Sunuva Ltd v Martin

An Employment Tribunal may award costs incurred while the receiving party was legally represented before service of the employer’s ET3, and before proceedings began. Rules 74 to 76 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 impose no temporal restriction of that kind.

Once the statutory threshold for a costs order is met, the Tribunal’s discretion is not confined to particular costs proved to have been caused by the unreasonable conduct. The conduct remains relevant to the proper exercise of the discretion, which must not be punitive.

The Claimant succeeded in her unfair-dismissal claim after the employer conceded at the hearing that a redundancy process had been predetermined. The Employment Tribunal at London Central awarded her two thirds of her claimed costs, totalling £17,136.90.

The employer appealed only the inclusion of £4,695 for work undertaken by the Claimant’s solicitors before receipt of the ET3. It contended that such costs could not lawfully be awarded because they predated the proceedings or its conduct of them.

The central issue was whether the Tribunal’s costs jurisdiction under the 2013 Rules required a causal link between the conduct triggering the jurisdiction and each item of costs awarded.

1. Appeal dismissed. The Tribunal was entitled to include costs incurred before receipt of the ET3. Rule 74(1) defines costs without a temporal limitation. Rule 75(1)(a) requires that the costs have been incurred while the receiving party was legally represented, but does not require that they be incurred after proceedings began or after service of a response.
2. The structure of Rules 75 and 76 supports that conclusion. Rule 75(2) permits a preparation time order for time spent working on the case while unrepresented, which may include preparation of the ET1. Rule 76(1) and Rule 76(1)(b) state the threshold conditions for a costs or preparation time order; they do not restrict the period in which recoverable costs may have been incurred.
3. The reasoning of Mummery LJ in McPherson v BNP Paribas (London Branch) [2004] ICR 1398 remained applicable under the 2013 Rules. Unreasonable conduct or a response with no reasonable prospect of success is a precondition to the jurisdiction and a relevant consideration in exercising it. It is not necessary to prove that each awarded cost was caused by a specific instance of that conduct.
4. The final sentence of paragraph 21 in Health Development Agency v Parish [2004] IRLR 550, requiring a causal relationship between the conduct and the costs awarded, could not stand with McPherson. The costs discretion must nevertheless be exercised compensatorily, not as punishment.
5. Here, the Tribunal found that the employer had advanced and maintained a false justification for dismissal, although unfair dismissal should have been admitted from the outset. Its award of two thirds of the costs was lawful.

• Employment Appeal Tribunal: dismissed the employer’s appeal and upheld the costs award.
• Employment Tribunal, London Central: awarded the Claimant costs of £17,136.90 following the hearing of her employment claims. No citation for that decision was stated.