Oni v NHS Leicester City (Formerly Leicester City Primary Care) (Practice and Procedure : Costs)

An Employment Tribunal deciding whether a costs claim was misconceived must decide whether the claim had no reasonable, meaning realistic, prospect of success from the outset. It must accurately identify the claim that was brought.

Where a remitted costs tribunal is bound by earlier liability findings, it must nevertheless make its own assessment of the costs threshold. It cannot simply treat an adverse liability finding as establishing that the claim was misconceived. A material misunderstanding of the pleaded discrimination case, or a failure independently to engage with the basis on which a constructive dismissal claim failed, renders the costs decision unsafe.

The Claimant appealed an order of the Leicester Employment Tribunal, chaired by Employment Judge Macmillan, which awarded the Respondent its costs following a remitted hearing. The costs were to be assessed in the County Court.

An earlier costs decision had been set aside and the application remitted because the original tribunal had not afforded the Claimant a fair costs hearing. The Macmillan Tribunal was bound by the earlier liability findings but was to determine the costs questions afresh.

It held that the Claimant's race discrimination and constructive unfair dismissal claims were misconceived. The appeal concerned whether the Tribunal had correctly understood and independently assessed those claims at the threshold stage.

1. Appeal allowed. The costs decision was unsafe and the application was remitted to a freshly constituted Employment Tribunal.

2. The relevant threshold under Rule 40 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 was whether the claims had no reasonable, or realistic, prospect of success when brought. The Tribunal had correctly stated the general three-stage costs structure, but the EAT was concerned only with the threshold stage.

3. The Tribunal had materially misunderstood the race discrimination claim. The Claimant had distinguished allegations of bullying and harassment by her line manager, which formed part of the constructive dismissal case, from her direct race discrimination claim concerning the handling of her grievances by senior managers. Although the liability findings could potentially support a conclusion that the discrimination claim was misconceived, a tribunal could reach that conclusion only after correctly identifying the claim. Its reasoning did not demonstrate that understanding.

4. The Tribunal was bound by the earlier liability finding that there was no last straw. It nevertheless had to make its own judgment whether the constructive unfair dismissal claim was misconceived from the outset. Its reasoning wrongly treated withdrawal of the first claim, made before resignation, as abandonment of the underlying allegations. It did not demonstrate independent engagement with why the later claim had failed.

5. A settlement offer and the absence of an earlier strike-out application did not determine whether the claims were misconceived. The issue was the Tribunal's assessment of the claims, not the Respondent's assessment of litigation risk.

6. Applying Jafri v Lincoln College, [2014] EWCA Civ 499, the errors could have affected the result and more than one outcome remained possible. The Respondent had not cross-appealed the refusal to find unreasonable conduct. The remission was therefore confined to whether the claims were misconceived. Having regard to Sinclair Roche & Temperley and Ors v Heard and Anor, [2004] IRLR 763, a fresh tribunal was appropriate for practical and administrative reasons.

• Employment Appeal Tribunal: Allowed the Claimant's appeal and remitted the costs application on the limited issue of whether the claims were misconceived.
• Leicester Employment Tribunal (Macmillan Tribunal): On 10 May 2013, awarded the Respondent its costs after holding that the race discrimination and constructive unfair dismissal claims were misconceived.
• Earlier Employment Appeal Tribunal proceedings: An earlier costs order had been set aside and the costs application remitted for a fresh determination: UKEAT/0144/12.