Daleside Nursing Home Ltd v Mathew

Factual and Procedural Background

This appeal arises from a decision of the Employment Tribunal at Liverpool dated 10 March 2008. The Appellant, Company A, sought costs against the Plaintiff following the Tribunal's unanimous dismissal of the Plaintiff's claims for direct race discrimination, constructive unfair dismissal, and unlawful deduction of wages. The Plaintiff initially indicated an intention to cross-appeal the substantive decision but subsequently withdrew this cross-appeal and did not attend the appeal hearing, submitting only limited written submissions not addressing the costs issue.

The Tribunal had considered two main issues: whether certain incidents constituted direct race discrimination, and whether the Plaintiff had been underpaid following a change in ownership at her workplace. The Tribunal found that the Plaintiff failed to establish direct race discrimination, particularly rejecting the key allegation that a manager had called the Plaintiff an explicit racial slur. The Tribunal also found that the Plaintiff had effectively accepted a lower hourly rate by continuing to work without objection after the ownership change.

The Plaintiff applied for costs at the conclusion of the hearing, but the Tribunal refused this application, concluding that neither the Plaintiff nor her representative had acted unreasonably in bringing or conducting the proceedings.

Legal Issues Presented

1. Whether the Employment Tribunal erred in refusing to award costs against the Plaintiff despite finding that a central racial discrimination allegation was deliberately fabricated.
2. Whether the Plaintiff's conduct in bringing and conducting the proceedings was unreasonable such as to justify a costs order under the relevant Employment Tribunal Rules.
3. The appropriate approach to awarding costs in employment claims involving allegations of discrimination that are found to be untrue and potentially fabricated.

Arguments of the Parties

Appellant's Arguments

• The key allegation of explicit racial abuse was found by the Tribunal to be a deliberate and cynical lie, central to the Plaintiff's claim.
• It was inconsistent and perverse for the Tribunal to find that the Plaintiff had not acted unreasonably in bringing or conducting the claim despite this finding of fabrication.
• The Tribunal should have made an order for costs against the Plaintiff given the falsehood at the heart of the claim.
• The amount of costs to be awarded and the Plaintiff's ability to pay should be considered by the Tribunal on remittal.

Respondent's Arguments

• The Plaintiff withdrew her cross-appeal and did not attend the appeal hearing, submitting limited written submissions.
• The written submissions did not meaningfully address the issue of costs but maintained the substantive claim.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analysed the Tribunal's findings in detail, particularly the factual finding that the Plaintiff's allegation of explicit racial abuse was false and deliberately fabricated. The Court identified a fundamental inconsistency between this finding and the Tribunal's conclusion that the Plaintiff had not acted unreasonably in bringing or conducting the claim. Given the centrality of the false allegation to the Plaintiff's case, the Court held that any reasonable Tribunal would have concluded that the Plaintiff acted unreasonably. The Court emphasised that this conclusion was based solely on the clear-cut facts of the case and did not intend to establish a broader legal principle.

The Court also noted that the Tribunal had discretion under the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 to consider costs orders where a party has acted unreasonably or the proceedings have been misconceived. The Court found that the Tribunal had erred in law by failing to make any costs order despite the unreasonable conduct identified. However, the Court did not determine the amount of costs to be awarded, leaving that to the Tribunal on remittal, including consideration of the Plaintiff's means.

Holding and Implications

The Court ALLOWED the appeal and overturned the Tribunal's decision refusing costs. It held that the Tribunal erred in law by failing to find that the Plaintiff acted unreasonably in bringing and conducting the proceedings, given the deliberate fabrication of a key allegation.

The case was remitted to the original Tribunal to determine the appropriate amount of costs to be awarded against the Plaintiff, with consideration to be given to the Plaintiff's ability to pay. The Court made clear that its decision was confined to the particular facts and did not establish a general principle on costs in discrimination claims.