Oni v NHS Leicester City (formerly Leicester City Primary Care Trust) (Practice And Procedure : Costs)

An Employment Tribunal considering a remitted costs application must treat prior liability findings as binding, but must independently decide whether the claim was misconceived when brought. A failed claim does not, without more, establish that it had no realistic prospect of success from the outset.

The Tribunal must accurately identify the case advanced by the claimant. A costs decision is unsafe where it materially proceeds from a mistaken characterisation of the discrimination claim, or where it simply repeats a liability finding without engaging with whether the claim was misconceived. A respondent’s settlement offer or decision not to seek an earlier strike-out does not determine that issue.

The Claimant brought constructive unfair dismissal and race discrimination claims against her employer. The Leicester Employment Tribunal dismissed the claims on liability. A previous costs award was set aside on appeal and the costs application was remitted for fresh determination.

The remitted Tribunal awarded the Respondent its costs, to be assessed in the County Court. It held that both claims had been misconceived. The Claimant appealed, contending that the Tribunal had misunderstood her race discrimination case and had failed independently to assess whether the constructive dismissal claim had been misconceived from the outset.

The central issue was whether the Tribunal’s reasoning safely established the threshold for a costs order under Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004.

1. Appeal allowed. The costs decision could not stand because the Tribunal’s conclusions that the race discrimination and constructive unfair dismissal claims were misconceived were unsafe.

2. The Tribunal was bound by the earlier Tribunal’s liability findings. It nevertheless had to reach its own conclusion on the costs threshold. The question was whether the claims had no reasonable, meaning realistic, prospect of success when brought. The fact that the claims ultimately failed did not itself answer that distinct question.

3. On race discrimination, the Tribunal materially misunderstood the pleaded case. The Claimant had distinguished allegations concerning her line manager, which formed part of the constructive dismissal case, from the race discrimination complaint concerning senior managers’ handling of her grievances. Internal grievances mentioning race did not alter the Tribunal claim as pleaded. A Tribunal deciding whether a claim was misconceived must first correctly understand what claim was advanced. The error could have infected its conclusion that the claim had never had realistic prospects of success.

4. On constructive unfair dismissal, the earlier finding that there was no last straw was binding. However, the remitted Tribunal had to consider for itself whether the claim was misconceived from the outset. Its conclusion that the claim was a contrivance because an earlier claim had been withdrawn did not demonstrate that independent engagement. The first claim had been withdrawn because the Claimant had not resigned, not because she had abandoned the underlying allegations.

5. A settlement offer and the absence of an earlier strike-out application did not determine the merits of the costs threshold. The relevant assessment was the Tribunal’s own assessment of the claims.

6. Applying [2014] EWCA Civ 499, remittal was required because more than one lawful outcome remained possible. Applying the guidance in [2004] IRLR 763, the costs application was remitted to a freshly constituted Employment Tribunal. The remittal was confined to whether the claims were misconceived, since the Respondent had not cross-appealed the refusal to find unreasonable conduct.

• Employment Appeal Tribunal: The Claimant’s appeal against the costs award was allowed. The application was remitted to a freshly constituted Tribunal, limited to the misconceived-claims issue.
• Employment Appeal Tribunal (earlier appeal): An earlier costs order was set aside because the Claimant had not received a fair hearing on costs. The application was remitted for fresh consideration.
• Leicester Employment Tribunal: The remitted Tribunal awarded the Respondent its costs, holding that the race discrimination and constructive unfair dismissal claims were misconceived.
• Leicester Employment Tribunal: The Tribunal had previously dismissed the substantive claims on liability.