FDA & Ors v U Bhardwaj

Under rule 76(1), an Employment Tribunal must first decide whether a threshold for costs is met. It must then separately decide whether to exercise its broad discretion to make an order. Satisfaction of the threshold does not make costs inevitable.

Reliance on informed specialist legal advice may properly weigh against an award, even where parts of a claim had no reasonable prospects of success. Costs decisions are fact-specific. Issue-based costs orders should generally be avoided, particularly in multi-issue litigation. Appeals against costs decisions require a clear error of principle.

The FDA and five of its officers appealed against an Employment Tribunal costs decision made after Ms Bhardwaj's discrimination and trade-union claims had failed following a lengthy hearing. The Tribunal refused the respondents' principal application for the costs of the merits proceedings, including claims said to have been brought in bad faith or without reasonable prospects of success.

It nevertheless awarded the respondents the costs wasted by a late privilege issue. Ms Bhardwaj cross-appealed against that order. The respondents also challenged refusals of costs relating to a recusal application and an application for an extension of time.

The central issue was whether the Tribunal had erred in its application of rule 76(1) of the 2013 ET Rules and in exercising its discretion on costs.

1. Appeals and cross-appeal dismissed. The Employment Judge made no error of law or principle in refusing the Tayler Costs and Recusal Costs, or in awarding the Privilege Costs.

2. Rule 76(1) of the 2013 ET Rules creates a two-stage process. The Tribunal must first decide whether conduct, lack of reasonable prospects, or another specified ground establishes the threshold for a costs order. If so, the Tribunal retains a broad discretion whether to make an order. A clear error of principle is required to disturb that discretionary decision on appeal.

3. The Tribunal was entitled to treat the claimant's consistent reliance on favourable specialist legal advice as a relevant and weighty factor at the discretionary stage. The findings that certain allegations were false and made in bad faith concerned statutory terminology and inconsistent conduct, not a deliberate lie or dishonesty. The advice was based on the same underlying facts as those considered at the merits hearing. It was therefore open to the Tribunal to decline costs, including for elements it had found misconceived or without reasonable prospects.

4. In multi-issue litigation, it will often be unrealistic to separate individual issues for costs purposes. Cases commonly stand or fall as a whole. Issue-based costs orders should generally be avoided. A Tribunal need decide only the matters necessary to its decision; once it had found the rule 76(1)(b) threshold, it was not obliged also to determine whether rule 76(1)(a) was met.

5. The privilege costs were materially different. The claimant raised the privilege issue at the last minute, maintained an incorrect position until it was abandoned, and thereby wasted hearing days allocated to the substantive costs applications. The threshold was met and the Employment Judge was entitled to make a discrete costs order.

• Employment Appeal Tribunal: The appeals by the FDA respondents and Ms Bhardwaj's cross-appeal were dismissed.
• Employment Tribunal: EJ Heap refused the principal costs applications arising from the merits proceedings, the recusal application and the extension-of-time application, but awarded costs wasted by the privilege issue.
• Employment Tribunal: EJ Tayler had rejected Ms Bhardwaj's underlying claims after a lengthy hearing. The judgment records that subsequent appeals against that merits decision were unsuccessful.