Gwara v Mid Essex Primary Care Trust

An Employment Tribunal must give a party facing a costs order a fair and reasonable opportunity to explain why no order should be made. Raising costs briefly while considering an adjournment does not satisfy that requirement where no costs application is made and the party is not told clearly that the Tribunal is considering an order, its basis and its amount.

The requirement applies whether costs are considered because of an adjournment or because of unreasonable conduct. Where the party may be unfit to address costs, consideration should be deferred. A costs award made without that opportunity is procedurally unfair and must be set aside.

The claimant, a disabled former nurse, brought claims for unfair dismissal and disability discrimination. During the part-heard Employment Tribunal hearing, her representation ended and she sought adjournments on health grounds. The Tribunal ultimately adjourned the merits hearing and ordered her to pay £4,500 in costs said to have been wasted by the adjournments.

She appealed the costs order. Her principal contention was that she had not been given the opportunity required by rule 38(9) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 to give reasons against a costs order. She also challenged the Tribunal's reasoning on the basis, amount and means-related aspects of the award, and sought remission of the whole case to a fresh Tribunal.

1. Appeal allowed. The Employment Tribunal's costs order was set aside. It had not afforded the claimant the fair and reasonable opportunity required by rule 38(9) to give reasons why costs should not be ordered.

2. A brief discussion of costs during the previous day's adjournment application was insufficient. No costs application was made, and the claimant was not told in plain terms that the Tribunal was considering an order of its own motion, the basis on which it would be made, or the amount sought. If a Tribunal proposes to make such an order, it must give the affected party reasonable time to make submissions.

3. The requirement applies whether costs are considered under rule 40(1), following an adjournment, or under rule 40(2) and (3), for unreasonable conduct. It reflects basic fairness and natural justice. Since the medical evidence raised doubt about the claimant's fitness to participate, the Tribunal should have deferred costs until a later hearing if it considered her unable to address the issue then.

4. The EAT also identified deficiencies in the costs reasoning. The award was intended to compensate rather than punish, but the Tribunal needed to focus on the reasons for the adjournment, make findings showing how the £4,500 figure was composed, and explain whether and how it had considered the claimant's means.

5. The whole case, including any costs application, was remitted for a fresh hearing before a different Tribunal. The procedural unfairness, the timing and extensive justification of the costs warning, the danger of giving such a warning while an adjournment application was unresolved, and the elapsed time made that course appropriate. The EAT applied principles broadly derived from Sinclair Roche & Temperley v Heard [2004] IRLR 763.

• Employment Appeal Tribunal: allowed the claimant's appeal, set aside the costs order, and remitted the whole case to a fresh Tribunal.
• Employment Tribunal sitting in East London: by judgment dated 25 July 2012, adjourned the part-heard claims and ordered the claimant to pay £4,500 in costs under rule 40(1) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004.