Radia v Jefferies International Ltd (Costs)

For costs under Rule 76(1) of the Employment Tribunals Rules of Procedure 2013, a tribunal must first decide whether the statutory threshold is met. It must then exercise its discretion whether to award costs.

A claim may objectively have had no reasonable prospect of success even if the claimant did not appreciate that fact. The claimant’s knowledge and what they reasonably ought to have known are ordinarily important at the discretionary stage and when deciding whether pursuit was unreasonable.

When assessing whether a claim had no reasonable prospect of success from its outset, a tribunal may use evidence heard at trial only insofar as it illuminates what was known or reasonably available at the outset. It must not rely on hindsight. The existence of factual disputes requiring evidence does not itself preclude such a finding.

The Claimant brought disability-discrimination complaints under the Equality Act 2010. Following a full merits hearing, the Employment Tribunal dismissed every complaint. It subsequently awarded the Respondent its whole costs, subject to detailed assessment, on several grounds including that the claims had no reasonable prospect of success and had been unreasonably pursued.

The Claimant appealed the costs decision on four grounds. He challenged findings about his motive for first raising discrimination during severance discussions, the conclusion that he ought to have known his claims lacked merit, the reliance on findings that he had given untrue or misleading evidence, and the conclusion that he acted unreasonably after a costs-warning letter.

The central issue was whether the Tribunal had lawfully applied the costs jurisdiction and reached its findings fairly.

1. Appeal dismissed. The Employment Tribunal was entitled to award the Respondent its whole costs, subject to detailed assessment. Its conclusions that the claims objectively had no reasonable prospect of success from the outset and that the Claimant knew or ought reasonably to have known that were independently sufficient bases for the award.

2. Rule 76(1) of the Employment Tribunals Rules of Procedure 2013 requires a two-stage exercise. The tribunal must first determine whether the threshold in Rule 76(1)(a) or (b) is crossed. It must then decide, in the exercise of discretion, whether to make an order. The test under Rule 76(1)(b) is objective. A claimant’s actual knowledge is not required for that threshold, although it will commonly matter at the discretionary stage and to unreasonable conduct under Rule 76(1)(a).

3. In deciding after a trial whether a claim had no reasonable prospect of success when commenced, the tribunal must focus on the prospective position at that earlier time. It may use evidence heard at trial where that evidence properly sheds light on what was known, or reasonably could have been known, when the claim began. It must not use information unavailable at that time. The presence of factual disputes requiring trial evidence does not prevent a finding that the claim was objectively hopeless from the outset.

4. The Tribunal fairly inferred from its liability findings that the Claimant did not believe his discrimination allegations had genuine merit when first raised in severance discussions. The essential allegation had been sufficiently raised in the pleadings, cross-examination and submissions. At the costs hearing the Tribunal gave both parties a fair opportunity to make submissions on the point.

5. The Tribunal was also entitled to rely on its unappealed liability findings that the Claimant had given untrue or misleading evidence about his weight and a Mexican holiday. Those findings amounted in substance to dishonesty and were central to identified complaints. They constituted unreasonable conduct for costs purposes. The Claimant could not reopen them at the costs hearing or on this appeal.

6. The Respondent’s grounds of resistance and later reasoned costs-warning letter also supported the conclusion that continued pursuit of the claims was unreasonable. The Claimant’s failure to give a considered response to the letter was material.

• Employment Appeal Tribunal: dismissed the Claimant’s appeal against the Employment Tribunal’s costs decision: [2020] UKEAT 0007_18_2102.
• Employment Tribunal: after dismissing the disability-discrimination claim in a liability decision sent on 3 February 2017, awarded the Respondent its whole costs, subject to detailed assessment, in a costs decision sent on 7 September 2017.