Mr J Ellis v GB & I Ltd and Global Business & Investment LLP: 1601753/2018
EMPLOYMENT TRIBUNALS
Case No 1601753/2018
Between
Mr J EllisClaimant1. GB&I Ltd 2. Global Business & Investment LLPRespondent
Before
Employment Judge CadneyDate 4 October 2024
JUDGMENT
The Respondents counter claim is dismissed following a withdrawal by the Respondent. JUDGMENT[1]With regard to the application to amend the particulars of claim:(i) the claim of indirect disability discrimination is withdrawn;(ii) the amendment to add claims of direct disability discrimination and a failure to make reasonable adjustments is not allowed;(iii) the amendment to add a claim under the Equality Act 2010 s.15 is allowed, as set out below;(iv) the amendment to add a claim of harassment is allowed, as set out below;(v) the application to add the Third, Fourth and Fifth Respondents is refused.[2]The parties are asked to confirm to the Judge within 14 days whether or not they agree with the revisions he has made to the draft amended particulars of claim to reflect this Judgment.
REASONS
[1]This has been a remote hearing on the papers, which the parties have not objected to. The form of remote hearing was: V - video. A face to face hearing was not held because it was not practicable and the issue of the future determination of the claim could be resolved from the papers. The documents that I was referred to are those contained in the Tribunal case file, an agreed hearing bundle, the Claimant’s skeleton argument, notes from financial statements.[2]The ET1 in this claim was filed on 3 December 2018, at which point the Claimant was unrepresented. It arises out of his employment between 20 January 2016 and 11 September 2018.[3]On 8 April 2019, the Claimant’s newly instructed solicitors referred to making an application to amend the claim and they were given permission to do so in a telephone case management hearing on 12 April 2019. EJ Cadney said: “the claimant has permission to serve an amended ET1 together with an application to amend to the extent that it is necessary”.[4]On 10 May 2019, amended particulars of claim were served. Running to some 18 pages, they amounted to an extensive revision and also sought to add three further Respondents. It is that application to amend that was the subject of this hearing. A further Preliminary Hearing and the Full Merits Hearing have already been listed and directions provided.
The law
[5]There was no dispute over the applicable legal principles and, in particular, the well-established guidance provided in Selkent Bus Co Ltd v Moore [1996] ICR 836. Mummery LJ referred to the relevant circumstances as including the nature of the amendment, the applicability of time limits and the timing and manner of the application.[6]Mr Frater referred in his skeleton to a number of other authorities by name, but did not cite any particular passages. Mr Smith also referred me to Ali v Office of National Statistics [2005] IRLR 201, CA (and see paragraphs 39, 40 in particular). The application[7]Mr Frater had prepared a skeleton argument, which he developed through his oral submissions. Mr Smith was able to rely upon the detailed response to the application, which he had drafted and which he also developed through his submissions. Rather than separately record their competing submissions, I shall set out my conclusions on the application.[8]As an initial point, the Claimant provided “original” particulars of claim with his ET1. EJ Cadney noted that the claims and the ambit of the claims were not entirely clear, but with all due respect to the Judge, I think it is perfectly clear what the Claimant was complaining about. There are 5 pages of closely typed narrative, plus information in the relevant boxes of the ET1. In essence, he alleges he was forced to resign as a result of the treatment he describes. He refers explicitly to disability discrimination and also harassment, although he mistakenly references “the Discrimination Act 2010”. As is often the case with claims drafted by litigants in person, there is a clear narrative, but it lacks the legal labels.[9]As I suggested to Mr Frater, this presented him with a problem, because the Claimant had already provided a detailed narrative, which contained explicit allegations. There was no obvious reason why he would not have included within his particulars of claim all of the matters about which he wanted to complain (with or without the correct label).[10]Taking each of the heads of claim in turn, the Respondent accepts that there is a complaint of constructive unfair dismissal on the basis pleaded in the original particulars of claim and also a claim for unlawful deduction of wages.[11]After some discussion, the application in respect of the claim for indirect disability discrimination was withdrawn by Mr Frater.[12]I agree with Mr Smith that the application to amend the claim by adding a complaint of direct discrimination is misconceived and that, in any event, it cannot be extrapolated from the original particulars of claim. During our discussions, I also agreed with Mr Smith that it is very often the case that litigants in person will claim direct disability discrimination, when they mean to bring a claim under the Equality Act 2010 s.15. It is an understandable confusion and the number of complaints that are truly direct disability discrimination will (thankfully) be rare.[13]In this case, the pleaded complaint clearly comes under s.15, namely discrimination arising from disability. The particulars of claim identify two separate complaints under this heading: stalling on the Claimant’s salary and forcing him to cancel insurance. The application to amend is much less specific, wishing to add, “all of the allegations above under Disability Discrimination”, which is a reference to the allegations of direct discrimination. However, Mr Smith is correct that these further allegations make little sense in the context of direct discrimination and, in any event, do not reflect the original claim and there is no basis for adding them now, either on Selkent principles or “just and equitable” principles. It would be unfair to extent the claim in this way, even if there was some basis for a claim of direct discrimination.[14]The claim for a failure to make reasonable adjustments is, on any view, a new claim. I do not find it anywhere in the original particulars of claim and I can see no reason why the Claimant would not have made reference to it, had he wished to do so. Applying the Selkent principles, I am not persuaded that an amendment should be allowed. It would extend the claim considerably and I note that – even now – it would still need further particularisation as to the PCPs. It causes relatively little prejudice to the Claimant, because other parts of his claim will proceed. On the other hand, it prejudices the Respondent by introducing new matters, which will require significant additional evidence.
The Law
[15]As to harassment, it is accepted that these complaints should proceed as set out at paragraphs 66 and 124 (ii)-(iv) of the amended particulars of claim. I do not allow the amendment set out at paragraph 55, which is new.[16]Turning to the application to add Respondents, there is no basis at all for adding Lee Wakemans as Third Respondent. At most, they were involved in loans and payments, but there was no contractual relationship with Claimant and nothing that suggests they could share liability. The fact that GB+I Ltd., which is the sole surviving Respondent, may not have many assets is not a reason for adding another respondent.[17]As to Mr Wong and Mr Hughes, I accept that accusations were made against them as individuals in the original particulars of claim, but it is almost always the case that allegedly responsible individuals will be named in particulars of claim. However, there is a huge difference between being named in a claim and being a named respondent. It causes prejudice to that individual to add them as a party 18 months after a claim was brought, especially where – as here – the Claimant could quite easily have added them as respondents at the time if he had wished to do so. The Claimant gains very little from adding them now, but they would suffer significant prejudice. The application to add them as Fourth and Fifth Respondents is refused.[18]We agreed that a sensible way forward was for me to amend the amended particulars of claim in the light of the judgment, which I have done by tracking deletions. The parties are then going to confirm to me within 14 days whether they agree with the revisions I have made or, if not, what suggestions they would make.[19]Overall, therefore, the application for reconsideration is dismissed.[20]Next steps. The Claimant has brought an appeal against the amendment judgment and I understand that is awaiting “the sift”. However, the substantive hearing begins on 12 April 2021 and there has as yet been no hearing to determine the Claimant’s employment status.[21]Mr Frater did not have instructions to apply for a stay and I was not able to offer the parties a listing for a hearing to determine employment status (which I was told would require 2 days) between now and 12 April. Therefore, I would suggest that the issue of employment status is dealt with at the start of the 6 day hearing and the Judge then decides how the rest of that hearing should progress.[22]I am sending a copy of this Judgment to the representatives at the same time that it is sent to the tribunal for promulgation, because I am aware of delays in sending out judgments and I appreciate that, for the purposes of the appeal, the parties will want to receive this sooner rather than later.
Introduction
[1]Mr John Ellis (the Claimant) brought claims of constructive unfair dismissal (s 98 Employment Rights Act 1996 “ERA 1996”), disability discrimination (s 15 & s26 Equality Act 2010 “EqA 2010”), failure to pay wages (s 13 ERA 1996) and failure to provide a statement of terms (s1 ERA 1996).[2]Broadly speaking, events relate to a period when Mr Ellis worked for GB&I Limited (the Respondent) in Dubai. The claim was initially pursued against a Second Respondent, Global Business & Investment LLP (GB&I LLP), which is now dissolved. The parties confirmed that the Second Respondent was removed from the proceedings at a prior case management hearing.[3]The Claimant asserted that he was an employee of the Respondent within the meaning of s230 (1) ERA 1996 and section 83 of the EqA 2010, and/or a worker within the definition of s230(3)(b) ERA 1996 and that he satisfied the wider definition of “employment” within the meaning of s 83 (2)(a) EqA 2010.[4]The Respondent initially disputed that the Tribunal had territorial jurisdiction to hear the claims, though the issue was conceded by the Respondent prior to this hearing.[5]In clarifying the issues to be determined, the parties confirmed that the Respondent was incorporated on 28 June 2018 and that the Claimant resigned on 11 September 2018. Therefore, if the Claimant was found to be an employee, his period of service with the Respondent, at only 2.5 months in duration, would mean that he lacked the requisite qualifying service to bring a claim of unfair dismissal. The Claimant sensibly withdrew his claim of (constructive) unfair dismissal following this discussion.[6]Both parties agreed that the Claimant’s remaining claims were not contingent on the Claimant being an employee of the Respondent. It was therefore agreed by both parties that the Tribunal need only determine whether the Claimant was a ‘worker’ / the comparable s 83(2)(a) EqA 2010 provision. 2 of 23 The issue[7]The issue to be determined is whether the Claimant was a worker within the meaning of s230(3)(b) and the comparable wide definition of employment under s83(2)(a) EqA 2010 (“contract to do work personally”) for the period 28 June 2018 to 11 September 2018 (“the Relevant Period”).[8]Whilst the Relevant Period is short, in order to gain a full picture of how the Claimant’s working relationship, both parties agreed it was necessary to consider the chronology of events going back as far as 2014.[9]This hearing has been concerned solely with worker status, not with the substance of the Claimant’s claims. The Evidence and the Hearing[10]This has been a remote electronic hearing by video under Rule 46 which has been consented to by the parties.[11]The participants were told that it is an offence to record the proceedings.[12]The evidence and submissions took place over two full days at the end of which I reserved judgment, explaining that full written reasons for the decision would be provided.[13]I was provided with a 359-page bundle of documents. I considered witness statements and heard oral evidence from the Claimant and Mr. Wong, a director of the Respondent. I considered all the documents in the bundle to which I was referred, as well as an additional 9 pages of documents attached to the Claimant’s witness statement. I was provided with skeleton arguments and heard oral submissions from both representatives at the conclusion of the evidence.[14]The facts I have found to be material to my conclusions are set out below. If I do not mention a particular fact in this jugdment, it does not mean I have not taken it into account. All my findings are made on the balance of probabilities.
The facts
[15]In July 2014 the Claimant was speaking at a Welsh Government organised event in Newport, Wales, regarding business opportunities in the United Arab Emirates (UAE) for UK businesses. The Claimant had been working in Dubai since 2002, initially with the UK Regional Government and afterwards with the Fujairah Government. During this time the Claimant developed a strong network of business contacts within the UAE. It was at the Newport event that the Claimant 3 of 23 first met Mr. Wong and Mr. Hughes. At that stage and throughout the events that followed Mr. Wong and Mr. Hughes were directors and shareholders of a company called Lee Wakemans Limited (‘Lee Wakemans’), a nearly 40-year-old development consultancy, based in Cardiff, providing construction project management and costs management services.[16]Mr. Wong and Mr. Hughes were interested in exploring whether Lee Wakemans might find construction work opportunities in the UAE and commenced discussions with the Claimant about the same in August 2014. At this time the Claimant was living and working in Dubai, as director and employee of UK Construction Limited.[17]During 2015 the Claimant, through UK Construction Limited, worked with Lee Wakemans by seeking out potential construction projects for it in Dubai. At this stage the Claimant was introducing work to Lee Wakemans. In his witness statement, the Claimant described Lee Wakemans as a client of UK Construction Limited. This working relationship allowed the Claimant and Mr. Wong and Mr. Hughes to get to know one another; the three of them got on well.[18]In the second half of 2015, Mr. Wong and Mr. Hughes heard that UK Construction Limited was struggling; the Claimant told them that he was not being paid and was seeking new work opportunities. The Claimant continued to live in Dubai with his wife and two children, who attended local private schools. Mr. Wong and Mr. Hughes saw this as an opportunity to work with the Claimant to build a new business. Recognising that pitching for projects in the UAE would be difficult and competitive, they considered a unique selling point for the new business venture would be to offer debt financing (particularly UK Export Finance) for construction projects. Rather than use Lee Wakemans to service that work (who carried out different work of project and costs management services), Mr. Wong and Mr. Hughes decided to start the new venture with a new brand and so registered Global Business & Investment LLP (GB&I LLP) on 30 July 2015. Each of Mr. Wong and Mr. Hughes were members of the LLP though the LLP was dormant until 2016.[19]Within their new business venture Mr. Wong and Mr. Hughes considered that the Claimant could provide a valuable link to potential clients in the Middle East, and the UAE in particular. Mr. Wong and Mr. Hughes had limited contacts in the Middle East and the Claimant had many, established over his years working in Dubai. They wanted the Claimant to carry out business development for GB&I LPP in the UAE by seeking project opportunities and introducing potential new clients for debt finance. They also considered that the Claimant had the advantage of being very familiar with the cultural differences which existed in Dubai and how they played out in completing successful business deals. For example, Dubai business deals worth significant sums of money were often agreed in principle at an in-person meeting, confirmed with only a handshake (with the finer details worked out later).[20]From November 2015 discussions took place between the Claimant and Mr. Wong and Mr. Hughes about their proposed working relationship. At this time, the 4 of 23 Claimant had been without salary from UK Construction Ltd and needed income, which Mr. Wong and Mr. Hughes knew. The three of them were optimistic that GB&I LPP would become profitable within a few months of trading. In the meantime, GB&I LLP had no cash in the business and as an interim measure Lee Wakemans loaned money to GB&I LLP to cover its initial costs.[21]From the outset of their discussions the Claimant, Mr. Wong and Mr. Hughes agreed that they would take an equal share of the profit generated by the new business venture, at 33 per cent (one-third) each. As the Claimant said in evidence, the three of them were “in it together.” I find that this was the case from the start of their discussions.[22]The Claimant began working for GB&I LLP on 1 January 2016; the basis of this working relationship was not set out in writing. Keen to get started on their new venture, the parties agreed that the working relationship would be ‘formalised later’ once the Claimant had taken legal advice and extricated himself from UK Construction Limited.[23]On 26 January 2016 the Claimant sent the following email to Mr. Wong with the heading “Business cards for John” (bold text is my emphasis); Paul Suggest the business cards for me for the time being until we are safely through everything is just Specialist Advisor or similar. In due course to have a more effective title. Ideally I would like to be the main face of the company. Address on card to show both Cardiff and Dubai if possible or it not the room then Dubai. No need for office number at this time just Dubai mobile. Many thanks John[24]The phrase “safely through everything” was a reference to the Claimant extricating himself from UK Construction Limited. In practical terms, the Claimant did not want to advertise the true extent of his new joint business venture with Mr. Wong and Mr. Hughes until he had formally ended his business with UK Construction Limited. Until that happened the Claimant and the parties agreed that the Claimant was to be referred to as ‘consultant’ or ‘specialist advisor’ to GB&I LLP. As will be seen from events that followed, the Claimant soon acquired the title of ‘Partner’ with GB&I LLP, which reflected the reality of the Claimant, Mr. Wong and Mr. Hughes being equal partners in terms of profit share from the outset (as well as the extent of the Claimant’s role). Consistent with the Claimant’s desire to be the “main face of the company” he initially requested the job title of CEO, though this was refused by Mr. Wong and Mr. Hughes.[25]Prior to the Claimant starting work in January 2016, it was agreed between the Claimant and Mr. Wong and Mr. Hughes that in return for working for GB&I LLP 5 of 23 the Claimant would receive monthly payments of £8,450.00 (“the Monthly Payment”). The Monthly Payment was not contingent on the Claimant carrying out a minimum number of hours and was paid (broadly) at the same time each month in GBP into the Claimant’s bank account. The Monthly Payment was not contingent on there being enough cash in the business to pay the Claimant. The Claimant had a family to support and needed an income; he could not have the uncertainty of not knowing if he would receive a Monthly Payment and did not agree to any such arrangement.[26]The Claimant also needed sums to cover the cost of his ‘expenses’ which comprised the rent on his accommodation in Dubai, fees for private school fees for his daughters, the costs of his personal assistant, Lisa Sage, and for travel and entertainment. These were previously paid by UK Construction Limited and as that relationship had ended, the Claimant needed these fees paid by some other means. It was agreed that GB&I LLP would pay the cost of those expenses to “help with cash flow”.[27]In respect of the Monthly Payments and the expenses it was agreed that these would be paid to on the basis of a loan from Lee Wakemans to the Claimant. However, whilst a loan agreement was drafted for that purpose, the Claimant did not sign the same.[28]I reject Mr. Smith’s submission that the Monthly Payments to the Claimant from GB&I LLP or the Respondent were varied and ‘wholly fluid.’ For a large part of the period under consideration the evidence shows that the Claimant received a minimum amount of £8450 each month from GB&I LLP. The variation of payments related to the expenses element of the agreement only, which by their very nature varied in amount each month: for example, school fees were payable termly.[29]The Claimant and Mr. Wong referred to the Monthly Payment received by the Claimant from GB&I LLP as ‘salary.’ The use of the word ‘salary’ by both parties was reflective of the agreement that the Claimant would be paid the Monthly Payment by GB&I LLP, whether there was profit or not. GB&I LLP knew that the Claimant’s position in working for it would not be sustainable if these payments were not made.[30]The Claimant did not receive the Monthly Payment through payroll and was responsible for paying his own tax.[31]In January 2016 the Claimant invoiced GB&I LLP the sum of £8450.00. There was one further invoice in March 2016, though a copy was not in the bundle. These two invoices were the only invoices sent by the Claimant to GB&I LLP. The January 2016 invoice contains no record of time spent, hours worked or hourly rate. No invoices were produced by the Claimant to the Respondent. 6 of 23[32]To obtain a visa to work in Dubai it is necessary for an individual to be ‘sponsored’ or attached to a company registered in UAE. Since 2012 the Claimant’s visa and health insurance had been provided by a company called Blue Ocean under a ‘barter’ type agreement i.e. that in return for his visa and health insurance the Claimant provided unpaid work for Blue Ocean. Such work included chairing conferences and speaking at events on Blue Ocean’s behalf, normally at the weekend. It was agreed by the Claimant and Mr. Wong and Mr. Hughes that the Claimant would continue this arrangement with Blue Ocean when carrying out work for GB&I LLP. This arrangement was beneficial to all, as setting up a Dubaibased company to provide the requisite work visa would be costly.[33]On 29 January 2016 a draft consultancy agreement was sent by GB&I LLP to the Claimant. The agreement was drafted as between the Claimant (as ‘Consultant’) and GB&I LLP (as ‘Client’).[34]The consultancy agreement included the following clauses: 2. TERMS OF ENGAGEMENT2.1 The client shall engage with the Consultant and the Consultant shall provide the Services on the terms of this agreement.2.2 The Engagement shall be deemed to have commenced on the Commencement Date and shall continue unless and until terminated:(a) As provided by the terms of this agreement: or(b) By either party giving to the other not less than 6 months’ prior written notice. 3. DUTIES AND OBLIGATIONS3.1 During the engagement, the Consultant shall: (a) Provide the Services with all due care, skill and ability and use his best endeavours to promote the interests of the Client. (b) Unless prevented by ill health or accident, devote at least [NUMBER] [hours OR days] in each calendar month to carrying out of the Services, together with such additional time, if any, as may be necessary for their proper performance; and...3.2 If the Consultant is unable to provide the Services due to illness or injury, he shall advise the client of that fact as soon as reasonably practicable. For the avoidance of doubt, no fee shall be payable in accordance with clause 4 in respect of any period during which the Services are not provided. ... . 3.6 The Consultant shall comply with the Client's policies as outlined in the Client’s company handbook. 4. FEES 7 of 23 4.1 The Client shall pay the Consultant a fee of £[AMOUNT] per [hour OR day] [exclusive or inclusive] of VAT. On the last working day of each month during the Engagement, the Consultant shall submit to the Client an invoice which gives details of the [hours OR days] the Consultant [or any Substitute] has worked during the month, the Services provided and the amount of the fee payable (plus VAT if applicable) or the Services during that month. 5. EXPENSES 5.1 [The Client shall reimburse all reasonable expenses properly and necessarily incurred by the Consultant in the course of the Engagement. Subject to production of receipts or other appropriate evidence of payment OR the Consultant shall bear his own expenses incurred in the course of the Engagement.] ... 10. INSURANCE ... 10.2 The Consultant shall ensure that the Insurance Policies are taken out with. reputable insurers acceptable to the Client and that the level of cover and other terms of insurance are acceptable to and agreed by the Client. ... 13. STATUS13.1 The relationship of the Consultant to the Client will be that of independent contractor and nothing in this agreement shall render him an employee, worker, agent or partner of the Client and the Consultant shall not hold himself as such;13.2 This contract constitutes a contract for the of services and not a contract of employment and accordingly, the Consultant shall be fully responsible for and shall indemnify the Client for and in respect of: (a) Any income tax, National Insurance and social security contributions and any other liability, deduction, contribution, assessment or claim arising from or made in connection with the performance of the services....[35]The draft consultancy agreement contains gaps in several key areas. For example, at clause, 4 (Fees) in respect of renumeration and at clause 5, (expenses) a section needs deleting for it to make sense. The interpretation section does not provide a definition of ‘Substitute’ featured at clause 4. There is no separate substitution clause.[36]On 29 January 2016 the Claimant indicated that he would be happy to sign the draft consultancy agreement, except for “minor adjustments.” However, further discussions about the terms of the consultancy agreement were not progressed because in March 2016 it was agreed that the Claimant would become a member of GB&I LLP. The draft consultancy agreement therefore became unnecessary. 8 of 23[37]It was agreed by all that the Claimant became a member of GB&I LLP on 4 April 2016, though this date was backdated to 5 January 2016 when registered at Companies House.[38]Lisa Sage was a personal assistant to the Claimant who began working with him from around 2014. When the Claimant started working with GB&I LPP from January 2016, he claimed the cost of Lisa Sage to him (£750 a month) as part of his expenses payment from the GB&I LLP. There was initially some confusion about whether Lisa Sage ought to be paid directly by GB&I LLP. It was later resolved that GB&I LLP paid Lisa Sage’s fee to the Claimant for the Claimant to then pay her. After March/April 2016 Lisa Sage worked exclusively for the Claimant on work he did for GB&I LLP until around November 2017, when work levels dropped off.[39]During his time as a member of the LLP the Claimant’s Monthly Payment and expenses payments continued as they had before he joined the LLP. However, under the terms of LLP agreement, these payments were classified as drawings against profit. In an email of 27 May 2016 from Mr. Wong to the Claimant headed “GB&I LLP Agreement” Mr Wong said as follows: .... 1. “Monies. It needs to run on a cash positive basis. In other words, you can only take out the monies that are actually in there. To date the monies you have received are predominantly loans from Lee Wakemans. Mike is going to schedule this, it's about 50K. Lee Wakemans need to see these monies come back. We also now need to run the GB&I account in a cash positive manner. So it is important to get the debt collecting going. As discussed, we will do this from Cardiff. As Lee Wakemans we give very little latitude to late payers and issue legal notices very quickly; it's a three-step process. The first step advises that the debt is outstanding and requests payment, or it will be referred to our lawyers. We will set up regular Week 3 Skype call to go through fees. ... 3.Working Time. Although you are full time in GB&I Mike and I will be predominantly working with Lee Wakemans but part time in GB&I....”[40]In July 2017 the Claimant suffered significant burns to his feet and spent eight days in hospital. During this time, he was unable to work most of the time, though he did make some business calls from his hospital bed. During this period of incapacity, the Claimant continued to receive his Monthly Payment and expenses by way of drawings from the LLP.[41]In or around November 2017, during his membership of the LLP, the Claimant raised the possibility of his wife becoming more involved in the business so that she could attend meetings if he was unable. The motivation for this discussion was the Claimant’s concern that if may become unwell and unable to work in the future, 9 of 23 and therefore may lose out on his one-third share of the profits. The Claimant anticipated that it may be some time before some of the deals which were ‘in the pipeline’ came to fruition and he did not want to miss out on those profit payments by reason of ill health. In an email dated 21 November 2017, headed ‘JE personal matters’ Mr. Wong declined the Claimant's suggestion to involve his wife in GB&I LLP, stating as follows: “ 3. Involvement of Maya. It is not appropriate to be sharing GB&I business information with your wife as she is not an employee of GB&I. This breaches confidentiality agreements and you should cease doing this immediately. Neither is she part of the GB&I plan. Should something happen to you unexpectedly which leaves you incapacitated to work then GB&I will resolve the way forward on existing commitments.”[42]Mr Wong’s witness statement and Mr Smith’s skeleton argument refer to this exchange as an “attempt at substitution” by the Claimant, in support of the Respondent’s case that the Claimant was self-employed and there was no requirement for personal service. Consistent with the lack of a substitution clause within the draft consultancy agreement, I find there was no express agreement at any time with either GB&I LLP or the Respondent that the Claimant was entitled to provide an alternative person to carry out his role. Further, I note that I was not invited by the Respondent to imply a term in the contract that the Claimant was able to provide a substitute. I find that in practice the Claimant did not provide a substitute to carry out his work. I further find that the Claimant’s discussion with Mr. Wong about his wife’s potential future involvement was insufficient evidence to imply such a term.[43]Within a few months of the Claimant joining the LLP it was clear that GB&I LLP was not producing enough profit to cover drawings taken by the Claimant causing a significant debt to be accrued and a tax liability to Mr. Wong and Mr. Hughes. Whilst Mr. Wong’s email of 27 May 2016 had insisted that the business would only run on cash positive basis, the Claimant continued to able to take drawings when the LLP had no cash. Loans continued to be provided by Lee Wakemans to GB&I LLP to cover those drawings though the situation was not sustainable.[44]During October and November 2016, GB&I LPP was still awaiting the first major commissions to come in from work it had undertaken. The lack of cash coming in meant that the Claimant and Mr. Wong discussed options to try and reduce costs. This was a collaborative process motivated no doubt by a common desire to make profit. Both were acutely aware of the difficulty of running GB&I LPP without good cash flow and the ongoing burden on the business in making the Monthly Payments and expenses payments to the Claimant.[45]Given the difficult financial position GB&I LLP and after taking advice from their accountants, Mr. Wong and Mr. Hughes decided that the Claimant should be removed from the LLP. 10 of 23[46]Upon his exit from the LLP the Claimant was not asked to sign a consultancy agreement nor was he provided with any further loan agreement. Once again, remarkably, nothing was put in writing to set out the nature of the working relationship.[47]The Claimant’s membership of the LLP ended on 29 December 2017, though this was backdated to 1 August 2016 when registered at Companies House.[48]Following the Claimant’s removal from the LLP the profit-sharing agreement (of 33% each) continued unchanged. It is not in dispute that until at least July 2018 GB&I LLP continued making Monthly Payments to the Claimant of £8450.00 despite the LLP not making profit every month. It is also common ground that upon his exit from the LLP the Claimant was not provided with a written loan agreement in relation to any payments made to him following his exit from the LLP.[49]Mr. Wong’s evidence was that it was agreed with the Claimant that after he exited the LLP the Claimant would revert to the position of consultant as he had been before entering the LLP and would become self-employed. I find that the job title ‘consultant’ was not agreed with the Claimant at this stage, nor was there any discussion or agreement that the Claimant would be ‘self-employed’. The Claimant continued to be called a Partner in the business after this exit from the LLP. Save for the issue of job title, I accept that the parties did revert to the financial agreement that existed pre-LLP: i.e. the Claimant would be paid £8540.00 each month plus expenses and that these payments would be made as a loan on account of anticipated profit.[50]Towards the end of 2017 work slowed down and it was evident that Dubai was heading towards recession. The Claimant remained optimistic about the projected future income of GB&I LLP, and the parties continued to work together.[51]In March and April 2018, the Claimant and Mr. Wong again discussed possible cost savings for GB&I LLP. Part of that discussion involved a suggestion of the Claimant re-locating to the UK. Mr. Wong did not direct that the Claimant must return to the UK; this was simply part of a sensible and pragmatic discussion about reducing costs. The Monthly Payment and expense payments were becoming a significant burden for GB&I LLP, and costs need to be saved. The discussion was a collaborative process, as the Claimant also recognised and appreciated the financial difficulties of the Respondent.[52]The Respondent was incorporated on 28 June 2018 with the purpose of replacing GB&I LLP and taking over its activities, which I find it did. Upon incorporation of the Respondent, the working arrangements for the Claimant did not change, except that the obligation to pay the Claimant a Monthly Payment and expenses (as a loan on account of profit) was now on the Respondent. I make no findings about whether Monthly Payments were in fact made by the Respondent to the 11 of 23 Claimant during this period, as this potentially forms part of issues to be determined on another day.[53]The Claimant started treatment for cancer in the UK during August 2018. The Claimant resigned by letter dated 11 September 2018, claiming, amongst others matters, that he was an employee of the Respondent. The Claimant’s day to day working arrangements[54]For the avoidance of doubt and unless otherwise set out, the findings of fact I make about the Claimant’s day to day working arrangements cover the whole period of the Claimant’s work from January 2016 to 11 September 2018. I note the this covers the following 4 sub-periods: Period 1: From 1 January 2016 to 3 April 2016 when the Claimant worked with GB&I LLP. Period 2: From 4 April 2016- 29 December 2017 when the Claimant was a member of GB&I LLP. Period 3: From 30 December 2017 – 27 June 2018 when the Claimant worked with GB&I LLP. Period 4: From 28 June 2018 – 11 September 2018 when the Claimant worked with the Respondent.[55]From around January 2016 GB&I LLP took on a small, serviced office space in Dubai, which provided a postal address for the new business and allowed GB&I LLP the ability to book and use meeting rooms within the same building. The Claimant worked from home. The Claimant provided his own laptop and mobile phone.[56]From April 2016 onwards the Claimant was given and used the title ‘Partner of GB&I LLP’. This title did not change upon his exit from the LLP (see page 283-284 as an example). The Claimant used a GB&I LLP email address. The Claimant was permitted access to GB&I LLP’s shared project folders on its IT system. However, the Claimant was not able to work on the IT protocols and did not access the system in that way. The Claimant was provided with GB&I LLP/the Respondent business cards which referred to him as a ‘Partner’.[57]The Claimant did not have his own professional indemnity insurance nor was he asked by GB&I LLP to provide it with a copy of such a policy.[58]The Claimant worked long hours, sometimes as many as 80-100 hours each week for GB&I LLP/ the Respondent. Unsurprisingly, the Claimant was keenly interested in the success of GB&I LLP and the Respondent, because he was entitled to onethird of any profit made. The Claimant anticipated some deals may bring about large commissions of up to 500k. 12 of 23[59]From around March /April 2016 onwards the Claimant did not work for anyone else (except for some unpaid ‘barter’ work for Blue Ocean – as set out at above) and from that time onwards the Claimant brought all business opportunities that came his way straight to GB&I LLP.[60]The Claimant did not ‘market’ his services as a separate business via a website or otherwise. On one occasion the Claimant was directly approached by an Indian company operating a training academy and university in India to work 1 week every month for £4,000. The Claimant drew the offer to Mr. Wong’s attention as part of a discussion about potential ways to save costs for GB&I LLP. The offer was not progressed by the Claimant.[61]In terms of his day-to-day work, there were two main elements to the Claimant’s role, which for ease I will call the First Element and the Second Element.[62]The First Element was to introduce clients to GB&I LLP/the Respondent who needed to raise investment funds for projects. GB&I LLP/the Respondent raised funds with debt funding and helped clients source designers and contractors for projects; from these deals commissions would be paid to GB&I LLP/the[63]In respect of the First Element, on a practical level, the Claimant would bring potential projects to the attention of Mr. Wong and Mr. Hughes, and (from their Cardiff office) they would carry out further work to understand and evaluate the viability of those projects. This evaluative process might involve one or more business meetings with the potential client in Dubai (which Mr. Wong and/or Mr. Hughes and the Claimant would attend), which the Claimant of Lisa Sage would arrange.[64]The Claimant continued to be present at meetings throughout the process of negotiations in a financing deal, not only because he made the initial introductions, but because he had good understanding and knowledge of the cultural aspects of negotiating and closing deals with Arab businessmen. These meetings would nearly always take place in person, in Dubai. The Claimant would be copied in on emails about the progression of each deal and was also involved in reviewing fees owed (p157) and in some cases asked to chase fees owing (p204). The progression of each deal would also be discussed at weekly (sometimes twice weekly meetings) at which the Claimant was present.[65]The ‘Second Element’ of the Claimant’s role was to assist UK companies to develop business in the UAE[66]Integral to the Second Element the Claimant worked closely with clients of GB&I LLP/the Respondent in assisting them to develop business opportunities in the UAE. At any one time 7-8 different companies paid GB&I LLP/the Respondent for these services by way of a monthly retainer fee. One such company was C&P 13 of 23 Engineering. The Claimant was directly involved with setting up a Dubai office for C&P Engineering. On behalf of C&P Engineering the Claimant also sought to engage Gower College (as C&P’s subcontractor) to carry out some training in Dubai on C&P’s behalf. Whilst the Claimant contacted Gower College directly, this was not, as suggested by Mr. Wong, part of the Claimant’s other project work as an independent consultant as part of his own business undertaking. The contact with Gower College was part of the Claimant’s work for GB&I LLP/ the Respondent.[67]As part of this role with the GB&I LLP / the Respondent the Claimant also worked with some companies from Canada (who paid a monthly retainer to GB&I LLP/the Respondent), in assisting them with developing business opportunities in Dubai.[68]The Claimant had complete freedom as to his working hours, though his long hours gave him little flexibility. He was not required to provide time sheets or record his hours. Save for the few occasions in early 2016, the Claimant did not produce invoices.[69]With regard the First Element of his role, the Claimant was given free rein to find businesses to introduce to GB&I LLP/ the Respondent. I reject the suggestion by the Claimant that Mr. Wong and Mr. Hughes instructed him who to target.[70]With regard to the Second Element of the Claimant’s role, free rein was not present, because the Claimant was required to undertake work exclusively for the clients of GB&I LLP/the Respondent who paid a monthly retainer fee to GB&I LLP/the[71]The Claimant attended weekly meetings with Mr. Wong and Mr. Hughes to discuss the First Element i.e. current deals and potential deals, and ongoing work in respect of the Second Element. The Claimant had to provide agenda documents before meetings and circulate those to Mr. Wong. The meetings increased to two meetings a week when work got busier.[72]The Claimant would prepare documents for use at client meetings, which would be shared with and edited by Mr. Wong and Mr. Hughes. The three of them did not always agree on the same approach to fees/commission, nor did they agree on the level of detail required at the beginning of negotiations to get the deal agreed. For example, the Claimant preferred a more simplistic approach to get the deal done, whereas Mr. Wong and Mr. Hughes wanted more detail and precision from the start. On one occasion, the Claimant produced a single-page document to record the heads of terms. Mr. Wong and Mr. Hughes were not happy that the document was sufficiently detailed and produced a lengthier document which was the document that used; the Claimant blamed their approach for the loss of the deal though did not dispute their ability to have the final say. Ultimately, Mr. Wong and Mr. Hughes had the final say on the issues of fees and documentation and whether a deal would be made or not. 14 of 23[73]In terms of holidays, the Claimant took very few, but informed Mr. Wong and Mr. Hughes when he was away. The Monthly Payment remained the same irrespective of holiday. The same approach was taken to sickness absence.
The law
[74]A worker is defined under s230(3) of the Employment Rights Act 1996 (ERA) as” “an individual who has entered into or works under (or, where the employment has ceased, worked under):(a) a contract of employment, or(b) any other contract, whether express or implied and (if express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.”[75]This case is concerned with s230(3)(b). Individuals who are not employees but who satisfy the worker test are sometimes referred to as “limb (b) workers.” The question as to whether an individual is a limb (b) worker has been subject to extensive consideration by the tribunals and appeal courts to determine what types of working relationships fall within its scope.[76]Section 83(2) of the EqA 2010 provides: “(2) “Employment” means - (1) employment under a contract of employment, a contract of apprenticeship or a contract personally to do work;”[77]Whilst the extended definition of employment under section 83(2) of the EqA 2010 is worded differently to the limb (b) worker definition, the two definitions are treated as meaning essentially the same thing (see Bates van Winkelhof v Clyde & Co LLP [2014] UKSC 32, at paragraphs 31 and 32, and Pimlico Plumbers Ltd v Smith [2018] UKSC 29, at paragraphs 13 to15).[78]In Bates van Winkelhof Baroness Hale (as she then was) delivered the leading judgment, which summarised the leading cases and identified key factors which the tribunal might assess and weigh in its overall consideration of status (my bold emphasis ): “32. In Allonby v Accrington and Rossendale College (Case C-256/01) [2004] ICR 1328: [2004] ECR I-873 the European Court of Justice was concerned with whether a college lecturer who was ostensibly self-employed could nevertheless be a “worker” for the purpose of an equal pay claim. The court held, at para 67, following LawrieBlum v Land Baden-Württemberg (Case 66/85) [1987] ICR 483; [1986] ECR 2121: 15 of 23 “There must be considered as a worker a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration.” However, such people were to be distinguished from “independent providers of services who are not in a relationship of subordination with the person who receives the services” (para 68). The concept of subordination was there introduced in order to distinguish the intermediate category from people who were dealing with clients or customers on their own account. It was used for the same purpose in the discrimination case of Hashwani v Jivraj [2011] ICR 1004.33. We are dealing with the more precise wording of section 230(3)(b). English cases in the Employment Appeal Tribunal have attempted to capture the essential distinction in a variety of ways. Thus, in Byrne Bros (Formwork) Ltd v Baird [2002] ICR 667, para 17(4) Mr Recorder Underhill QC suggested: “The reason why employees are thought to need such protection is that they are in a subordinate and dependent position vis-a-vis their employers: the purpose of the Regulations is to extend protection to workers who are, substantively and economically, in the same position. Thus the essence of the intended distinction must be between, on the one hand, workers whose degree of dependence is essentially the same as that of employees and, on the other, contractors who have a sufficiently arm's-length and independent position to be treated as being able to look after themselves in the relevant respects.”34. In Cotswold Developments Construction Ltd v Williams [2006] IRLR 181, para 53 Langstaff J suggested: “a focus on whether the purported worker actively markets his services as an independent person to the world in general (a person who will thus have a client or customer) on the one hand, or whether he is recruited by the principal to work for that principal as an integral part of the principal's operations, will in most cases demonstrate on which side of the line a given person falls.”35. In James v Redcats (Brands) Ltd [2007] ICR 1006, para 50 Elias J agreed that this would “often assist in providing the answer” but the difficult cases were those where the putative worker did not market her services at all. He also accepted, at para 48: “in a general sense the degree of dependence is in large part what one is seeking to identify—if employees are integrated into the business, workers may be described as semi-detached and those conducting a business undertaking as detached—but that must be assessed by a careful analysis of the contract itself. The fact that the individual may be in a subordinate position, 16 of 23 both economically and substantively, is of itself of little assistance in defining the relevant boundary because a small business operation may be as economically dependent on the other contracting party, as is the selfemployed worker, particularly if it is a key or the only customer.”36. After looking at how the distinction had been introduced into the sex discrimination legislation, which contained a similarly wide definition of worker but without the reference to clients and customers, by reference to a “dominant purpose” test in Mirror Group Newspapers Ltd v Gunning [1986] ICR 145, he concluded, at para 59: “The dominant purpose test is really an attempt to identify the essential nature of the contract. Is it in essence to be located in the field of dependent work relationships, or is it in essence a contract between two independent business undertakings? … Its purpose is to distinguish between the concept of worker and the independent contractor who is on business in his own account, even if only in a small way.”37. The issue came before the Court of Appeal in Hospital Medical Group Ltd v Westwood [2013] ICR 415, a case which was understandably not referred to in the Court of Appeal in this case; it was argued shortly before the hearing in this case, but judgment was delivered a few days afterwards. Hospital Medical Group Ltd (“HMG”) argued that Dr Westwood was in business on his own account as a doctor, in which he had three customers: the NHS for his services as a general practitioner, the Albany Clinic for whom he did transgender work, and HMG for whom he performed hair restoration surgery. The Court of Appeal considered that these were three separate businesses, quite unrelated to one another, and that he was a class (b) worker in relation to HMG.38. Maurice Kay LJ pointed out, at para 18, that neither the Cotswold “integration” test nor the Redcats “dominant purpose” test purported to lay down a test of general application. In his view they were wise “to eschew a more prescriptive approach which would gloss the words of the statute”. Judge Peter Clark in the appeal tribunal had taken the view that Dr Westwood was a limb (b) worker because he had agreed to provide his services as a hair restoration surgeon exclusively to HMG, he did not offer that service to the world in general, and he was recruited by HMG to work as an integral part of its operations. That was the right approach. The fact that Dr Westwood was in business on his own account was not conclusive because the definition also required that the other party to the contract was not his client or customer, and HMG was neither. Maurice Kay LJ concluded, at para 19, by declining the suggestion that the court might give some guidance as to a more uniform approach: “I do not consider that there is a single key with which to unlock the words of the statute in every case. On the other hand, I agree with Langstaff J that his ‘integration’ test will 17 of 23 often be appropriate as it is here.” For what it is worth, the Supreme Court refused permission to appeal in that case: [2013] ICR 415, 427. 39. I agree with Maurice Kay LJ that there is not “a single key to unlock the words of the statute in every case”. There can be no substitute for applying the words of the statute to the facts of the individual case. There will be cases where that is not easy to do. But in my view, they are not solved by adding some mystery ingredient of “subordination” to the concept of employee and worker. The experienced employment judges who have considered this problem have all recognised that there is no magic test other than the words of the statute themselves. As Elias J recognised in the Redcats case [2007] ICR 1006, a small business may be genuinely an independent business but be completely dependent on and subordinate to the demands of a key customer (the position of those small factories making goods exclusively for the “St Michael” brand in the past comes to mind). Equally, as Maurice Kay LJ recognised in Westwood's case [2013] ICR 415, one may be a professional person with a high degree of autonomy as to how the work is performed and more than one string to one's bow, and still be so closely integrated into the other party's operation as to fall within the definition. As the case of the controlling shareholder in a company who is also employed as chief executive shows, one can effectively be one's own boss and still be a “worker”. While subordination may sometimes be an aid to distinguishing workers from other self-employed people, it is not a freestanding and universal characteristic of being a worker.”[79]Of paramount importantance to consideration of limb (b) worker status is careful examination of the wording of the relevant statute to assess whether the Claimant can satisfy the definition. The question of worker status is a question of statutory interpretation, rather than contractual interpretation. Further, when assessing worker status, the purpose of the legislation must be kept in mind. In Uber v Aslam and others [2021] UKSC 5 giving the sole judgment, Lord Leggatt said as follows: “In determining whether an individual is a “worker”, there can, as Baroness Hale DPSC said in the Bates van Winkelhof case [2014] ICR 730, para 39, “be no substitute for applying the words of the statute to the facts of the individual case.” At the same time, in applying the statutory language, it is necessary both to view the facts realistically and to keep in mind the purpose of the legislation. As noted earlier, the vulnerabilities of workers which create the need for statutory protection are subordination to and dependence upon another person in relation to the work done. As also discussed, a touchstone of such subordination and dependence is (as has long been recognised in employment law) the degree of control exercised by the putative employer over the work, or services performed by the individual concerned. The greater the extent of such control, the stronger the case for classifying the individual as a “worker” who is employed under a “worker's contract”.” 18 of 23[80]Further important considerations were identified by the Supreme Court in Uber as being relevant to the question of whether a putative worker was in business on his own account. The factors include: the level of subordination of putative worker to putative employer; the degree of control exerted by the putative employer over the putative worker; the degree of dependence by the putative worker on the putative employer; the extent to which the putative worker is free to develop their own extended business; who deals with complaints and determines whether there should be refund to the customer; which party dictates the terms on which they trade with the ‘end client’ or ‘consumer’; who has the most control over contact with end clients: and the degree of integration of the putative worker within the putative employer’s organisation.[81]In Sejpal v Rodericks Dental Ltd [20220 EAT 91, the EAT, following Uber, emphasised the need for a structured application of the statutory test. Concepts such as “mutuality of obligation”, “irreducible minimum”, “substitution”, “dominant purpose”, “subordination”, “control” and “integration” are tools that can sometimes help in applying the statutory test but are not themselves tests.[82]Regarding the issue of substitution, the significant body of case law on this point was summarised by the Court of Appeal in Pimlico Plumbers Ltd v Smith [2017] ICR 657 (upheld on appeal to the SC: [2018] ICR 1511). Following a review of the authorities, Sir Terence Etherton MR (with whom Davis LJ agreed, and with whose reasons Underhill LJ “essentially” agreed) stated at [84]: “In the light of the cases and the language and objects of the relevant legislation, I would summarise as follows the applicable principles as to the requirement for personal performance. Firstly, an unfettered right to substitute another person to do the work or perform the services is inconsistent with an undertaking to do so personally. Secondly, a conditional right to substitute another person may or may not be inconsistent with personal performance depending upon the conditionality. It will depend on the precise contractual arrangements and, in particular, the nature and degree of any fetter on a right of substitution or, using different language, the extent to which the right of substitution is limited or occasional. Thirdly, by way of example, a right of substitution only when the contractor is unable to carry out the work will, subject to any exceptional facts, be consistent with personal performance. Fourthly, again by way of example, a right of substitution limited only by the need to show that the substitute is as qualified as the contractor to do the work, whether or not that entails a particular procedure, will, subject to any exceptional facts, be inconsistent with personal performance. Fifthly, again by way of example, a right to substitute only with the consent of another person who has an absolute and unqualified discretion to withhold consent will be consistent with personal performance.” 19 of 23 Conclusion: application of the statutory definition to the facts[83]In following a structured approach, I note that there are three parts to the limb (b) worker definition:(i) The requirement for a contract between the worker and the putative employer;(ii) The requirement that the contract is to do or perform any work ‘personally’; and,(iii) The requirement that the putative employer is not the customer or client of any business or undertaking or profession carried on by the putative worker.[84]In his submissions, Mr. Smith accepted there was a contract between the Claimant and the Respondent. I therefore do not need to consider the first part of the definition as it is agreed there was a contract during the Relevant Period.[85]The Respondent does not accept that the second part of the definition has been satisfied. I must therefore consider whether there was a requirement for personal service during the Relevant Period. This question may sometimes be answered by considering the concepts of “substitution” and “dominant purpose” though they are no substitute for applying the words of the statute.[86]The sole submission made by the Respondent about the second part of the definition was as follows: “...C by his own actions considered he could substitute himself for his wife if he was unable to work [245]”. The reference to the Claimant’s ‘own actions’ was him making enquiries of Mr. Wong about the Claimant’s wife attending meetings on his behalf if he was incapacitated by illness. The relevant findings can be found in paragraph 41-42 above.[87]There was no express or implied agreement that the Claimant was entitled to provide a substitute. In practice this did not happen. The Claimant’s discussion with Mr. Wong about his wife’s potential future involvement in the event he was incapacitated was insufficient evidence to persuade me that the contract did not require personal service. At best, these facts would more closely fit with the Claimant asserting a right of substitution only when he was unable to carry out the work. Whilst it was not the Respondent's case that such a substitution clause formed part of the contract, I nevertheless note the comment in Pimlico Plumbers that, subject to exceptional facts, such an agreement would be consistent with personal performance.[88]Further, I conclude that a substantial objective of the contract was for the Claimant to provide his specialist and direct knowledge of the UAE market (obtained over many years) for the benefit of the Respondent and its clients.[89]Applying the words of the statute, I find that the requirement of the contract was for the Claimant to perform work personally.[90]The main dispute is in relation to the third part of the definition. I must consider whether the Respondent was, by virtue of the contract, a client or customer of any 20 of 23 profession or business undertaking carried out by the Claimant during the Relevant Period. In my judgment, it was not. In reaching that conclusion, remembering the words of Maurice Kay LJ in Westwood case that there is “no single key with which to unlock the words of statue in every case” I have in particular taken the following matters into consideration: -a. The Claimant was entitled to be paid the Monthly Payment each month and expenses when they arose. The Claimant received the Monthly Payment by GB&I LLP/the Respondent on about the same day each month whether there was profit in the business or not. The Monthly Payment was referred to as ‘salary’ - that was reflective of the agreement that it would be paid each month come what may.b. That the Monthly Payment and expenses were provided as a loan on account of profit provided meant there was an element of risk for the Claimant of the loans being recalled if the Respondent was not profitable. That risk is not the same as the risk taken by a person running their own business servicing the needs of clients who are not concerned as to the profitability of that person’s business.c. Except for two occasions in the early part of the relationship the Claimant did not invoice GB&I LLP/ the Respondent.d. The Claimant was paid the same amount of Monthly Payment and expenses in months when he took holiday or was sick.e. The Claimant used an email address and business cards provided by thef. From April 2016 the Claimant worked exclusively for GB&I LLP/the Respondent until his resignation in September 2018.g. The Claimant was recruited to undertake the work personally for GB&I LLP/the Respondent. This was the dominant feature of the contract. It was the Claimant’s specific knowledge of both contacts and the cultural aspects of the working in the UAE which were sought out by GB&I LLP/the Respondent as well as his ability to work with the Respondent’s clients in closing a deal and providing those clients business development assistance in Dubai.h. The Claimant was approached with an offer for him to work with an Indian university. That the Claimant took this offer to Mr. Wong as an idea for potential cost saving for GB&I LLP is inconsistent with the Respondent being his client. If the Claimant was a client of the Respondent, and conducting his own business undertaking, it seems unlikely he would share 21 of 23 this information in this way but would instead weigh up the pros and cons of the offer privately.i. In his closing submissions Mr. Smith argued that the Claimant was “used exclusively to gain a foothold” or “created a doorway only” for the Respondent in the UAE market. Mr. Smith also submitted that the Claimant was paid to “use his talents to generate leads’ and “not much else” and after introducing the clients to Mr. Wong and Mr. Hughes the Claimant remained at ‘arm's length' from the Respondent. If those assertions were supported by my factual findings based on the evidence, I accept that they may well direct towards a finding that the Claimant was carrying out a business undertaking with the Respondent as his client. However, I reject those submissions. The Claimant was involved in the business of GB&I LPP / the Respondent in a significant way as set out at paragraphs 61-67.j. From April 2016 onwards and throughout the Relevant Period the Claimant held the title ‘Partner’ of GB&I LLP/the Respondent. Whilst the label adopted by the parties cannot alter the “true relationship” I find it is nonetheless relevant because it is reflective of the extent of the Claimant’s integration within the business.k. The geographical distance from Dubai to Cardiff was in practical terms, irrelevant because the Claimant collaborated with Mr. Wong and Mr. Hughes on a regular basis via Skype. As part of a team, the three of them worked closely to complete deals and provide services to those clients of the GB&I LPP/ the Respondent. As part of that team, the Claimant was, in effect, the ‘face’ of the Dubai office of GB&I LLP/the Respondent.l. Whilst the Claimant had a high degree of autonomy when finding and introducing new clients, the reality of his day-to-day work, particularly with the Second Element of his role, did not provide him with the ability to pick and choose what work he did. The Claimant was required by GB&I LLP/ the Respondent to provide business development services to those clients of the Respondent who paid a monthly retainer. In that sense GB&I LLP exercised control over what work the Claimant undertook.m. Finally, there was an element of subordination in the relationship. The Claimant was subject to oversight and control by Mr. Wong and Mr. Hughes. In respect of the First Element of his role, as set out in paragraph 72 above, Mr. Wong and Mr. Hughes had the final say on certain matters in respect of the clients of GB&I LLP/the Respondent. Further, the Claimant was obliged and directed to undertake the Second Element of his role, including chasing down fees of GB&I LLP/the Respondent at Mr. Wong’s and/or Mr. Hugh’s direction. 22 of 23 Overall conclusion[91]In my judgment the Claimant was a worker within the meaning of of s 230(3)(b) of the Employment Rights Act 1996 (ERA 1996) and falls within the definition of “employment” in s83(2)(a) of the Equality Act 2010 (EqA 2010), as he was engaged in a “contract personally to do work”.[92]I have made directions via a separate case management order to get the matter ready for the final hearing. COSTS JUDGMENT It is the unanimous Judgment of the Tribunal that the respondent’s application under Rule 76 (1)(a) and (b) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, schedule 1 is successful. The claimant is to pay the sum of £18,199.00 to the respondent.[1]At the outset of this Judgment, the Tribunal repeats its previous statement that nothing in this Judgment undermines the seriousness of the claimant’s ill health and his more recent diagnosis. The Tribunal notes and echo’s the respondent’s sentiment and sincerely hope his health will recover.[2]The liability hearing took place over four days, although it was listed for five days. The claimant was unavailable between 11am and 2pm on the fifth day due to a medical appointment and due to those timings, this resulted in the fifth day of the hearing being ineffective. On the morning of the fourth day, oral Judgment was delivered. After a short adjournment to take instructions and discussions about the practicalities of proceeding, the Tribunal heard the respondent’s costs application.[3]The Tribunal had made the finding that although the main thrust of the claimant’s claim was for unlawful disability discrimination contrary to the Equality Act 2010 (EQA); what the claim was really about was money. The respondent had paid sums of money which were found to be monthly payments and expenses as a loan on account of profits. The claimant had received the sum of £436,911 from the respondent and its predecessor between 1/1/2016 and 11/9/2018. The respondent had never made a profit and it had survived due to some income and loans.[4]At the time the claimant’s terminated his engagement, the respondent stated that he owed his creditors a total of £104,480 on 27/9/2018 (page 289).[5]The claimant had other debts, including owing HMRC circa £65,000.[6]Ideally, the Tribunal would have preferred to adjourn the costs application to the fifth day of the hearing. That would allow the parties time to have a discussion about costs and for the claimant to collect his thoughts and to address his ability to pay any costs which were awarded. Due to the claimant’s medical appointment, this was not possible.[7]After discussions, the Tribunal decided that the proportionate way to proceed, which was in accordance with the overriding objective; was to hear the application, to give directions and to reserve its decision.[8]The respondent provided a costs warning letter dated 6/9/2024 and a breakdown of its costs sought. The respondent limited its costs to the period 6/9/2024 and the final hearing.[9]The respondent’s application was made under Rule 78 (1)(a) and (b).[10]The costs warning letter relied upon the claims having no reasonable prospects of success; whereas Mr Smith’s oral application relied more upon the conduct of the proceedings and/or vexatiousness.[11]The overlap between unreasonable conduct and the claim having no reasonable prospects of success is acknowledged.[12]In view of the fact the Tribunal was not able to determine the costs application during the currency of the hearing, it made an Order for Directions on the 9/10/2024.[13]It directed the claimant to provide confirmation of his medical appointment on the 4/10/2024. On the 17/10/2024 the claimant’s representative wrote and explained that there was no letter confirming the appointment as it had been arranged urgently. On the 1/11/2024 the representative sent to the Tribunal a ‘letter from the GP noting his cancer treatment appointment’ A letter dated 22/10/2024 was provided. That letter did not confirm the appointment on the 4/10/2024 and it referred to the claimant having been assessed by an Oncologist on the 12/9/2024 with a recurrence of his cancer and him having started on ongoing treatment and that he is being reviewed monthly.[14]The Tribunal also received an email from the claimant’s wife on the 28/10/2024. That email was not copied to the respondent. Furthermore, the claimant’s representative wrote to the Tribunal on the 1/11/2024 and enclosed recent correspondence the claimant had received. It appeared therefore that Mr Frater remained on the record as the claimant’s representative.
The law
[15]The material provisions of the ET Rules 2013 governing costs applications are excerpted below: Rule 74. Definitions(1) “Costs” means fees, charges, disbursements or expenses incurred by or on behalf of the receiving party (including expenses that witnesses incur for the purpose of, or in connection with, attendance at a Tribunal hearing). […] Rule 75. Costs orders and preparation time orders (1) A costs order is an order that a party (“the paying party”) make a payment to— (a) another party (“the receiving party”) in respect of the costs that the receiving party has incurred while legally represented or while represented by a lay representative. Rule 76. Where a costs order or preparation time order may or shall be made (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) have been conducted; or (b) any claim or response had no reasonable prospect of success.(2) A Tribunal may also make such an order where a party has been in breach of any order or practice direction or where a hearing has been postponed or adjourned on the application of a party. Rule 77. Procedure 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. The amount of a costs order (1) A costs order may— (a) 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; (b) order the paying party to pay the receiving party the whole or a specified part of the costs of the receiving party, with the amount to be paid being determined, in England and Wales, by way of detailed assessment carried out either by a county court in accordance with the Civil Procedure Rules 1998, or by an Employment Judge applying the same principles; […](3) For the avoidance of doubt, the amount of a costs order under subparagraphs (b) to (e) of paragraph (1) may exceed £20,000. Rule 84. Ability to pay 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 (or, where a wasted costs order is made, the representative’s) ability to pay.[16]When determining an application for costs, the ET should apply a three-stage approach: 16.1. Is the relevant jurisdictional threshold in rule 76 met? 16.2. If so, should the ET exercise its discretion in favour of making a costs order? 16.3. If so, what sum of costs should the ET order?[17]For the purposes of rule 76(1)(a) the word “unreasonable” is to be given its ordinary English meaning and is not to be interpreted as meaning something similar to vexatious (Dyer v Secretary of State for Employment UKEAT/0183/83).[18]The Tribunal should consider the nature, gravity and effect of the unreasonable etc conduct, but it is appropriate to avoid a formulaic approach and have regard to the totality of the relevant conduct. As Mummery LJ explained in Yerrakalva v Barnsley MBC [2012] ICR 420, CA at §41: 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 […][19]It should, however, be noted that the Tribunal is not confined to making an award limited to those costs caused by the unreasonable conduct. As Mummery LJ confirmed in McPherson v BNP Paribas (London Branch) [2004] ICR 1398, CA:39. Miss McCafferty submitted that her client's liability for the costs was limited, as a matter of the construction of rule 14, by a requirement that the costs in issue were "attributable to" specific instances of unreasonable conduct by him. She argued that the tribunal had misconstrued the rule and wrongly ordered payment of all the costs, irrespective of whether they were "attributable to" the unreasonable conduct in question or not. The costs awarded should be caused by, or at least be proportionate to, the particular conduct which has been identified as unreasonable.40. In my judgment, rule 14(1) does not impose any such causal requirement in the exercise of the discretion. The principle of relevance means that the tribunal must have regard to the nature, gravity and effect of the unreasonable conduct as factors relevant to the exercise of the discretion, but that is not the same as requiring BNP Paribas to prove that specific unreasonable conduct by the applicant caused particular costs to be incurred. As Mr Tatton-Brown pointed out, there is a significant contrast between the language of rule 14(1), which deals with costs generally, and the language of rule 14(4), which deals with an order in respect of the costs incurred "as a result of the postponement or adjournment". Further, the passages in the cases relied on by Miss McCafferty (Kovacs v Queen Mary and Westfield College [2002] ICR 919, para 35, Lodwick v Southwark London Borough Council [2004] ICR 884, paras 23-27, and Health Development Agency v Parish [2004] IRLR 550, paras 26-27) are not authority for the proposition that rule 14(1) limits the tribunal's discretion to those costs that are caused by or attributable to the unreasonable conduct of the applicant.41. In a related submission Miss McCafferty argued that the discretion could not be properly exercised to punish the applicant for unreasonable conduct. That is undoubtedly correct, if it means that the indemnity principle must apply to the award of costs. It is not, however, punitive and impermissible for a tribunal to order costs without confining them to the costs attributable to the unreasonable conduct. As I have explained, the unreasonable conduct is a precondition of the existence of the power to order costs and it is also a relevant factor to be taken into account in deciding whether to make an order for costs and the form of the order.[20]Mummery LJ did not resile from these observations in his later judgment in Yerrakalva, though he did emphasise in Yerrakalva that whilst the Tribunal is not limited to awarding those costs incurred by the receiving party as a result of the paying party’s unreasonable conduct, the “effect” of the unreasonable conduct will often be a relevant factor in the Tribunal’s exercise of its discretion.[21]In circumstances where the Tribunal finds that the jurisdictional threshold in rule 76 is met, the Tribunal retains a broad discretion as to whether to make a costs order and the amount of any costs awarded. Whilst there is no closed list of factors relevant to the exercise of the Tribunal’s discretion, the following factors are often relevant: 21.1. Costs orders are intended to be compensatory, not punitive (Lodwick v Southwark LBC [2004] ICR 884, CA). Therefore, the extent of any causal link between the unreasonable etc conduct and the costs incurred will normally be a relevant discretionary factor (Yerrakalva), albeit there is no requirement to establish a causal link between the unreasonable conduct and the costs incurred before an order can be made (McPherson). 21.2. The paying party’s ability to pay is a factor which the Tribunal is entitled, but not obligated, to consider (see rule 84). Where regard is had to the paying party’s ability to pay, that factor should be balanced against the need to compensate the receiving party who has unreasonably been put to expense (Howman v Queen Elizabeth Hospital Kings Lynn UKEAT/0509/12). 21.3. Any assessment or consideration of means need not be limited to the paying party’s means as at the date the order is made. It is sufficient that there is a “realistic prospect that [they] might at some point in the future be able to afford to pay” (Vaughan v London Borough of Lewisham [2013] IRLR 713, EAT). 21.4. Where the Tribunal does decide to take the paying party’s means into account, it must do so on the basis of sufficient evidence (for example by the paying party completing a county court form EX140) (Oni v NHS Leicester City UKEAT/0144/12). 21.5. There is no requirement to limit costs to the amount the paying party can afford (Arrowsmith v Nottingham Trent University [2012] ICR 159, EAT). 21.6. The Tribunal may have regard to the means of a party’s spouse or other immediate family members (Abaya v Leeds Teaching Hospitals NHS Trust UKEAT/0258/16). 21.7. Whether a party is legally represented may be a relevant factor. An unrepresented litigant may be afforded more latitude than a party who has the benefit of professional legal advice and representation (AQ Ltd v Holden [2012] IRLR 648, EAT).[22]In Radia v Jefferies International Ltd UKEAT/0007/18/JOJ the EAT said: ’61. It is well-established that the first question for a Tribunal considering a costs application is whether the costs threshold is crossed, in the sense that at least one of Rule 76(1)(a) or (b) is made out. If so, it does not automatically follow that a costs order will be made. Rather, this means that the Tribunal may make a costs order, and shall consider whether to do so. That is the second stage, and it involves the exercise by the Tribunal of a judicial discretion. If it decides in principle to make a costs order, the Tribunal must consider the amount in accordance with Rule 78. Rule 84 provides that, in deciding both whether to make a costs order, and if so, in what amount, the Tribunal may have regard to ability to pay.62. At the first stage, accordingly, it is sufficient if either Rule 76(1)(a) (through at least one sub-route) or Rule 76(1)(b) is found to be fulfilled. There is an element of potential overlap between (a) and (b). The Tribunal may consider, in a given case, under (a), that a complainant acted unreasonably, in bringing, or continuing the proceedings, because they had no reasonable prospect of success, and that was something which they knew; but it may also conclude that the case crosses the threshold under (b) simply because the claims, in fact, in the Tribunal’s view, had no reasonable prospect of success, even though the complainant did not realise it at the time. The test is an objective one, and therefore turns not on whether they thought they had a good case, but whether they actually did.63. In this regard, the remarks in earlier authorities, about the meaning of “misconceived” in Rule 40(3) in the 2004 Rules of Procedure, are equally applicable to this replacement threshold test in the 2013 Rules. See in particular Vaughan v London Borough of Lewisham [2013] IRLR 713 at paragraphs 8 and 14(6). However, in such a case, what the party actually thought or knew, or could reasonably be expected to have appreciated, about the prospects of success, may, and usually will, be highly relevant at the second stage, of exercise of the discretion.64. This means that, in practice, where costs are sought both through the Rule 76(1)(a) and the Rule 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?
Findings of fact
[23]The history of the claim and the explanation for the delay in the final hearing taking place are set out in the liability Judgment.[24]The respondent submitted and the Tribunal accepted that the claimant could not pursue his unauthorised deduction from wages claim under s.13 Employment Rights Act 1996 (ERA) as the payments which were made to him by the respondent, did not fall within the definition of Wages in s.27 ERA and indeed were expressly excluded under s.27(2)(a) ERA. Furthermore, as the claimant had been found to be a worker by EJ Millns on 29/6/2024 (page 103), he could not pursue his claim of a failure to provide written particulars of employment.[25]The claimant relied upon four allegations of harassment. He was diagnosed with cancer in May 2018 and he was therefore disabled at the relevant time and that was his protected characteristic.[26]The Tribunal found that the allegations were inadequately framed in that they were not dated and they did not state who the harasser was. They were: Did the company or any of its employees engage in unwanted conduct as follows:2.1 from about March 2018, during weekly conference calls, require a breakdown of all his costs and expenses [39]2.2 requiring him to “beg and plead” for his salary and/or expenses to be paid [66]2.3 in August 2018 saying that he was in the gutter and bankrupt [67]2.4 informing clients that he had left due to ill health.[27]The claimant led little evidence-in-chief in respect of the allegations and his chronology differed from that of his representative’s skeleton argument.[28]On the claimant’s own account of the allegations of harassment, 2.1 predated his diagnosis of cancer in May 2018. The Tribunal found that the claimant did not ‘beg and plead’ for payments; but that it was the claimant who pestered the respondent for loans and payments.[29]The Tribunal robustly rejected the allegation that (it turned out) Mr Wong had referred to him being in the gutter. It found that bankrupt was an accurate description of the claimant, but found on the balance of probabilities, Mr Wong did not use that term. At best, that allegation was going to depend upon whose version of events the Tribunal preferred as there was no documentary evidence of it. Furthermore, it was objectively correct to describe the claimant as bankrupt and to do so would not amount to harassment related to the claimant’s cancer (per s.26 EQA).[30]This was also against an evidenced background of Mr Wong: relating his father’s similar cancer diagnosis and experience to the claimant in order to reassure him; offering him free accommodation while the claimant was in Wales having treatment; and; offering an extremely generous ‘rescue’ package (which it was found he and Mr Hughes would have funded personally) for the claimant once the extent of his debts became apparent.[31]The final allegation was at least on the face of it, causally linked to the claimant’s cancer. Again, there was no documentary evidence of it and the Tribunal preferred the respondent’s explanation that some clients (by that stage there was a limited number) were told the claimant had left. There was no reference made by the respondent to the claimant’s health, to those clients.[32]In respect of the discrimination arising from disability (allegations 2.1, 2.2 and 2.3), the unfavourable treatment was ‘stalling on his salary, which forced him to consider sleeping in his car whilst undergoing cancer treatment and to cancel his health insurance policy (allegation 3.1).[33]The Tribunal found there was no stalling on the claimant’s monthly payment and up until the 6/8/2018 when the claimant’s treatment commenced, all payments had been paid (page 291). The Tribunal found the notion of the claimant considering sleeping in his car when Mr Wong on the 3/8/2018 offered him free accommodation was nonsense (page 237). Finally, there was simply no evidence that the claimant had cancelled his health insurance policy and EJ Millns had made a finding that the policy was maintained by Blue Ocean (page 87).[34]The Tribunal found the unfavourable treatment was simply not made out.[35]The respondent sent a focused costs warning letter to the claimant on the 6/9/2024. It is worth setting out the letter in full: ‘We refer to the upcoming Final Hearing in the above case in respect of your client’s remaining claims for unlawful deductions from wages, discrimination arising out of disability and disability-related harassment. In a sensible attempt to streamline or settle this claim, our client would like to resolve the claim for unlawful deduction from wages in respect of your client’s monthly remuneration of £8,450. Although we have still not received an updated schedule of loss from you, we calculate that the amount of that sum which was unpaid for August 2018 was £4,950, and for the first 11 days of September 2018 (i.e. up to the date of your client’s resignation from his engagement) was £3,055; the unpaid amount therefore totals £8,005. In respect of your client’s claim for expenses, rent and school fees, our client does not believe there is merit to this claim for multiple reasons; not least, that they are excluded from the definition of wages by section 27(2) of the Employment Rights Act 1996, but also because your client has failed to disclose evidence that any such amounts were owing to him. In respect of your client’s claims for discrimination, as you are aware, our client strongly believes that these claims also have no reasonable prospects of success. The only evidence existing regarding GB+I’s treatment of your client in relation to his cancer treatment shows that GB+I gave your client nothing but support regarding this. The dispute regarding your client’s costs, expenses and financial situation clearly did not arise out his disability, but out of the disclosures which he made to our client during 2018 about his debts and also out of the financial burden to GB+I of continuing to engage your client in circumstances where its income had dried up due to the financial situation in the UAE. There is no evidence in the hearing bundle that could suggest any causal link between your client’s cancer and the claims he has made. Our client therefore believes that proceeding to the Final Hearing in respect of his remaining claims will achieve nothing but to waste time and costs for both parties. For the reasons set out above our client would like to make your client the following alternative offers of settlement, on a no admission of liability basis and subject to COT3 wording: 1. Accept the offer of £8,005 in full and final settlement of all claims and sensibly conclude these proceedings for a sum which represents the value of the only claim which has reasonable prospects of success, without incurring the costs of preparing for and attending the Final Hearing. 2. Accept the offer of £8,005 in settlement of the claim for unlawful deduction from wages, and continue with the discrimination claims and claim for expenses/living costs. If your client chooses this option, however, please be aware that if your client loses those claims for the reasons set out in this letter, then our client reserves the right to make a costs application against him under rule 76(1)(b) of the Employment Tribunal Rules of Procedure on the basis that it has now been made clear to him on multiple occasions that those claims have no reasonable prospects of success. Due to the proximity of the Final Hearing and the fact that our counsel’s brief fee will shortly be incurred if the claim is not settled, we would be grateful if you would respond to this offer by no later than close of business on Wednesday 11 September 2024. We look forward to hearing from you as soon as possible.’[36]The Tribunal reminds itself that the claimant was legally represented by his current representative since at least the preliminary hearing on the 12/4/2019. He also had the benefit of legal advice prior to his resignation.[37]The respondent’s settlement offer of the 6/9/2024 was reasonable. It in fact offered the claimant two options and both options included the provision of a payment of over £8,000 to the claimant. The second option exceptionally allowed the claimant to take the £8,000 to withdraw the unauthorised deduction from wages claim and still to pursue the discrimination and money claims.[38]The costs warning letter also to some extent, ‘mirrored’ the findings and conclusions which the Tribunal reached. The respondent quite rightly pointed out, as the Tribunal found, that the allegations of discrimination made, lacked a causal link to the protected characteristic of disability.[39]What this proposal offered to the claimant was certainty and it removed any risk to him in pursuing the claims; at least in respect of the first option. It also obviously avoided the need for any further preparation between the 6/9/2024 and the 30/9/2024, in addition to the need for attendance at and participation in the final hearing. It removed the risk of a costs application if the claimant took up the first option and the second option allowed him to continue to litigate the claims which were not settled; with the costs risk if he was unsuccessful.[40]If the claimant took the first option, although his complaints would not be tested and determined by the Tribunal, this was more of a disadvantage for the respondent than the claimant. The claimant had not effectively made any causative link between the allegations and the protected characteristic of disability. The allegations although vague, were especially offensive and upsetting for Mr Hughes and in particular Mr Wong. They were the antithesis of the compassion the claimant had been shown. It was arguably more of a disadvantage for the respondent not to have the complaints aired, determined and for its individuals to be exonerated; than it was for the claimant to simply walk away.[41]A refusal of an offer of settlement is a factor which the Tribunal can take into account (Kopel v Safeway Stores plc 2003 IRLR 753). The Tribunal has found the settlement offer to be reasonable and unusual in that it gave the claimant two settlement options.[42]The Tribunal therefore finds that the conduct of continuing with the claim, was unreasonable from the point the settlement offer/costs warning was made.[43]It was unreasonable to continue with allegations which in the main, were on the claimant’s own chronology of events, out of time. Or alternatively, had no reasonable prospect of success as they pre-dated the claimant’s cancer diagnosis. Furthermore, it was unreasonable to maintain allegations which had either no causal link to the claimant’s cancer or of which there was no evidence (when if the claimant’s case was correct, that evidence could have been obtained). The effect of the claimant’s unreasonable conduct was to force the respondent to defend unmeritorious allegations; which ultimately, the Tribunal determined were not well-founded. There is also the impact the claims had upon the individuals at the respondent and in particular Mr Hughes and Mr Wong; to be facing these allegations for such a long period of time.[44]Accordingly, the Tribunal found that it was appropriate to exercise its discretion and to make a costs award in favour of the respondent.[45]The Tribunal then turned to the sum which should be awarded. The Tribunal has already made findings about the claimant’s disastrous finances. The claimant provided a witness statement dated 1/11/2024 when he said that he does not have enough income to cover his living costs in the UK, he is not able to save and he is not able to pay off any of his considerable debts. He confirmed his debts in the UK are in the region of £500,000 and his debts in Dubai remain.[46]The claimant did not give any evidence about any assets which he has. The claimant throughout these proceedings has used two correspondence addresses; one in West Sussex and one in Brighton. The Brighton property was referred to in correspondence with the respondent when the claimant said for example on the 5/9/2018 ‘I will live in Brighton and cover my own hotel costs in Cardiff’ (page 254). The claimant used the Brighton address when he presented his claim on 3/12/2018.[47]The Tribunal is cautious when a claimant is impecunious, to use that factor to decline to make a costs award. The rationale for that is, particularly in this case where the claimant has been living beyond his means since at least 2016 and in all likelihood prior to that; that his financial mismanagement should not protect him from a costs order. Otherwise, a prudent claimant, who has savings and assets, is more likely to be ordered to pay costs, as they have the means to do so. In any event, Rule 84 (ability to pay), clearly allows for this as it provides that the Tribunal ‘may have regard’ to the paying party’s (in this case the claimant’s) ability to pay any costs ordered.[48]In the claimant’s correspondence, there is reference to him being covered by the Debt Respite Scheme Regulations 2020 (referred to as the Mental Health Breathing Space). As the Tribunal understands this and despite the assertions made upon the claimant’s behalf; those Regulations do not prevent a costs order being made. They do however impact upon those costs, if not paid, being enforced. That is a matter for the respondent and not this Tribunal. The respondent made a similar point in its submission of the 5/12/2024.[49]In respect of Counsel’s fees, the Tribunal finds them to be reasonable. The Tribunal does take issue with section 5 (work done in relation to documents/ preparation) in the costs schedule. There does not appear to be any justification for claiming for work done after the 12/9/2024 in respect of the preliminary hearing, preparing an interlocutory bundles and pleadings and in respect of disclosure/the hearing bundle. Reviewing however the respondent’s time-recording, the Tribunal is satisfied the work done does relate only to preparation for the hearing (pages 9 and 10 of the mini bundle).[50]The costs allowed are: 50.1. Counsel’s fees of £12,000 plus 50.2. Solicitor’s costs of £ 6,199 50.3. Total £18,199[51]The Tribunal reminds itself that costs are compensatory and are not punitive. A costs Order of £18,199, which may not immediately be paid, and which does not cover the entirety of the fees incurred, is a reasonable sum be paid to the respondent. It is accepted that it does not fully compensate the respondent for its legal costs.[52]For those reasons, the Tribunal finds the costs threshold is met, it was persuaded to exercise its discretion in favour of the respondent and taking into account the claimant’s ability to pay, it was prepared to Order him to pay to the respondent the sum of £18,199 (no vat has been claimed). 9/12/2024