Cost in the Industrial Tribunal

The winner does not usually take all in employment cases: the power of an industrial tribunal to award costs is severely limited. The restrictions are consistent with the philosophy of modern employment protection law, as tribunal proceedings are intended to be speedy, informal and cheap. Inevitably, though, parties who are represented by lawyers at a tribunal hearing -- more than one-third of all applicants and approximately one-half of all respondents -- are apt to find that the satisfaction of pursuing or defending a claim successfully is diminished once legal fees are taken into account. it is therefore important to be able to assess the chances of obtaining reimbursement, in whole or in part, of those fees.
The principal rules on costs are set out in reg. 11 of the Industrial Tribunals (Rules of Procedure) Regulations 1985. The basic rule is that an industrial tribunal may only award costs 'where in its opinion a party . . . has in bringing or conducting the proceedings acted frivolously, vexatiously or otherwise unreasonably'. Costs are also awarded in certain circumstances if incurred as the result of the grant of an adjournment or postponement of a hearing.
Frivolous, Vexatious or Unreasonable Conduct
It is rare for a tribunal to conclude that a party has acted 'frivolously' or 'vexatiously'. In E T Marler Ltd v Robertson [1974] ICR 72, the National Industrial Relations Court suggested that an employee who knows that his case is bound to fail or whose claim can have no prospect of success may be acting 'frivolously', whilst an employee who brings a case out of spite or for some other improper motive behaves 'vexatiously'. In Marler itself, no costs were awarded against a managing director who claimed unfair dismissal, but admitted under cross-examination that the company had acted reasonably in dismissing him for numerous breaches of his service agreement.
Costs were awarded against employers who acted both frivolously and vexatiously in Cartiers Superfoods v Laws [1978] IRLR 315. They unjustifiably took the view that a lady 'of excellent character' was guilty of some kind of criminal offence, dismissed her with no regard for good industrial relations procedure and then threatened her with a claim for damages if she sought legal advice. Therein lay the reason why her dismissal was unfair, but not content with that, in their notice of appearance, the employers described the applicant as a 'criminal' and said that if she had not been a woman, they would have prosecuted. The EAT adopted the approach outlined in Marler, whilst acknowledging that great care should be exercised by tribunals before ordering costs against a respondent, 'because obviously, a respondent must be entitled to defend proceedings brought against him'.
The rules whi ch applied in Marler and Cartiers Superfoods differed from those at present in force. The words 'in bringing or conducting the proceedings' and 'or otherwise unreasonably' were first introduced by the procedural regulations of 1980. It is unlikely that the introduction of the former phrase significantly narrows the scope of the tribunal's power to award costs, although the EAT suggested the contrary in Davidson v John Calder (Publishers) Ltd and the Calder Educational Trust Ltd [1985] IRLR 97.
There is little doubt that enabling tribunals to penalise 'unreasonable' conduct has made it possible to obtain costs in cases where the strict test proposed in Marler cannot be met. Whether a party has acted 'unreasonably' is a question of fact for the tribunal. A classic example is the case where a party, without prior warning or good excuse, fails to turn up for the hearing -- although it should be added that costs are by no means always awarded in such circumstances and it is not unknown for a party who does not appear and is not represented actually to win his case.
Relevant factors
As in many other areas, industrial tribunals have a wide discretion with regard to costs, but a number of relevant principles in determining whether or not an order should be made emerge from the reported cases.
Financial Means
The inability of a party to meet any order for costs is a matter which a tribunal can legitimately take into account (Wiggin Alloys Ltd v Jenkins [1981] IRLR 275). The EAT held that a tribunal had not erred in law in declining to award costs against an employee serving prison sentences on various counts, including theft from his luckless former employers, and totalling six years. Nevertheless, the EAT emphasised that 'it is no consequence of our decision that the mere fact that for the time being an applicant is penniless is in every case a sufficient ground for refusing an order of costs'.
An industrial tribunal which rejected an employee's application for costs on the basis that the request amounted to an invitation to 'penalise the respondents' found its decision overturned by the EAT in the Davidson case (supra). The EAT accepted that the means of the unsuccessful party might properly be taken into account as one of the elements in deciding the amount of costs to be awarded, but made it clear that the tribunal should approach the question on the basis of 'compensation to the winner for what it has cost him to get justice' rather than in terms of 'punishment to the loser'.
The means of a trade union which supports a member's meritless claim are irrelevant. This apparently obvious point had to be made by the EAT in Carr v Allen-Bradley Electronics Ltd [1980] IRLR 263. The tribunal had wrongly held that the order should be similar to that made in the High Court in personal injury cases where an unsuccessful plaintiff has been union-assisted.
Pre-hearing Assessments
The pre-hearing assessment system was introduced in October 1980 with a view to discouraging hopeless cases. A 'warning' given at a pre-hearing assessment that a party risks an award of costs by pursuing an application, or a contention that has 'no reasonable prospects of success', may be taken into account if that application or contention is persisted with and proves unsuccessful at the full hearing. In the year 1983/84, the latest for which statistics were available at the time of writing, pre-hearing assessments were arranged in 3042 cases -- rather less than one-tenth of the total number of applications registered. Approxima tely two-fifths of the pre-hearing assessments resulted in a warning being given.
Knowledge of the Weakness of the Case
The EAT suggested in the Cartiers Superfoods case (supra) that it is right to consider what the party in question knew or ought to have known about the strength of his case. Perhaps fortunately, the Scottish EAT said in The Lothian Health Board v Johnstone [1981] IRLR 321, that this statement does not lay down a general proposition governing the conduct of solicitors who may insist in their pleas beyond a stage which the tribunal deems appropriate.
In Marler, the NIRC accepted that it might sometimes be easier to conclude that a senior executive knew of the hopelessness of his claim than an employee much lower down the ladder. On the other hand, the NIRC accepted that the situations in which senior employees are involved and which lead to their dismissal may often be more complex than average. This was demonstrated by the fact that the industrial tribunal hearing in Marler itself lasted no fewer than nine days.
In-house Lawyers
'In ordinary litigation', said the EAT in the Wiggin Alloys case, 'it is well established that legal costs incurred in litigation by the use of in-house lawyers are as much recoverable as are the costs incurred by employing independent solicitors'. The EAT held that the same principle applied to proceedings before an industrial tribunal.
Practicalities
The procedural regulations have never specified a time-limit for seeking costs, but according to the EAT in the Lothian case, any such application should be made as soon as possible after the favourable decision is intimated. Thus, in a case where the tribunal does not reserve its decision, a successful party who considers that an order for costs is appropriate should apply at once, whilst the whole conduct of the case is fresh in the tribunal's mind.
More difficulties arise in cases where the decision is reserved. The EAT thought in Colin Johnson t/a Richard Andrews Ladies Hairstylist v Baxter [1985] IRLR 96 that even then 'the trouble, delay and expense of an extra hearing on costs might be avoided if the party which anticipated victory were to say to the tribunal that if successful he was applying now for costs, explaining why, and to invite the tribunal to deal with costs in giving their decision in reasons'. Few parties are likely to wish to tempt fate in this way, however, and in any event there will not be many reserved decision cases in which an application for costs is justified.
Where an order for costs and expenses is made, it may be either for a specific sum or for the whole part of the costs or expenses as taxed (if not otherwise agreed) (reg. 11(1)(a)). Costs will be taxed on such county court scale as the tribunal directs.
In the Carr case (supra), the EAT noted that 'it has been the practice of industrial tribunals all over the country, in those cases in which orders for costs have been made, to consider that they have jurisdiction to make orders for specified sums rather than for taxed costs in default of agreement'. Such an approach was also favoured in the Lothian case by the Scottish EAT, which criticised a 'finely calculated' award which did little more than complicate an already complex situation.
A party who fails to request a pre-heating assessment does not automatically forfeit his right to seek costs later. Nevertheless, cases which are strong enough to justify an application for costs will usually be sufficiently clear at the outset to warrant a pre-hearing assessment. A sking for an assessment to be arranged is a sensible first step when it is proposed to seek costs. But it is only realistic to acknowledge that in the industrial tribunal, awards of costs will remain exceptional.