Mrs S HowarthClaimantPlan With Grace LtdRespondent
Before
Employment Judge K J PalmerPaul Smith (instructed by Counsel) for claimantPaul Strelitz (instructed by Counsel) for respondentDate 7 March 2025
JUDGMENT
PURSUANT TO AN APPLICATION FOR COSTS PURSUED BY THE RESPONDENT The application for costs pursued by the Respondent against the Claimant is refused.
REASONS
[1]This matter came before me today listed for a one day hearing. The purpose of the hearing was an application for costs lodged by the Respondent’s solicitors under cover of a letter dated 18 June 2024.[2]I had before me an extensive bundle running to some 632 pages, written submissions on behalf of the Respondents from Mr Strelitz of Counsel and I heard extensively from Mr Strelitz and for the Claimant, Mr Smith of Counsel. History[3]The Claimant presented an ET1 to this Tribunal on 11 May 2023. The Claimant, at that time, was unrepresented and the ET1 is home made. The Claimant had been employed as a Director of the Respondent company between April 2017 and the end of March 2023. In that claim the Claimant ticked the box for unfair dismissal and, in essence, advanced a claim for constructive dismissal.[4]The Claimant also ticked box 10 of the ET1 with respect to a claim for protected disclosure. The information at 8.2 did not make it clear what the nature of the protected disclosure claim was. However, the narrative set out suggests that such a claim was part of the Claimant’s claim in the ET1 and she referred to disclosures made to the Board, which were ignored, about the activities of other Directors and that, in reliance on the ignoring of those disclosures, she resigned.[5]On its face, therefore, the ET1 evidenced a claim for constructive unfair dismissal and a claim for whistle blowing under the Whistle Blowing Provisions in the Employment Rights Act 1996. Pursuant to the ET1, a detailed grounds of resistance was filed with the Respondents ET3 drafted by Mr Strelitz, who is before me today. It was clear that there was a significant history between the parties and that the Claimant was a director of the Respondent prior to her resignation and that there had clearly been a considerable falling out between her and the other Directors of the Respondent. In essence, the Claimant had sold the shares in her company to the Respondents in September 2022 and had then become a Director in the purchasing Respondent company.[6]The extensive background set out in the grounds of resistance outlines an unhappy relationship between the Claimant and the Directors of the Respondent company which purchased 100% of her business. Sadly, in commercial transactions this is not entirely unusual post-acquisition of a business that has previously been managed and controlled by one individual when that individual is then retained in the new entity going forward. The Respondents ventured allegations against the Claimant, which essentially suggest misconduct. The Claimant resigned. Moreover, events post-completion of the sale of the shares gave rise to a dispute between the purchasing shareholders and the Claimant.[7]It is clear that these Tribunal proceedings are only a part of the dispute between the Claimant and the Respondent and its fellow directors.[8]However, the wider context of that dispute is not strictly relevant to the issues the Claimant sets out in her ET1, albeit in a home made capacity.[9]The grounds of resistance is extremely assertive and floats the possibility that the Respondents seek a Preliminary Hearing to consider the making of a Deposit Order in respect of the whistle blowing or section 103A claim which is implicit in the Claimant’s ET1. The background is that the Claimant owned and ran a company which provides pre-paid funeral plans to the public and that this was the subject of 100% share sale to the Respondents.[10]The company purchased the Claimant’s company, The Funeral Market Ltd (TFM).[11]This, and much greater detail, is set out in the grounds of resistance. However, for the purposes of this application, this information is of limited relevance only other than to illustrate that the Claimant is a person reasonably well versed in business and an intelligent person who has owned and run her own business and served as a Director in the purchasing business.[12]At the same time as lodging the ET3 on the grounds of resistance, the Respondent set out a detailed and lengthy request for further and better particulars dated 7 September 2023.[13]It must be remembered that even though the Claimant was an experienced person in business, she was not a lawyer. She could not be expected to understand the intricacies and nuances of the law and by being a Director who had owned and run a business, she is certainly not imbued with sufficient legal knowledge to understand the details and vagaries of employment law and its practice and operation in the Employment Tribunal.[14]The Claimant’s Counsel, Mr Smith, makes a very valid point that despite the Respondent’s protestations about the inadequacy of the Claimant’s ET1, it did not prevent the Respondents instructing Counsel to draft a very fulsome and detailed grounds of resistance. That document was dated 23 June 2023.[15]The Claimant, prior to submission of her claim form, had sent to the Respondents on 31 March 2023, a lengthy 18 page document setting out the basis of her contention that she had been constructively dismissed. This was certainly not drafted in a way in which an employment lawyer would have drafted it but that is understandable.[16]The original grounds of resistance did not criticise any lack of particularity in the Claimant’s ET1 and in fact the request for further and better particulars did not emerge until some time later as indicated above, in September 2023.[17]Subsequent to that, the Claimant, when faced with the request for further and better particulars, sought advice from ACAS who told her to contact the ET to ask if she needed to respond.[18]The Claimant contacted the Employment Tribunal and was advised to “wait for the Judge to issue orders”. She then wrote to those representing the Respondents, explaining what she had been told by the Tribunal. Those representing the Respondents sought documentary evidence and the Claimant, in turn, explained she was waiting to hear from the Tribunal and attached the 18 page, 31 March 2023 document.[19]I agree with Mr Smith that as an unrepresented party, irrespective of the merits of ACAS and/or the Tribunal volunteering advice which may or may not be proper or appropriate, she was entitled to take it at face value. It would be harsh indeed if a Tribunal were to determine that acting in reliance upon that advice, be it good or bad, constituted unreasonable behaviour.[20]The Respondent’s request was long and detailed and it is true, as set out by those representing the Claimant and reiterated by Mr Smith, that the Tribunal, at no stage, has ever ordered the Claimant to respond to that lengthy request.[21]In fact, on 31 October 2023, EJ Tynan, listed the matter for a Full Merits Hearing in April 2024 and attached a series of orders in standard format, including an order seeking details of the Claimant’s Remedy sought. Essentially, an order for a Schedule of Loss. He also set out an order seeking details of the claim in whistle blowing in the standard format. The time limit for compliance with that order was 5 December 2023 and the compliance time limit for the order to provide a Schedule of Loss was 28 November 2023.[22]The Claimant then purported to respond to the Tribunal’s orders, albeit perhaps not perfectly. She remained unrepresented at this point. She did not disclose her earnings. This was because she considered, perhaps incorrectly, that doing so would be a breach of a confidentiality clause. This may have been a misguided understanding but I do not consider it to be unreasonable.[23]Ultimately, the Tribunal under the auspices of REJ Foxwell, listed the matter for a Case Management Discussion to take place on 16 February 2024. The notice of hearing is in standard format and sets out that an Employment Judge will clarify issues in the claim. It also specified that the Respondent’s application for an Unless Order/Costs Order would be heard at that time.[24]Prior to that hearing taking place on 7 January 2024, the Claimant withdrew her claim and accordingly, pursuant to that withdrawal, a legal officer issues a judgment on the basis of that withdrawal, dismissing the Claimant’s claims under Rule 52 of the Employment Tribunal Rules of Procedure.[25]I accept that the Claimant did this without seeking legal advice and without knowing the risks that she ran in doing so and that she may face a costs application of the nature she is facing today.[26]The Claimant did not give the reasons for withdrawal at that time but it is clear that the Respondents did not ask for them and simply applied for the costs order, which is before me.[27]It appears that there were reasons for the withdrawal, partly due to ignorance of the law and, on 18 December 2023, just before Christmas and just before the withdrawal, her brother-in-law had passed away. This was the second bereavement suffered by the Claimant’s family in 9 months, with her other brother-in-law having passed away. I can imagine that this had caused considerable trauma, upset and grief within her family.[28]It is against this factual matrix that I am asked to make a cost order today. I should add that the Claimant has indicated through her Counsel, Mr Smith, that she intends to pursue a counter costs order for the unreasonable behaviour of the Respondents in constantly haranguing the Claimant seeking further and better particulars and in pursuing this costs order.[29]I was, however, asked to “park” that application pending the outcome of this application.[30]Accordingly, as this application is refused, it is now for the Claimant to decide whether they wish to proceed with their counter application. That is a matter for them.
The legal framework
[31]The application before me is pursued on the basis of the provisions within the Employment Tribunal Procedure Rules of 2024. When the application was originally made, those rules were not in force and the preceding rules from 2013 were in force. However, for the purposes of this application the wording of the appropriate orders has not changed but the place within the Rules has, such that the numbering is slightly different.[32]The order which is pertinent to these applications is Rule 74. Rule 74-(1) The Tribunal may make a costs order or a preparation time order (as appropriate) on its own initiative or on the application of a party or, in respect of a costs order under rule 73(1)(b), a witness who has attended or has been ordered to attend to give oral evidence at a hearing.(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 of it, or the way that the proceedings, or part of it, have been conducted, (b)any claim, response or reply had no reasonable prospect of success, or (c)a hearing has been postponed or adjourned on the application of a party made less than 7 days before the date on which that hearing begins.[33]I am grateful to both Counsel for setting for setting out for me, guidance to Employment Tribunals in applying this order.[34]The Respondents seek a costs order on the basis of Rule 74(2)(a) that the Claimant has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings, or part of it, or the way that the proceedings, or part of it, have been conducted.[35]The EAT have given guidance on the approach to take when considering the making of such an order. He refers me to the case of Radia v Jefferies International Ltd UKEAT/007/18, where there is a two stage test a Tribunal must apply. The first stage, described as the threshold test, is an objective one by reference to the limb asserted under what is now Rule 74(2)(a).[36]It should also be remembered that costs in the Employment Tribunal are still the exception rather than the rule, Yerrakalva v Barnsley Metropolitan Borough Council and Another [2012] ICR420(CA). The Tribunal’s power to order costs is more sparingly exercised and is more circumscribed than that of the ordinary courts where the general rule is that costs follow the event and the unsuccessful litigant normally has to foot the legal bill for the litigation. In the majority of cases, Employment Tribunals do not make an order for costs. Costs do not follow the event in the Employment Tribunal. If an order is made it must be so within the expressly confined power outlined to the Tribunal in the Rules of Procedure. It is therefore something of a high bar for a party to seek and be awarded a costs order in the Employment Tribunal. The power is, however, discretionary and is not fettered by case law. Costs awards are fact specific, FDA and Others v Bhardwaj [2022] ICR1541 EAT.[37]The second stage of the test to be conducted by the Tribunal in these circumstances, is subjective. Therefore, it is engaged if the Tribunal conducts the threshold test and determines that behaviour does fall into the description set out in the Rule. In this case it is the Respondent’s assertion that the conduct, as set out in the Respondent’s letter of application for costs, both individually and cumulatively amount to conduct on the part of the Claimant which is vexatious, abusive or unreasonable conduct in the bringing of the proceedings, the failure to engage with attempts to narrow the issues and for discontinuing the claim.[38]Once a Tribunal has satisfied itself that a party has conducted itself in any of those ways, it is then necessary to go on to consider making a costs order having regard to the matters outlined in the Radia case at the subjective stage of the analysis.[39]I must take into account issues put before me by Mr Smith, including the fact that it is a right of an employee with the appropriate service to pursue a claim in the Employment Tribunal. He reminds me that this case was in its relative infancy at the point of withdrawal. It was at that point going to be subject scrutiny by a Judge in an attempt to clarify the issues. No list of issues had been formulated and it is common these days for Employment Judges to “roll up their sleeves” and sit down with the parties that isolate the issues and clarify them. This is something that Tribunals do pursuant to guidance given to them in the EAT.[40]It is something that Employment Judges do on a daily basis. I am also minded, of course, to take into account the fact that the Claimant was not represented throughout the period of time within consideration for the purposes of this application. I have already made comment on that in general terms above.[41]Both Mr Strelitz, on behalf of the Respondents and Mr Smith, on behalf of the Claimant, are forceful in their opposing suggestions that their arguments carry great weight. Mr Strelitz tells me that it is precisely the type of case where an award of costs is appropriate. He says the allegations ranged in the ET 1 were of a most serious nature, referring to potential criminal offences of the Respondent’s Directors.[42]He invites me to consider that there is much behind the scenes going on pursuant to the corporate transaction and that much of the Claimant’s claim was, in a sense, an attempt to obfuscate nefarious activities she was herself involved in. He asked me to accept that it is little short of breathtaking that the Claimant should commence a claim which is shrouded in such a volatile and inflammatory language with loosely articulated accusations abounding of criminality by the Respondent’s Board, likely knowing that this could have real adverse consequences for it with at least the FCA only then to resist attempts to seek clarity of those allegations before withdrawing them at the prospect of facing an Unless Order. Mr Smith equally passionately entreats me to consider that this application for costs is, of itself, outrageous and should never have been brought.[43]The original application from the Respondent’s solicitors, responded to by the Claimant’s solicitors, are the key documents to which both Counsel spoke.[44]Mr Smith asked me to consider that the submissions of Mr Strelitz go further than the original application in that he now invites me to consider that the actions of the Claimant constitute vexatious and abusive behaviour under the rule which had not been ventilated in the original application.
Conclusions
[45]It may be wise if I confined myself to the foreground set out by the Respondents in their original letter of application dated 18 June 2024. These are isolated individually and dealt with in the Claimant’s solicitors response in their letter of 12 September 2024.[46]These can be broken down into four sections: The Claimant commenced proceedings in the Employment Tribunal putting the Respondent to the cost and inconvenience of the same, without providing sufficient evidence or proper particulars as to her
claim.
[47]The Claimant presented her claim, as I have indicated above and included the home made claim, raising various allegations which she said amounted to a breach of contract entitling her to treat herself as constructively dismissed. Within the nature of those allegations was an assertion that Directors of the Respondents had ignored significant and important matters she had brought to their attention and that in light of that she had resigned. This raised the possibility that there was a whistle blowing claim within her claim, most probably under section 103A of the Employment Rights Act.[48]The Claimant was an employee with sufficient service and entitled to pursue a claim in the Employment Tribunal. I do not regard it as significant that she was a person well versed in business. She is not a lawyer, she was not advised by a lawyer and pursued the claim herself. It was very much home made. It is common in the Employment Tribunals. The Employment Tribunals were originally put in place to enable employees to seek redress in employment disputes without the need to engage expensive legal professionals. That is still one of the aims of the Tribunal to this day. There were certainly some strident allegations put forward in that ET1 but nothing which would persuade me to accept Mr Strelitz’s argument that the issuing of those proceedings themselves constituted behaviour sufficient to qualify under Rule 74 as being behaviour constituting vexatious, abusive, disruptive or otherwise unreasonable behaviour.[49]In this first limb of the Respondent’s application I conclude that the first limb of the test I have to apply is not engaged. The threshold is not crossed.[50]The Claimant was simply exercising her legal right to bring a claim in the Employment Tribunal. At the time she no doubt considered those claims to have merit and genuinely believed the contents of her ET1. Ultimately, the allegations raised would have been tested before a Tribunal or maybe the Claimant would have been unsuccessful but the threshold has clearly not been crossed in this respect.[51]There was some inadequacy of particularisation but this is common in an ET1 that is home made. The case was plainly outlined and in any event the Respondents were hardly prejudiced by this as Mr Smith pointed out, Mr Strelitz was able to produce a most fulsome grounds of resistance. The Respondent’s application fails on this first limb. The Claimant continually refused to provide further and better particulars to enable the Respondent to understand her claim, putting the Respondent to the cost and inconvenience of requesting the same.[52]I do not find that the above is borne out by the facts of the matter. Yes, it is the case that the Respondents raised a detailed and lengthy request for further and better particulars some two months after they filed their grounds of resistance and then pursued the Claimant vigorously when she did not supply those further and better particulars as requested.[53]However, at no stage was she under any Tribunal order to so comply with that request, as set out by the Respondent. In fact, the opposite was the case, as in October, EJ Tynan caused orders to be sent to the parties which included a specific request by the Tribunal for further and better particulars as part of the Claimant’s claim.[54]The Claimant purported to provide this information, albeit not in the form that would have been provided had it been drafted by a legal Representative. Moreover, the Claimant had provided, in a lengthy and detailed document, an exposition of her claim, once again, albeit not in legalese.[55]The Claimant attempted to comply with the order of Judge Tynan, both in terms of the request of further and better particulars but also in terms of the supplying of a schedule of loss. It may not have been perfect and there were clearly mistakes and further clarification would have been required but I would have expected that this would have taken place at the case management discussion which would have inevitably ensued on 16 February.[56]It is entirely understandable that the Claimant did not respond in terms to the Respondent’s request for further and better particulars in light of the advice she received both from ACAS and from the Employment Tribunal Administration. That may not have been wise advice but she is entitled to rely on it, as I have outlined above. I do not consider that the Claimant’s behaviour in the way in which she reacted to the Claimant’s specific request for further and better particulars or indeed the way in which she responded to EJ Tynan’s orders to have, in any way, met the threshold required by Rule 76(2)(a). None of her conduct met the threshold of vexatious, abusive or unreasonable conduct.[57]This also deals with the third limb of the written application of the Respondents and leaves only the final limb which is the withdrawal of the proceedings on 7 January in advance of the case management discussion and the hearing of the Respondent’s application due to take place on 16 February.[58]The Claimant pursued her withdrawal without the basis of legal advice. She had reached the point where she had come to realise that the duty to mitigate would severely impact upon any compensation she might receive should she be successful in her claims. It was also against the unfortunate background of the loss of two brothers-in-law, one very recently and she was under great stress at the time.[59]When considering awarding costs against the Claimant who have withdrawn a claim, the Tribunal must consider whether the Claimant has conducted the proceedings unreasonably in all the circumstances and not just whether the late withdrawal of the claim was, itself, unreasonable. This is the case of McPherson v BNP Paribas (London Branch) [2004] ICR 1398 Court of Appeal. That case highlighted the fact that tribunals must look at the conduct of the Claimant overall throughout the proceedings, not just the fact of withdrawal.[60]Accordingly I conclude, as set out above, that the behaviour of the Claimant throughout was not of a type to engage the threshold set out in the Rule 74(2)(a) of being vexatious, abusive or unreasonable.[61]The Claimant did have reasons for withdrawal, albeit that she did not express those at the time and, taking into account her general conduct of the proceedings throughout, the fact of the withdrawal did not render her general conduct to fall into the category set out and therefore threshold test was not triggered and I do not find that any of her conduct throughout, including the withdrawal, constituted abusive, vexatious or unreasonable conduct.[62]For the reasons I have outlined above, the Respondent’s application for costs fails and is dismissed. Approved by: