Hobbs v Channel Group Plc [1992] UKEAT 234_91_0806

EAT

Hobbs v Channel Group Plc

[1992] UKEAT 234_91_0806 · 1992-06-08

JUDGE HAGUE :

This is an Appeal brought by Mr Hobbs against his former employers Channel Group Plc in relation to a decision of an Industrial Tribunal sitting in Cardiff which was sent to the parties on 20 March 1991. By their decision the Tribunal unanimously dismissed his claim that he had been unfairly dismissed and by a majority ordered that he should pay to the employers' solicitors the sum of £1500 towards their costs of the proceedings.

By his original Notice of Appeal, which was subsequently amended, Mr Hobbs appealed from:

"The majority decision of the Tribunal to pay to the Respondents' solicitors £1500 in respect of their costs in these proceedings."

So the appeal was clearly limited to the question of costs. The appeal was the subject of a Preliminary Hearing on 9 September 1991 when Mr Hobbs was given leave to amend his Notice of Appeal. The Appeal Tribunal directed that the Chairman be asked to produce his Notes of Evidence relevant to the issue of costs only.

One point which Mr Hobbs sought to raise before us was really directed not to the question of costs but to the merits of the decision. In our view (which I think Mr Hobbs accepted in the end) that was simply not open to him. His appeal was originally against costs only, and he is of course now way out of time for bringing a further appeal. There is nothing in the Order made on the Preliminary Hearing giving him leave to appeal out of time, and so it is clear that the appeal must be limited to the question of costs. Quite apart from that, we have read the Decision and we are of clear opinion that there is no error of law in it and so any appeal on the merits would be hopeless.

The case lasted a long time by any standards. It started on Tuesday 8 May 1990. There were two more days in October and three more in December, and a final day on the 27 February 1991. In the course of that hearing Mr Hobbs was cross-examined for 2 1 / 2 days. Both sides were represented by Counsel and Solicitors. The majority of the Tribunal took the view that Mr Hobbs had by his conduct somewhat extended the hearing. In paragraph 13 of the Industrial Tribunal Reasons the Tribunal say:

"In short, during a 2 1 /2-day cross-examination he contradicted himself a number of times and showed a generally tenacious attitude towards every little point in the case. That may show the cast of his mind; it also reflects the length of the cross-examination, by the end of which Mr Hobbs was evidently exhausted."

It is fair to say that the majority then go on to make some bilateral criticism of both parties for the way in which they had conducted the case. But then at the end of paragraph 13 they say this:

"We would not accuse Mr Hobbs of being frivolous or vexatious but it may well be, given his outlook, that he would behave unreasonably in the conduct of the case, and his opponent should not suffer for that."

A little later on in their Decision the majority say that if it had not been for Mr Hobbs' means they would have ordered him to pay one quarter of the employers' costs.

The general rule in cases in front of an Industrial Tribunal is laid down by paragraph 11 of Schedule 1 to the Industrial Tribunals (Rules of Procedure) Regulations 1985. Omitting the irrelevant words this reads as follows:

"..a tribunal shall not normally make an award in respect of the costs or expenses incurred by a party to the proceedings but where in its opinion a party ...has in bringing or conducting the proceedings acted frivolously, vexatiously or otherwise unreasonably the tribunal may make - (a)an order that that party shall pay to another party ...either a specified sum in respect of the costs or expenses incurred by that other party ...or the whole or part of those costs or expenses as taxed (if not otherwise agreed)."

It is well recognised that the general rule of no costs can bring hardship to the party who is successful, whether in the proceedings he brings or in proceedings brought against him. For example, as in this case, it can be of considerable detriment to an employer who has to spend a great deal of money and much executive time in defending a claim made against him by the employee in which the employer is wholly successful. In the present case we are told by Mr Bevan that the final bill for his company's costs is going to be in the region of £16,000 odd. Even on the footing of the Tribunal's decision as to costs, the company is going to be some £14,500 out of pocket. That is a result of the general rule which Parliament has laid down. There are, however, good reasons for the rule, because it would obviously make it almost impossible for most employees to bring proceedings in the Tribunal if there was a chance that at the end they were going to be presented with a large bill for the employers' costs.

The exception to the general rule applies where the Tribunal is of the opinion that one party

"has in bringing or conducting the proceedings acted frivolously, vexatiously or otherwise unreasonably."

In the present case the majority of the Tribunal did not in paragraph 13 (which is the crucial paragraph) say that in express terms. They indeed said they would not accuse Mr Hobbs of being frivolous or vexatious; but although they did not say it in so many words it seems to us really quite plain that they must have formed the view that Mr Hobbs in conducting the proceedings acted unreasonably in order to be able to make any award against Mr Hobbs of costs at all. The wording of paragraph 13 is not very happy, but that is clearly the result of the paragraph, and of course it is a conclusion which the Tribunal had ample material before it to come to. The Tribunal sat through all the long days of this hearing and of course we cannot even begin to get a flavour of what happened in front of the Tribunal. So if the matter had rested there we would not have thought it right to interfere with the decision of the majority as regards costs, there being no error of law in that respect.

There is however in our view a difficulty about the quantum of costs. It is quite plain, as the Tribunal itself recognised in paragraph 14 of their Reasons, that in exercising their discretion as to whether or not to make an award of costs the Tribunal must take into account the finances of the party against which the order is to be made. In this case at the relevant time (and we think we must look at it as at that relevant time) Mr Hobbs was employed. He was being paid on commission, and as the Tribunal puts it:

".. he could earn upwards of £20,000 a year but is not at the moment approaching that level."

So his income position was rather uncertain but at that stage fell well short of £20,000 a year. The Tribunal then go on to say:

"and his debts, evidenced by his latest bank statements, are considerable."

When one looks at the Chairman's Notes of Evidence the debts evidenced by his bank statements were indeed considerable. There is reference to three accounts all of which were overdrawn in the sums of £4,262, £7,636 and £4,600.

It was because of his income position and because of those debts that the majority thought that they should reduce the one-quarter of the taxed costs which they would otherwise have ordered Mr Hobbs to pay to £1,500. But there were other matters. At the time Mr Hobbs had paid his solicitors £1,500 on account but had not had their final bill. We have now seen the final bill which comes in two parts. First there is the solicitor's bill for the solicitor's fees plus VAT totalling £5,813.25, and there is also a letter which indicates that Counsel is owed a further £1,128.56. So there was in round terms another £7,000 odd for Mr Hobbs to pay to his own lawyers.

It seems to us from the wording of paragraph 14 of the Reasons, and the only mention of debts being those evidenced by Mr Hobbs' bank statements, that the Tribunal has failed to take that additional very heavy liability into account. We think they should have taken it into account, and erred in law in failing to do so. In those circumstances, with a good deal of reluctance and recognising that the matter is inevitably unfair on the employers, we think that it was not right to make any order for costs. We would therefore set aside the order for Mr Hobbs to pay £1,500 in respect of costs and substitute an order that there be no order for costs.