Case No 8001711/2024Venue DundeeHearing 14 January 2026
Between
Ms Kelly ConnorClaimantLillie Beau LtdRespondent
Before
Employment Judge M SutherlandMr R Russell (instructed by Solicitor) for respondentDate 20 January 2026
JUDGMENT
The judgment of the Tribunal is that the Claimant is ordered to pay to the Respondent the sum of £4,000 in respect of expenses incurred by them in defending this claim.
REASONS
[1]A hearing on expenses was held in chambers to determine the Respondent’s application for a expenses.[2]The respondent was in attendance and as previously advised neither the claimant nor her representative were in attendance.
Background
[3]On 12 September 2025 the Respondent made an application for expenses on the grounds that:(1) the claim had no reasonable prospects of success,(2) the Claimant acted vexatiously, abusively, disruptively or otherwise unreasonably in the bringing of the proceedings and the way that the proceedings have been conducted.[4]On 7 October 2025 the respondent was ordered to set out in writing the facts relied upon in making the application including the acts and conduct relied upon and the costs sought. The claimant was ordered to advise whether the application was opposed and provide details of her financial circumstances and vouching. On 14 October 2025 the Respondent provided details of the factual basis of the application including the acts and conduct relied upon and the costs sought together with supporting documentation.[5]On 13 October the claimant advised that she was unfit to take part in a hearing and asked for the application to be determined on the papers and if not for her mother to attend on her behalf. On 28 October the tribunal confirmed that the claimant herself would only require to attend to give evidence (e.g. regarding her financial circumstances).[6]On 29 October the application for expenses was opposed by the claimant on stated grounds which was copied to the respondent. She also provided information regarding her financial circumstances which was not copied to the respondent because it was said to be sensitive/ personal.[7]On 6 November the tribunal advised that the expenses haring would be heard remotely by video on 14 January 2026 and the tribunal issued various orders regarding the expenses hearing including that the claimant must provide a financial statement and supporting documentation to the respondent’s representative expressly on a confidential basis for use only at the expenses hearing.[8]On 12 November the claimant advised that she was withdrawing from the proceedings on grounds on her mental health. She refused to disclose the financial information on the basis of the behaviour of the respondent’s representative citing in reliance the cost warning letters. No explanation was given as to why her mother would not be attending the hearing on her behalf.[9]On 14 November the tribunal advised the claimant that the extent to which information could be relied upon which has not been shared with the respondent would be considered at the expenses hearing.[10]Formal notice of the hearing on expenses was issued to parties on 10 December 2025.[11]No oral testimony was heard at the hearing and the respondent relied upon the following supporting documents:a. The final hearing bundle;b. The tribunal judgment;c. Correspondence sent to and from the parties and the tribunal;d. The respondent’s statement of account of legal costs (including a detailed breakdown of the time spent).[12]The tribunal also accessed publicly available information on Companies House regarding the respondent’s financial circumstances. Findings in fact[13]On 22 September 2024 the claimant commenced ACAS Early Conciliation which lasted 4 days.[14]On 18 October 2024 the Claimant presented a complaint of unfair dismissal.[15]The claimant was ably represented by her mother as a lay representative. The Claimant advised of a cognitive impairment. She is an intelligent and articulate individual who made an active and informed contribution to that representation at the final hearing.[16]On 15 November 2024 the respondent provided a detailed response which noted that the claim was vexatious and without any prospect of success. It advised of an intention to seek strike out failing which a deposit order on the basis of little or no prospects of success.[17]On 14 November 2024 respondent advised the claimant that unless her claim was withdrawn an application for costs would be made on the basis that she was acting vexatiously in bringing the claim and that there were no reasonable prospects of success. It advised of having documentary evidence that the claimant had repeatedly lied, was setting up her own salon and tried to steal customers. It warned that the legal fees will be at least several thousand pounds.[18]On 3 December an Employment Judge on initial consideration noted that it would be difficult for the tribunal to determine any application for deposit or strike out because of the material dispute on the facts. The application was not therefore pursued.[19]The respondent operates a nail salon near Dundee. It is a small business which at the relevant time comprised 2 employees (including the claimant) and the owner. The respondent’s unaudited financial statements for the year to 28 February were as follows (the company is exempt from audit): total assets less current liabilities of £9,094.[20]The claimant is a mature student (age 40) with a part time professional position and a dependent child. She is on low income from that work with limited savings and significant debts. She has performed paid nail work from her home for over 10 years. She receives financial support from her parents including paid foreign holidays. In her schedule of loss she sought compensation of £5,000.[21]A tribunal order was issued in February 2025 requiring the claimant to disclose details of contact made with all respondent customers in the period March to August 2024 regarding them leaving the respondent business and going with the claimant. The claimant did not comply with the orders and respondent required to correspond with the claimant and the tribunal regarding her failure to comply. The claimant replied stating that she does not have any documents or evidence, that she is not working as a nail technician and she has not set up a business. As noted in the judgment, It was apparent from the documentary evidence lodged by the respondent that the claimant had in fact made contact with more than one respondent customer and was working as a nail technician from home and that her response to the order was accordingly misleading if not uncandid.[22]On 21 March the respondent asked the claimant to advise the names of her witnesses. In absence of a response an order was sought on 25 February which was refused. On 19 March 2025 the final hearing was adjourned in part because the respondent was not aware that the claimant would be calling three witnesses.[23]On 21 July the respondent warned the claimant that an application for costs would be made on the basis of no reasonable prospects and unreasonable conduct which was described.[24]On 18 July the claimant made an application for without prejudice and protected communication to be included in evidence on the basis that there was no live dispute between the parties. This application was opposed by the respondent on the basis that at the time the claimant was subject to a live disciplinary warning and had been invited to a disciplinary meeting and the application was ultimately refused on this basis following further protracted correspondence. On 13 August the respondent warned the claimant that her conduct in relation to the without prejudice correspondence would be relied upon in an application for costs.[25]The final hearing was held in person in Dundee on 25 to 28 August 2025. Judgement was issued on 12 September 2025.[26]On 15 September the claimant made an application for a privacy order which was not copied to the respondent. The claimant referred to being employed in a professional forensic science role.[27]The respondent’s representative’s detailed statement of account of legal costs in sum of £19,075 (70 hours at £280) plus VAT roughly comprised the following costs (and hours) –a.£2.5k (9 hours) - preparing and lodging ET3 Responseb.£4.5k (17 hours) – making and responding to ancillary applications and ordersc.£4.5k (16 hours) – preparation for tribunal hearingd.£7.5k (27 hours) - attendance at tribunal hearings Observations on the evidence[28]The claimant was aware that she required to evidence her financial circumstance to enable that to be taken into consideration.[29]The claimant provided to the tribunal information (including documentation) regarding her financial circumstances which she refused to share with the respondent despite an order from the tribunal that she share this with the respondent’s representative on an expressly confidential basis for use only at the expenses hearing. The claimant was advised that the extent to which information could be relied upon which has not been shared with the respondent would be considered at the expenses hearing.[30]Although the claimant advised that she was withdrawing from the proceedings on grounds of her mental health, no explanation was given as to why her mother would not be attending the hearing on her behalf.[31]Accordingly there was no opportunity for the tribunal to address the confidentiality concerns or for the respondent to consider and comment on the financial information and accordingly it was not considered in furtherance of the overriding objective to deal with cases fairly and justly for this financial information to be taken into consideration.[32]However, sufficient financial information was made available at the final hearing for the tribunal to be aware that the claimant is a mature student (age[40]with a part time professional position and a dependent child and it was considered likely that the claimant was on low income from that work, with limited savings and has significant debts. She has performed paid nail work from her home for over 10 years. She receives financial support from her parents including paid foreign holidays. The law 33. Under Rule 80 of the Employment Tribunal Rules of Procedure a party may apply for a costs order (i.e. an expenses order) at any stage up to 28 days after the date on which the judgement finally determining the proceedings was limit specified in these rules. 34. Under Rule 73, a costs order is an order that a party make a payment to the other party in respect of the cost incurred while legally represented. 35. Under Rule 72(1) costs includes fees incurred for the purpose of, or in connection with, attendance at a Tribunal hearing. 36. Under Rule 74 a tribunal may make a costs order, and shall consider whether to do so, in specified circumstances including where it considers that(a) a party (or that party’s representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in the bringing or conducting of proceedings (or part thereof) or(b) the claim or response has no reasonable prospect of success. 37. Where the grounds are established the tribunal has a duty to consider making a costs order but has discretion as to whether do so. First, a tribunal must consider whether the ground is established; if so, it must consider whether it is appropriate to exercise its discretion in favour of making a costs order; if so, it must consider the amount of the cost order. Stage 1. Is the ground established? 38. First the tribunal must consider whether the ground of unreasonable conduct, or no reasonable prospects is established. 39. In determining whether a party has acted unreasonably in the bringing or conducting of proceedings (or part thereof) allowance should be made for the lack of experience and objectivity of a litigant in person. In assessing whether there has been unreasonable conduct the tribunal should take into account the nature, gravity and effect of the conduct (McPherson v BNP Paribas (London Branch) 2004 ICR 1398, Court of Appeal). 40. When determining whether the claim had no reasonable prospects of success this should be judged on the basis of what the claimant knew or ought reasonably to have known at the time. Stage 2 – Should the discretion be exercised?
The law
[41]If the Tribunal considers that the ground is established, it must then consider whether it is appropriate to exercise its discretion in favour of making a costs order.[42]The following factors may be relevant but not solely determinative of that exercise of discretion: awarding a costs order is the exception – costs orders do not automatically follow the outcome and are not made in the substantial majority of tribunal cases; their purpose is to compensate the party who incurred the costs and not to punish the paying party; whether or not a party had professional representation; whether a costs warning has been issued; whether there has been unreasonable refusal of a settlement offer; and their ability to pay.[43]The vital point in exercising the discretion is to look at the whole picture of what happened in the case including consideration of the other party’s conduct (Yerrakalva v Barnsley Metropolitan Borough Council and nor 2012 ICR 420, CA). Stage 3 - The amount of the costs order?[44]If the ground is established, and if the tribunal consider it is appropriate to exercise its discretion in favour of making a costs order, the tribunal must consider the amount of the cost order. Under Rule 76 a tribunal may order payment of unassessed costs of up to £20,000; taxed (i.e. assessed) costs; or agreed costs.[45]Under Rule 82 in deciding whether to make a costs order, and if so, in what amount, the Tribunal may have regard to the paying party’s ability to pay.[46]Costs should not exceed those reasonably and necessarily incurred having regard to ability to pay and having regard to the effect of any unreasonable conduct by considering broadly what costs are attributable to the conduct in all the circumstances (Yerrakalva). Submissions[47]The Respondent’s submissions were in summary as follows –a. The respondent’s representative rarely advises makes an application for expenses and only does so in exceptional circumstancesb. unreasonable conduct is to be given its ordinary English meaning (Dyer v Secretary of State for Employment EAT183/83)c. The tribunal should apply an objective test to the first stage (were there no reasonable prospects?) and a subjective test to the second stage (Did the claimant know, or should she have known, she had no reasonable prospects?)d. The claim for unfair dismissal had no reasonable prospects from the outset – i. the claimant accepted that the relationship had broken down and that this was the reason for the dismissal; ii. the claimant was fully aware that the relationship had broken down because she was trying to steal clients, she was working from home in competition, she was caught lying and she made serious allegations against her boss; iii. The claimant was repeatedly warned that her case had no reasonable prospects on detailed grounds both in writing in advance of the hearing and also orally during the hearing; iv. The claimant lied under oath with a view to winning a case she knew was otherwise unwinnable.e. The claimant engaged in the following unreasonable conduct which put the respondent to additional work – i. Making a claim for unfair dismissal where the claimant accepted that the relationship had broken down and that this was the reason for the dismissal; ii. Repeatedly lying to the tribunal when she falsely denied having contacted customers and when she falsely denied doing nails from home for customers; iii. Unreasonably refusing to comply with Orders of the tribunal which resulted in additional work in having to chase for responses; iv. Repeatedly failing to copy in the respondent despite repeated reminders to do so; v. Making an application to include protected/ without prejudice correspondence on the spurious basis that there was no dispute between the parties when there was a live disciplinary warning and a live disciplinary procedure; vi. Engaging in conduct that was described by the tribunal as disingenuous, uncandid and misleading; vii. The orders, when finally complied with, showed that she was trying to steal clients and was working from home in competition and had lied about it; viii. Her refusal to advise provide witness details in advance of the final hearing listed for April 2025 resulted in an unnecessarily late postponement of that hearing on the basis that there was insufficient time to hear all of the witnessesf. The respondent incurred roughly half the legal costs for preparing for and attending 4 days of hearing and roughly half the legal costs related to ancillary applications and including attending to her unreasonable conduct of the proceedings.g. The respondent is a micro business with very limited funds and is at material risk of insolvency if required to pay the legal costs without material contribution.h. The tribunal may make a substantial award even where a person has no means of paying. Whilst the claimant is a student she also has a professional job. She was financially supported by her parents whilst a student which included a number of paid foreign holidays. The claimant has also been working from home doing nails.[48]The claimant’s prior written opposition to the application was in summary as follows and this taken into consideration:a. The application for costs is punitive rather than reasonable;b. The respondent has not provided details of the acts and conduct relied upon;c. The respondent has not provide a detailed time breakdown of costs;d. The claimant genuinely believed that her dismissal was procedurally and substantively unfair;e. The adjournment of the prior hearing was a decision of the tribunal not caused by any act of the claimant;f. The final hearing lasted 3 days and not 4;g. It claims there were 7 witnesses when they were 6 at the time of listing and 2 added by agreement;h. The time spent was excessive and disproportionate to the nature and complexity of the case;i. The less technical legal work was not delegated to junior or administrative staff;j. The claimant did not set up in competition with the respondent and instead has occasionally done nails for friends in exchange for small gifts;k. She did not believe that the individuals contacted were clients of the salon when they had previously been her own customers;l. The expression of intention to re-open re home salon was made at a time of considerable anxiety and she did not in fact re-open;m. Her behaviour was cooperative throughout the tribunal process;n. The tribunal did not find her to be dishonest or deceitful;o. The claimant did not fail to comply with tribunal orders;p. The claimant did not comply with Rule 90 only when her correspondence contained sensitive or personal information;q. The tone and frequency of the cost warnings were unnecessarily adversarial and intimidating rather than professional and proportionate and this was contrary to the overriding objective;r. The claimant is a single parent, full time student and part time worker with limited income;s. The respondent has unreasonably insisted upon an in person hearing when there are no few facts to be determined;t. The respondent’s conduct has been unreasonable;u. No cost order should be made. Discussion and decision[49]The application for costs was made within the time limit. Stage 1. Is the ground established? No reasonable prospects of success[50]The following is noted having regard to the judgment. The claimant was dismissed because the claimant’s relationship with the owner had broken down irretrievably. In April 2024 the claimant was issued with a written warning following customer complaints. She then commenced a period of sickness absence which continued (bar 1 day) until her dismissal. She was required to attend a disciplinary hearing following further customer complaints which she declined to attend. In April 2024 the claimant advised customers that she was not planning on returning to work, she was going to open up her salon in her house again and asking the customers to come with her. From April 2024 the claimant was performing nail work at home for respondent customers. In May 2024 the claimant raised a grievance about her treatment by the owner from April. The claimant also collected her work tools in May. In June a meeting was held to discuss her grievance. In July the claimant was requested to attend a meeting to discuss their relationship but she initially declined to attend. In August a meeting was held to consider whether the relationship had broken down irretrievably following which the claimant was dismissed. The actions of the claimant indicated that she also considered that the relationship had broken down beyond repair. In these circumstances the claim for unfair dismissal had no reasonable prospects of success. Acted unreasonably, etc in the bringing or conducting of proceedings[51]The claimant did on occasions fail to act in compliance with tribunal rules and orders including the obligation to co-operate with the respondent’s representative in furtherance of the overriding objective under Rule 2 and to copy in correspondence under Rule 90 despite reminders.[52]The claimant’s lack of experience and objectivity as a litigant in person (which was shared by her mother as lay representative) resulted in her seeing the respondent’s representative as “unnecessarily adversarial and intimidating” rather than a solicitor acting professionally under instruction. This was perhaps understandable in the context of ongoing legal proceedings but it was compounded by an evident desire to win at all costs despite or perhaps because of the repeated cost warnings that she had no reasonable prospects. The claimant provided responses to orders which were found in the judgment to be “misleading if not uncandid” and gave evidence which was found to be “disingenuous” and in these respects she acted unreasonably in the conduct of the proceedings. Stage 2 – Should the discretion be exercised?[53]If the Tribunal considers that the ground is established, it must then consider whether it is appropriate to exercise its discretion in favour of making a costs order. Awarding costs is the exception and awards are not made in the substantial majority of tribunal cases.[54]The claimant was for the most part represented by her mother. The claimant stated that she suffers from dyslexia, dysgraphia and undiagnosed ADHA. She is intelligent and articulate. It was apparent that she was able to give proper instructions to her mother and at times took over representation. Although neither the claimant nor her mother are legally qualified, the representation was competent and articulate (E.g. her correspondence making applications for waiver of without prejudice protection and for a privacy order).[55]Various costs warnings were issued to the claimant which articulated in detail the basis upon which her complaint had no reasonable prospects of success. Despite her lack of experience and objectivity as a litigant in person (which was shared by her mother as a lay represent), it was or ought to have been readily apparent to the claimant that her claim had no reasonable prospects of success particularly after she received the ET3 response and the first cost warning letter.[56]Although her unreasonable conduct of the proceedings (i.e. sperate from the bringing and maintaining of them) resulted in some unnecessary work for the respondent’s representative and therefore additional cost to the respondent, that of itself would not justify an award of expenses in the circumstances.[57]Notwithstanding that the claimant was a litigant in person who had a lay representative, and the exceptional nature of cost awards, having regard to the whole picture of the claimant’s conduct in bringing and maintaining a claim which had no reasonable prospects it is considered appropriate to make an award of costs. Stage 3 - The amount of the costs order?[58]In deciding whether to make a costs order regard may be had to the Claimant’s ability to pay.[59]The claimant is a mature student (age 40) with a part time professional position and a dependent child. She is on low income from that work with limited savings and significant debts. She has however performed paid nail work from her home for over 10 years. She also receives financial support from her parents including paid foreign holidays.[60]The respondent is a micro business whose balance sheet indicates that having to pay the full of the legal costs without contribution would put the company at risk of insolvency.[61]Having regard to the nature of the claim, the conduct of the proceedings and the worked detailed in the statement of account, it was not unreasonable for the respondent’s representative to have spent 70 hours working on this case. More time was spent on ancillary issues than was strictly necessary for a case with no reasonable prospects but the respondent’s representative was entitled to adopt a tactical approach to defending the claim and the prehearing preparation was more efficient than might ordinarily have been expected.[62]The rate applied of £280 an hour appeared to be an average charge notwithstanding that the respondent’s representative was a partner and accredited specialist. As would be expected, it was higher than the taxed rate of around £180 and it was not possible to make a detailed assessment without undertaking taxation but this was considered unnecessary given the likely amount of the award at under £20k.[63]Following receipt of the initial costs warning letter the claimant unreasonably pursued a claim which was or ought to have been readily apparent to her had no reasonable prospects of success. That costs warning letter stated that costs sought would be at least several thousand pounds. There was no offer of settlement based upon likely irrecoverable legal costs. Whilst the respondent was under no obligation to make such an offer it which may well have resolved matters at an early stage given the amount of compensation sought. Further, the claimant was not provided with an updated estimate of the likely total cost of defending the proceedings once it became apparent that the costs were likely to be in excess of ten thousand rather than several thousand.[64]On balance, taking into account all the circumstances including the nature, gravity and effect of the Claimant’s conduct as a litigant in person on costs reasonably and necessarily incurred by the respondent after the initial cost warning, her financial circumstances, and the initial cost estimate provided to her, it is considered appropriate to make a costs order in sum of £4,000 (no award is made for VAT which it is understood may be reclaimed by the respondent).