Where an Employment Tribunal exercises the discretion to award costs because of unreasonable conduct it is not required to precisely align the unreasonable conduct with the costs caused by it, but it is generally necessary to have regard to the nature, gravity and effect of the unreasonable conduct: McPherson v BNP Paribas (London Branch) [2004] ICR 1398 , CA. In Yerrakalva v Barnsley Metropolitan Borough Council [2012] ICR 420 , Mummery LJ returned to the issue he had discussed in McPherson :
The grounds of appeal
Assuming that when the claimant obtained legal representation he was advised that his claim had no reasonable prospects of success
The Employment Tribunal stated repeatedly that it assumed that once the claimant was legally represented he was advised that there were no reasonable prospects of success in the claim:
The respondent conceded that the Employment Tribunal erred in law in holding that the claimant must have been advised that his claim had no reasonable prospects of success, which involved making assumptions about what would have been privileged advice. That assumption was a significant component of the decision to award costs. The respondent contends that the judgment should be upheld notwithstanding this error of law because the Employment Tribunal also concluded that the claim was misconceived in the sense that it had no reasonable prospects of success. Having decided that two of the thresholds for awarding costs were met, that the claim was misconceived and the claimant had acted unreasonably in pursuing it, the Employment Tribunal then exercised the discretion to award costs. It is not clear to what extent that exercise of discretion was as a result of the Employment Tribunal concluding that the claim was misconceived and/or that the claimant should have realised that was the case prior to having legal representation, as opposed to continuing with the claim once he had legal representation based on the assumption about the advice that he would have been given. Accordingly, this error alone undermines the entirety of the judgment.
The period during which the claimant was unrepresented
In my reasons for permitting the appeal to proceed at the Rule 3(10) Hearing I summarised this ground as follows:
I accept the respondent's contention that the Employment Tribunal did take account of the period during which the claimant was unrepresented. However, I do not accept that the Employment Tribunal took account of the difficulties that face a claimant in determining whether a discrimination claim has no reasonable prospect of success prior to the hearing. The authorities set out above make it clear this is a factor that should have been taken into account.
This links with the decision of the Employment Tribunal that it was not relevant that the respondent had not sought strike out, a deposit order or given a costs warning:
It is surprising that the Employment Tribunal concluded that the claimant, while acting in person prior to the hearing, should have realised that his claim had no reasonable prospects of success while also concluding it was irrelevant that the professionally represented respondent did not apply for strike out, which would have required the application of a very similar test, because such an application would have had very limited prospects of success. As set out above, the policy considerations that were referred to in Anyanwu , a case to which the Employment Tribunal specifically referred, are also of potential relevance to making an award of costs at the conclusion of a discrimination claim. Strike out can prevent a discrimination complaint "being examined on the merits or demerits of its particular facts" but so could fear that an Employment Tribunal may too readily be prepared to award costs in case in which it is difficult to form a clear view of the merits of a discrimination complaint, for which there appears to be some supporting evidence, because the outcome is likely to turn on witness evidence given at the final hearing.
In Iyieke HHJ Auerbach warned that when considering whether a litigant should have appreciated that a claim had no reasonable prospects of success it is important to avoid "being influenced by the hindsight of how the evidence in fact unfolded at trial".
In this case the Employment Tribunal concluded that there "was no evidence at all that race played any part in what happened" which appears to have been a factor in the conclusion that the claimant should have appreciated this all along. The Employment Tribunal contrasted him having asked for a change of time for his interview as opposed to DW who obtained a change of date, and concluded that this could not provide any evidence to support a complaint of discrimination. The fact that the claimant asked for his interview to be moved and it was not, but another person of a different race asked for an interview to be moved and it was, albeit to another day, was a factor that the claimant could reasonably have thought provided some limited support for his claim. The Employment Tribunal held that the claimant's suggestion that the successful candidate was preferred by the respondent meant that race cannot have been a factor as that would have been the case whatever the claimant's race. However, it is not necessary that the claimant's race be a reason for the treatment, it is only necessary that race was a factor. It there was a preference for a white candidate that was a matter that the claimant might reasonably have thought supported his complaint of race discrimination, particularly when linked with his assertion that there was a significant under-representation of those from ethnic minorities in the respondent's staff (a factor that the claimant raised but the Employment Tribunal did not refer to). The claimant was also entitled to consider that the delay in dealing with his request for feedback and his grievance might support his claim, notwithstanding the fact that the Employment Tribunal accepted the respondent's evidence explaining the delay at the full hearing.
The Employment Tribunal erred in law in concluding that the claimant should have appreciated from the outset that the claim had no reasonable prospects of success by having no regard to the difficulties facing a claimant in ascertaining the prospects of success in a claim that essentially turned on why the decision not to appoint him was taken.
Nature, gravity and effect of any unreasonable conduct
For an award of costs to be made there is no requirement for a precise attribution of the costs to specific unreasonable conduct, however it is necessary to have regard to the nature, gravity and effect of any unreasonable conduct. The main form of unreasonable conduct that the Employment Tribunal relied on was the claimant pursuing a claim that he should have appreciated had no reasonable prospect of success. For the reasons set out above, I have concluded that the Employment Tribunal erred in law in so doing.
The Employment Tribunal relied on further unreasonable conduct. The Employment Tribunal did not analyse the nature, gravity and effect of the additional unreasonable conduct. The Employment Tribunal criticised the claimant for expressing his opinions about widespread racism including "privileged and educated Caucasian professionals including Judges". This was described as "a conspiracy of which there is no single piece of evidence". The Employment Tribunal also criticised the claimant for being "fixed in his views that the only explanation for the things he complained of was racism" and for being "combative and argumentative in cross-examination". The Employment Tribunal also criticised the claimant for things that he suggested he would do, but had not done, such as having "threatened to pursue the respondent for costs when the case had to be adjourned because respondent's Counsel fell ill", "intimated an application for costs when the hearing was postponed because of the claimant's non-availability" and "made an application for specific disclosure that, ultimately, was not pursued". None of these matters can have had significant effect on the costs incurred in defending the claim. The Employment Tribunal did not consider that fact and analyse the nature, gravity and effect of his conduct. The Employment Tribunal was entitled to see the claimant's belief that there is widespread racism as being irrelevant to the case it had to determine, but it was not a reason to award costs against him for expressing that opinion.
Conclusion
The appeal is allowed. The Employment Tribunal expressed itself in such trenchant terms that I have decided that the matter should be remitted to a differently constituted Employment Tribunal so that the claimant can be confident that the application for costs will be determined afresh if the respondent decides to pursue it.