Clarke v Newry & Mourne District Counci... [2010] NIIT 128

THE INDUSTRIAL TRIBUNALS

CASE REFS: 374/08

1591/08

128/09

CLAIMANT: Edward Francies Clarke

RESPONDENT: Newry & Mourne District Council

DECISION

The decision of the tribunal is that the claimant and/or his representative conducted the proceedings otherwise unreasonably; and the tribunal orders that the claimant must pay to the respondent, the sum of £500 (inclusive of any Value Added Tax properly payable by the claimant to the respondent), in respect of the respondent’s costs.

Constitution of Tribunal:

Chairman (sitting alone): Mr N Drennan QC

Appearances:

The claimant was represented by Mr D Rafferty, of Belfast Unemployed Resource Centre.

The respondent was represented by Mr P O’Kane, Solicitor, of McShane & Company, Solicitors.

Reasons

1.1 This matter, which related to three consolidated claims brought by the claimant pursuant to Articles 73 – 76 of the Employment Rights (Northern Ireland) Order 1996 (detriment on grounds related to trade union membership and activities) was ordered, by consent, at a Case Management Discussion held on 27 August 2009, to be listed for hearing from 1 – 12 February 2010, as set out in the Record of Proceedings dated 3 September 2009. Formal Notice of Hearing for a hearing on those dates (excluding 9 and 11 February 2010) was issued to the parties on 13 January 2010.

1.2 By an e-mail sent by the claimant’s representative to the tribunal, and copied to the respondent’s representative, at 15.10 hours on 29 January 2010, the tribunal was informed as follows:-

“I’m instructed by the claimant to withdraw the above scheduled for hearing on 1 February 2010. I will follow this with a letter of confirmation.”

A letter of confirmation was sent by the claimant’s representative to the tribunal, on 1 February 2010, in the following terms:-

“I am instructed by the claimant to withdraw the above scheduled for hearing today. The tribunal was notified of withdrawal on 29 January by e-mail and by telephone.”

1.3 By decision registered and issued to the parties on 2 February 2010, the said claims of the claimant were dismissed by the tribunal, following the said withdrawal.

1.4 By letter dated 2 February 2010, the respondent’s representative made an application to the tribunal for an Order for Costs against the claimant, pursuant to Rule 40 of the Industrial Tribunals Rules of Procedure, contained in Schedule 1 of the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 (‘the Rules of Procedure’). In the letter it was stated:-

“ … the grounds of the respondent’s application are that the claimant and/or his representative has, in conducting the proceedings acted vexatiously and/or unreasonably … .”

2.1 Rule 40 of the Rules of Procedure, insofar as relevant and material, provides:-

“Rule 40 …

(2) A tribunal or chairman shall consider making a costs order against a paying party where, in the opinion of the tribunal or chairman (as the case may be) any of the circumstances in Paragraph (3) apply. Having so considered the tribunal or chairman may make a costs order against the paying party if it or he considers it appropriate to do so.

(3) The circumstances referred to in Paragraph (2) are where the paying party has in bringing the proceedings or he or his representative has in conducting the proceedings, acted vexatiously … or otherwise unreasonably … .”

2.2 Rule 41 of the Rules of Procedure, insofar as relevant and material, provides:-

“(1) The amount of a costs order against the paying party shall be determined in any of the following ways –

(a) The tribunal may specify the sum which the paying party must pay to the receiving party, provided that sum does not exceed £10,000.

…

(2) The tribunal or chairman may have regard to the paying party’s ability to pay when considering whether it or he shall make a costs order or how much that order should be.

… .”

3.1 In connection with the said application for an Order for Costs, the respondent’s representative prepared a schedule of the costs claimed by the respondent, which was made up of £4,103.10 (inclusive of Value Added Tax), in respect of the respondent’s solicitor’s costs and £1,000 (no Value Added Tax payable), in respect of outlay for the fees of the counsel for the respondent. The total sum claimed was therefore £5,103.10 (inclusive of Value Added Tax as appropriate).

In respect of the sums claimed for solicitor’s costs, these related to a claim for a total of 24 hours worked by the solicitor on certain dates/times, as specified in the schedule, during the month of January 2010. The rate charged for the said work was £97 per hour with a 50% mark-up. The claimant’s representative did not dispute the rate charged or the said percentage mark-up (see further Donaldson v Eastern Health & Social Services Board [1997] NI 232 and the taxing master’s agreed composite hourly rate for solicitors from April 2009).

The respondent’s counsel marked a brief fee of £1,500 in the above matter. He stated, in correspondence to his instructing solicitors, inter alia, that:-

“ … if the matter had resolved at an earlier stage, two weeks before the allocated hearing date … a lesser brief fee of £500 would have been marked.”

As a consequence, the respondent claimed in the schedule the sum of £1,000 (£1,500 - £500), as set out above, in respect of counsel’s fee. The claimant’s representative did not dispute the method of calculation in respect of counsel’s fees.

3.2 The tribunal was informed by the claimant, for the purposes of this application, and in relation to his ability to pay any Order for Costs made by the tribunal (see further Rule 41(2) of the Rules of Procedure) that he had a net income from his employment with the respondent in the sum of £300 per week. He further indicated that he had average weekly outgoings, in respect of food/heating oil/petrol in the sum of approximately £160 together with unspecified sums in respect of normal household and personal expenditure. The respondent’s representative did not dispute these figures.

4.1 Under Rule 40(2) and (3) of the Rules of Procedure, it is necessary for a tribunal, when considering an application for costs under the said Rules to embark on a two-stage process. Firstly, the tribunal has to consider whether it has been established that the relevant party has satisfied the terms of Rule 40(3) – for example a finding of vexatious and/or otherwise unreasonable conduct. The tribunal then has to consider, secondly and separately, whether to exercise its discretion to make an Order for Costs (see further Criddle v Epcot Ltd [UKEAT/0275/05]). Mummery LJ in Khan v Kirklees BC [2007] EWCA Civ 1342, in the course of his judgment said it was not possible to list exhaustively what all the circumstances at the second stage might be. However, he indicated (see Paragraph 8 of the judgment) potentially relevant considerations might include conduct, proportionality and the merits of the case and also whether a person is represented or unrepresented. However, clearly, this was not an exhaustive list and each case will depend on its own particular facts.

4.2 Unlike the Rules, which normally apply to proceedings in, for example, the High Court/County Court, costs do not follow the event. In addition, the Rules of Procedure do not replicate the general rules, applicable in those courts, which provide, where a person discontinues proceedings, he is normally liable for the costs which a defendant has incurred, before notice of discontinuance was served on him.

In the case of Lodwick v London Borough of Suffolk [2004] IRLR 554, a case of unfair dismissal/breach of contract, Lord Justice Pill made it clear, when considering whether an Order for Costs should be made under the said Rule:-

“To order costs in the employment tribunal is an exceptional course of action and the reason for, and the basis of, an order should be specified clearly; especially where a sum as substantial as £4,000 is involved.”

There is nothing in the Rules of Procedure which expressly states that an Order for Costs should be considered the exception rather than the rule. Certainly, however, that has been the view taken in relation to the exercise of the power under the said Rule, which govern claims, such as unfair dismissal/unlawful discrimination (see further the case of Gee v Shell (UK) Ltd [2003] IRLR 82).

But, as Burton P in the case of Salinas v Bear Stearns International Holdings [2005] ICR 1117, stated, the reason why Costs Orders are not made in the substantial majority of cases is that the tribunal Rules contain a high hurdle to be surmounted, before such an Order can be considered. Those Rules, to which Burton P was referring, were the pre-conditions which require to be considered before the issue of the discretion arises, as set out above. In the case of Benyon v Scadden [1999] IRLR 700, it was made clear that the Costs Rules are discretionary and, as such, cannot be restricted by case law. Matters to be derived from the case law can only be factors that may or may not be given weight by the tribunal. In any event, any Order for Costs must be compensatory and not punitive (see further Lodwick v London Borough of Suffolk [2004] IRLR 554). In the case of McPherson v BNP Paribas (London Branch) [2004] IRLR 558, the Court of Appeal held that there is no requirement for a causal link between the party’s unreasonable behaviour and the costs incurred by the receiving party:-

“In exercising its discretion to award costs, the tribunal must have regard to the nature, gravity and effect of the unreasonable conduct. However, the discretion is not limited to those costs that are caused by or are attributable to the unreasonable conduct. The unreasonable conduct is a precondition of the existence of the power to order costs and is also a relevant factor to be taken into account in deciding whether to make an Order for Costs and the form of the Order, but that is not the same as requiring a party to prove the specific unreasonable conduct caused particular costs to be incurred.”

5.1 In this matter, as set out above, the respondent’s representative has made his claim for an Order for Costs, pursuant to Rule 40(3) on the grounds that the claimant has in conducting the proceedings acted vexatiously and/or otherwise unreasonably. The classic definition for vexatious claims is found in the case of ET Marler Ltd v Robertson [1974] ICR 72, which stated:-

“ … if an employee brings a hopeless claim not with any expectation of recovering compensation but out of spite to harass his employers or for some other improper motive, he acts vexatiously.”

However, the court made clear that this was a high hurdle for a party to show, stating:-

“ … it is a serious finding to make against an applicant, for it will generally involve bad faith on his part and one would expect the discretion to be sparingly exercised … .”

5.2 There is no doubt this matter has had a long history of case-management in order to prepare it for hearing, with some eight Case Management Discussions between August 2008 and December 2009 involving the tribunal granting various interlocutory orders and/or giving directions to both parties for, in particular, additional information and/or discovery and inspection; together with a pre-hearing review relating to an unsuccessful application by the claimant in August 2009 for an amendment of his claim to include an alternative claim of unlawful discrimination on the grounds of political opinion. As set out in the various Records of Proceedings of those Case Management Discussions, little was agreed between the parties and many matters were strongly contested, requiring orders to be made by the tribunal. Issues of non-compliance, in particular time-limits, with the tribunal’s orders frequently arose, requiring, on one occasion, the tribunal to make an ‘Unless Order’ against the claimant on 21 May 2009, which was complied with.

I have no doubt that, if this matter had come on for hearing, it would have continued to be strongly contested between the parties.

However, I have no grounds, on the basis of the ‘pleadings’/Records of Proceedings, before me, and in the absence of a full hearing, to conclude that the claimant acted in bad faith and/or had brought a hopeless claim, with no expectation of receiving compensation but out of spite and/or to harass the respondent or for some other improper motive. The fact that the respondent has at all times believed that it would be ultimately successful in defending the claimant’s claim is not the same. Indeed, it is to be noted, that the claim for costs by the respondent was not brought on the grounds that the claim made by the claimant was misconceived (which includes having no reasonable prospect of success) (see further Rule 40(3)).

In the circumstances, I therefore was not satisfied that the respondent had established that the claimant and/or his representative had conducted the proceedings vexatiously. Thus, it was therefore necessary for me to further consider whether the respondent had shown that the claimant and/or his representative had conducted the proceedings otherwise unreasonably.

5.3 Clearly, ‘otherwise unreasonably’ is a much wider concept then ‘vexatiously’. It reinforces the obligation on representatives, as well as parties, to behave reasonably in the conduct of the proceedings. In the Khan case, Mummery LJ, when emphasising that Costs Order are the exception rather than the norm in employment tribunals, said:-

“If you behave in a reasonable way and you lose your case you do not have to pay the costs, but if you behave in an unreasonable way … .”

What is unreasonable conduct depends very much on the facts of the particular case. As Girvan LJ confirmed in the case of Peifer v Castlederg High School and Western Education & Library Board [2008] NICA 49, a tribunal or chairman is required to give effect to the terms of the overriding objectives when it exercises any power given to it under the Rules of Procedure and stressed that these objectives were intended to be exactly what they were described as being, namely overriding objectives. Indeed, he stated that “tribunals should be encouraged to use their increased costs powers set out in Regulation 38 et seq of the Rules of Procedure to penalise time-wasting or the pursuit of cases in a way which unduly and unfairly increases the costs falling on opponents”. In this case, the claimant did not have the benefit of legal representation; but he had the benefit of a representative, who has considerable experience of representing parties in these tribunals. In this context, Girvan LJ stated in the Peifer case:-

“When parties before the tribunal appear in person, without the benefit of legal representation, the lack of legal experience on the part of an unrepresented party may lead to the pursuit of irrelevancies and unnecessary lengthy proceedings. While tribunals must give some latitude to personal litigants who may be struggling in a complex field they must also be aware that the other parties will suffer from delay, incur increased costs, be exposed to unstructured and at times irrelevant cross-examination. While one must have sympathy for a tribunal faced with such a situation the tribunal remains under the same duty to ensure that the overriding objectives in Regulation 3 are pursued.”

In the case of McPherson v BNP Paribas [2004] IRLR 558, the Court of Appeal emphasised that withdrawal on its own is not necessarily unreasonable behaviour for the purposes of Rule 40.

In that case the claimant withdrew his case several weeks before the hearing so there was no decision on the substantive merits, but the tribunal nevertheless made an Order for Costs in favour of the respondent.

Mummery LJ set out the conflicting considerations. On the one hand, it was important for claimants not to be deterred from making a sensible litigation decision about dropping a claim because of the prospect of an Order for Costs on withdrawal, which might well not be made against them if they fought on to a full hearing and failed. He acknowledged that in most cases the withdrawal will result in a saving of costs. But, on the other hand, Mummery LJ also recognised that the practice of never making Costs Order on withdrawal might encourage speculative claims, by allowing claimants to start cases and to pursue them down to the last week or two before the hearing in the hope of receiving an offer to settle, and then, failing an offer, dropping the case without any risk of a costs sanction. He concluded:-

“The solution lies in the proper construction and sensible application of the Rule … . The crucial question is whether, in all of the circumstances of the case, the claimant withdrawing the claim has conducted the proceedings unreasonably. It is not whether the withdrawal of the claim is in itself unreasonable.”

On the facts of the McPherson case, the court found that the tribunal was entitled to conclude that there was unreasonable conduct of the proceedings on the part of the claimant. He had, for example, not complied with the orders of the tribunal, he had been asked for documentation which he was obviously loathed to supply; and he had given the impression right up to the date of the withdrawal on 9 May 2002 that he was pursuing the complaint and allowed the respondent to incur considerable expense in preparing the case on that basis, while, on his own evidence and unknown to the tribunal and the respondent, he had seriously been considering with his GP in December 2001 the question of abandoning the proceedings on health grounds. It is also necessary, in relation to this issue of costs, to recall Sir Hugh Griffith’s observation in the case of Marler v Robertson, namely “the ordinary experience of life frequently teaches us that which is plain for all to see once the dust of battle has subsided was far from clear to the combatants when they took up arms”.

5.4 In this matter, the claimant withdrew his claim mid-afternoon on Friday 29 January 2010, in circumstances where the hearing was due to commence on Monday 1 February 2010. During the month of January 2010; as set out in the respondent’s representative’s detailed chronology of time spent on work preparing the case for hearing, the respondent’s representative was involved, in ongoing discussions/meetings/correspondence with the claimant’s representative in order to agree and prepare the bundle for the hearing. Like much that had taken place in this case, this process of preparation of the bundles did not go as smoothly as one might have hoped. However, I put this down, in part, to the fact that the claimant’s representative did not have the same administrative facilities as were open to the solicitor for the respondent. This clearly led to some of the difficulties. However, crucially, throughout this whole process involving the respondent’s representative preparing its case for the hearing commencing on 1 February 2010, there was no suggestion at any time that the claimant was not intending to proceed with his claim to hearing. Thus, the respondent’s representative continued the necessary preparatory work for the hearing up until he was notified by the claimant’s representative of the withdrawal of the claim on 29 January 2010 at 15.10 hours.

5.5 It was not seriously challenged, by the claimant’s representative, that the 97 hours stated to have been spent by the respondent’s representative on the individual items of work in preparation for the case, as set out in the respondent’s schedule, between 4 January 2010 – 29 January 2010 were in fact spent on such preparatory work.

5.6 The crucial issue, in my judgment, was when and in what circumstances did the claimant decide to withdraw his claim. By the end of December 2009, I am satisfied that the claimant had obtained all the relevant additional information and/or documentation from the respondent to determine whether he was going to proceed with his claim. In particular, by the date of the Case Management Discussion on 17 December 2009, the legal and main factual issues had been identified by the parties and the respondent had complied with the tribunal’s order to provide to the claimant the necessary replies in relation to the issues arising under Article 75 of the 1996 Order. At the date of that Case Management Discussion, both parties were agreed that the matter was now ready for hearing to commence on 1 February 2010. I gave various directions to enable an agreed bundle to be agreed between the parties, stressing that the representatives should liaise and co-operate including, if appropriate and relevant, exchanging between them ‘draft’ indexes in good time. I am satisfied, on the evidence given to the tribunal at this hearing by the claimant and his representative, that the claimant was intending to proceed with his claim against the respondent, until a consultation took place with one of the persons, whom the claimant intended to call as a witness in support of his claim. This was Mr ‘X’, a full-time trade union official. This consultation, with Mr ‘X’, was attended by the claimant and the claimant’s representative. It took place in a coffee shop in Newry on 28 January 2010. In the days earlier that week, other consultations had taken place with other witnesses, whom the claimant intended to call. During the consultation with Mr ‘X’, it became apparent that this witness would not be supportive of the claimant’s claim. As a result, upon advice from the claimant’s representative, the claimant decided to consider his position and, after consulting his General Practitioner on 29 January 2010, he gave instructions to the claimant’s representative to withdraw his claim. He was explicit, in his evidence to the tribunal, that the only factor in his decision not to proceed with the claim, and to have the claim withdrawn, related to what had occurred at this consultation. He had always expected that this witness would give evidence, supporting his claim, but had now found, at the consultation, that this would not be the case. I accept this evidence. However, it must be noted that this witness’ evidence was considered by the claimant and his representative to be very important and relevant; so much so that, when the witness indicated he was not prepared to support the claimant’s claim, the claimant, upon advice from the claimant’s representative, decided to withdraw his claim. At no time prior to the consultation, some two working days prior to the commencement of the hearing, had any attempt been made by the claimant or his representative to consult and/or to take a statement from this witness to ensure that he would in fact give the evidence which it was expected that he would give. This case had been listed from August 2009 and the claimant and his representative knew that considerable preparation would be necessary by both parties and their representatives to ensure that this case was ready to start as arranged on 1 February 2010. The tribunal had frequently, throughout the Case Management Discussions, reminded the parties of the terms of the overriding objective.

5.7 To leave, until 28 January 2010, to consult with such a witness, whose involvement in the case was of such importance and relevance that, when it became clear he would not give the evidence expected, the claimant felt it necessary to withdraw his claim, was, in my judgment, unreasonable conduct on the part of the claimant and/or his representative. The failure to do so, until such a late stage, was particularly unreasonable. From in or about October 2009, the claimant’s relationship with Mr ‘X’ had deteriorated to such an extent that he had reported Mr ‘X’ to more senior officials in the union. The claimant did so because he felt, in relation to certain matters, not related to the issues the subject-matter of these claims, the official was more supportive of management than he should have been in his role as a trade union official. Despite these misgivings about Mr ‘X’s relationship with management of the respondent, neither the claimant or his representative had consulted in any way with Mr ‘X’ and, in particular, confirmed with him he would support the claimant, as a witness, in relation to the subject-matter of the claimant’s claim. In light of the foregoing and the ongoing preparation for the case, the necessity to have an early consultation to confirm the position was particularly important and necessary.

5.8 Having determined the conduct of the claimant and his representative was unreasonable, it was then necessary for me to consider whether, in the exercise of my discretion, I should make an Order for Costs. The agreed bundle was ordered by the tribunal at the Case Management Discussion on 21 December 2009 to be lodged with the tribunal by 21 January 2010. It is apparent that, even on 28/29 January 2010, efforts were being made by both the claimant’s representative and the respondent’s representative to finalise an agreed bundle. At the Case Management Discussion on 21 December 2009, Mr Rafferty had indicated to the tribunal that over the Christmas/New Year period he was to be out of the jurisdiction in Australia. However, by at least 18 January 2010, I am satisfied that the claimant’s representative was back in the jurisdiction and preparing with the respondent’s representative the documentation for inclusion in the agreed bundle. Although I consider that the failure to arrange an earlier consultation with the trade union official prior to 28 January 2010 was unreasonable conduct on behalf of the claimant and/or his representative, and should and could have been held before the claimant’s representative went on holiday to Australia, I am not prepared, in the exercise of my discretion, to make any Order for Costs for any such failure until his return from Australia. Indeed, I can see no reason why such a consultation, could not have been arranged, prior to his leaving for Australia, to take place immediately upon Mr Rafferty’s return from Australia. It could have been arranged for on or about 18 January 2010, when Mr Rafferty was back in Northern Ireland and already carrying out work in preparation of the bundles. If that consultation had been arranged for on or about 18 January 2010, counsel’s fees could have been restricted to at or about £500 and the respondent’s representatives would have saved a considerable amount of time in relation to the items of work carried out by them after that date, as set out in his said schedule. In particular, on the basis of his claim for 24 hours at £97 per hour plus 50% mark-up, I think that a saving of approximately 14 hours work could have been made – which I estimate to be, including the 50% mark-up, a sum of £2,037 exclusive of VAT (£1,358 plus £679).

However, subject to what I set out below, having found that the conduct of the claimant and/or his representative was unreasonable in the circumstances set out above, in the exercise of my discretion, I was also prepared to make an Order for Costs against the claimant in the sum of £2,037, (plus Value Added Tax), in respect of the respondent’s solicitor’s costs together with £500 in respect of the respondent’s counsel’s fees. This would have related to the costs incurred by the respondent’s representative from on or about 18 January 2010. In exercising my discretion whether to make an Order for Costs in such circumstances, I took into account, as set out above, the fact that the claimant’s representative was out of the jurisdiction during the early part of January 2010. However, given that the claimant and/or the claimant’s representative were fully aware of the considerable efforts and time being taken by the respondent’s representative to prepare for this case, for the reasons set out above, I am satisfied the consultation with the essential witness could and should have been arranged to take place on or about 18 January 2010 and not left to 28 January 2010. The failure to arrange the consultation in good time in the circumstances was, in my judgment, a major failure which should not have happened and did not need to happen. If parties and/or their representatives leave such consultations to ‘the last minute’ and this results in the necessity to withdraw the claim, they must be aware that they are taking a risk and that costs may be awarded against them in such circumstances. The claimant and his representative were fully aware of the terms of the overriding objective, which had been referred to at various Case Management Discussions. It also has to be noted that in this case, during the course of earlier Case Management Discussions, the claimant and his representative, on a number of occasions, had left matters to the last minute and/or failed to comply with relevant tribunal orders in time. On one occasion this had resulted in the imposition of an ‘Unless Order’ against the claimant. In making that Order the importance of the terms of the overriding objective and the necessity to comply with tribunal’s orders in time were stressed; and that, if they were not, draconian sanctions might be imposed such as the strike-out of the claimant’s claim for failure to comply with the ‘Unless Order’. Thus, the claimant and his representative were fully aware of the necessity to take in good time all necessary and appropriate action to properly prepare the claimant’s case for hearing. In the circumstances, I was therefore satisfied it was appropriate, in the exercise of my discretion, to make such an Order for Costs.

5.9 As set out previously, the tribunal may have regard to the paying party’s ability to pay when considering whether it shall make a Costs Order or how much that Order should be (see Rule 41(2) of the Rules of Procedure). In this case, the claimant has a net income of approximately £300 per week, with outgoings of approximately £200. In the circumstances, I have concluded that it is appropriate for me to take into account the claimant’s ability to pay, in considering whether to make any Costs Order and/or how much that Order should be. Taking into account the claimant’s net weekly income, after taking account of relevant outgoings, it would appear that the claimant has approximately £100 per week available to pay any Order for Costs made by the tribunal. I am of the opinion that, although the weekly income of the claimant is small, that it is appropriate for the tribunal to make an Order for Costs against the claimant, in the circumstances set out above; but the amount of his weekly income has to be taken into account in relation to the amount of any such Costs Order. Doing the best that I can, taking account of the claimant’s income, I have come to the conclusion that I should make an Order for Costs against the claimant in the sum of £500, (inclusive of any sum for Value Added Tax that is properly payable by the claimant to the respondent), as a contribution towards the respondent’s costs.

Chairman:

Date and place of hearing: 23 April 2010, Belfast

Date decision recorded in register and issued to parties:

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