Afolayan v MRCS Ltd & Anor

For costs under rule 34(1)(a), the relevant conduct may include the bringing and defence of the underlying proceedings, not merely conduct in defending an appeal. It was arguable that disciplinary proceedings initiated in bad faith, followed by bad-faith opposition to an unfair-dismissal claim, could amount to improper conduct. The issue required further factual findings. Permission to appeal was therefore granted on that limited ground, with all other grounds refused.

Mr Afolayan, a care worker, was dismissed after disciplinary proceedings concerning an altercation with a resident. The Employment Tribunal found the dismissal procedurally unfair but awarded no compensation, finding 100% contribution. On 4 June 2008, the Employment Appeal Tribunal allowed his appeal, identified fundamental errors, and remitted contribution and remedies issues. Nelson J later refused his costs application under rule 34(1)(a). The renewed application concerned whether the costs decision had addressed alleged bad faith in bringing and defending the underlying proceedings, rather than only the employer’s conduct in defending the EAT appeal.

Permission granted on a limited basis. Permission was refused on all remaining grounds.

1. EAT rules rule 34(1)(a) permits a costs order where proceedings were unnecessary, improper, vexatious or misconceived, or where there was unreasonable delay or other unreasonable conduct in bringing or conducting them.
2. Mr Afolayan sought costs of the proceedings in the Employment Tribunal and Employment Appeal Tribunal, including preliminary hearings. Nelson J’s reasoning addressed the employer’s conduct in resisting the appeal and concluded that it had not been improper or unreasonable.
3. Lady Justice Smith considered it arguable that this approach was incomplete. The costs inquiry was not necessarily confined to the employer’s conduct in defending the EAT appeal. It could require consideration of whether the original disciplinary proceedings and the employer’s opposition to the unfair-dismissal claim had been conducted in bad faith.
4. It was further arguable that bringing disciplinary proceedings in bad faith, followed by contesting the unfair-dismissal claim in bad faith, could amount to improper conduct within rule 34(1)(a). The necessary factual findings had not yet been made. They might need to await the differently constituted tribunal’s consideration of the remitted remedies issues.
5. Permission was granted only on that basis. The grounds were to be amended accordingly by 16 January 2009. The applicant was encouraged to seek representation.

1. Court of Appeal (Civil Division) — In [2008] EWCA Civ 1554, Lady Justice Smith granted renewed permission to appeal on the limited bad-faith and improper-conduct ground and refused permission on all other grounds.
2. Employment Appeal Tribunal — On 4 June 2008, the EAT allowed the unfair-dismissal appeal on several grounds and remitted contribution and compensation issues to a differently constituted tribunal. On 18 July 2008, Nelson J refused the applicant’s subsequent costs application.
3. Employment Tribunal — The tribunal had found the dismissal procedurally unfair but made no compensation award after finding that the applicant had contributed 100% to his dismissal.