EAT Practice and Procedure : Costs – Employment Tribunal refusal to make an award of costs – ET Rules 2004
When deciding it would not be appropriate to make an award of costs (having determined that the threshold for such an award had otherwise been crossed) did the Employment Judge err in taking into account: (1) the fact that the Respondents were volunteers and trustees of a charity and/or (2) that any recovered costs will inure to the benefit of the Claimant’s insurers rather than to the Claimant personally.
This was a challenge to an Employment Judge’s exercise of discretion. That being so, it would not be for the EAT to interfere unless it was established that the order was vitiated by an error of legal principle or was not based on the relevant circumstances (per Mummery LJ in Yerrakalva v Barnsley MBC [2012] ICR 420).
As to whether it amounted to an error of law for the Employment Judge to have had regard to the nature of the Respondents’ positions as volunteer trustees of a charity: it could not be said that she thereby improperly fettered her discretion or took into account an irrelevant fact. The Employment Judge was not saying that it would always be the case that volunteer trustees could not face personal liability for costs, simply that she felt that it was inappropriate to make an award against volunteer trustees in these circumstances. That was a matter within her discretion and did not vitiate her decision.
The Employment Judge’s reasoning did not, however, stop there. She also identified that the Claimant had been funded by an insurer and was therefore not personally out of pocket. She took that view notwithstanding that Counsel then appearing for the Respondents had agreed that she should disregard that fact. The Respondents’ position before the Employment Tribunal had been correct. The Rules did not identify the means of the receiving party as a potentially relevant question and there were good policy reasons why it should not be. Furthermore, here the potentially receiving party was only not personally suffering from the costs of the Respondents’ misconceived defence and unreasonable conduct of the litigation because he had prudently entered into an insurance policy that would meet this liability. Allowing that the appeal concerned a power to award costs derived from statutory instrument rather than a common-law award of damages, the public policy principle was essentially the same as that approved in Parry v Cleaver [1970] AC 1.
Allowing that the Respondents should avoid the costs consequences of their unreasonable conduct because the Claimant had prudently entered into this insurance would allow them to appropriate that benefit and that would be wrong. The Claimant’s insurance policy was therefore an irrelevant consideration that rendered the decision unsafe.
Questions of appropriateness of costs award and possible issues as to means to be remitted to the same Employment Judge (if practicable) for fresh consideration in the light of this Judgment.
Eady QC HHJ
[2014] UKEAT 0483 – 13 – 2507
Bailii
England and Wales
Employment
Updated: 21 December 2021; Ref: scu.536689