Graham v University College London Hospitals NHS Foundation Trust & Ors

A costs order does not follow automatically because an Employment Tribunal has jurisdiction to award costs for a misconceived claim. The tribunal must separately decide whether an order is appropriate and must base that discretionary decision on relevant and fair considerations.

On a fresh exercise of the discretion, a party's subjective culpability in pursuing a hopeless claim may be relevant. Self-representation, prior case-management decisions and the party's individual circumstances may be considered. They do not, however, create a general immunity from costs.

The claimant, a medical secretary, was dismissed for gross misconduct and brought consolidated claims for unfair dismissal, wrongful dismissal and race discrimination. The Employment Tribunal rejected all claims after a four-day hearing and ordered her to pay £1,500 costs.

Her appeal proceeded on two grounds. First, she contended that the Tribunal had not determined an allegation that she had been required to work in other departments more often than a named comparator. Secondly, she challenged the costs order. The central issues were whether the undeveloped discrimination allegation should be formally disposed of and whether the Tribunal had properly exercised its costs discretion.

1. Appeal allowed in part. The challenge concerning the unaddressed race-discrimination allegation failed. The claimant had adduced no evidence about the comparator or the alleged differential movement between departments. The Employment Appeal Tribunal therefore formally recorded dismissal of that complaint under section 35(1)(a) of the Employment Tribunals Act 1996.

2. The Employment Tribunal had jurisdiction to award costs because it found the remaining claims misconceived. That finding did not itself make a costs order appropriate. The Tribunal had to exercise a distinct discretion on relevant grounds.

3. The reasons relied on in paragraphs 63 and 64 of the Tribunal's decision could not sustain that exercise. It was unfair to criticise the claimant for failing to investigate whether a witness from a different department, called to address her work, considered that racism existed. The claimant's failure to accept responsibility for poor performance and internet use was also not shown to bear properly on whether pursuing her unfair-dismissal claim was obviously hopeless.

4. The costs order was set aside. Exercising the discretion afresh, the EAT accepted that the claims were hopeless and that the claimant had received costs warnings. Nevertheless, her continuation of the claims was subjectively excusable in her particular circumstances. Her self-representation, the case-management history and the impression she made before the EAT were relevant. No costs order was made.

5. The decision was fact-specific. Passing a case-management discussion or pre-hearing review, and being self-represented, do not establish any general bar to a costs order.

• Employment Appeal Tribunal: Allowed the appeal against the costs order, set it aside and refused costs on a fresh exercise of discretion. Rejected the appeal concerning the unaddressed race-discrimination allegation.
• Employment Tribunal, London Central: Following a hearing in February and March 2012, rejected the claimant's outstanding claims. Reasons were sent on 21 May 2012. It found the claims misconceived and ordered £1,500 costs.