Factual and Procedural Background
The claimant presented a race discrimination claim to the Employment Tribunal ("ET") on 6 October 2019, challenging the respondent's withdrawal of a job offer. The respondent denied discrimination, citing unsatisfactory references as the reason for withdrawal, and indicated intentions to apply for strike out or a deposit order. Throughout the proceedings, the claimant sent numerous abusive and inappropriate correspondences to the respondent and its representatives. The respondent applied for strike out or costs on grounds of the claimant’s vexatious conduct.
A preliminary hearing on 23 June 2020 dismissed the strike out applications but made a deposit order against the claimant, concluding the claim had little reasonable prospect of success. The claimant’s appeal against the deposit order was rejected by the Employment Appeal Tribunal ("EAT").
The full merits hearing was conducted over three days in March 2021, culminating in the ET dismissing the claimant’s claim on the basis that the withdrawal of the job offer was due to lack of satisfactory references and not race discrimination. At the conclusion of the liability hearing, the respondent applied for costs, which the ET proceeded to hear despite the claimant's objections.
The ET awarded costs against the claimant in the sum of £14,000, finding that the claimant had acted unreasonably both in pursuing a claim with no reasonable prospects of success and in his conduct during the proceedings, including abusive correspondence and disproportionate applications. The claimant subsequently applied for reconsideration and made applications for wasted costs against the respondent’s representatives, which were dismissed.
Legal Issues Presented
- What approach should an Employment Tribunal adopt when hearing an application for costs at the end of a final liability hearing?
- How should an Employment Tribunal separately determine an application for wasted costs within the same proceedings?
- Whether the ET’s decision to hear the respondent's costs application immediately after the liability hearing was procedurally fair to the claimant.
- Whether the ET correctly applied the legal principles governing costs awards, including the impact of deposit orders and the claimant’s conduct.
- Whether the ET erred in dismissing the claimant’s wasted costs applications against the respondent's representatives.
- Whether the composition of the ET panel was appropriate for determining the wasted costs application.
Arguments of the Parties
Appellant's Arguments
- The ET unfairly allowed only a few minutes for the claimant to digest a lengthy liability judgment before proceeding with a costs hearing, which was unexpected and left the claimant unprepared.
- The ET erred by ignoring prior case management orders that limited the hearing to liability only and by admitting a costs bundle late and without agreement.
- The ET failed to properly consider the claimant’s abusive conduct and persistent applications in the context of awarding costs, including failing to analyze the relevance of such conduct to the costs claimed.
- The ET misdirected itself by accepting that the claimant had not addressed his mind to the respondent’s costs warning letters, when the claimant argued these relied on a misrepresentation of his case.
- The ET erred by delaying the determination of the claimant’s wasted costs application and by hearing it without the full ET panel that decided liability and costs.
- The ET misinterpreted directions relating to disclosure applications and failed to properly consider the claimant’s position as a litigant in person when dismissing the wasted costs application.
Respondent's Arguments
- There is no minimum notice requirement for costs applications; the claimant had reasonable opportunity to respond, having been warned repeatedly through "without prejudice save as to costs" letters and the deposit order.
- The ET’s decision to hear the costs application immediately after the liability hearing was a proper exercise of case management discretion and consistent with Presidential Guidance.
- The claimant’s abusive emails and persistent, meritless applications amounted to unreasonable conduct justifying a costs award, and the ET’s reasoning was adequate and lawful.
- The respondent’s representatives acted properly regarding disclosure and witness applications; the ET reasonably rejected the claimant’s wasted costs application.
- The delay in determining the wasted costs application was not unreasonable given the volume of correspondence and applications from the claimant, and no prejudice arose.
- The ET did not err in hearing the wasted costs application without the full panel; the application related to conduct predating the panel’s involvement and did not concern the liability hearing itself.
- The ET correctly applied the overriding objective and relevant case law, and the appeal against the costs order does not meet the threshold for intervention.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Yerrakalva v Barnsley [2011] EWCA Civ 1255; [2012] ICR 420 |
Costs orders require identification of unreasonable conduct and its effects; costs are compensatory, not punitive. |
The ET properly looked at the whole picture of the claimant's conduct and its effects in awarding costs. |
| Riley v Secretary of State for Justice and ors UKEAT/0438/14 |
Costs applications related to a hearing decided by a panel must be heard by the same panel. |
The ET’s decision to hear the wasted costs application alone was not erroneous as the application related to conduct predating the panel’s involvement. |
| McPherson v BNP Paribas (London Branch) (No 1) [2004] EWCA Civ 569; [2004] ICR 1398 |
Costs awards do not require precise causal link between conduct and costs incurred. |
The ET was entitled to consider the claimant’s abusive conduct and persistent applications as part of the background to the costs award. |
| Sunuva Ltd v Martin UKEAT/0174/17 |
Similar to McPherson regarding causation in costs awards. |
Supported the ET’s approach to costs assessment without strict causation requirements. |
| AQ Ltd v Holden [2012] IRLR 648 |
Tribunals should not judge litigants in person by the standards of professional representatives when assessing conduct for costs. |
The ET was mindful of the claimant’s unrepresented status but found no error in its assessment of conduct or refusal of wasted costs. |
| Bastick v James Lane (Turf Accountants) Ltd [1979] ICR 778 |
Limits on appellate interference with ET’s exercise of discretion. |
The EAT upheld the ET’s case management discretion unless perverse or based on irrelevant/omitted factors. |
| Carter v Credit Change Ltd [1979] ICR 980; [1979] IRLR 361 |
As above, on appellate review of ET discretion. |
Supported the principle that appellate courts rarely overturn ET discretion absent clear error. |
| Yeboah v Crofton [2002] EWCA Civ 794; [2002] IRLR 634 |
High threshold for perversity challenge on ET decisions. |
The claimant’s challenges failed to meet the high standard for overturning ET decisions. |
| Bangs v Connex South Eastern Ltd [2005] EWCA Civ 14; [2005] ICR 763 |
Delay in ET proceedings only grounds for appeal if it causes perverse decision or breaches fair trial rights. |
The delay in wasted costs determination was not unreasonable nor prejudicial to the claimant. |
| Hemdan v Ishmail [2017] IRLR 228 |
Deposit orders discourage pursuit of claims with little prospect; create presumption of unreasonable conduct if claim is lost for substantially the same reasons. |
The ET properly applied rule 39(5) ET Rules in finding the claimant acted unreasonably. |
| Beynon and ors v Scadden and ors [1999] IRLR 700 |
Costs orders are compensatory, not punitive. |
The ET’s costs award was compensatory and within its discretion. |
| DPP Law Ltd v Greenberg [2021] EWCA Civ 672; [2021] IRLR 1016 |
Guidance on ET reasoning and appellate review. |
The ET’s reasoning was sufficient and not subject to successful appellate challenge. |
Court's Reasoning and Analysis
The court began by considering the claimant’s contention that his wasted costs application should have been taken into account when the ET decided the respondent’s costs application. The court found that the delay in determining the wasted costs application was a factual matter and not unreasonable given the volume of applications and correspondence. Moreover, the wasted costs application related to conduct predating the liability hearing and was ultimately dismissed as unfounded. The court concluded that any failure to consider the wasted costs application concurrently with the costs application did not amount to a material error.
Regarding the ET’s decision to hear the costs application immediately after the liability hearing, the court held that the ET’s case management discretion was properly exercised. The claimant had been repeatedly warned of the possibility of costs orders via multiple "without prejudice save as to costs" letters and a deposit order. The ET’s adjournment for an hour after delivering its liability decision provided a reasonable opportunity for the claimant to consider the judgment and costs application. The ET’s approach was consistent with the overriding objective and Presidential Guidance to avoid delay and unnecessary expense.
The court further found that the ET had adequately identified the claimant’s unreasonable conduct, including abusive correspondence and persistent, disproportionate applications, and had sufficiently linked this conduct to the costs award. The ET’s reliance on the deposit order and warnings given to the claimant was lawful and supported the conclusion that the claimant acted unreasonably in pursuing a hopeless claim.
In relation to the wasted costs application against the respondent’s representatives, the court agreed with the ET that the respondent’s conduct had been reasonable and proper. The ET had carefully considered each allegation and found no improper or negligent acts. The court found no error in the ET’s reasoning or its consideration of the claimant’s status as a litigant in person.
Finally, the court addressed the argument about the ET panel composition for the wasted costs application and concluded that there was no jurisdictional error. The wasted costs application concerned conduct before the panel’s involvement and was properly determined by the Employment Judge sitting alone.
Holding and Implications
The appeals are dismissed in their entirety.
The Employment Appeal Tribunal upheld the Employment Tribunal’s decisions awarding costs against the claimant and dismissing his wasted costs applications. The court affirmed the ET’s discretion in case management and costs decisions, emphasizing the importance of the overriding objective and the limited scope for appellate interference absent error of law or perversity. The decision confirms that ETs may hear costs applications immediately following liability hearings where appropriate and that litigants must heed deposit orders and costs warnings. No new precedent was established; the ruling reinforces existing principles governing costs and wasted costs applications in Employment Tribunal proceedings.