Misconceived employment claims and costs awards

In Vaughan v London Borough of Lewisham & Ors [2013] UKEAT 0533_12_0606 the Employment Appeal Tribunal has upheld a costs award of around £87,000 against an unrepresented claimant with limited means, on the basis that her claims of discrimination and whistleblowing were misconceived.

In this particular case, Ms Vaughan brought unsuccessful claims for discrimination, harassment on the grounds of race and/or disability, and detriment suffered for alleged whistleblowing. She brought claims against the London Borough of Lewisham (her employer), the previous employer from whom she had transferred under TUPE, and a number of individual employees. Over the course of three hearings lasting 20 days, the tribunal ordered Ms Vaughan to pay a third of the respondents’ costs.

The claimant appealed on the grounds that:

• No deposit order had been sought by the respondents, even if the case had little reasonable prospect of success.
• The respondents had not issued a costs warning.
• No account had been taken of the respondents’ settlement offers for substantial amounts (£95,000), which may have been regarded as an indication of the claims being credible.
• No account had been taken of the claimant being unrepresented.
• The decision on costs was unreasonable in light of the claimant’s limited means.

The EAT dismissed the appeal, and thereby confirmed that, although costs do not “follow the event” in employment tribunals as they do in civil courts, tribunals do have the discretion to make costs orders in certain circumstances. These include proceedings which have been misconceived by the paying party where they have no reasonable prospect of success. Ms Vaughan’s “mass conspiracy” approach was unsupported by any evidence therefore it was unreasonable for her to have believed that she had a good chance of success. The EAT also concluded that the respondents’ failure to seek a deposit order or to issue costs warnings was not necessarily a recognition of the merits of the claim. Generally the responsibility for assessing the merits of a case ought to lie with the party advancing it.

Although the tribunal was aware of the claimant being unrepresented, the decisive factor was her “fundamentally unreasonable appreciation of the behaviour of her employers and colleagues”. Furthermore, the tribunal was entitled to form the view that there was a realistic prospect that the claimant would be able to return to work in due course and be able to pay costs awarded, despite the fact she is presently unemployed and suffering from depression.

This case exemplifies that the rules on costs can operate harshly, particularly in respect of claimants bringing discrimination claims. Some unrepresented claimants may not appreciate that their claims are without merit, especially if no application for strike-out or deposit order was made earlier in the proceedings. However, one of the benefits of the double-sift system under the new rules, introduced in July 2013, is that it might prevent claimants from incurring substantial costs awards as in this case.

Mark Hammerton is Head of Employment at national law firm DWF and contributing author to Employment.Law-OnDemand.com.