Onyx Financial Advisors Ltd v Shah

An Employment Tribunal has discretion to decide a costs application on written submissions and need not hold an oral hearing merely because one is requested. However, both the paying party and the applicant must have a fair opportunity to present their respective cases. Where an applicant has made clear that its letter does not contain its full case, refusal of an oral hearing must be accompanied by directions allowing full written submissions and supporting costs material.

A Tribunal must keep an open mind until that opportunity has been given. It must also give adequate reasons addressing the threshold for costs and, if that threshold is met, the exercise of discretion.

The claimant's claims for constructive unfair dismissal, protected-disclosure detriment and holiday pay were dismissed by the Employment Tribunal. The employer then sought a hearing to pursue costs, alleging that the claimant had acted vexatiously, abusively or unreasonably and that claims had lacked reasonable prospects of success.

The employer's letter indicated that it wished to advance further argument and provide a costs breakdown. The Employment Tribunal refused both a hearing and the costs application, relying on findings that the employer's managers had committed a fundamental breach of contract. The employer appealed against the procedure and reasons for that refusal.

1. Appeal allowed. The Employment Tribunal was entitled to decide whether an oral hearing was necessary, but it could not refuse a hearing and then determine the costs application immediately when it was clear that the employer had not intended its initial letter to be its complete case.

2. Rule 77 of the Employment Tribunal Rules of Procedure 2013 expressly requires a reasonable opportunity for the paying party to make representations. Fair procedure and the overriding objective equally require a costs applicant to have a fair opportunity to advance its case. That opportunity will often be adequately provided in writing, but a Tribunal which refuses an oral hearing in a substantial and detailed matter must give suitable directions for full written submissions and the relevant costs material.

3. The Tribunal had formed and acted on a view that costs could not be awarded before hearing the employer's intended submissions about the claimant's conduct of the litigation. It should have kept an open mind until those submissions had been received.

4. The reasons were also inadequate. The Tribunal had not addressed whether the alleged conduct met the threshold for a costs award, including the claimant's knowledge of the fraudulent-misrepresentation issue and the alleged conduct of the proceedings. If unreasonable conduct were found, it would then have had to explain why no costs award was just despite the findings against the claimant.

5. The decision was not held perverse: a properly conducted reconsideration could still result in no order for costs. Applying Sinclair Roche & Temperley v Heard [2004] IRLR 763, the application was remitted to a differently constituted Employment Tribunal because the original Tribunal had expressed a premature and strongly stated view. The remitted Tribunal must proceed from the existing liability findings, decide a fair procedure, and determine the costs application afresh.

• Employment Appeal Tribunal: allowed the employer's appeal and remitted the costs application to a differently constituted Employment Tribunal.
• Employment Tribunal: after dismissing the claimant's substantive claims, refused the employer's requested costs hearing and its costs application by an order dated 11 October 2013.