Melanie Carroll-Cliffe v Pembrey and Burry Port Town Council

An Employment Tribunal considering costs under rule 76 must first decide whether the relevant threshold is met and then decide whether it is appropriate to exercise its discretion to make an award. The no-reasonable-prospect threshold is objective. A party’s actual or imputed knowledge is nevertheless highly relevant to discretion.

The Tribunal may use evidence obtained at the final hearing to illuminate what was, or should reasonably have been, known earlier. It must avoid hindsight and assess the case from the relevant party’s position as proceedings developed. Conduct before proceedings cannot itself establish unreasonable conduct of proceedings under rule 76(1)(a), although pre-litigation costs may be included in an award once the jurisdiction is engaged. Costs remain exceptional in the Employment Tribunal. The Tribunal may consider the whole litigation, including overlapping claims and mixed success, when exercising its discretion.

The claimant brought claims including constructive unfair and wrongful dismissal, protected-disclosure claims, equal pay and money claims. The Cardiff Employment Tribunal upheld the constructive dismissal claims but dismissed the remaining claims. It awarded remedy of £40,299.37.

The claimant then sought most of her legal costs under rule 76 of Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. The Tribunal awarded £1,000 for unreasonable disclosure and bundle preparation, but refused the balance. It held that the respondent’s defence had not crossed the relevant costs thresholds and, alternatively, that a wider costs award would not be appropriate.

The claimant appealed, alleging errors in the assessment of the defence to constructive dismissal and of pre-proceedings work.

1. Appeal dismissed. The Employment Tribunal did not make an error of law in refusing the further costs sought.

2. Under rule 76, an Employment Tribunal must distinguish the objective threshold question from its discretionary decision whether to order costs. The Tribunal’s reasoning under rule 76(1)(b) appeared to focus on what the respondent knew or ought to have known, rather than solely on the objective threshold. That did not affect the outcome. Those matters were directly relevant to discretion and there was overlap with the rule 76(1)(a) application.

3. The Tribunal was entitled to assess the respondent’s knowledge of the true facts and the sensible view it should have taken of its defence. It could use the evidence heard at trial for that purpose, without applying strike-out principles or treating the respondent’s case at its highest. The assessment should extend through the proceedings, since a defensible position may cease to be so after disclosure or witness evidence.

4. Reading the costs and liability decisions together, the Tribunal had permissibly concluded that the respondent retained arguable grounds on affirmation, the pay evaluation, the grievance process and the letter of 29 January 2019. The liability findings were more qualified than the claimant’s appeal suggested. No perversity was established.

5. Conduct before proceedings could not found unreasonable conduct of proceedings under rule 76(1)(a). If the costs jurisdiction had been engaged and discretion exercised, however, expenditure incurred before litigation could have been included in an award.

6. The alternative discretionary conclusion independently disposed of the appeal. Costs are exceptional in this jurisdiction. The Tribunal could consider that other substantial claims had been successfully defended, that factual issues overlapped, and that the balance of success and failure was even. As the tribunal which managed and tried the case, it was best placed to make that evaluative assessment.

• Employment Appeal Tribunal: dismissed the claimant’s appeal from the costs decision: [2024] EAT 125.
• Employment Tribunal, Cardiff: on 8 February 2023, awarded £1,000 costs for disclosure and hearing-bundle conduct, but otherwise refused the claimant’s costs application.