D Ireland v University College London

An Employment Tribunal may ordinarily determine a costs application at the conclusion of a liability hearing, provided that the paying party has had a reasonable opportunity to make representations. The fact that a separate wasted-costs application has not then been determined does not prevent that course, especially where its substance can be raised in response to the costs application.

A costs award for unreasonable conduct is compensatory, not punitive. The Tribunal must consider the whole course of the proceedings, but need not establish a precise causal link between each instance of unreasonable conduct and each item of costs claimed. A party who pursues an allegation rejected for substantially the reasons stated in a deposit order is treated as having acted unreasonably under rule 39(5), unless the contrary is shown.

The claimant brought a race-discrimination claim after the respondent withdrew an offer of employment. An Employment Tribunal made a deposit order and later dismissed the claim, finding that the withdrawal resulted from unsatisfactory references rather than race.

At the end of the liability hearing, the Tribunal heard the respondent’s costs application and awarded £14,000 against the claimant. It later dismissed the claimant’s wasted-costs application against the respondent’s representatives. The claimant appealed both decisions.

The central issues were whether it was fair to determine costs at the liability hearing, whether the claimant’s conduct justified the costs award, and whether the wasted-costs application was wrongly delayed or wrongly dismissed.

1. Both appeals were dismissed. The Employment Tribunal made no error of law in deciding to hear the respondent’s costs application after giving its liability decision. Its earlier direction that the final hearing would determine liability did not prevent it from determining a costs application arising at that hearing. This course was consistent with the overriding objective and with rule 77 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013.

2. The claimant had a reasonable opportunity to respond. He had received repeated costs warnings, including a letter shortly before the hearing telling him to be ready to address costs and means. The Tribunal allowed an hour for the parties to consider the liability decision. It was entitled to conclude that hearing costs then would avoid delay and expense.

3. The Tribunal was not required to decide the claimant’s separate wasted-costs application at the same time. That application concerned the conduct of the respondent’s representatives, whereas the costs application required an assessment of the claimant’s pursuit and conduct of the proceedings. The claimant was able to raise the substance of his complaints about disclosure and alleged misrepresentation when resisting costs. The later rejection of the wasted-costs allegations also showed that their earlier determination could not have affected the costs result.

4. There was no legal error in Employment Judge Brown determining the wasted-costs application alone. Unlike the application in Riley, it concerned alleged conduct before the liability hearing, not the conduct of a hearing determined by a three-member panel. The delay in deciding it was explicable, caused no identified prejudice and did not impair article 6 rights.

5. The Tribunal permissibly found that the claimant had acted unreasonably. His abusive and intimidating correspondence and persistent, repetitive applications could be considered as part of the overall picture. Costs remained compensatory; no precise causal link was required between each item of conduct and the particular costs claimed.

6. More fundamentally, the claim was dismissed for substantially the reasons given when the deposit order was made. Under rule 39(5), the claimant was therefore treated as having acted unreasonably in pursuing it. The Tribunal was also entitled to rely on the repeated warnings explaining the weakness of the claim. Its discretionary costs award of £14,000 was not perverse and was not vitiated by error of principle.

• Employment Appeal Tribunal: Both appeals against the Tribunal’s costs and wasted-costs decisions were dismissed: [2024] EAT 68.
• London Central Employment Tribunal: Decision sent on 28 January 2022 dismissing the claimant’s wasted-costs applications against the respondent’s representatives.
• London Central Employment Tribunal: Decision sent on 27 June 2021 awarding the respondent £14,000 costs after dismissing the claimant’s race-discrimination claim.