Ayoola v St Christopher’s Fellowship

Employment Tribunal costs are exceptional. A finding that a claim was misconceived or that conduct was unreasonable engages the costs jurisdiction, but does not make an award automatic. The Tribunal must separately decide whether an award is appropriate.

The Tribunal has a broad discretion as to amount and need not require a schedule of costs. It must, however, act judicially, avoid penalising the paying party, and give enough reasoning to show that it has independently scrutinised the sum claimed. Where that reasoning is absent, the question should ordinarily be remitted rather than determined afresh by the Employment Appeal Tribunal.

The Claimant appealed against an Employment Tribunal judgment awarding the Respondent £10,000 costs after the Claimant’s unfair dismissal and notice pay claims were struck out for failure to comply with an unless order.

The appeal challenged both the decision to award costs and the amount awarded. The Employment Tribunal had found that the claim was misconceived, that the Claimant’s conduct was unreasonable, and that he had intentionally failed to provide documents relevant to his employment status. The Employment Appeal Tribunal considered whether the Tribunal had applied the required two-stage costs process and whether it had adequately explained the amount awarded.

1. First ground dismissed. Under Schedule 1, Rule 40(2) and (3) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004, the Tribunal must first determine whether conduct or proceedings fall within Rule 40(3), and must then separately consider whether it is appropriate to make a costs order. Costs do not automatically follow once the jurisdiction is engaged.

2. The Employment Judge had carried out that two-stage process. The findings that the Claimant had intentionally failed to disclose evidence central to his employment-status case, knew or should have known that the claim was misconceived, and later attempted to circumvent the service requirement supported both the Rule 40(3) findings and the exercise of discretion under Rule 40(2). The Judge was entitled to rely on the Tribunal’s reasons as a whole and was not required to label each stage formally.

3. The Employment Appeal Tribunal must not make good deficiencies in the Tribunal’s reasoning or substitute its own assessment of the merits. Where a costs decision is challenged, appellate intervention requires an error of legal principle or a decision unsupported by relevant circumstances. The broad-brush nature of costs assessment does not remove the need for adequate reasons.

4. Second ground allowed. No schedule of costs or particular procedure was required. Nevertheless, the discretion as to amount had to be exercised judicially. The award had to compensate rather than penalise, comply with the indemnity principle, and be supported by an indication of independent scrutiny sufficient to explain how the amount was reached. The judgment did not show that the Employment Judge had scrutinised the Respondent’s figures or explained why £10,000 was appropriate.

5. The issue was remitted to the same Employment Judge for reconsideration of the amount of costs only. More than one outcome was reasonably possible, so the Employment Appeal Tribunal could not determine the amount itself.

• Employment Tribunal: On 16 November 2012, with Reasons sent on 16 January 2013, the Claimant’s claim was struck out and the Respondent was awarded £10,000 costs.
• Employment Appeal Tribunal: The appeal against the costs jurisdiction and discretion was dismissed. The appeal concerning the amount and adequacy of reasons was allowed, and that issue was remitted to the same Employment Judge.