Cook v Building Research Establishment Ltd

Under rule 40 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, an Employment Judge must first decide whether a party acted unreasonably in bringing or conducting proceedings. Only then does the discretionary question arise whether a costs order is appropriate in all the circumstances.

Withdrawal alone does not establish unreasonable conduct. An unrepresented claimant is not ordinarily unreasonable merely because they did not discover the combined effect of a statutory tribunal award limit and authority preventing a cause of action from being divided between tribunal and court proceedings. A costs order cannot stand where the claimant’s original claims and their timing were reasonably pursued, even if withdrawal of a remaining claim may retrospectively appear unwise.

The claimant was dismissed after almost 19 years’ service. He maintained that the dismissal was by reason of redundancy, while the employer relied on capability. He presented claims for contractual and statutory redundancy payments in the Employment Tribunal.

After obtaining legal advice, he withdrew the contractual claim because the Tribunal could award no more than £25,000. On the day fixed for the statutory claim, he withdrew that claim after being told that findings on the reason for dismissal could affect a later county court claim. The Employment Judge later ordered him to pay £10,000 towards the employer’s costs, finding his conduct unreasonable.

The claimant appealed. The central issue was whether it had been open to the Employment Judge to characterise the bringing, pursuit and withdrawal of either claim as unreasonable for the purposes of rule 40.

1. Appeal allowed. The costs order was set aside. The Employment Judge’s conclusion that the claimant had acted unreasonably in bringing or conducting either redundancy claim was not open to him on the facts found.

2. Rule 40 required two distinct stages. First, the Tribunal had to determine whether the claimant had acted vexatiously, abusively, disruptively or otherwise unreasonably in bringing or conducting the proceedings. Secondly, and only if that threshold was met, it had to decide whether a costs order was appropriate in all the circumstances. The critical inquiry was the reasonableness of the claimant’s overall conduct, rather than whether withdrawal was itself unreasonable, consistently with McPherson [2004] ICR 1398.

3. The withdrawal of the contractual redundancy claim was the only sensible course once the claimant had learned of Fraser [2006] ICR 1395. A final Tribunal judgment on the contractual claim, limited by Article 10 of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994, would prevent pursuit in the court of the balance of the same cause of action.

4. Although the claimant could have discovered the £25,000 limit, an unrepresented litigant could not reasonably be expected to discover the additional and decisive effect of Fraser. Absent that authority, it was not unreasonable to start the contractual claim in the Tribunal, where the central redundancy issue could be determined promptly and without serious exposure to an adverse costs order. Nor was it unreasonable not to obtain legal advice earlier.

5. The statutory redundancy claim was reasonably brought and pursued. It was not unreasonable to decline to seek a stay pending court proceedings. Continuing in the Tribunal offered a prompt determination of the common redundancy issue and, if successful, could preclude the employer from disputing that issue in the contractual claim. Withdrawal may have been unwise, but it was understandable in the circumstances and did not make the preceding conduct unreasonable.

• Employment Appeal Tribunal: Allowed the claimant’s appeal and set aside the Employment Judge’s order requiring payment of £10,000 towards the employer’s costs.
• Employment Tribunal, Watford: Employment Judge Mahoney ordered the claimant to pay £10,000 towards the employer’s legal costs following withdrawal of his contractual and statutory redundancy payment claims.