Nicolson Highlandwear Ltd v Nicolson

Under Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, success in an unfair dismissal claim does not prevent a finding that the claimant acted unreasonably. The question is whether the proceedings were brought or conducted unreasonably in their particular context. A claimant who knowingly pursues a claim despite well-founded allegations of dishonesty and clear notice that no compensation may be awarded may have acted unreasonably. Sympathy for a litigant in person, speculation about legal advice, and general concerns about discouraging unrepresented claimants are irrelevant to that assessment. An unfair dismissal claim is directed to the statutory remedies under the Employment Rights Act 1996; it is not brought merely to obtain a declaration of unfair dismissal.

The respondent appealed from an Employment Tribunal’s refusal to award expenses. In the underlying proceedings the claimant had been found automatically unfairly dismissed because the statutory dismissal procedure had not been followed, but the tribunal found that his gross misconduct and prima facie fraudulent financial conduct had directly caused the dismissal and awarded no compensation.

The claimant had sought compensation and had been warned in the respondent’s ET3 that the respondent would rely on dishonesty and submit that no compensation should be awarded. The issue was whether his decision to bring and continue the claim was unreasonable under the costs provisions.

1. Appeal allowed. The refusal of expenses was set aside. The claimant was found to have acted unreasonably in bringing and continuing the claim, and the respondent was held entitled to an award of expenses.
2. Under regulation 40(3) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, the relevant question is not whether the paying party succeeded in any part of the claim. Partial or complete success does not itself prevent a finding of unreasonable conduct. The assessment depends on the circumstances of the individual case.
3. The claimant knew, or must have known, that the dishonesty underlying his dismissal was well founded and that the respondent would argue that no compensation should be awarded. His persistence with the claim in that context was unreasonable. The approach in Daleside Nursing Home Ltd v Mathew and Dunedin Canmore Housing Association Limited v Donaldson supported that conclusion.
4. The second tribunal relied on irrelevant or unsupported matters. It had no basis for finding that Mr Chalmers had lied on oath, since rejection of evidence does not itself establish perjury. It was also wrong to speculate about legal advice, the withdrawal of solicitors, or the reaction of other unrepresented claimants.
5. The tribunal further erred in treating a bare declaration of unfair dismissal as a proper objective of an unfair dismissal claim. The listed provisions of the Employment Rights Act 1996 provide for statutory remedies, but do not establish a declaratory remedy of that kind.
6. The matter was remitted to a fresh Employment Tribunal to assess the amount of expenses.

• Employment Tribunal, Edinburgh: found the dismissal automatically unfair but awarded no compensation.
• Employment Tribunal, Edinburgh: refused the respondent’s application for expenses in the judgment registered on 29 September 2009.
• Employment Appeal Tribunal: allowed the appeal, substituted a finding of unreasonable conduct and remitted assessment of expenses to a fresh tribunal.