the United Kingdom Employment Appeal Tribunal (EAT) on June 14, 1999. This case revolves around an appeal against a costs order made by an Employment Tribunal, where the unsuccessful appellants, represented by UNISON, were ordered to pay the respondents' legal costs. The core issues pertain to the application of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE), the discretion of tribunals in awarding costs, and the conduct of trade unions in supporting litigation.

The appellants, led by Mrs. M.J. Beynon, contested their dismissal of claims under TUPE Regulations, which protect employees during business transfers. Their representation by UNISON and the subsequent costs order raised significant legal questions about the boundaries of tribunal discretion and the implications of union involvement in litigation perceived as vexatious.

Summary of the Judgment

The Employment Tribunal initially dismissed the appellants' claims under TUPE Regulations, determining that there was no relevant transfer of undertaking between Urbane Rubicon and Hillside Houses (Care Homes) Ltd. Subsequently, the Tribunal ordered the appellants to pay the respondents' costs on an indemnity basis, citing the appellants' union representation and the perceived unreasonableness of their litigation.

Upon appeal, the EAT upheld the Tribunal's decision, emphasizing the tribunal's broad discretion in awarding costs. The EAT found no error in the Tribunal's consideration of UNISON's involvement and the appellants' conduct, reinforcing the principle that tribunals may penalize parties engaging in vexatious or unreasonable litigation, even when such actions are supported by trade unions.

Analysis

Precedents Cited

The judgment extensively references prior cases to contextualize and justify the Tribunal's decision:

Gardner v. Jay (1885): Emphasized that judicial discretion must be exercised with common sense and justice, and that tribunals should not be restricted by rigid rules when exercising their discretion.
Carr v. Allen-Bradley Electronics Ltd (1980): Addressed the consideration of a party's means in awarding costs, distinguishing the normal approach from exceptional cases.
Wiggin Alloys Ltd v. Jenkins (1981): Discussed the Tribunal's discretion in considering a party's ability to pay costs, affirming that inability alone does not preclude cost orders.
Omar v. Worldwide News Inc. (1998): Explored the extent to which a union's conduct and support can influence cost orders, highlighting that unions must not pursue litigation without merit.
Symphony Group Plc v. Hodgson (1994): Mentioned in relation to the use of the term "exceptional circumstances" in cost orders, clarifying that such terms should not be rigid prerequisites.

These precedents collectively underscore the Tribunal's wide latitude in awarding costs based on the conduct of parties and their representatives.

Legal Reasoning

The Tribunal's legal reasoning centered on the appellants' persistent pursuit of claims deemed to have no reasonable prospect of success. Key points include:

Vexatious Litigation: The Tribunal found that the appellants, supported by UNISON, engaged in litigation that was frivolous and served a collateral purpose—namely, seeking trade union recognition—rather than genuine protection of employment rights.
Union Conduct: UNISON's involvement was scrutinized, with the Tribunal inferring that the union supported the claims despite recognizing their lack of merit, indicating an ulterior motive.
Discretion in Cost Orders: The judgment reiterated that tribunals have broad discretion under Rule 12 of the Industrial Tribunals (Constitution etc.) Regulations 1993 to award costs, including on an indemnity basis, when a party's conduct warrants such measures.
Identification of Parties and Representatives: The Tribunal held that appellants could be held responsible for the actions of their representatives (UNISON officials), justifying the cost order against them.

The EAT affirmed that the Tribunal correctly exercised its discretion, emphasizing that the union's role did not absolve the appellants of responsibility for vexatious litigation.

Impact

The judgment in Benyon & Ors v. Scadden & Ors has significant implications for employment law and tribunal practices:

Tribunal Discretion Reinforced: It solidifies the principle that tribunals possess extensive discretion in awarding costs, especially in cases where litigation is deemed unreasonable or vexatious.
Union Accountability: The case underscores that trade unions must exercise due diligence in supporting litigation, ensuring that cases have merit to avoid potential cost penalties for their members.
Cost Orders Clarity: It clarifies the application of indemnity cost orders within Employment Tribunals, setting a precedent for assessing the appropriateness of such orders based on conduct and intent.
Litigation Strategy Considerations: Parties and their representatives are reminded of the importance of conducting litigation with genuine prospects of success to avoid punitive cost orders.

Future cases will reference this judgment when addressing the limits of tribunal discretion and the responsibilities of both parties and their representatives in litigation.

Complex Concepts Simplified

TUPE Regulations: The Transfer of Undertakings (Protection of Employment) Regulations 1981 are designed to protect employees when a business or undertaking is transferred to a new employer, ensuring their terms and conditions of employment are preserved.
Indemnity Basis of Taxation: This refers to a cost order where the paying party must cover all reasonable costs incurred by the other party, often used in cases of unreasonable or meritorious conduct.
Vexatious Litigation: Legal actions which are brought primarily to harass or subdue an opponent, rather than to resolve a genuine legal dispute.
Tribunal Discretion: The authority given to tribunals to make decisions within certain bounds, allowing them to consider the specifics of each case rather than applying a rigid set of rules.
Costs Order: A directive by a tribunal or court requiring one party to pay the legal costs of the opposing party, typically awarded when a party's conduct in litigation warrants such an order.

Conclusion

The Benyon & Ors v. Scadden & Ors judgment serves as a cornerstone in understanding the extent of tribunal discretion in awarding costs within employment disputes. By affirming the Tribunal's authority to penalize vexatious litigation, especially when influenced by union conduct, the case reinforces the necessity for all parties and their representatives to engage in litigation responsibly and with genuine intent.

The decision balances the protection of legal processes against the abuse of tribunals, ensuring that cost orders serve their compensatory purpose without becoming punitive measures. It also delineates the responsibilities of trade unions in supporting members' litigation efforts, highlighting the importance of merit in legal claims.

Overall, this judgment contributes to the jurisprudence surrounding tribunal cost orders, emphasizing fairness, accountability, and the judicious use of legal resources in the realm of employment law.