Kapoor v The Governing Body of Barnhill Community High School

An Employment Tribunal must not treat a claimant’s untruthfulness as automatically establishing unreasonable conduct for the purpose of a costs order. Under the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, it must consider the whole picture, identify the conduct said to be unreasonable, and assess its nature, gravity and effects.

A lie may justify costs, but its context and material impact must be evaluated. The Tribunal retains a broad discretion and must not impose a judicial gloss requiring precise proof that particular conduct caused particular costs.

The claimant’s complaints of race discrimination, victimisation and harassment were dismissed after a five-day Employment Tribunal hearing. The Tribunal then ordered her to contribute £8,900 towards the respondent’s costs. It reasoned that she had advanced false evidence and that conducting a case without telling the truth was, without more, unreasonable conduct.

The claimant appealed only the costs order. The central issue was whether the Tribunal had lawfully exercised its discretion to award costs when it treated the finding of untruthfulness as determinative.

1. Appeal allowed. The Employment Tribunal misdirected itself when it held that a claimant who had not told the truth had, without more, conducted proceedings unreasonably.

2. Under Rule 40, the existence of unreasonable conduct requires the Tribunal to consider a costs order, but does not compel one. The Tribunal must exercise its discretion by considering the case as a whole. It should identify the impugned conduct, explain why it was unreasonable, and consider its nature, gravity and effect.

3. A lie is capable of being a powerful factor supporting a costs order. However, it does not automatically resolve the discretionary question. The Tribunal should also consider matters such as the procedural history, the extent to which the untruth affected its findings, and whether the claim failed for reasons unrelated to dishonesty.

4. The court applied the approach in HCA International Limited v JL May-Bheemul and Yerrakalva v Barnsley MBC [2012] ICR 420. Those authorities do not add a gloss to the Rules or require a precise causal allocation of costs. They require relevant matters, including the effects of unreasonable conduct, to be assessed in the overall exercise of discretion.

5. The costs order was remitted to the same Employment Tribunal for reconsideration. A differently constituted Tribunal was unnecessary: the original Tribunal was familiar with the evidence and could approach the issue fairly and with an open mind.

• Employment Appeal Tribunal: allowed the claimant’s appeal against the costs order and remitted costs for reconsideration by the same Tribunal.

• Employment Tribunal at Watford: dismissed the discrimination, victimisation and harassment claims and ordered the claimant to pay £8,900 towards the respondent’s costs.