Dean & Dean (a firm) & Ors v Dionissiou -Moussaoui (Rev 1)

Costs in employment tribunals remain discretionary. An appellate court may interfere with a refusal to award costs only where the tribunal erred in legal principle, failed to consider relevant circumstances, or reached an obviously wrong conclusion. Claims struck out on jurisdictional or procedural grounds before a substantive hearing cannot thereby be treated as false, misconceived, frivolous or vexatious, because the evidence and disputed facts remain untested. Relevant considerations include surviving claims, the fact that the allegations would have been contested, and difficulties caused by complex procedural regulations. An appellate court must not substitute its own assessment merely because it might have given fuller reasons or made a different costs order.

The claimant, a solicitor, brought employment tribunal proceedings against her former firm and connected individuals, alleging discrimination, sexual harassment, unfair constructive dismissal and related matters. Most claims were struck out on jurisdictional grounds or withdrawn after a pre-hearing review; holiday pay and victimisation claims remained. The respondents sought substantial costs under rule 40(3) of the Employment Tribunal Rules of Procedure 2004. The Employment Tribunal refused the application, and the Employment Appeal Tribunal dismissed the appeal on UKEAT/0140/08ZT. The central issue was whether the Employment Tribunal had erred in principle or acted plainly wrongly in refusing costs.

A related County Court appeal concerning commission arrangements was heard at the same time, but this appeal concerned only the Employment Tribunal costs decision.

1. Appeal dismissed. Lord Justice Mummery gave the judgment, with Lord Justice Stanley Burnton and Lord Justice Patten agreeing. The salaried partners’ appeal was not pursued and was dismissed.
2. Rule 40(3) of the Employment Tribunal Rules of Procedure 2004 conferred a discretion. The Employment Tribunal correctly recognised that a costs application had to be considered, but that an award was not mandatory merely because a claim had been struck out as having no reasonable prospect of success or as misconceived.
3. The applicable appellate threshold was stringent. Interference was justified only if the Employment Tribunal erred in legal principle, failed to give proper consideration to all relevant circumstances, or reached a conclusion that was plainly or obviously wrong. This approach was consistent with Barnsley MBC v. Yerrakalva [2011] EWCA Civ 1255.
4. The Employment Tribunal had been fully aware of the nature and context of the proceedings after a two-day pre-hearing review. It was entitled to consider that the victimisation claim would continue and that, had the other claims proceeded, the allegations would have been contested.
5. Because the claims had been struck out on jurisdictional grounds, there would be no substantive testing of the evidence, determination of disputed facts, or adjudication of their merits. The Employment Tribunal therefore could not conclude that the allegations were false, or for that reason that the claims were misconceived, frivolous or vexatious.
6. The Employment Tribunal had done the best it could with the information available and had exercised its discretion fairly and adequately. The Court of Appeal could not intervene simply because it might have analysed the circumstances more deeply, given fuller reasons, or awarded some costs.

1. Court of Appeal (Civil Division): dismissed the appeal against the refusal of costs under [2011] EWCA Civ 1332.
2. Employment Appeal Tribunal: on 14 July 2008, dismissed the respondents’ appeals from the Employment Tribunal’s costs decision, case number UKEAT/0140/08ZT.
3. Employment Tribunal: following a pre-hearing review, struck out most claims or recorded their withdrawal, retained claims for holiday pay and victimisation, and refused the respondents’ costs application in its decision sent on 1 October 2007.