Mr A K Robson v Eric Roberts Contractors Ltd: 1400989/2021
EMPLOYMENT TRIBUNALS
Case No 1400989/2021
Between
Mr A K RobsonClaimantEric Roberts Contractors LtdRespondent
Before
Employment Judge CuthbertIn person for claimantTerry Falcao (instructed by Solicitor) for respondentDate 12 January 2022
JUDGMENT
The judgment of the tribunal is that the claimant’s claim for unfair dismissal is not well-founded and is dismissed.
REASONS
[1]The claimant brought a claim for unfair dismissal in an ET1 presented on 1 March 2021. The case came before the tribunal for a two-day unfair dismissal hearing, via the Video Hearings service, on 22 and 23 December 2021. The claimant appeared in-person and the respondent was represented by Mr Falcao.[2]The parties confirmed at the start of the hearing that they were content to proceed with a video hearing and, save for(i) a very short period during the afternoon of 22 December, when there was a problem resuming after a comfort-break which subsequently resolved itself, and(ii) a short interruption during delivery of the oral judgment. the hearing proceeded without any technical issues.[3]The respondent’s witnesses, with the exception of Mr Randall, gave evidence from a conference room at the respondent’s solicitors’ offices. I explained that when giving evidence they must not communicate with others present and I was satisfied that this was the case when they did so. Issues[4]The issues were agreed with the parties at the outset of the hearing, as follows: Unfair dismissal[5]Was the claimant dismissed? The burden was on the claimant to prove that he was dismissed. The claimant expressly confirmed that he was claiming that he was dismissed by the respondent and that he did not resign from his employment.[6]If the claimant was dismissed, the respondent in effect accepted that there was no potentially fair reason for dismissal for the purposes of s.98(2) of the Employment Rights Act 1996 and furthermore that no fair procedure would have been followed were the claimant to be found to have been dismissed.[7]In effect the unfair dismissal claim therefore turned solely upon whether or not there was a dismissal. Remedy (if it became relevant)[8]If the claimant was dismissed, what basic award was payable (less any redundancy payment made)?[9]If there was a compensatory award, how much should it be? Did the Acas code apply?[11]The respondent had asserted a potential illegality defence in the ET3 but confirmed at the start of the hearing that this was not being pursued as such at the hearing before me.[12]The respondent’s ET3 also referred to a potential counterclaim against the claimant concerning the return of a van which remained in the claimant’s possession and which the respondent asserted remained the property of the respondent (see further below). Mr Falcao accepted, however, that I had no jurisdiction to deal with that counterclaim, given that the claimant was not pursuing a breach of contract claim in these proceedings and in any event even if he had been, I would have had no power to deal with a counterclaim for the return of disputed property, as counterclaims in the tribunal are limited to claims for damages only. I indicated that I would avoid making any findings on the specific issue of the disputed van which could impact on any separate civil proceedings which may arise. Evidence and Practicalities[13]I was provided with a 128-page bundle of documents (and references to page numbers in these reasons are to that bundle).[14]I considered and heard witness evidence as follows:a. The claimant adduced a five-page witness statement – this was unsigned but the claimant affirmed the content of that statement under oath and gave oral evidence.b. On behalf of the respondent, I heard oral evidence from: i. (William) Eric Roberts – owner of the respondent and director – he also provided a four-page signed witness statement. ii. Stacey Grainger – Office Manager (previously administrator) – he also provided a three-page signed witness statement. iii. David Cox – nephew of Mr Roberts and his attorney from 14 October 2019 for his business affairs – he also provided a six-page signed witness statement. Mr Cox is also employed by the respondent and was recently appointed as a director iv. Gary Randall – accountant and managing director of Prydis Accounts Ltd, the respondent’s accountants – he also provided a two-page signed witness statement and appended P11 form.[15]I was also provided by the respondent with a three-page signed witness statement dated 8 December 2021 from Matthew Gummow, currently an Operations Manager of the respondent and previously an Estimator. As Mr Gummow did not attend for cross examination, I did not afford his statement as much weight as that of those who gave evidence orally. He had very little involvement in the relevant issues in any event.[16]I discussed any adjustments needed during evidence with the parties. Mr Roberts had various health issues (see below) and it was agreed that questions would be asked more slowly and repeated if necessary. He was also assisted by Mr Falcao during his evidence to locate documents to which reference was made and given more time to read them.[17]I also explained to the unrepresented claimant that, when cross examining the respondent’s witnesses, he should put his own case to them and challenge the evidence of the respondent’s witnesses with which he disagreed. It was evident during the hearing that he had prepared in advance a list of questions for each witness on this basis.
Findings of fact
[18]I only made findings of fact where those were required for the proper determination of the issues in this claim. I therefore did not make findings on each and every area where the parties were in dispute with each other.[19]There were few documents before me, or seemingly in existence, which were directly relevant to the key issues in dispute in this case and so I necessarily based my findings largely upon the witness evidence. Generally, I preferred the evidence of the respondent’s witnesses where there was a material issue of dispute, particularly in relation to the events which took place on 20 January 2021. Their accounts of those events and of their responses and reactions, which they described in evidence, were more compelling and credible than the account of the claimant of his actions on that day.[20]The respondent is a small highway and private premises surfacing company based in Cornwall, which employed 21 people at the relevant time. It is a private limited company.[21]The claimant commenced his employment with the respondent in 2011 as a Transport Manager. I understand that this role was required in order to for a business such as the respondent to hold a HGV operators’ licence.[22]In October 2019, following the departure of some previous directors of the respondent at that time, under a cloud it seems to be agreed, the claimant was promoted to director. From that point up to and including the time of the relevant events in early 2021, the only two directors of the respondent were:a. Mr Eric Roberts (also the 100% shareholder in and owner of the respondent); andb. the claimant. Mr Roberts’ health[23]Mr Roberts and his health were matters which seemed to be fairly common knowledge at the respondent and were not suggested as being in any way confidential for the purposes of these proceedings.[24]Mr Roberts was 88 years’ old at the time of the key events in question in January 2021 and was 89 when the case came before me. I saw extracts from his medical records which included diagnoses and supporting evidence of the following issues and conditions:a. mild cognitive impairment (Oct 2016)b. vascular dementia (Dec 2018)c. dementia/Alzheimer’s disease (Jan 2019)d. atrial fibrillation (Dec 2020)[25]Mr Roberts also recalled during his evidence that he had suffered what he believed to be a mini-stroke shortly before the disputed meeting on 20 January 2021 (see below), which he had discussed with his GP. His GP records from 15 January 2021 did record that he had some difficulties overnight and on other nights and he was having problems with his right hand but the notes indicate that in the GP’s view there were “no clear signs” of a stroke at that time. This suggested that the possibility of a stroke was discussed. It was nonetheless clear that Mr Roberts had a number of serious underlying health issues and that these had taken a turn for the worse in late 2020.[26]On 14 October 2019, a Lasting Power of Attorney was registered in respect of Mr Roberts, with his nephew Mr Cox appointed as his attorney. Mr Cox was not at that time employed by the respondent but was subsequently employed during 2020. This power of attorney expressly (see page [89]) gave general authority to Mr Cox to act in relation to the respondent’s business “to be included in making any decisions regarding that business as I myself would”.[27]In practice, it appeared that very few decisions at the respondent were expressly made with reference to the power of attorney, but that Mr Roberts and Mr Cox were often consulted with jointly by the claimant about the running of the respondent’s business, for instance in respect of two staff redundancies in early 2021.[28]I accepted the evidence of Mr Cox that Mr Roberts was, as a result of his dementia, forgetful and could struggle with concentration and understanding when information was presented to him which was unexpected or substantial in volume. Mr Grainger gave evidence to the same effect that Mr Roberts would regularly forget things and would write things on small pieces of paper, which I also accepted.[29]The claimant was aware of the main health issues of Mr Roberts and of the existence of the limited power of attorney. The claimant’s appointment as director[30]There was dispute as to whether the claimant was a “director” or “managing director” for the respondent. There was no documentary evidence about his appointment. I find that on a day-to-day basis from the period between October 2019 and January 2021 the claimant was in effect the most senior day-to-day manager for the respondent and acted, and was treated, as such.[31]The claimant’s case was that he was appointed to the director role by Mr Roberts in 2019. Mr Roberts recalled in his witness statement that Mr Cox appointed the claimant but in his oral evidence recalled that he had made the decision, whereas Mr Cox recalled that he recommended the claimant’s appointment to Mr Roberts but did not specifically address who appointed the claimant. Again, there were no contemporaneous documents to assist with recollections or my findings. I find that the claimant was most likely appointed by Mr Roberts in consultation with Mr Cox, but that following his appointment, most of the management of the company was in any event undertaken by the claimant.[32]The claimant’s pay package was another source of dispute and again there was an almost complete lack of documentation as to what was agreed and why. There seemed to be no doubt that he agreed with the respondent to defer some of his increased salary of £55,000 on promotion, roughly £200 of his weekly pay, and to receive that at some future date and so was instead paid a weekly sum of £798.23 gross, £589.73 net.[33]I acknowledge that there was a dispute between the parties as to the basis of this deferred compensation arrangement; the claimant’s case was that this was proposed by Mr Roberts and Mr Cox due to “fraudulent actions” by previous directors. The respondent’s case was that the arrangement was requested by the claimant because he wished to conceal his true earnings from his wife from whom he was divorcing, for the purposes of any financial divorce settlement. I did not find it necessary to reach any finding on this dispute for the purposes of the issues I needed to decide in these proceedings. The claimant’s employment between 2019 and early 2021[34]A notable feature of this unusual case is that both sides were in almost complete broad agreement about the claimant’s performance following his appointment as a director in late 2019 right through until the termination of his employment in January 2021. In essence, the claimant did a good job for the respondent in managing the day-to-day running of the business during this period, despite the challenges of COVID.[35]There were occasional minor disagreements between the claimant and Mr Roberts, for example over the purchase of a tipper truck. The claimant accepted that on one such occasion, he may have responded to the effect that Mr Roberts should make all of the decisions if he were not happy. Mr Cox’s evidence was to the effect that the claimant, on the occasions when he was criticised, would reply that he would happily leave or let someone else take charge, as a threat. However, overall, the employment relationship appears to have been a happy one.[36]In around mid-2020 the claimant wished to reduce his working days to four days per week, with Monday as a non-working day This was for personal reasons, to spend more time with his partner. Initially he appeared to have taken annual leave to achieve this, but then had a discussion with Mr Roberts in October 2020 about it.[37]In his evidence to the Tribunal, the claimant said that he discussed this proposed four-day arrangement whilst alone with Mr Roberts, Mr Roberts was in agreement and this was followed up in a text message to Mr Randall, the accountant. The claimant said in evidence that he did also consult with Mr Cox prior to speaking to Mr Roberts about this same issue, and Mr Cox told him to just take the day off and not to tell Mr Roberts “as he will forget it anyway”. A text message exchange at page [95] between the claimant and Mr Randall indicated that the claimant wished to formalise the four-day working week from 1 November 2020. In a text message on 19 October 2020 to Mr Randall, the claimant also mentioned having spoken to Mr Roberts earlier that morning and Mr Roberts “said he was ok with it but may tell you something different”. It is clear from the exchanges on this reduction in hours issue that the decision-making capability of Mr Roberts was in some doubt because of his memory issues.[38]In his own evidence to the Tribunal on this same issue, Mr Roberts said that initially he had not disagreed with the claimant working four-days and so this had carried on and he left it, but eventually did agree with the claimant that the claimant could cut back to four days. He said that whatever the claimant had done (in the context of this arrangement), he was happy with and if the claimant was happy, that was “fair enough” with him. Mr Roberts’ level of involvement in the respondent’s business[39]On a more general level, the claimant’s account was, in summary, that Mr Roberts was and remained fairly heavily involved in running the respondent’s business throughout this 2019 to 2021 period and indeed the claimant suggested that Mr Roberts’ involvement in the business had picked up towards the end of 2020.[40]Mr Roberts’ evidence, to the contrary, was that he had tried to take a step back from being heavily involved in the respondent’s business following his diagnosis of dementia, which is unsurprising. He had suffered heart complications in December 2020 and it had taken him time to get back to his usual self. He had difficulty concentrating and absorbing information and became tired quickly.[41]The medical records indicate that Mr Roberts’ GP referred him to a Heart Function Clinic on 14 December 2020 due to shortness of breath and atrial fibrillation (pages [65] and [72]) – the same notes suggested a follow-up appointment in two to three weeks “but not sure he will remember”. On 15 January 2021, he was noted by the GP to still be short of breath and wheezing (page [64]). Against that medical backdrop I find it implausible that Mr Roberts was generally increasing his involvement in the respondent’s business at this time.[42]I also find that Mr Roberts, despite his various health issues, did nonetheless take as active an interest as possible in what was a family business which he had largely built. For example, Mr Roberts was asked in cross examination about his involvement in key decisions on pricing and equipment. He said that he did not really make these decisions himself – if the purchase of a large piece of equipment was being discussed, he would try to help and say what he thought about the proposal and “kick it around” but that others also come up with options and decide what to do. In effect, I find that Mr Roberts made such suggestions, but in reality the day-to-day running of the respondent’s business during the relevant period before the end of the claimant’s employment was in the hands of the claimant.[43]The claimant did discuss other matters with Mr Roberts and with Mr Cox jointly, for example two staff redundancies which were implemented around two weeks before the termination of the claimant’s own employment, with which the claimant said they all agreed, but the strong impression from the evidence was that the claimant was managing the business overall. Events in January 2021[44]There was a downturn in the respondent’s business at the end of 2020 and into early 2021. Some staff were furloughed and as noted previously, two were made redundant in early 2021.[45]A meeting took place on Wednesday 20 January 2021 between the claimant, Mr Roberts, Mr Cox, Mr Grainger (Office Manager) and Mr Gummow (then in the role of Estimator), which came about as a result of the downturn and was intended to discuss how to address this.[46]There was a dispute between the parties as to precisely how the meeting came about, and who requested it and to what end. It did appear that, prior to the meeting, Mr Roberts had commented to Mr Gummow to the effect that, if the business was quiet, why was the claimant taking Mondays off but there was no evidence of any broader underlying concerns about the claimant or his performance on the part of the respondent or of any prior intention on the respondent’s part to terminate the claimant’s employment. There were, again, no documents to shed any light on this general meeting but in any event I did not consider this particular dispute about the meeting arrangements to be material, in view of how events at the meeting itself unfolded.[47]At the meeting itself, which took place in the respondent’s main office room, various issues relating to the respondent’s business were discussed. There were no notes of the main meeting. The issues discussed were relatively innocuous, about various aspects of the respondent’s business. Mr Cox recalled mention made by Mr Roberts of waste materials being dumped in the yard and it being more cost effective to take them straight to the dump. Mr Roberts recalled mentioning an issue about filling additional potholes at no extra cost, for customer service purposes. The claimant recalled mention of companies from Devon undercutting the respondent, although in cross examination he accepted this was not a criticism of him. The claimant then stated in his evidence that Mr Roberts started to make “some other comments” about pricing, which the claimant felt were personal, on the basis that the claimant was responsible for pricing. Meetings in the small office on 20 January 2021[48]The claimant then invited Mr Roberts, and Mr Roberts alone, into a small office adjoining the main office to carry on the meeting in private. This was significant in my view, in that it was not Mr Roberts who instigated the smaller private meeting which followed, as might be expected if there were some prior intention to dismiss the claimant, but rather the claimant himself. The claimant also did not invite Mr Cox into that meeting, despite Mr Cox being present and it being clear that Mr Cox and Mr Roberts often acted together, in their discussions with the claimant, on issues such as the recent redundancies in the company.[49]It was put to the claimant in cross examination by Mr Falcao that, in so taking Mr Roberts aside, he was seeking to isolate Mr Roberts and reference was made to Mr Roberts being taken advantage of by the claimant’s predecessors, although the claimant disputed that this was the case on his part.[50]The claimant’s account of the meeting which followed between himself and Mr Roberts in the small office was as follows. The claimant said that he asked Mr Roberts if there was an issue which needed to be discussed. He said that Mr Roberts paused and then said that he did not like the way the claimant was running the business and that the claimant had been running the company down. He said that Mr Roberts raised an issue about vehicles in the yard but staff being at home. The claimant said he asked Mr Roberts “what are you trying to say, you are making me redundant?” and that Mr Roberts replied “yes”. At this point the claimant left and asked Mr Grainger, the office manager, to join them.[51]Mr Roberts on the other hand said that on entering the small office with the claimant, the claimant immediately told him, “If you aren’t happy with the way I am running the business, I’ll go. I’ll take the van in lieu of the money you owe me but will still be the Transport Manager and be here for the boys”. The claimant would not let Mr Roberts get a word in. Mr Roberts said that he was in shock and did not really know what was going on. Mr Roberts said, during cross examination by the claimant, that he “never opened [his] mouth” in the meeting; he said that he had received quite a shock and had no-one else to run the respondent’s business other than the claimant; he said that he could not grasp it all, that he was dumbfounded and did not know what to say, and that the claimant then disappeared.[52]The other witnesses who had remained in the larger room described this meeting between the claimant and Mr Roberts behind closed doors in the small office as being very short, a minute or two. There were no contemporaneous documents or other records in respect of it.[53]It is not disputed that the claimant then returned to the main meeting room and asked Mr Grainger (but again not Mr Cox) to then join him and Mr Roberts in the small office to make some notes.[54]Mr Grainger made a handwritten note of the second meeting in the small office, which the claimant agreed was accurate. Mr Grainger said in evidence that his notes reflected what the claimant said to Mr Roberts during that meeting. They stated as follows: Eric Meeting Making Andrew Redundant Redundancy figures 12 weeks notice period (payment in lieu of 12 weeks) end of week 22nd Jan Andrew to keep van instead of extra payment for his year taking over from Tony O[perating] licence is with Andrew, need transport mgr Resignation for directorship[55]Mr Grainger said that he himself was in complete shock and felt ambushed when he entered the room and the claimant started speaking. He recalled Mr Roberts nodding at one point but did not recall Mr Roberts as saying anything whatsoever during the meeting. Mr Grainger added that when Mr Roberts was not comfortable, he would look down at papers and not at people’s faces and that is what he did during this meeting.[56]Mr Roberts also said that he did not say anything during the second meeting with the claimant in the small office with Mr Grainger present. He said that he would not know how to make somebody redundant. He said that he did not want the claimant to leave as he had no-one to fill his role. He said that the one slight comfort for him was that he understood the claimant may be prepared to remain on as Transport Manager (a role which related to the respondent’s HGV operating licence).[57]The claimant said that during this subsequent meeting, he asked Mr Roberts to confirm that he was making the claimant redundant, to which Mr Roberts nodded and then was asked again and answered “yes”. The claimant said that he then asked Mr Roberts when he wanted the claimant to finish and Mr Roberts asked the claimant if he had anyone who “could pick [him] up now”. The claimant said he said he had things to tie up before his departure and so it was “agreed” by Mr Roberts during the second meeting that he would receive 12 weeks’ pay in lieu of notice and would finish on Friday 22 January and that Mr Roberts also agreed to transfer a company van to him in lieu of additional salary not taken following his appointment as a director, and a payment in lieu.[58]The claimant was asked during cross examination by Mr Falcao if it would seem bizarre for the respondent, in the circumstances, to have asserted that he was running the company into the ground and for him to be made redundant. He agreed that this seemed “very bizarre”.[59]Based upon the following factors:a. my impression of the witnesses during oral evidence, including Mr Roberts who came across as credible and compelling despite his health difficulties, readily acknowledging events which he could not recall and appearing genuinely perplexed about why the claimant may have acted as he did in January 2021;b. the inherent implausibility of Mr Roberts dismissing the claimant in circumstances where the business was going through a challenging time, where no ready replacement existed for the claimant in his general management role or his Transport Manager role, and where the claimant was generally very well regarded by the respondent and its staff; andc. the claimant’s own immediate response to the situation at the time, as a long serving employee who (on his own account) was being dismissed without apparent cause or justification, and yet he raised no protest or concern about this, either on 20 January itself or before the termination took effect on 22 January 2021, and as detailed below he even prepared his own termination letter on 20 January. His focus appears to have been solely upon securing a favourable leaving package and I find his actions to have been inconsistent with those of an employee who genuinely considered that they have just been unjustifiably and unfairly dismissed I therefore preferred the accounts of the respondent’s witnesses of the events of 20 January 2021 to that of the claimant. The letter the claimant prepared dated 21 January 2021[60]Following the meeting on 20 January, that same afternoon, the claimant prepared a draft termination letter, in the name of Mr Roberts. He modified the letter slightly, but not materially, the next day and the final version reads as follows: 21st January 2021 Dear Andrew Following our meeting yesterday, I must inform you that your position of Director with Eric Roberts Contractors Ltd has been made redundant. The Governments statutory notice period of 12 weeks will start from 23rd January 2021 and your last day of employment will be 16th April 2021. As it has been mutually agreed, the option of being paid in lieu of notice has been accepted by yourself and your final working day will be Friday 22nd January 2021. All keys, bank cards, company property, etc will be required to be handed in by close of business on this day. Your redundancy payment will be £7,263.00 which has been calculated using the governments redundancy calculator and is based on your years of service and your salary based of the preceding 12 week period. This figure is not subject to deductions and will be paid with your final pay instalment. It has also been mutually agreed that your company vehicle will be transferred to you as an additional lieu of payment. Any annual leave you have accrued but not taken will be added to your final pay instalment. If you feel your redundancy selection has been unfair, you can appeal against the decision within 7 days from receipt of this letter. This must be in writing to me, setting out the reasons for the appeal. I would personally like to thank you for your hard work and commitment shown during your employment and wish you the very best for the future. Yours sincerely Eric Roberts Director Eric Roberts Contractors Ltd[61]Mr Grainger accepted that the claimant showed him a copy of the letter. The claimant said that he based the letter on a template (it was saved in a shared folder on the respondent’s computer system called “HR/Employment Termination /Andrew redundancy letters”). The claimant’s explanation as to why he prepared it was that there was “no other member of staff that dealt with HR issues” and so he said that he considered it unlikely that he would otherwise have received anything from the respondent.[62]The claimant’s account of events was that he was shocked by having been made redundant out of the blue but, as already noted, there was no evidence before me to suggest that, during the two days before the termination of his employment took effect on 22 January 2021, he protested against any perceived unfairness or dismissal or questioned what was, on his account, a decision by Mr Roberts to terminate his employment. On the contrary, he drafted his own letter of termination from the respondent which was focused primarily on confirming the various entitlements which he was seeking on termination.[63]Mr Grainger in his witness statement indicated that the claimant, on 20 January, “went home very easily that day and did not appear to be upset”. The claimant challenged this in cross examination and Mr Grainger confirmed that, for the claimant, the events of the day appeared “like a normal day at the office”. Mr Grainger added that he himself was shellshocked and did not think that he was the only one, but to the claimant the day’s events appeared to be “water off a duck’s back … you would never know anything had gone on”.[64]I make no findings in these proceedings as to whether or not the claimant was lawfully entitled to the “redundancy payment”, the “payment in lieu of notice” or to retain the company van, as these are not issues which I am required to determine. I do note that the disputed van was said by the respondent to have a value in excess of £20,000 whereas the claimant values it at £12,800. In either case, I regard this as substantial. I also note that the value of the notice pay, the tax-free redundancy payment and the van (taken on the claimant’s lower valuation) equates to around 45 weeks’ net pay for the claimant (based on his weekly take-home pay of £589). Events later that week[65]On 21 January 2021, the claimant presented Mr Roberts with a copy of the termination letter which the claimant had drafted.[66]The claimant said that he identified this to Mr Roberts as his “redundancy letter” based on notes from Mr Grainger.[67]Mr Roberts said that the claimant had asked to see him that day and was carrying a booklet of papers and merely asked him to sign a document on top of those papers. Mr Roberts said that he regularly signed papers and documents for all of his team and almost never read what he was signing. He trusted the claimant and so he signed the document which was presented by the claimant without reading it or asking what it was. Mr Roberts did say in oral evidence that he assumed what he was signing was an agreement that the claimant took the van and wages and would be staying on as Transport Manager, but affirmed that he had not read the document.[68]Mr Cox was not involved in the signing of the letter but did see it subsequently. He summarised his impression of the position during cross examination by the claimant as follows: The way you conducted yourself, the way you wrote the letter out as if Eric had written it – I knew it was nothing to do with Eric as he would have told me if so – he was as stunned as we all were. It seemed you took over that afternoon on 20th and dictated what you wanted and no-one was arguing with you as your made mind was made up”.[69]There was some discussion between the claimant and Mr Cox that week as to whether the claimant might remain on with the respondent in a limited capacity of Transport Manager, but this was not ultimately agreed upon.[70]The claimant asserted that the respondent offered Mr Gummow his managing role for the respondent but I have seen no evidence that this was in fact the case. Mr Gummow stated in his witness statement that he has not replaced the claimant or been offered his role. He said that he has taken on a role of Operations Manager for the respondent as there was no-one else in a position to do so.[71]The claimant made arrangements with Mr Grainger to receive the payments set out in the letter of 21 January. Mr Grainger said that he did not question the amounts or the claimant’s entitlement to them and trusted the claimant. Mr Grainger in turn passed on a request to make them to the respondent’s payroll manager and they were paid accordingly.[72]Mr Roberts said in evidence that it had appeared to him that the claimant had made his mind up to step down from the managing role, which disappointed him as the claimant was good at what he did. He believed initially that the claimant would be remaining as Transport Manager from the following week (i.e. week commencing 25 January) but said that the claimant informed him on the Monday or Tuesday of that week that he would not be returning and that his last day was the previous Friday (22 January).[73]The claimant’s resignation from his role of director at Companies House took effect on 22 January 2021.[74]I find that the claimant’s employment terminated on Friday 22 January 2021.[75]On Tuesday 26 January 2021, the claimant attended the respondent’s offices and handed a letter to Mr Roberts. This letter came out of the blue in view of the events the previous week, as I have found them, and stated as follows: 26th January 2021 Appeal against a Redundancy Dismissal Decision Dear Eric, I am writing to formally appeal against the decision to dismiss me because of redundancy on 20th January 2021 and confirmed in writing on 21st January 2021. My reasons for appeal are as follows – I feel the decision was made on a personal nature and not a business critical decision. The reasons presented for my redundancy were not valid or substantiated. At no point prior to this was there any consultation with me regarding this decision. The formal redundancy/dismissal procedure was not followed I would be grateful if you would let me know when and where we can discuss my appeal further. Yours sincerely Andrew Robson[76]The claimant said that Mr Roberts put the letter in his pocket on receipt. Mr Roberts took no action in respect of this letter and in oral evidence did not specifically recall receiving it. The appeal letter did come to Mr Cox’s attention subsequently but it is not in dispute that the respondent took no positive steps to respond to the claimant following its receipt.[77]The following day, Wednesday 27 January 2021, the claimant exchanged some text messages with Mr Grainger which are at pages [108] – [109]. Mr Grainger’s evidence was that he considered the claimant as a friend and the exchange in question indicates that they were close. The exchange was as follows: 27 January 2021 Hi Andrew, I will give you a bell Friday. Did you get your SAGE wages notification and was it correct. That mad old fucker has been in every day [17.50] Hi Stace, payslip all received thanks and call me anytime evenings, whatever. I haven't rung you cause I dont want to put you in any situation. Has he said anything about the letter I dropped in [17:53] Yes, but it's not really making anything of sense to him. He literally repeats himself every time he comes in. I've told Dave I don't want to be dragged in but you were made redundant end of story. To be fair to Dave (I won't say that very often) he has been trying to convince him of exactly what has gone on [17.58][78]Both Mr Grainger and Mr Cox gave oral evidence that Mr Roberts appeared to be confused by the claimant’s actions in the days following the events of 20 January. This evidence is consistent with the above exchange between the claimant and Mr Grainger via WhatsApp, one of the few contemporaneous documents in the case.[79]Mr Grainger was asked by the claimant in cross examination what he meant by his comment in the above exchange, “you were made redundant end of story”. Mr Grainger said that he meant that it was the claimant’s position that he was made redundant and that Mr Grainger did not wish to be involved in a dispute about it with Mr Cox. I accepted that explanation.[80]I also asked Mr Grainger what he meant by the comment in the same exchange of messages “he has been trying to convince him of what exactly has gone on”. He explained that Mr Roberts “didn’t understand a thing going on…it was a shock to all of us and was not discussed. We were asking ‘what do we do now?, ‘Where do we go from here?’”. This evidence is consistent with the respondent’s staff, including Mr Roberts, being in shock at what had occurred on 20 January 2021 and I accepted it.[81]Mr Cox has said that he did later report the taking of the company van by the claimant to the police, following legal advice, and has been verbally provided with a crime reference number and I accepted that evidence. The respondent was informed by the police that the dispute was a civil matter and so the police would not take further action.[82]I noted that Mr Cox was appointed as a director of the respondent in June 2021, over four months after the end of the claimant’s employment. I attached no significance to that fact.[83]Following the termination of the claimant’s employment with the respondent, he became his elderly mother’s full-time carer and moved in with her. According to the claimant’s schedule of loss, he started a new full-time role with a civil engineering company on 5 October 2021, on somewhat lower pay than he received at the respondent. Law[84]The relevant sections of the Employment Rights Act 1996 are as follows, contained within Part X (Unfair Dismissal), Chapter I (Right not to be unfairly dismissed):[94]The right. (1) An employee has the right not to be unfairly dismissed by his employer. …[95]Circumstances in which an employee is dismissed. (1) For the purposes of this Part an employee is dismissed by his employer if (and, subject to subsection (2) only if) — (a) the contract under which he is employed is terminated by the employer (whether with or without notice), (b) he is employed under a limited-term contract and that contract terminates by virtue of the limiting event without being renewed under the same contract, or (c) the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct. …[98]General.(1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show— (a) the reason (or, if more than one, the principal reason) for the dismissal, and (b) that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.(2) A reason falls within this subsection if it— (a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do, (b) relates to the conduct of the employee, (c) is that the employee was redundant, or (d) is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment. … (4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)— (a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case. 85. The burden of proving that there has been a dismissal within the meaning of s.95(1) rests upon a claimant and so in the case the claimant needed to satisfy the tribunal, on the balance of probabilities, that he had been dismissed. Only if he did so, would s.98 become relevant. Discussion and Decision 86. I heard oral closing submissions from Mr Falcao on behalf of the respondent and then oral closing submissions from the claimant. I was not referred to any authorities by either party. 87. The respondent’s case, in summary, was that the claimant was not dismissed by the respondent and that he resigned from his employment. The claimant’s case was that he was dismissed for redundancy by Mr Roberts, that there was no redundancy situation in existence, no fair process was followed and so he was unfairly dismissed. 88. The key issue in dispute in this case was whether or not the claimant was dismissed by the respondent. This needed to be decided against the backdrop of what was a very unusual set of facts. 89. The claimant’s case was that he was expressly dismissed by the respondent, i.e. within the meaning of s.95(1)(a), namely that his contract of employment was terminated by the respondent. This in turn, on the facts of this particular case, depended upon him establishing on the balance of probabilities that he was dismissed:a. by virtue of what was said to him in the meetings in the small office with Mr Roberts on 21 January; and/orb. by virtue of the letter which the claimant prepared dated 21 January which was signed by Mr Roberts. 90. I find that the claimant was not dismissed during either of the two meetings of 20 January 2021. I accepted Mr Roberts’ account of those meetings, and that of Mr Grainger of the second meeting, for the reasons given earlier. In summary: a. in the first meeting, the claimant told Mr Roberts, out of the blue, that if Mr Roberts was not happy with the way the claimant was running the business, the claimant would leave. The claimant said that he would take a company van in lieu of money which he said he was owed. Mr Roberts was in shock and did not speak during this short meeting, and the claimant then left to bring in Mr Grainger; and b. in the second meeting, when Mr Grainger entered the room, the claimant started speaking and set out various matters to which he said was entitled on redundancy. Mr Roberts and Mr Grainger were in shock and, at most, Mr Roberts may merely have nodded at one stage, but he appeared very uncomfortable to Mr Grainger and again Mr Roberts did not speak during this meeting. 91. Mr Roberts, who was an 88-year-old man with dementia, therefore did not say anything in either meeting and it was only the claimant himself who mentioned “redundancy”. Mr Cox, who had a power of attorney for Mr Roberts and who had been involved in many decisions and in previous redundancy situations, was not present in either meeting. The claimant did not therefore prove that a dismissal by the respondent occurred for the purposes of s.95(1)(a) during the meetings. 92. I also find that the claimant was not dismissed by virtue of the letter which the claimant prepared and which he presented on 21 January 2021 for Mr Roberts to sign and which Mr Roberts then did sign. I accepted Mr Roberts’ evidence, against the backdrop of him being 88 years old and suffering from dementia, that he did not read the letter or know what he was signing. Again, I noted that Mr Cox, who had the power of attorney for Mr Roberts and who was involved alongside him and the claimant in various decisions on behalf of the respondent, was not involved by the claimant in either the preparation of or the signing of the letter. The letter was, in addition, premised upon the claimant’s version of the events of the previous day, which I have found did not occur as he asserted they did. In all of the circumstances of this unusual case, including those of the meetings the previous day to which this letter purported to give effect, I find that the claimant did not prove that this letter amounted to a dismissal by the respondent for the purposes of s.95(1)(a). 93. For the avoidance of doubt and for completeness I also do not find that the claimant proved that any other events or occurrences about which I heard evidence during these proceedings amounted to a dismissal of the claimant by the respondent for the purposes of s.95(1)(a). 94. I do in passing say that I found it somewhat odd that the respondent did not seek, at any stage before the presentation of the ET3, to challenge the claimant’s apparent position that he had been dismissed for redundancy, particularly following sight of the appeal letter by Mr Cox. I took into account, however, the fact that the respondent is a small company and as the claimant accepted in evidence, he had dealt with their HR issues for them and so in his absence there would have been no-one to do so. It had also become plain to the respondent by the time that letter of appeal was received by them, out of the blue in view of the previous week’s events as I found them, that the claimant no longer wished to work for the respondent and the respondent considered that he had resigned. This further peculiar feature of an already unusual case did not, therefore, cause me to change my primary conclusions above, which are that the claimant did not establish that he was dismissed by the respondent for the purposes of s.95(1)(a). 95. It was clear from the evidence that the claimant no longer intended to be bound by his contract of employment after 22 January 2021. That was not the result of any act of dismissal by the respondent, but as a result of his own actions and the steps he took on 20 and 21 January 2021 to assert that he was redundant and to prepare a letter to the same effect in the name of the respondent. He regarded his employment at an end on that date and the respondent reluctantly accepted the position. Those circumstances did not amount to a dismissal for the purposes of s.95(1)(a). 96. I considered the other provisions of s.95(1) which exclusively define when a dismissal may occur for the purposes of an unfair dismissal claim. 97. S.95(1)(b) did not come into play because there was no fixed term contract here. 98. For the purposes of s.95(1)(c), the claimant did not seek to argue that he terminated his contract of employment and he expressly confirmed his position as being that he did not resign and that he was dismissed by the respondent.[99]Even if, despite that express indication by the claimant, the unusual events of this case could be construed as the claimant having terminated his own contract for the purposes of the first limb of s.95(1)(c), I find in any event that the second limb of s.95(1)(c) was not satisfied on the evidence I heard. In particular, the claimant would need to have asserted and proven on the balance of probabilities that there existed “circumstances in which he is entitled to terminate [his contract] without notice by reason of the employer’s conduct”. On the facts of the case as I have found them, there was no fundamental breach of the claimant’s contract of employment by the respondent. There was therefore no dismissal for the purposes of s.95(1)(c).[100]In summary, it was not in doubt that both parties subsequently treated the claimant’s employment as being at an end with effect from 22 January 2021, but the claimant did not prove, as he was required to do in order to pursue a claim for unfair dismissal in these proceedings, that the termination of his employment was by virtue of a dismissal by the respondent within the meaning of s.95. The claimant’s claim for unfair dismissal therefore fail and is dismissed.
Introduction
[1]The claimant brought a claim for unfair dismissal in an ET1 presented on 1 March 2021. The case came before the tribunal for a two-day unfair dismissal hearing, via the Video Hearings service, on 22 and 23 December 2021. The claimant appeared in-person, as he had been throughout the proceedings, and the respondent was represented by Mr Falcao, its instructed solicitor.[2]Judgment and reasons were given orally on 23 December 2021 and the claimant’s claim was dismissed, in particular because I found that the claimant had not established, on the balance of probabilities, that he had been dismissed by the respondent. I have not referred in detail to the findings made at the full merits hearing because those are set out in the subsequent written reasons dated 12 January 2022, which are publicly available. The respondent’s application for costs[3]On 30 December 2021, the respondent submitted an application for costs against the claimant and also a request for written reasons from the tribunal.[4]In its costs application, the respondent submitted that the claimant’s claim(1) had no reasonable prospect of success and(2) that the claimant had acted vexatiously and unreasonably in bringing his claim.[5]The respondent asserted variously within the costs application that:a. the claim was bound to fail and that the claimant knew at the outset that it was without substance and was based on a complete fiction, namely an alleged discussion with Mr Roberts, the 89-year-old managing director of the respondent.b. the claimant had dictated the events upon which to base his own exit package and fabricated a fictional redundancy.c. the claim was brought with improper motives of taking advantage of the respondent’s vulnerable owner, an elderly man, whom the claimant knew was suffering with dementia and in respect of whom there was a lasting power of attorney in favour of his nephew Mr Cox.d. the claimant relied on the possibility that the tribunal would either find that Mr Roberts’ evidence was not credible because of his dementia or alternatively that the claimant would be found to be more credible as a person who was not suffering from dementia.e. the claimant pursued the claim despite being provided with ample evidence that his role was a) not redundant, b) very important at a time when the respondent needed his particular skills to a greater degree when the business was suffering a short seasonal downturn, c) contained the operator’s licence holder element without which the respondent could not operate at all.f. the claimant was offered a generous walkaway deal, including keeping a redundancy payment of £7,263 and the Mercedes Van valued at the time at approximately £23,000 and failed to withdraw his claims, instead seeking a further unreasonable sum of £42,000.g. the claimant was warned as to costs prior to the hearing and given a further generous offer to end proceedings but failed to withdraw his claim.h. the claimant dishonestly appropriated a Mercedes van worth at the time in excess of £23,000 and a redundancy pay-out of £7,263 from the respondent.[6]The respondent asserted that the claimant’s conduct was vexatious because he brought the proceedings dishonestly and based on an entirely fictional account of events. The claimant knew his claim had no substance as it had been so manifestly misconceived that it could have no prospect of success (see Marler Ltd v Robertson [1974] ICR 72).[7]Furthermore, the respondent asserted that the claimant acted wholly unreasonably in bringing the proceedings given that his version of events presented to the tribunal was untrue and found to be “implausible”. The respondent submitted that where a claimant was so unreasonable as to fabricate circumstances and assertions with the foreseeable aim/consequence of causing the respondent and its vulnerable witness distress and loss, this must logically fall at the highest end of unreasonable conduct; see Daleside Nursing Home Ltd v Mathew UKEAT/0519/08.[8]The respondent sought to recover the legal costs it incurred by solicitors to prepare for and attend the tribunal hearing. The entire legal costs incurred were said to be £14,000 + VAT.[9]A bundle of supporting documents was provided by the respondent (16 pages), including:a. a “without prejudice” drop-hands offer dated 8 March 2021 which included the claimant keeping the disputed van and the redundancy payment. I noted that the basis of the respondent’s offer was an illegality argument which was not pursued at the substantive hearing. The claimant replied that he knew the true facts and would proceed to a hearing. In his response, Mr Falcao included a costs warning and suggested that the claimant obtain legal advice;b. an email from Acas to the respondent dated 23 August 2021 indicating, in response to a request from the respondent as to what the claimant sought by way of settlement, that he was seeking £42,000 and a letter confirming that he had been unfairly dismissed. That was rejected by the respondent; andc. an email to the claimant, “without prejudice save as to costs”, dated 16 December 2021 (following exchange of witness statements), in which the respondent asserted that the claim was vexatious, that the claimant had resigned and was not redundant, and the claimant’s case was “absurd” and “a complete creation”. A further drop hands offer was made, on this occasion requiring the return of the van. I have not seen any response from the claimant to that offer and it was evidently not accepted by him. The claimant’s response to the respondent’s costs application[10]On 7 January 2022, the claimant submitted his written response to the respondent’s costs application by email to the tribunal.[11]He stated (in summary) that:a. he had behaved responsibly, reasonably, properly and professionally and had complied with all the case management orders and deadlines and co-operated fully with the respondent’s solicitors.b. he had always told the truth and acted honestly before and during the hearing.c. he had not been represented and, as such, should not be judged by the standards of a legal professional.d. he submitted a claim supported by evidence and good grounds and so it was reasonable for him to believe he had a chance of success.e. he considered that his account of the meeting with Mr Roberts was supported by Mr Grainger’s text message and he had a letter signed by Mr Roberts confirming his redundancy, and that the respondent did not respond to his appeal letter.f. there was no evidence of ‘improper motives’.g. he found the offers from the respondent intimidatory.h. he found the tribunal process stressful, especially as he was not legally represented.i. he was critical of the respondent’s solicitor for allegedly contacting his wife at her workplace the day before the hearing leaving a message for her to contact him urgently about a court case involving the respondent.j. he stated that during the video hearing, the respondent, his solicitor and witnesses were sat a long way away from the camera which made it difficult for him to hear their responses, see their faces and their reactions. He stated that he raised this problem with the respondent’s solicitor on more than one occasion but it was not addressed. He stated that this may have affected his ability to present his case as effectively as he would have wanted (On this point, the respondent’s witnesses successively gave their evidence close to the camera and microphone in a conference room at Mr Falcao’s firm’s offices, having discussed this at the start of the hearing. My notes of the hearing do not indicate the claimant having raised any concerns during the course of the respondents’ evidence about his ability to hear them; rather he asked a series of questions he had prepared and received responses to each one). Correspondence subsequent to the costs application and response[12]Written reasons, at the request of the respondent. were completed by me on 12 January 2022 and sent out to the parties by the tribunal on 18 January 2022[13]On 9 March 2022, I asked the respondent to confirm if it maintained its costs application following the written reasons and, of so, whether the parties consented to the costs application being determined on the papers. The respondent indicated that it did maintain the application and the parties each consented, on 14 March 2022, to the costs application being dealt on the papers previously provided by the parties.
Relevant law
[14]The employment tribunal is a different jurisdiction to the county court or high court, where the normal principle is that “costs follow the event”, or in other words, the loser pays the winner’s costs.[15]The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 contain the relevant rules to be applied by employment tribunals, and for present purposes these are as follows: Rule 74(1) - “Costs” means fees, charges, disbursements or expenses incurred by or on behalf of the receiving party (including expenses that witnesses incur for the purposes of or in connection with attendance at a tribunal hearing). Rule 76 (1) A tribunal may make a costs order or a preparation time order and shall consider whether to do so where it considers that – (a) a party (or that party’s representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) had been conducted; or (b) any claim or response had no reasonable prospect of success. Rule 77 - A party may apply for a costs order or a preparation time order at any stage up to 28 days after the date on which the judgment finally determining the proceedings in respect of that party, was sent to the parties. No such order may be made unless the paying party has had a reasonable opportunity to make representations (in writing or at a hearing, as the tribunal may order) in response to the application. Rule 78(1)(a) A costs order may order the paying party to pay the receiving party a specified amount not exceeding £20,000 in respect of the costs of the receiving party. Rule 84 - In deciding whether to make a costs, preparation time or wasted costs order and if so in what amount, the tribunal may have regard to the paying party’s ability to pay.[16]Costs in employment tribunals have long been, and remain, the exception rather than the norm. Lord Justice Sedley in Gee v Shell UK Limited [2002] IRLR 82 stated as follows: “A very important feature of the employment jurisdiction that it is designed to be accessible to people without the need of lawyers, and that – in sharp distinction from ordinary litigation in the United Kingdom – losing does not ordinarily mean paying the other side’s costs”. That said, the facts of a case need not be exceptional for a costs order to be made. The question is whether the relevant test is satisfied (Vaughan v London Borough of Lewisham and others [2013] IRLR 713).[17]The discretion afforded to a tribunal to make an award of costs must be exercised judicially (Doyle v North West London Hospitals NHS Trust UKEAT/0271/11/RN. The tribunal must take into account all of the relevant matters and circumstances. The tribunal must not treat costs orders as merely ancillary and not requiring the same detailed reasons as more substantive issues. Costs orders may be substantial and can thus create a significant liability for the paying party. Accordingly, they warrant appropriately detailed and reasoned consideration and conclusions. Costs are intended to be compensatory and not punitive.[18]The EAT in Haydar v Pennine Acute NHS Trust UKEAT/0141/17 held that the determination of a costs application is essentially a three-stage process (per Simler J at [25]) (emphasis added): The words of the Rules are clear and require no gloss as the Court of Appeal has emphasised. They make clear (as is common ground) that there is, in effect, a three-stage process to awarding costs. The first stage - stage one - is to ask whether the trigger for making a costs order has been established either because a party or his representative has behaved unreasonably, abusively, disruptively or vexatiously in bringing or conducting the proceedings or part of them, or because the claim had no reasonable prospects of success. The trigger, if it is satisfied, is a necessary but not sufficient condition for an award of costs. Simply because the costs jurisdiction is engaged, does not mean that costs will automatically follow. This is because, at the second stage - stage two - the Tribunal must consider whether to exercise its discretion to make an award of costs. The discretion is broad and unfettered. The third stage - stage three - only arises if the Tribunal decides to exercise its discretion to make an award of costs, and involves assessing the amount of costs to be ordered in accordance with Rule 78.[19]For the purposes of rule 76(1)(a) above, “unreasonable” has its ordinary meaning; it is not equivalent to “vexatious” (Dyer v Secretary of State for Employment UKEAT/183/83).[20]In Yerraklava v Barnsley MBC [2012] IRLR 78 Mummery LJ gave the following guidance at [41] including as to the question of causation in the context of unreasonable conduct and related costs claimed: The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by the Claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had. The main thrust of the passages cited above from my judgment in McPherson was to reject as erroneous the submission to the court that, in deciding whether to make a costs order, the ET had to determine whether or not there was a precise causal link between the unreasonable conduct in question and the specific costs being claimed. In rejecting that submission I had no intention of giving birth to erroneous notions, such as that causation was irrelevant or that the circumstances had to be separated into sections and each section to be analysed separately so as to lose sight of the totality of the relevant circumstances.[21]In Daleside Nursing Home Ltd v Mathew UKEAT/0519/08, the EAT said that where there was a "clear-cut finding that the central allegation ... was a lie, it is perverse for the tribunal to fail to conclude that the making of such a false allegation at the heart of the claim does not constitute a person acting unreasonably." However, in Kapoor v The Governing Body of Barnhill Community High School UKEAT/0352/13, the EAT found that a tribunal had misdirected itself in its approach to the question of costs, because it considered that the simple fact that a claimant had lied meant that she had conducted the proceedings unreasonably; it should instead have considered all the circumstances of the case, including the procedural history and the extent to which the claimant’s lies had made a material impact on its actual findings.[22]A failure to accept an offer not to pursue a party for costs does not, of itself, constitute unreasonable conduct: Lake v Arco Grating (UK) Ltd, UKEAT/0511/04. However, if a party issues a clear costs warning, but the other party (particularly if represented) fails to take it seriously and to engage with it, by addressing their minds to the issues raised in support of the warning, a costs order on the basis of unreasonable conduct will be more likely.[23]The meaning of the word, “vexatious” has been the subject of a number of reported cases. In Attorney General v. Barker [2000] 1 FLR 759, Bingham CJ described the hallmark of vexatious proceedings as being that it had: “Little or no basis in law (at least no discernible basis); that whatever the intention of the proceeding may be, its effect is to subject the defendant to inconvenience, harassment and expense out of all proportion to any gain likely to accrue to the claimant; and it involves an abuse of the process of the court, meaning a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process”. In Ashmore v. British Coal Corporation [1990] ICR 485 the Court of Appeal observed that whether a case was vexatious depended on all the relevant circumstances of the case.[24]In Marler Ltd V Robertson [1974] ICR 72, NIRC the National Industrial Relations Court stated that “If an employee brings a hopeless claim not with any expectation of recovering compensation but out of spite to harass his employers or for some other improper motive, he acts vexatiously.”[25]Simply being “misguided”, or even “seriously misguided” is not sufficient to establish vexatious conduct — AQ Ltd v Holden [2012] IRLR 648, EAT at [38].[26]On the question of a claim having no reasonable prospect of success, for the purposes of rule 76(1)(b) above, under the previous tribunal rules, a “misconceived” claim was synonymous with a claim having no reasonable prospect of success. In Scott v Inland Revenue Commissioners [2004] ICR 1410, CA, Lord Justice Sedley observed that “misconceived” for the purposes of costs under the Tribunal Rules 2004 included “having no reasonable prospect of success” and clarified that the key question in this regard is not whether a party thought he or she was in the right, but whether he or she had reasonable grounds for doing so.[27]In Radia v Jefferies International Ltd [2020] IRLR 431 the EAT gave guidance on how tribunals should approach costs applications under rule 76(1)(b). It emphasised that the test is whether the claim had no reasonable prospect of success, judged on the basis of the information that was known or reasonably available at the start. Thus, the tribunal must consider how, at that earlier point, the prospects of success in a trial that was yet to take place would have looked. In doing so, it should take account of any information it has gained, and evidence it has seen, by virtue of having heard the case, that may properly cast light back on that question, but it should not have regard to information or evidence which would not have been available at that earlier time. The EAT went on to clarify that the mere existence of factual disputes in the case, which could only be resolved by hearing evidence and finding facts, does not necessarily mean that the tribunal cannot properly conclude that the claim had no reasonable prospects from the outset, or that the claimant could or should have appreciated this from the outset. That still depends on what the claimant knew, or ought to have known, were the true facts, and what view the claimant could reasonably have taken of the prospects of the claim in light of those facts.[28]In Radia the EAT also considered the overlap between a claim or response having no reasonable prospect of success and unreasonable conduct and stated as follows at [64]: This means that, in practice, where costs are sought both through the r 76(1)(a) and the r 76(1)(b) route, and the conduct said to be unreasonable under (a) is the bringing, or continuation, of claims which had no reasonable prospect of success, the key issues for overall consideration by the Tribunal will, in either case, likely be the same (though there may be other considerations, of course, in particular at the second stage). Did the complaints, in fact, have no reasonable prospect of success? If so, did the complainant in fact know or appreciate that? If not, ought they, reasonably, to have known or appreciated that? 27. In terms of the general exercise of discretion, the fact that a party is unrepresented is a relevant consideration. The threshold tests may be the same whether a party is represented or not, but the application of those tests should take account of whether a litigant has been professionally represented or not (Omi v Unison UKEAT/0370/14/LA). A litigant in person should not be judged by the same standards as a professional representative as lay people may lack the objectivity of law and practice brought to bear by a professional adviser and this is a relevant factor that should be considered by the Tribunal (AQ Limited v Holden [2012] IRLR 648). 28. The means of a paying party in any costs award may be considered twice – first in considering whether to make an award of costs and secondly if an award is to be made, in deciding how much should be awarded. If means are to be taken into account, the tribunal should set out its findings about ability to pay and say what impact this has had on the decision whether to award costs or an amount of costs (Jilley v Birmingham & Solihull Mental Health NHS Trust UKEAT/0584/06).
Conclusion
[29]Having considered the law above against the respondent’s application, I have concluded that the respondent has not overcome the hurdle of establishing, for the purposes of its application for costs, that the claimant acted unreasonably or vexatiously in the bringing or conduct of the proceedings or that his claim had no reasonable prospect of success.[30]This was an unusual case in which there were significant facts in dispute, being facts relevant to determining whether or not the claimant had been dismissed.[31]There were few documents before me at the substantive hearing, or seemingly in existence, which were directly relevant to the key issues in dispute and so I had to base my findings of fact almost entirely upon the witness testimony. Whilst I generally preferred the evidence of the respondent’s witnesses where there was a material issue of dispute, there were nonetheless some potentially significant anomalies which could on one view have lent support to the claimant’s unfair dismissal claim, including:a. A text message from Mr Grainger to the claimant which was clearly open to interpretation and on one view could have supported the claimant’s account of the key meetings with Mr Roberts and his claim that he had been made redundant in them.b. The fact that Mr Roberts had signed the purported letter of dismissal to the claimant which set out details of the potential redundancy package.c. The failure by the respondent to engage at all with the appeal letter submitted by the claimant or to correct the claimant’s version of events set out in that letter.[32]There were therefore a number of points which were open to interpretation (as opposed to pointing overwhelmingly in the respondent’s favour) and which required determination after hearing oral evidence from the relevant witnesses.[33]In his oral evidence, the claimant appeared to believe in his account of events, and stood firmly by it, and I did not make any finding that he had lied in his evidence to the tribunal.[34]Faced with two sides that steadfastly stood by their contrasting accounts of the disputed events, it was self-evident that I would need to opt for the one which I found most likely to have occurred after hearing their oral evidence. Whilst, for the reasons given in the substantive decision dated 12 January 2022, I came down on the side of the respondent on the main factual disputes and did not find the claimant’s case on those disputes to be a plausible one, a different tribunal could have reached a different conclusion on the same evidence, particularly in light of the matters at paragraph 31(a) – (c) above. Therefore, the fact that I accepted the respondent’s evidence on the disputes of fact did not detract from the fact that those points required scrutiny.[35]It was clear to me that evidence would have been required to be heard in order to determine whether or not the claimant’s claim was well-founded. I was not satisfied that his was a case that was entirely hopeless or that it was a claim without reasonable a prospect of success. I was not satisfied that the claimant appreciated those matters at any time prior to the hearing, or that he ought reasonably to have done so.[36]I also do not accept that the claimant had acted unreasonably or vexatiously in bringing the proceedings or in the way in which they were conducted. There was no direct evidence or finding of any improper motive on his part and the assertions to this effect by the respondent are merely inferential. The earlier offers of settlement made by the respondent were predicated largely upon a dispute (alleged illegality in the operation of the contract of employment) which was not pursued at the substantive hearing. The final drop hands settlement offer was only made very shortly before the hearing before me, and I do not consider that, in not accepting that offer, the claimant’s conduct of the proceedings thereby became unreasonable.[37]Consequently, for the reasons given above, I have found that the threshold required by the rules to demonstrate vexatious or unreasonable behaviour or that the claim had no reasonable prospect of success was not reached. Therefore, the respondent’s application for a costs order failed at the first stage and there was, strictly, no need for me to consider the second or third stages of the process.[38]Had I gone on to consider the second stage, and the broad discretion available to me, I would not in any event have exercised that discretion in the respondent’s favour. Costs remain the exception rather than the rule. The claimant was unrepresented throughout the proceedings and there was no evidence that he had recourse to legal advice. I was mindful again of the unusual nature of the case and of the possibility that a different tribunal could have arrived at a different outcome on the facts which were before me. As Sir Hugh Griffiths observed in Marler v Robertson [1974] ICR 72: “Ordinary experience of life frequently teaches us that that which is plain for all to see once the dust of battle has subsided was far from clear to the contestants when they took up arms” and that statement is apposite here. I would have exercised my discretion and not awarded costs in the circumstances.[39]The respondent’s application for costs is refused and is dismissed accordingly.