Mr J Elliott v Atlas FM Ltd and Chase Services Group Ltd: 8002241/2025
EMPLOYMENT TRIBUNALS (SCOTLAND)
Case No 8002241/2025
Between
Mr J ElliottClaimantAtlas FM Ltd and Chase Services Group LtdRespondent
Before
Employment Judge M WhitcombeDate 19 May 2026
JUDGMENT
ON EXPENSES The second respondent conducted the proceedings unreasonably and its position on the preliminary issue had no reasonable prospect of success. It is ordered to pay the first respondent’s legal expenses (i.e. legal costs) limited to and summarily assessed at £2,400 (£2,000 plus £400 VAT).
REASONS
[1]This is my judgment on the first respondent’s application for expenses (i.e. legal costs) against the second respondent. It follows a preliminary hearing on TUPE 2006 issues in which an oral judgment was given on 13 March 2026. The written record of that judgment was sent to the parties on 17 March 2026. There was no request for written reasons from any of the parties. The first respondent was the transferor and the second respondent was the transferee.[2]By a direction given on 1 April 2026 this application for expenses was to be decided on written submissions unless either respondent requested a hearing within 7 days. Neither of them did. The claimant is neutral on this application and is not participating to save cost.[3]The first respondent’s application and written submissions are contained in a letter dated 27 March 2026. On 9 April 2026 I set a deadline of 24 April 2026 for any further written submissions on expenses from either respondent. None were received by that deadline. The only communication from the second respondent was a brief email of 6 May 2026 from Mr Mir saying, “As we have already agreed a settlement with the claimant’s representative and we also intend to cover the cost for second respondent” [sic]. I am not sure what that means, because no settlement has been concluded with the claimant and, more pertinently, the Tribunal has not been notified of any agreement to resolve the first respondent’s application for expenses.[4]It follows that the commendably clear submissions made in the first respondent’s written application for expenses have not been addressed by the second respondent at all. I make the working assumption in the second respondent’s favour that the application is opposed, even though no grounds have been put forward. The basis of the application[5]The first respondent’s application is made under rule 74 of the Employment Tribunal Procedure Rules 2024 on the basis that:a. The second respondent has acted unreasonably and disruptively in the conduct of the proceedings; andb. The second respondent’s response had no reasonable prospect of success (on the matters to be considered at the preliminary hearing).[6]Effectively, the argument is therefore that the tests in rule 74(2)(a) and (b) are met, such that the Tribunal “must consider” making an order for expenses, and that as a matter of discretion an award should be made in the sum claimed. Legal Principles[7]All references to rules are to the Employment Tribunal Procedure Rules 2024.[8]Rule 2 (interpretation) provides that in Scotland all references to costs (apart from “wasted costs”) must be read as references to expenses.[9]Rules 72 to 76 provide as follows: Definitions 72. In this Part— “paying party” means a party liable to pay costs; “preparation time” means time spent by the receiving party (including by any of the receiving party’s employees or advisers) in working on the case, except for time spent at any final hearing; “receiving party” means a party entitled to be paid costs. Costs orders and preparation time orders 73.—(1) A costs order is an order that the paying party make a payment to—(a) the receiving party in respect of the costs that the receiving party has incurred while represented by a legal representative or a lay representative, or(b) another party or witness in respect of expenses incurred, or to be incurred, for the purpose of, or in connection with, an individual’s attendance as a witness at a hearing. (2) A preparation time order is an order that the paying party make a payment to the receiving party in respect of the receiving party’s preparation time while not represented by a legal representative. (3) A costs order under paragraph (1)(a) and a preparation time order may not both be made in favour of the same party in the same proceedings. (4) The Tribunal may decide in the course of the proceedings that a party is entitled to either a costs order or a preparation time order but may defer its decision on the kind of order to make until a later stage in the proceedings. When a costs order or a preparation time order may or must be made 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. (3) The Tribunal may also make a costs order or a preparation time order (as appropriate) on the application of a party where a party has been in breach of any order, rule or practice direction or where a hearing has been postponed or adjourned. (4) Where in proceedings for unfair dismissal a final hearing is postponed or adjourned, the Tribunal must order the respondent to pay the costs incurred as a result of the postponement or adjournment if— (a) the claimant has expressed a wish to be reinstated or re-engaged which has been communicated to the respondent not less than 7 days before the hearing, and (b) the postponement or adjournment of that hearing has been caused by the respondent’s failure, without a special reason, to adduce reasonable evidence as to the availability of the job from which the claimant was dismissed or of comparable or suitable employment. Procedure 75.—(1) A party may apply for a costs order or a preparation time order at any stage up to 28 days after the date on which the judgment finally determining the proceedings in respect of that party was sent to the parties. (2) The Tribunal must not make a costs order or a preparation time order against a party unless that party has had a reasonable opportunity to make representations (in writing or at a hearing, as the Tribunal may order). The amount of a costs order 76.—(1) A costs order may order the paying party to pay— (a) the receiving party a specified amount, not exceeding £20,000, in respect of the costs of the receiving party; (b) the receiving party the whole or a specified part of the costs of the receiving party, with the amount to be paid being determined— (i) in England and Wales, by way of detailed assessment carried out either by a county court in accordance with the Civil Procedure Rules 1998(1), or by the Tribunal applying the same principles; (ii) in Scotland, by way of taxation carried out either by the auditor of court in accordance with the Act of Sederunt (Taxation of Judicial Expenses Rules) 2019(2), or by the Tribunal applying the same principles; (c) another party or a witness, as appropriate, a specified amount in respect of necessary and reasonably incurred expenses for the purpose of, or in connection with, an individual’s attendance as a witness at a hearing;(d) an amount agreed between the paying party and the receiving party in respect of the receiving party’s costs. (2) Where the costs order includes an amount in respect of fees charged by a lay representative, for the purposes of the calculation of the order, the hourly rate applicable for the fees of the lay representative must not exceed the rate under rule 77(2) (the amount of a preparation time order). (3) A costs order under sub-paragraphs (b) to (d) of paragraph (1) may exceed £20,000.[10]Rule 82 now embodies the principle that when deciding whether to make an order for expenses the Tribunal may (not must) have regard to the paying party’s ability to pay. It has long been established that it is often wise for a Tribunal to raise the issue of means, certainly where the sums at stake are substantial (Ono v NHS Leicester City [2013] ICR 91, EAT, Doyle v North West London Hospitals NHS Trust [2012] ICR D21, EAT). The issue is not necessarily confined to ability to pay at the date the order is made, it might also extend to future ability to pay (Vaughan v London Borough of Lewisham [2013] IRLR 713, EAT).[11]I adopt a staged approach:a. Consider first whether the situation fell within one of those set out in rule 74 so as to trigger a discretion to award expenses. If so, then the Tribunal “must consider” whether to make an order, but, importantly, it is not mandatory and remains a matter of discretion.b. If a threshold condition is met, then should I as a matter of discretion award expenses in favour of the first respondent?c. If so, then I would turn to the amount. The structure of rule 76 effectively allows me to assess expenses summarily, up to but not exceeding £20,000 for a receiving party. Alternatively, I could make an order for a more detailed assessment mirroring civil court practice, in which case the £20,000 limit does not apply.d. At the second and third stage I may (not must) have regard to the paying party’s ability to pay. However, the second respondent provided no evidence or submission about that. I note that the second respondent is a trading and solvent limited company. Publicly available Companies House records indicate net current assets approaching £1M. I find on the balance of probabilities that it has the means to pay the sum sought by the first respondent if an order for expenses were to be made.e. When applying those rules I also took into account the overriding objective in rule 3, and the need to decide this issue fairly and justly. Conduct - rule 74(2)(a)[12]“Unreasonable” conduct is not defined and bears its ordinary everyday meaning. It is important to analyse (though not necessarily in separate compartments) the nature, gravity and effect of the unreasonable conduct (Yerrakalva v Barnsley MBC [2012] ICR 420, CA).[13]It is not necessary for there to be a precise causal relationship between unreasonable conduct and the expenses incurred or claimed by the receiving party. It is not punitive or impermissible for a tribunal to award expenses without confining them to those strictly proven to be attributable to the unreasonable conduct (McPherson v BNP Paribas [2004] ICR 1398, CA, Salinas v Bear Stearns International Holdings Inc [2005] ICR 1117, EAT, Yerrakalva (above)). A “broad-brush” assessment at first instance will often be appropriate and an overly-analytical approach should be avoided (Sunava Ltd v Martin [2018] ICR D9, EAT). No reasonable prospect of success - rule 74(2)(b)[14]The question is not whether the paying party genuinely thought that they were in the right, but rather whether they had reasonable grounds for doing so (Scott v Inland Revenue Commissioners) [2004] ICR 1410, CA).[15]It may be relevant to consider whether the response lacked reasonable prospects of success from the outset, or whether that only became clear from the date on which an ET3 was filed, or certain evidence disclosed. However, the way in which the first respondent has limited its application for expenses makes a focus on the preliminary hearing most relevant. I proceed on the basis that a party can reasonably be taken to know what its own witnesses will say on the key issues in dispute at a preliminary hearing. Other relevant factors[16]While it is often said that awards of expenses are the exception rather than the rule, that cliché reflects the rarity of the situations falling within rule 74 and the fact that expenses are certainly not awarded in Employment Tribunals simply because the receiving party has been successful on an issue, or in an entire claim. Awards of expenses are certainly rare, but that is because conduct falling within rule 74 is rare (Salinas v Bear Stearns International Holdings Inc [2005] ICR 1117, EAT).[17]Parties without legal representation or training often find it difficult to assess their own claim with the necessary objectivity, or to identify, understand and apply the relevant legal principles. However, for the reasons set out below, I find that the second respondent was not in that category. It had access to internal advice and the means to seek additional independent legal advice if it wished. Many respondents in a similar position would have done so.[18]It is a fundamental principle that awards of expenses are made to compensate the receiving party and not to punish the paying party. Since awards are intended to be compensatory, they will be limited to expenses reasonably and necessarily incurred (Yerrakalva, above). For the same reason, the paying party’s ability to pay must be balanced against the need to compensate a receiving party unreasonably put to expense. The former may trump the latter, but not necessarily. This is reflected in the wording of what is now rule 82. Reasoning and conclusion Factual findings[19]Although the second respondent was represented at the hearing by Mr Ameer Faisal (Project Manager) it also has a dedicated HR function and correspondence had been received on behalf of the second respondent from “H Mirza, Hr Manager”. The second respondent had also been able to prepare detailed and structured written legal submissions referencing several relevant legal authorities. In those circumstances I find that it would be reasonable to expect the second respondent to be consistent in the presentation of its own case, and to have at least a basic understanding of the way in which would need to conduct the proceedings to further the overriding objective. Similarly, the need to advance a case which was consistent with its own response form, grounds of resistance, written submissions and evidence ought reasonably to have been known to the second respondent, and it could also reasonably be expected to make a realistic appraisal of the prospects of success on the preliminary issue.[20]The first respondent’s first broad point is that the second respondent failed to engage with the Tribunal process in a timely or coherent manner, contrary to the overriding objective in rule 3. It then goes on to argue that the second respondent’s case on the preliminary issue had no reasonable prospect of success and was unreasonably conducted.[21]I agree, for the following reasons. They are based partly on the Tribunal’s correspondence file and also on my notes and recollection of the preliminary hearing.a. Both the claimant’s solicitor and the first respondent’s solicitor wrote to the Tribunal raising concerns about the second respondent’s lack of engagement with preparations for the hearing. By 11 March 2026 (just 2 days before the preliminary hearing), the second respondent had not engaged in any exchange of relevant documents at all. I find this to have been unreasonable conduct of proceedings which put the first respondent to additional expense.b. The second respondent wrongly included duplicate documents and “without prejudice” correspondence with ACAS in the hearing bundle, despite the first respondent’s objection on 11 March 2025. This was also unreasonable conduct of proceedings which put the first respondent to additional expense.c. The second respondent applied during the preliminary hearing for a postponement because of a lack of legal representation in circumstances where an error in the notice of hearing had framed the issue as whether there was a transfer, rather than the true issue of whether the claimant was assigned to the part transferred. However, I refused the second respondent’s application to postpone the hearing because I was satisfied that there was no prejudice to any party in doing so. All three parties had attended ready and able to argue the correct point, as was clear from the second respondent’s own written submissions. When I asked Mr Faisal directly whether he had understood what the correct issue was, he replied, “yes, I do.” I therefore find that there was no reasonable basis for the application to postpone, but any harm done was minimal because I refused that application anyway. Some time was spent hearing argument on it, but the hearing finished within its allocated time.d. During the preliminary hearing, the second respondent’s own witnesses (Mr Bilal Riaz and Mr Muhammed Zuhaib) confirmed in evidence that the claimant’s role fell within the scope of the services transferred, that they had been notified that the claimant was in the pool of transferring employees on the day of the transfer and had met him, and accepted that the claimant should have been included in the consultation process and transferred to the second respondent.e. Despite the above evidence, the second respondent raised for the first time in closing submissions the new argument that the claimant was really a manager unassigned to any particular client or contract, and not someone engaged on operational work done by an organised grouping of employees. I agree with the first respondent that this argument was contrary to the evidence of every single witness who gave evidence at the hearing, had not been part of the second respondent’s case as set out in its ET3, grounds of resistance and written submissions, had not been put to the claimant or the first respondent’s witness, and was untenable for all of those reasons. I note that the second respondent’s “pleaded” case was that the claimant was engaged by the first respondent on “12-hour response shifts”, which was a reactive mobile response function. There was no mention of a management role.f. Overall, I agree with the first respondent’s submission that the second respondent’s defence never had a reasonable prospect of success. The fact that there had been a relevant transfer was quickly dealt with by consent, but the real point is that there was no reasonable prospect of arguing successfully that the claimant was not assigned to the organised grouping of employees transferred from the first respondent to the second respondent. The second respondent ought reasonably to have been aware of that if it had taken the time to establish what its own witnesses would say on the relevant issues, and then reflect on the implications for the merits of its argument.[22]Putting those matters into context a little, I do not regard (a) and (b) as especially serious, because they caused little disruption. Point (c) took up some time at the hearing, but there were no wider consequences. While matters (a), (b) and (c) met the test of unreasonable conduct of proceedings, they were at a low level of seriousness. I regard paragraphs (d), (e) and (f) as the most serious issues. The preliminary hearing should not have been necessary, the second respondent should reasonably have conceded the real point in issue instead of seeking to argue a position which was inconsistent with its own evidence, or a totally difference position which was neither set out in the ET3 and grounds of resistance, nor the written submissions, nor put to the relevant witnesses in evidence.[23]I am satisfied that the second respondent’s case had no reasonable prospect of success from (at least) the point when it had an opportunity to establish what its witnesses would say. It was unreasonable to argue that the claimant was not assigned in those circumstances. For both reasons, the first respondent was put to the trouble and expense of attending a preliminary hearing which need not have taken place. Threshold conditions[24]I am satisfied that the threshold conditions for consideration of an award of expenses were met. There was unreasonable conduct of proceedings by the second respondent in the ways set out above. The most important aspect was the fact that the claimant’s assignment to the organised grouping of employees transferred ought reasonably to have been conceded and the preliminary hearing ought not to have been necessary. The second respondent’s position at that hearing had no reasonable prospect of success. Exercise of discretion[25]I think that it would be just to exercise my discretion in favour of making an award of expenses in the first respondent’s favour. It has incurred unnecessary expense because of the second respondent’s conduct. The second respondent has not put forward any reason why an award should not be made.[26]The first respondent’s application for legal expenses is limited to counsel’s brief fee of £2,000 plus VAT of £400. I am satisfied that it was reasonable to instruct counsel for the preliminary hearing and that £2,000 plus VAT was within the reasonable range of fees for a preliminary hearing of that sort.[27]I am satisfied that the sum claimed properly and proportionately reflects the cost to which the first respondent was put because of the second respondent’s unreasonable pursuit of a defence that had no reasonable prospect of success, given the evidence of the second respondent’s own witnesses. That is obviously evidence of which the second respondent ought reasonably to have been aware.[28]In my judgment it would be just in all the circumstances for the second respondent to be ordered to pay the first respondent’s claimed legal costs, summarily assessed at £2,400 (£2,000 plus £400 VAT), and I order accordingly.