Mrs P Da Silva v Mrs A Loizou (removed as a Respondent by Tribunal order) and Little Adventures Play Centre Ltd (dissolved 22nd November 2021): 3220570/2020
EMPLOYMENT TRIBUNALS
Case No 3220570/2020
Between
Mrs P Da SilvaClaimant(1) Mrs A Loizou (removed as a Respondent by Tribunal order) (2) Little Adventures Play Centre Limited (dissolved 22 nd November 2021)Respondent
Before
Employment Judge P HousegoDate 9 June 2023
JUDGMENT
[1]The First Respondent’s application for costs dated 1st December 2021 (supplemented on 10th January 2022) under Rule 76 of the Tribunal Rules 2013 is refused.[2]No order for costs is made against the Claimant.
REASONS
[1]The First Respondent made an application for costs at the hearing on 1st December 2021, supplemented by submissions and supporting documents sent to the Tribunal on 10th January 2022 (with extra documents sent on 11th January 2022) and responded to by the Claimant on 17th January 2022.[2]The application was set out in para 1 of the First Respondent’s submissions and was made under under Rule 76(1)(a) Tribunal Rules 2013 (vexatious and/or unreasonable conduct) and Rule 76(1)(b) (no reasonable prospects of success, the reference to ‘clearly hopeless’ in the submission para (viii)). The costs application was made in relation to two matters firstly the Claimant’s actions in bringing or continuing her claim against the First Respondent and secondly her actions at the (telephone) hearing on 1st December 2021 in attending without the hearing bundle (in breach of a Tribunal Order, relevant to Rule 76(2)) such that the hearing could not go ahead.[3]The Claimant resisted the application. She does not have legal representation in this claim but is represented by her husband Mr Ribero. A large part of her submissions dwelt on what she considered correspondingly unreasonable/vexatious behaviour by the First Respondent and/or the Second Respondent. Her response to the actual application was that firstly she acted reasonably as regards the inclusion of the First Respondent as a respondent both at the time of bringing the claim and subsequently in the light of her knowledge of Tribunal proceedings and the orders made by the Tribunal on the issue. Secondly she said she had been called in unexpectedly to work the day of the hearing on 1st December 2021 and although she had planned to take the call at home, when the start of the hearing was delayed and she was then called in to work she then had to drive to work and take the call from her car when she got there; she said her understanding had been that due to the nature of the hearing she had not needed to have the bundle with her when she left home.
Relevant law
[4]The relevant Tribunal Rules are Rules 74-84 of the Tribunal Rules 2013. Costs in the Employment Tribunal are the exception rather than the rule and there is a high threshold.[5]There is a two stage test, to consider firstly whether the relevant ground under Rule 76 is made out and then if it is, secondly whether the Tribunal should exercise its discretion to award costs.[6]The Tribunal may (but is not required to) take into account the paying party’s ability to pay in deciding whether to make a costs order and if so in what amount (Rule 84).[7]Yerrakalva v Barnsley Metropolitan Borough Council [2012] ICR 420 requires the Tribunal to consider all the circumstances as a whole and McPherson v BNP Paribas [2004] IRLR 558 establishes the need to consider the nature, gravity and effect of the claimed unreasonable conduct.[8]In AQ Ltd v Holden 2012 IRLR 648 the EAT stated that the threshold tests governing the award of costs are the same whether a litigant is or is not professionally represented, but that the application of those tests should take this factor into account. However, a litigant in person can be found to have behaved unreasonably even when proper allowance is made for their inexperience and lack of objectivity.[9]There is also Presidential Guidance on costs (Presidential Guidance; General Case management – Guidance Note 7 Costs) which I have taken into account.[10]The Tribunal does not give legal advice to parties. Findings relevant to the costs application Presentation of claim against First Respondent and subsequent failure to withdraw claim against First Respondent[11]The Claimant obtained an ACAS certificate issued on 18th November 2020 naming the Second Respondent as her employer. That was her correct employer.[12]The Claimant presented her claim form on 13th December 2020, however now naming the First Respondent as the Respondent (page 3, Q2) but on the same form (page[13]also referring to employment by the Second Respondent and (page 14) saying that the claim was against the First Respondent trading as the Second Respondent and that she was employed by the Second Respondent from 18th November 2020. Her contract of employment had been clear that her employer was the Second Respondent. Reading her claim as a whole I find that when she presented her claim form the Claimant was in practice potentially claiming against both the First Respondent and the Second Respondent. However given her claim form also included that reference to the Second Respondent being her employer I find that the presentation of the claim against both was at this stage not unreasonable, taking into account she did not have legal advice and she had included a reference to the (correct) Second Respondent; this was not a case where the claim form when read as a whole only claimed against the person identified in the Respondent box on Q2 of the form (ie the First Respondent). It is not uncommon for an unrepresented claimant to name both the person they work for (their ‘boss’) and the name of the company, particularly when they are aware that a company is in financial difficulties. The Claimant did not understand (evident from what she wrote on the form) that a company is a separate legal entity and that when it comes to an employment contract with a company, a director of that company is not personally liable under that contract, because they are only an officer of the company. 13 I therefore find that the Claimant did not act vexatiously and/or unreasonably in presenting her claim against both the First Respondent and the Second Respondent.[14]The First Respondent did not send in a response to the claim. On 23rd April 2021 the First Respondent’s accountant Mr Christodoulou contacted the Tribunal (not copied to the Claimant at this stage) to say he was the First Respondent’s representative and to say that she was not the correct respondent and that the correct respondent was the Second Respondent. This was the first time this issue had been raised and by now some 4 months since the Claimant had presented her claim.[15]The hearing on 4th June 2021 was postponed (page 24). The First Respondent had emailed the Tribunal on 4th June 2021 (not copied to the Claimant) saying she was not the correct respondent (page 27). The order was that the Second Respondent be served with the claim (page 25) as an additional respondent. There were no orders about the First Respondent.[16]The Tribunal wrote to the Second Respondent on 10th June 2021 (page 21) enclosing a notice of claim and notifying the hearing date as 1st December 2021. The Tribunal did not do anything as regards the First Respondent. Given that, it was reasonable for the Claimant to assume that both respondents were still in play from the Tribunal’s perspective, as potential respondents, with that issue still to be decided and that there was nothing for her to do on that issue at this stage.[17]On 14th May 2021 (page 27) the First Respondent emailed the Tribunal again making the same points and again not copying in the Claimant. The Tribunal asked her to send it to the Claimant (page 33) and for the Claimant to respond on the correct Respondent issue by 12th July (extended to 19th July 2021, page 34).[18]The Second Respondent provided its response on 28th June 2021 and it said (page 16) that the Second Respondent was her employer and asked for the First Respondent to be removed (page 18) as she had been incorrectly served with the claim and was not the Claimant’s employer.[19]On 3rd July 2021 the Tribunal asked the Claimant to confirm which was her employer and whether she objected to the First Respondent being struck out. The response to the Tribunal was dated 6th July 2021 (page 36) and said that her employment contract was with the Second Respondent. She also referred to a Mr Georgio now apparently representing the Second Respondent and for this reason the First Respondent as a director should be retained as a Respondent; this did not follow legally from whether or not Mr Georgio had been appointed given her previous acceptance that the Second Respondent was her employer, though again was likely to be linked to concerns that the Second Respondent was in financial difficulties and might ‘disappear’. She wanted to keep her options open when she said that she still wanted to leave the First Respondent as a respondent ie not wanting to be left with no respondent at all if she expressly agreed the First Respondent should be removed. She had therefore answered ‘yes’ to the Tribunal’s question as to whether she objected to the removal of the First Respondent. However she then put the ball back into the Tribunal’s court by saying if the Tribunal thought continuing with the First Respondent harmed her claim she should be removed. In this the Claimant was being somewhat equivocal. The Claimant clearly did not understand that it is not the Tribunal’s role to give advice including as to whether a step harmed her case or not.[20]The parties were then in further correspondence with each other and by email dated 3rd August 2021 the First Respondent again asked that the claim against the First Respondent be withdrawn. However by letter dated 7th August 2021 the Tribunal told the parties that the hearing listed for 1st December 2021 would decide all the issues, including the First Respondent’s application to be removed.[21]Taking the above findings into account I therefore find although there was an element of keeping her options open throughout this period (motivated by a concern that the Second Respondent was in financial difficulties and might disappear), the Claimant reasonably then relied on the Tribunal’s letter dated 7th August 2021 to the effect that the matter would be decided at the hearing on 1st December 2021 and, flowing from this, it was reasonable of her to ‘park’ the issue at this stage. In making this finding I have taken into account that the Claimant is not legally represented and if she got a letter from the Tribunal saying an issue would be dealt with at the hearing she would not be aware that even if the Tribunal said this, there might still be a costs risk for her (the costs warning was to come later – see below). She also might reasonably (albeit wrongly) conclude that the decision was to be the Tribunal’s and not something she had to decide or do anything about herself. That was the situation as at August 2021.[22]The First Respondent made removal applications to the Tribunal on 7th October 2021 and 1st November 2021.[23]However by letter dated 3rd November 2021 and a month before the hearing was listed, the First Respondent’s solicitors sent a without prejudice as to costs letter advising the Claimant that the costs were around £6,000 but that those costs would not be pursued if she withdrew her claim against the First Respondent by 5th November 2021. The Claimant did not reply to that letter.[24]The Claimant’s representative Mr Ribero however emailed the Tribunal on 3rd November 2021 about this costs threat . He did not copy in the Respondents to his email to the Tribunal. His email said: ‘I have just received this email from the respondent’s solicitors threatening to sue me for £6000 of costs if I don’t remove the 1st respondent from the proceeding within the next 48 hours. Can someone please call me urgently on [mobile number] to let me know if this is something I need to take seriously? Many thanks Steven Ribero’.[25]On 4th November 2021 the Tribunal wrote to all parties about the removal applications dated 7th October 2021 and 1st November and referred to the Claimant’s email sent the day before (but did not enclose a copy of it). The letter advised the parties that the removal application would be addressed at the 1st December 2021 hearing.[26]Mr Ribero sent a second email on 4th November 2021 (again not copied to the Respondents) which said: ‘ I have just been threatened once again, it seems that for some reason they cannot wait till the 1st December for this to be addressed. Many thanks for sending that email to them earlier today stating that the issue will be addressed on the 1st. In the meantime, I will reply with you on CC to state that I will not be bullied and that the court will only address this issue on the 1st Dec. Many thanks Steve Ribero.’[27]Given the above findings as to the state of play in August 2021 the issue is whether given receipt of the costs warning letter the Claimant should in November 2021 at this stage have withdrawn her claim against the First Respondent. Given it was only a month now until the hearing, the claim had started in December 2020 and the Claimant had been told twice by the Tribunal (in August 2021 and again now in November 2021) that the issue of the First Respondent’s removal would be decided at the hearing on 1st December 2021 I conclude that the Claimant did not act unreasonably in relying on what the Tribunal had told her, even after receipt of the costs letter dated 3rd November 2021 and up until the hearing date. She had told the Tribunal about the costs threat specifically and had been told again to wait for the hearing on 1st December 2021.[28]Had she been legally represented that outcome might have been different because if legally represented she could have been expected to know firstly that the Tribunal saying that the issue would be dealt with at the hearing was not a complete answer (ie it did not preclude a costs award being made because her conduct of her claim might still fall within Rule 76), secondly that the only respondent should be her contractual employer and thirdly that including the wrong respondent incurs costs for that respondent.[29]I therefore find that the Claimant did not act vexatiously and/or unreasonably in failing to withdraw her claim against the First Respondent after she presented it and up to the hearing on 1st December 2021, although accepting it was very irritating for the First Respondent. Relocating without the bundle at the hearing on 1st December 2021[30]At the beginning of the hearing on 1st December 2021 the relevant issues were identified as the issue of who was the correct respondent and the dissolution of the Second Respondent after the claim had been presented. There was a break around 10.55am for 20 minutes and then the hearing resumed. No decision had yet been taken about removal of the First Respondent before the Claimant says she had to relocate from being at home (because called in to work) to taking the call outside her workplace from her car (now without the bundle). The Claimant’s submission (para 38) says that removal of the First Respondent had been decided before the break but it had not, the order to remove the First Respondent was not made until after the break and it was not right for her to conclude that after the break the rest of the hearing would only be a formality or that she would not be required to say anything; she had not said that she agreed to the removal of the First Respondent at the outset of the hearing so it was still a live issue at the point she relocated.[31]However although the hearing was postponed on 1st December 2021 for two reasons (the Claimant’s ability to give evidence without the bundle and the issue of the dissolution of the Second Respondent) the First Respondent was subsequently removed by Tribunal order confirmed on 30th December 2021. This is therefore not a case where the First Respondent wasted costs on 1st December 2021 and will have to come back again for another hearing; the objective for the First Respondent was her removal and the order for her removal was made at the hearing and subsequently confirmed by Tribunal letter dated 30th December 2021. It is only potentially the Second Respondent who may become reinvolved in the claim if there is a successful application to restore it to the Register of Companies. The First Respondent was not prejudiced by the postponement because in practice she will not have to re-attend. In that context whilst the Claimant’s handling of what she did when called in to work was unhelpful and disorganised, in practice it had little effect on the First Respondent.[32]Taking the above findings of fact into account the First Respondent has not met the high threshold required for a costs award looking at all the circumstances. Whilst not having legal representation is not a complete excuse, I have taken it into account in the light of what the Claimant was saying and doing and in the light of what she was being told by the Tribunal (which at times was not assisted by the parties not copying each other into their correspondence with the Tribunal).[33]Taking the above findings of fact into account the First Respondent has not shown the grounds in Rule 76(1)(a) or 76(1)(b) are made out, taking into account the nature, gravity and effect of the claimed unreasonable conduct. Although the Claimant relocated without the bundle (potentially relevant to an order under Rule 76(2), para 8 page 30) I conclude that that behaviour (although unhelpful and disorganised) does not support the making of a costs award in all the circumstances, particularly taking into account the limited practical effect of that on the First Respondent.[34]The First Respondent’s costs application is therefore dismissed.
Relevant law
[1]The Claimant was employed by the 2nd Respondent. She agrees that this is so. Accordingly, the claim against the 1st Respondent (a director of the 2nd Respondent) is dismissed.[2]The 2nd Respondent (Company number 11814619) was placed into creditors’ voluntary liquidation on 11 April 2023.[3]The liquidator consented to this claim proceeding.[4]The Claimant was made redundant immediately the Covid-19 pandemic started. Then the furlough scheme was introduced. The Claimant was reinstated on 21 March 2020, and immediately furloughed.[5]Once furloughed she received no pay prior to being dismissed again.[6]Whether the 2nd Respondent obtained the furlough pay from the Government is not known to me.[7]On 23 July 2020 the Claimant was again dismissed, as redundant. She was paid the correct amount in lieu of notice pay.[8]The period between reinstatement and dismissal was 17 weeks and 4 days.[9]The Claimant’s pay was £9 an hour. She worked 43.5 hours a week. For 17 weeks that is 739.5 hours. For the additional 4 days she would have worked, if not furloughed, 3 days at 7.5 hours and 1 day at 6 hours. This is a further 28.5 hours. The total number of hours for which she should have received furlough pay was therefore 768 hours.[10]The full pay for those hours would have been 768 x 9 = £6,912.[11]The Claimant was entitled to furlough pay of 80% of that, which is £5,529.60.[12]I order the 2nd Respondent to pay that sum to the Claimant.[13]As the 2nd Respondent is in liquidation the Claimant will make application to the Government’s redundancy payments service for payment of this sum. Costs application[14]The ACAS early conciliation period in respect of this claim was 18 October 2020 – 18 November 2020.[15]On 01 December 2020 the directors of the 2nd Respondent applied for it to be struck off. On 13 December 2020 this claim was filed.[17]On 13 July 2021 the 2nd Respondent was struck off the register.[18]On 01 December 2021 a hearing of this claim was adjourned partly by reason of the dissolution of the 2nd Respondent.[19]The Claimant paid £300 in fees to Companies House and £856 to a professional (Stanley Davis Group) to have the company restored, in order that the claim could proceed. Receipts were provided to me.[20]On 03 January 2023 the Court ordered the restoration of the 2nd Respondent to the register.[21]On 18 February 2023 the parties were given notice of this hearing.[22]On 11 April 2023 winding up the 2nd Respondent commenced.[23]On 18 April 2023 a voluntary liquidator was appointed.[24]On 01 May 2023 an extraordinary resolution to wind up the 2nd Respondent was passed.[25](The details are from Companies House website for the 2nd Respondent.)[26]At a Case Management Hearing on 02 December 2021 the 1st Respondent attended, and Counsel made a costs application against the Claimant seeking £5,400. That application was subsequently refused.[27]The Case Management Order from the hearing of 02 December 2021 states that that the 2nd Respondent knew of the claim (because the 1st Respondent is a director of it and she attended the hearing) but that as the claim did not name the 2nd Respondent and the claim was not served on the registered office a claim against the 2nd Respondent was either not made or was not served in accordance with the Rules.[28]This was, plainly, a technicality given that a director of the 2nd Respondent was in attendance.[29]The history of this matter shows a calculated course of action designed to make it difficult for the Claimant to proceed, either by causing the 2nd Respondent to cease to exist, or by trying to frighten the Claimant by seeking large sums as costs.[30]The sum claimed as costs is almost as large as the claim. Instead of fighting the claim the 2nd Respondent could have paid it and been little worse off.[31]No defence has been filed to this claim, by either Respondent.[32]The Claimant’s representative, her husband, has spent 58.3 hours overall on this case. That does not include any time spent at hearings.[33]I consider this to be a reasonable amount of time, particularly given the approach to the case taken by the 2nd Respondent. The application complies with Rule 45(1).[34]I have regard to the paying parties means. The 2nd Respondent is insolvent. The Secretary of State will not be paying the preparation time order. It will be admitted for payment with all the other unsecured creditors of the 2nd Respondent. That seems to me entirely appropriate.[35]I make a preparation time order under Rule 42 and Rule 44(3). I consider that the conduct of the 2nd Respondent, under the direction of the 1st Respondent falls within the required parameters. The 2nd Respondent clearly conducted the proceedings “otherwise unreasonably”, in the ways set out above, and I consider it appropriate to make a preparation time order. The provisions are: “(2) A tribunal or chairman shall consider making a preparation time order against a party (the paying party) where, in the opinion of the tribunal or the chairman (as the case may be), any of the circumstances in paragraph (3) apply. Having so considered the tribunal or chairman may make a preparation time order against that party if it considers it appropriate to do so. (3) The circumstances described in paragraph (2) are where the paying party has in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived.”[36]A litigant in person is entitled to claim expenses - CPR 46.5. The expenses of getting the 2nd Respondent restored to the register were essential to enable the claim to be heard, for unless such an application was made successfully there would be no respondent.[37]The hourly rate for a preparation time order was £40 (06 April 2020- 05 April 2021), £41 (to 05 April 2022), £42 (to 05 April 2023) and is currently £43.[38]The work done has spanned several of those years. I decide that most of the work was done in the year for which the rate was £42. There would have been some in the years either side, which would average out at £42 also.[39]I therefore award 58.3 x £42 = £2,448.60 plus the disbursements of £1,156. This totals £3,604.60.[40]Rule 42(7) provides: “(7) No preparation time order shall be made unless the Secretary has sent notice to the party against whom the order may be made giving him the opportunity to give reasons why the order should not be made. This paragraph shall not be taken to require the Secretary to send notice to that party if the party has been given an opportunity to give reasons orally to the chairman or tribunal as to why the order should not be made.”[41]The 2nd Respondent was served with notice of this hearing but did not attend. The 2nd Respondent had the opportunity to give reasons orally why an order should not be made, but by failing to attend has not availed itself of that opportunity. If the 2nd Respondent is aggrieved at this decision, then application can be made for it to be reconsidered, giving reasons.