Mr C Veitch v Alternative Futures Group Ltd: 2409890/2022
EMPLOYMENT TRIBUNALS
Case No 2409890/2022
Between
Mr C VeitchClaimantAlternative Futures Group LtdRespondent
Before
Employment Judge M ButlerDate 27 May 2025
JUDGMENT
[1]The respondent’s application for costs is refused.
REASONS
[2]The claimant presented a claim before the Employment Tribunal on 14 December 2022. The claimant brought complaints of unfair dismissal (both in the ordinary sense and as automatic unfair dismissal), wrongful dismissal, being subject to a detriment for having made a protected disclosure and part-time worker discrimination.[3]Following a Case Management Preliminary Hearing before Employment Judge Batten, which took place on 30 March 2023, the claimant by letter dated 14 April 2023 withdrew all claims relating to unfair dismissal and wrongful dismissal. The only claims being pursued were the claims for being subject to a detriment for having made a protected disclosure and part-time worker discrimination.[4]The claimant made an application to amend his claim and to strike out the respondent’s defence in the letter of 14 April 2023. The strike out application was withdrawn at a Preliminary Hearing before Employment Judge Shotter on 2 December 2023, and EJ Shotter considered that the ‘application to amend’ was merely clarification of the existing claims.[5]The case had been set down for final hearing to be heard on 08, 09, 10 and 11 July 2024.[6]On 15 January 2024, the respondent wrote to the claimant explaining that it considered that the claimant’s outstanding claims did not have reasonable prospects of success. And invited the claimant to withdraw the remaining claims in the following terms: “Given the costs already occasioned by the claims brought and then not pursued and the lack of merit in the claims progressing you are invited to withdraw your client's claims forthwith. In the event that you do so, our client is content not to pursue any cost against your client, however, should the matter progress, we are instructed to put you on notice that we will be asked to make application for the costs unnecessarily and unreasonably incurred by this case. Given our clients position as a charity we trust that you will review the matter accordingly.”[7]The claimant responded to the respondent on 12 May 2024. In short, this was a counter-offer made by the claimant.[8]On 24 May 2024, considering the above, the respondent continued with preparing the case for final hearing. And sought to agree a variation to the date for witness statement exchange. The date for exchange was due on 28 May 2024, and the respondent was seeking to agree an extension of that date until 04 June 2024. The claimant did not reply to this email.[9]On 10 June 2024, at 11.29, the respondent emailed that claimant explaining that it had identified additional relevant documents that were being disclosed as part of its ongoing disclosure obligations. And at 11.36, provided the claimant with an updated OneDrive Link, which contained the updated bundle of evidence.[10]The claimant emailed the Employment Tribunal and the respondent on 10 June 2024 at 14.22 to withdraw his claim in its entirety.[11]The respondent made an application for a Costs Order by letter dated 11 July 2024. This letter explained the following: “The Respondent contends that: 1. The Claimant understood that his claim had no reasonable prospects of success and withdrew the claim late in the day (less than one month before the hearing) after all the costs had been incurred, despite the Respondent’s Costs Warning dated 15 January 2024; 2. The Respondent contacted the Claimant's representative on 24 May 2024 regarding exchange of witness statements which was ordered to take place on 28 May 2024. There was no response. The Respondent emailed the Claimant again on 10 June 2024 regarding further disclosure documents, and requested the Claimant confirm he was in a position to exchange statements. The Respondent did not receive a direct response to either of these emails. The Respondent continued to prepare the case and were aligned to the orders of the ET; 3. In the circumstances, the Claimant and his lay representative have, in continuing with the proceedings until his late withdrawal of 10 June 2024 (less than a month before the scheduled hearing date of 8 July 2024), pursued a claim with no reasonable prospects of success, and in doing so have acted unreasonably particularly as he had undertaken a close review of the merits of the case earlier in the year and had continued to progress; and 4. The Claimant's late withdrawal of his claim resulted in further unnecessary costs being incurred as the Respondent had already incurred costs in finalising the final hearing bundle and drafting 4 witness statements.[12]The application for costs at this stage was limited to the total sum of £7,312.[13]The claimant responded to the respondent’s application for costs by later dated 18 July 2024. Amongst other matters, the claimant opposed the application for the following reasons:a. The claimant has complied with all case management orders of the tribunal. And this included having already sent the claimant’s witness statement, that being on 24 November 2024. The respondent was the one in breach of tribunal directions.b. There has not been any unreasonable conduct by the claimant.c. The claimant was accepting the respondent’s offer of 15 January 2024, where withdrawal would not attract an application for costs. This offer had no end date and had not been rescinded.d. The claimant is not a man of substantial means.e. The respondent at no point made an application to strike out the claim.f. The claim had more merit that no reasonable prospects of success.g. The claimant withdrew complaints and simplified the claim at an early opportunity, following discussion at the first CMPH.h. There has been effort by the claimant over the two years of litigation to try to resolve the matter.i. The claimant withdrew the claim by the date that EJ Shotter had directed the parties to inform the tribunal that the case was ready for hearing.
LIST OF ISSUES
[14]To determine whether to make a costs order in favour of the respondent, and if so, at what level. THE RULES[15]The power to award costs by the Employment Tribunal is contained within the Employment Tribunals Rules of Procedure Regulations 2024. Rule 74 specifically deals with the grounds for which a costs order can be made. Rule 76 deals with the ‘amount’ of a costs order and Rule 82 deals with the ‘ability’ of the paying party to pay a costs order.[16]Under Rule 74 (1) "a Tribunal may make a costs order or a preparation time order (as appropriate or on the application of a party…”. Whilst under Rule 74(2), “the Tribunal must consider making a costs order or a preparation time order 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) where any claim […] has no reasonable prospects of success”.[17]Under Rule 76(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 …"[18]Under Rule 82, 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. RELEVANT PRINCINPLES[19]In terms of general principles that I have reminded myself of in advance of considering this matter, these include:a. costs are the exception, not the rule;b. costs are designed to compensate the receiving party for costs unreasonably incurred, not to punish the paying party for bringing an unreasonable case, or for conducting it unreasonably.c. I should follow a 3-stage process: first, I should decide whether the threshold in Rule 74 had been crossed. Secondly, I should then consider as an exercise of discretion whether that conduct merited a costs order; it was not automatic that because I had the power, I should exercise it. Thirdly, if I decided to make a costs order, I should consider the appropriate amount of costs incurred by the respondent in defending the unreasonable claims.d. Litigants in person, or persons not professionally represented ought to be judge less harshly than those professionally represented.[20]Lord Justice Mummery had set out the general principle to follow at this third stage, in his judgement in Yerrakelva v Barnsley MBC [2012] ICR 420, at paragraph 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. The main thrust of the passages cited above from McPherson’s case was to reject as erroneous the submission to the court that, in deciding whether to make a costs order, the employment Tribunal had to determine whether or not there was a precise causal link between the unreasonable conduct in question and the specific costs being claimed.’[21]With regard to the paying party's ability to pay, Rule 84 allows the tribunal to have regard to the paying party's ability to pay, but it does not have to, see Jilley v Birmingham and Solihull Mental Health NHS Trust and Single Homeless Project v Abu UKEAT/0519/12.[22]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).[23]With regard to the paying party's ability to pay, Rule 84 allows the tribunal to have regard to the paying party's ability to pay, but it does not have to, see Jilley v Birmingham and Solihull Mental Health NHS Trust and Single Homeless Project v Abu UKEAT/0519/12. The fact that a party’s ability to pay is limited, does not, however, require the tribunal to assess a sum that is confined to an amount that he or she could pay see Arrowsmith v Nottingham Trent University, which upheld a costs order against a claimant of very limited means and per Rimer LJ “her circumstances may well improve and no doubt she hopes that they will.” One reason for not taking means into account is the failure of the paying party to provide sufficient and/or credible evidence of his or her means.[24]Insofar as it does have regard to the paying party's ability to pay, the tribunal should have regard to the whole means of that party's ability to pay, see Shield Automotive Ltd v Greig UKEATS/0024/10 (per Lady Smith obiter). This includes considering capital within a person's means, which will often be represented by property or other investments which are not as flexible as cash, but which should not be ignored.[25]The ET 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).[26]Last but not least, discretion must be exercised so as to give effect to the overriding objective (rule 2) to deal with cases justly and fairly, having regard to:(a) ensuring that the parties are on an equal footing;(b) dealing with cases in ways which are proportionate to the complexity and importance of the issues;(c) avoiding unnecessary formality and seeking flexibility in the proceedings;(d) avoiding delay, so far as compatible with proper consideration of the issues; and(e) saving expense.[27]Ms Barry referred the tribunal to the Court of Appeal decision of McPherson v BNP Parabas [2004] ICR 1398, relevantly it was stated by LJ Mummery: “[27] The tribunal correctly directed itself that the first question was whether, in all the circumstances, Mr McPherson had conducted the proceedings unreasonably (paras 6 and 7 of the extended reasons). The tribunal appreciated that the issue was not whether the action of withdrawing the complaint was itself unreasonable. As it observed, ʺThere are many genuine issues and matters which might lead an applicant to that course.ʺ [28] In my view, it would be legally erroneous if, acting on a misconceived analogy with the CPR, tribunals took the line that it was unreasonable conduct for employment tribunal claimants to withdraw claims and that they should accordingly be made liable to pay all the costs of the proceedings. It would be unfortunate if claimants were deterred from dropping claims by the prospect of an order for costs on McPherson v BNP Paribas (London Branch) [2004] ADR.L.R. 05/13 Alternative Dispute Resolution Law Reports. Typeset by NADR. Crown Copyright reserved. 5 withdrawal, which might well not be made against them if they fought on to a full hearing and failed. As Miss McCafferty, appearing for Mr McPherson, pointed out, withdrawal could lead to a saving of costs. Also, as Thorpe LJ observed during argument, notice of withdrawal might in some cases be the dawn of sanity and the tribunal should not adopt a practice on costs, which would deter applicants from making sensible litigation decisions. [29] On the other side, I agree with Mr Tatton-Brown, appearing for BNP Paribas, that tribunals should not follow a practice on costs, which might encourage speculative claims, by allowing applicants to start cases and to pursue them down to the last week or two before the hearing in the hope of receiving an offer to settle, and then, failing an offer, dropping the case without any risk of a costs sanction. [30] The solution lies in the proper construction and sensible application of rule 14. The crucial question is whether, in all the circumstances of the case, the claimant withdrawing the claim has conducted the proceedings unreasonably. It is not whether the withdrawal of the claim is in itself unreasonable… [31] In my judgment the tribunal was entitled to conclude that there was unreasonable conduct of the proceedings on the part of Mr McPherson. Indeed, Ms McCafferty accepted that that was a correct description of some aspects of her clientʹs conduct of the proceedings: he had not, for example, complied with orders of the tribunal. There were other circumstances, which were properly regarded by the tribunal as unreasonable conduct of the proceedings: Mr McPherson had been asked for documentation which he was obviously loathe to supply; and he had given the impression right up to 9 May 2002 that he was pursuing the complaint and allowed BNP Paribas to incur considerable expense in preparing the case on that basis, while, on his own evidence and unknown to the tribunal and BNP Paribas, he had been seriously considering with his GP in December 2001 the question of abandoning the proceedings on health grounds… [36] … Although there were grounds for criticising Mr McPherson for lack of co-operation with the tribunal and with BNP Paribas on the health issue, the tribunal was probably too critical about the shortcomings of the medical evidence. That said, however, I am aware that an appeal court should read the reasoning of the tribunal as a whole and not scrutinise it for error line by line. On that approach I am satisfied that the tribunal was entitled to infer that Mr McPhersonʹs health was not the sole reason for leaving the decision to withdraw so close to the date when the full hearing was due to take place and without any earlier warning of that possibility, which had been considered by him with his GP over five months previously.” PARTIES’ SUBMISSIONS[28]The respondent, amongst others, made the following oral submissions in support of its application:a. The respondent no longer pursues the application for costs because the claims had no reasonable prospects of success. Rather, the application is pursued based on unreasonable conduct of the proceedings only.b. Ultimately this is about the late withdrawal of the claim, that being down around 1 month from the final hearing, on 10 June 2025.c. The claimant during employment raised a formal grievance in respect the matters making up this claim and this was rejected.d. The claimant brought claims across 5 heads of claim initially: automatic unfair dismissal, ordinary unfair dismissal, wrongful dismissal, claims under the Part-Time worker regulations, and being subject to a detriment on the grounds of having made a protected disclosure.e. The parties attended a CMPH before EJ Batten on 30 March 2023. The case was listed for a final hearing with a time estimate of 5 days, and case management directions were given.f. During the CMPH, the claimant’s representative had raised two statements of claim with EJ Batten. The second of which (not part of the claim form) had matters in it that were not in the original statement of claim. The claimant’s representative was told that the claimant would need to make an application to amend his claim if he wanted to include matters not included in the original claim form.g. Following the CMPH, the claimant withdrew several heads of claim, leaving only the claims brought under the Part-Time worker regulations, and that of being subject to a detriment on the grounds of having made a protected disclosure. As part of this same document, the claimant maintained an application to amend the claim, sought information as to why the respondent was putting the claimant on notice for costs and applied to strike out the respondent’s response. The claimant at this stage must have given consideration as to the prospects of success of these claims, otherwise why were they being maintained.h. The respondent responded on 28 April 2023, opposing any amendment application, opposing the claimant’s strike out application and explaining that it was reserving its position in respect of costs as the outstanding claims had little or no reasonable prospects of success.i. There is correspondence between the parties around June 2023 with respect directions. As part of this correspondence, the claimant’s representative makes an unsupported application to postpone the final hearing listing.j. The respondent wrote to the tribunal on 28 July 2023, seeking to put on hold directions until it is decided which claims are going forward to final hearing, with this being determined at the preliminary hearing listed on 19 October 2023. Unfortunately, there was no response from the tribunal to this email.k. Before EJ Shotter 2024, on 12 December 2023, it was deemed that no application to amend was needed. In short, the respondent says it spent a lot of time responding to the claimant and addressing his applications, to end up back at square one. A lot of time and money was spent, all of which came to nothing.l. Although the respondent considers it was sensible that the claimant did not ultimately pursue the strike out application, the respondent still incurred costs in responding to it.m. EJ Shotter laid down a revised set of case management directions.n. The claimant had received all relevant documents in January 2024, and by the end of February 2024 at the latest, if not in January.o. Witness statements were due to be exchanged on 28 May 2024.p. The parties were told to write to tribunal by 10 June 2025 to say whether the case was ready for final hearing or not.q. The respondent sent the claimant a cost warning letter on 15 January 2024. This included an invitation for the claimant to withdraw the claim, and if he did then the respondent would not pursue costs. However, it is worded such that if the matter were to progress then the respondent would be making an application for costs.r. The claimant did not respond to this letter until 12 May 2024. And in that letter, it is submitted that the claims were speculative, and that the claimant did not have the ‘something more’ to satisfy causation.s. The claimant referenced the lack of a strike out application. However, this case is akin to a discrimination claim, and is fact sensitive. Nothing should be read into such an application not having been made.t. The respondent writes to the claimant about witness statement exchange on 24 May 2024. There is no response from the claimant.u. The respondent writes to the claimant about an additional document having been identified on 10 June 2024. And it was only later that same day that the claimant withdraws his case. That is after all of the preparatory work has been completed.v. The respondent accepts it has not sent the claimant any witness statements. As no date had been agreed for exchange and the claim was then withdrawn.w. The costs application was made on 11 July 2024.x. The greatest concern is the late withdrawal. This was a delay to maximise the costs to the respondent. The claimant knew what the merits of the claims were but was hoping for a settlement that was not forthcoming.y. Costs have been limited to the period post the costs warning letter.z. The claimant was not accepting what was an open offer. As the claim had progressed. aa. The respondent is not saying that the claimant has lied or shown poor behaviour. bb. The most significant point is that nothing changed from the start of the proceedings until withdrawal of the claim. Simply appeared to be a change of heart when no settlement was forthcoming. cc. When the claimant withdrew 4 of his grounds of claim this left two speculative claims, and he must have turned his mind to the merits of the claim at this point. From then there is a costs warning, and further costs warning. The claimant did not engage with the respondent during this period. Nothing changed during this period up until withdrawal. dd. Costs are to compensate not punish. And are the exception rather than the rule. ee. The tribunal should consider first whether there is unreasonable conduct such as to support making a costs order, before deciding whether to use its discretion to make such an order. ff. McPherson v BNP Parabas is a useful case here, as this deals with late withdrawal as a conduct matter for a costs order. gg. The claimant does have the ability to pay. hh. A costs order should be made. In the figures suggested as they are a reasonable figure in the circumstances.[29]In response, the following, amongst other submissions, were made on behalf the claimant:a. The claimant met all the deadlines with respect exchange of documents.b. The claimant has never been sent witness statements by the respondent. Whilst the respondent has been sent the claimant’s witness statement.c. Part of the reason behind a late withdrawal is that when the respondent came with a ‘drop hands’ offer, the claimant did not want to be bullied into withdrawing his case.d. The claimant only brought this claim as he had exhausted the internal processes, and this was the last resort.e. The claimant had a right to a written statement of reasons for his treatment under the part-time worker regulations. He was a capable employee, he was the only employee made redundant, he was the only one with registered manager status, and the only difference between him and his comparator was part-time/full-time status.f. The claimant’s feedback totalled only 5 lines. The responses were limited and very vague. The respondent refused to supply him with a statement of reasons.g. It is not unusual to not know whether discriminated against when bringing such a complaint. And there is a degree of speculation.h. With respect the Public Interest Disclosure claim, this was the first time in he had raised concerns with his manager in his 6 years’ service. And this was the first disciplinary brought against him. And when it was investigated, the disciplinary against him was found to have no substance. The claimant had nothing to do with the incident in question, put simply, he was not present to be involved.i. The claimant relies on this to suggest that there were questions to answer and that gave the claim enough merit to proceed.j. Main representations are those as set out in the claimant’s response of 18 July 2024 (these are summarised above).k. The claimant only made an application to amend following the first CMPH as the respondent requested that we had to. And then we were ordered to do so by EJ Batten. And then EJ Shotter decided that no such application was needed.l. The claimant had the respondent’s offer. But considered that he should not be bullied into accepting nothing to drop his claim. As he had lost congenial employment through the actions of the respondent. At the time, that offer was not good enough.m. The respondent should have seen merit in the claim and entered negotiations in good faith.n. The claimant is represented by a lay representative. If the offer by the respondent was not dealt with in the way a legal representative would have dealt with it, can only apologise.o. There was no expiry date on the respondent’s offer. It was just that if we withdrew, they would not pursue costs. We considered that to be the live position until it had been accepted. The claimant withdrew his claim based on that understanding.p. EJ Shotter set a deadline to let the tribunal know whether the case was ready for final hearing. The claimant took this as being the last date on which the claim could sensibly be withdrawn.q. On the Employment Tribunal website there are other cases where no costs have been awarded. In those cases where costs were awarded, there were serious behavioural issues, which are no present in this case.r. The costs sought by the respondent are out of proportion.s. The complaint has remained the same throughout.t. The respondent if it considered the claim to be weak should have made an application to strike it out. Not having done so is a factor the tribunal is invited to take into account.u. The claimant was unsure why the respondent needed an extension for witness statement exchange. He had sent his. And did not agree to the extension.v. The claimant accepts he was seeking to settle the claim throughout. That was his preferred option. That should not be held against him. ANALYSIS AND CONCLUSIONS Has the claimant (or the claimant’s representative) 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?[30]This tribunal finds that the claimant, and/or the claimant’s representative, has not acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings or the way that proceedings have been conducted, such as to give rise to a costs award.[31]The claimant was represented by an inexperienced lay representative. And the claimant was not legally trained. The tribunal has been careful to not judge the claimant’s conduct, or that of his lay representative, to the standard of an experienced representative.[32]The tribunal reminded itself of the principals laid down by the Court of Appeal in McPherson. And that the critical question for an Employment Tribunal was whether the claimant withdrawing the claim has conducted the proceedings unreasonably, not whether the withdrawal of the claim is in itself unreasonable.[33]Rather than pursuing unmeritorious claims, the claimant withdrew his dismissal complaints (and other matters outside of the tribunal’s jurisdiction) within 14 days of the Case Management Hearing that took place before EJ Batten on 30 March 2024, which was the time afforded to the parties to check and confirm the accuracy of the list of issues. And this is some time before updated grounds of resistance were due. If the claimant was seeking to act unreasonably, then this would have been done later, after the respondent had gone to more expense and effort.[34]The respondent submitted that the claimant must have been aware that his outstanding claim lacked any reasonable prospects of success, as he must have reviewed it at the time he withdrew his claims of relating to dismissal. However, this could also be viewed as the claimant having concluded that his outstanding claims, namely for being subject to a detriment for having made a protected disclosure and part-time worker discrimination, had some prospects of success. And on the face of the pleadings, these claims do appear to have at least some prospects of success, when taken at their highest. So, maintaining these at this point, albeit the claims may be weak, cannot be said to be unreasonable conduct.[35]At the Case Management Hearing, EJ Batten identified that there may be a need for an application to amend the claim. An application was made on the back of this. This tribunal accepts that this was a misunderstanding on behalf of the claimant, who considered the second document to only include further and better particulars (which incidentally was the decision of EJ Shotter), and made the application given the views of EJ Batten. This does not reach the level of being a conduct issue for the purpose of costs.[36]The claimant complied with case management directions, and the respondent does not say otherwise.[37]The claimant’s position, which I accept, was that he thought that the document he sent on 24 November 2024 would stand as his witness statement. And as far as he was concerned there was no need to agree a new date for witness statement exchange, as the respondent already had his. However, even if that was not the case, the respondent was trying to agree and amended date for witness statement exchange, and the claimant cannot be at fault for the respondent not being able to mutually exchange statements.[38]Part of the claimant’s submission is that the offer to drop the claim in return for the respondent not pursuing costs was misinterpreted, and he considered it still to be open when it was accepted. And I do have some sympathy with the claimant in this respect. Although it would be clear to those who operate within the tribunal system what was meant by ‘should the matter progress’ then the offer to not pursue costs would be removed. The same cannot be said of a lay claimant and or lay representative. The claimant clearly interpreted this as meaning ‘if the matter progressed to final hearing’ then the offer would be revoked. This is supported by the explanation given to the tribunal, which was that the claimant withdrew his remaining claims on the date he was required to write to the tribunal to explain whether the claim was ready for final hearing. And this was because he interpreted this as the date when the tribunal needed to know whether the claim was progressing to final hearing. And it on the back of this that the tribunal accepts that the claimant interpreted the respondent’s offer as referring to progressing to final hearing, which on a literal reading of the costs warning letter was open to him. This is not considered conduct that would lead to a costs order.[39]The respondent accepts that the claimant has not lied or shown poor behaviour.[40]The claimant can be criticised for not responding to the respondent’s correspondence 24 May 2024 and 10 June 2024. Especially when one considers the obligation placed on all parties to co-operate.[41]Considering all these matters, despite there being a relatively late withdrawal of the claim and despite the lack of engagement in May and June 2024, the claimant cannot be said to have conducted the proceedings unreasonably. And it certainly does not reach the level of vexatious, abusive or disruptive conduct.[42]In those circumstances, the respondent’s application for costs does not succeed and is dismissed. Approved by: