Kuwait Oil Company v Dr Jamal Al-Tarkait
| Jurisdiction | England & Wales |
| Judge | Lady Justice Simler,Lady Justice Andrews,Lord Justice Bean |
| Judgment Date | 21 December 2020 |
| Neutral Citation | [2020] EWCA Civ 1752 |
| Docket Number | Case No: A2/2020/0005 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 December 2020 |
[2020] EWCA Civ 1752
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EMPLOYMENT APPEAL TRIBUNAL
MR JUSTICE KERR
UKEAT/0210/19/00
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Bean
Lady Justice Simler
and
Lady Justice Andrews
Case No: A2/2020/0005
Mr Michael Duggan QC (instructed by Hfw Llp Solicitors) for the Appellant
No attendance for the Respondent
Hearing dates: 15 December 2020
Approved Judgment
Introduction
This appeal raises a short but important point of construction not previously considered at the level of this court, in relation to the rules relating to awards of costs in Employment Tribunal proceedings. The essential question is whether an Employment Tribunal has jurisdiction under the relevant rules to place a cap on the potential award of costs that might be made when it makes an order for costs which are likely to exceed £20,000 and should therefore be sent for detailed assessment. Both the Employment Tribunal and the Employment Appeal Tribunal said yes but Mr Duggan QC for the appellant contends they erred in law and there is no jurisdiction under the rules to do this. He invites this court (as he unsuccessfully invited the Employment Appeal Tribunal to do) to remove the cap but to leave the order otherwise undisturbed. Dr Al-Tarkait has played no part in the appeal.
The question arises in this way. Following lengthy proceedings, Dr Al-Tarkait's claims for disability discrimination and wrongful dismissal failed, but his unfair dismissal claim succeeded. Following a Remedy Hearing, by a judgment with reasons promulgated on 9 November 2018, the Employment Tribunal (Employment Judge Tayler, Mrs Cameron and Mr McLaughlin, “the Tayler Tribunal”) made reductions to both the compensatory and basic awards to reflect Polkey and contributory fault respectively, and then awarded compensation totalling £79,724.20 to Dr Al-Tarkait, with payment stayed because of the costs decisions made at the same time.
Each of the parties made a costs application against the other because of the way the proceedings were conducted. Both costs applications succeeded in part. The Tayler Tribunal made a small award of costs of £4,900 in favour of Dr Al-Tarkait (who was the claimant below but is the respondent to this appeal). The order reads as follows:
“3. The Claimant is awarded costs in respect of the Respondent's failure to disclose documentation attached to the investigation report until an application was made to the tribunal. Otherwise the Claimant's application for costs is dismissed”.
There is no appeal from this order.
The award of costs in favour of Kuwait Oil Company (the respondent below but the appellant on this appeal) was in terms as follows:
“4. The Respondent is awarded the costs incurred by reason of the Claimant raising the matters that were dismissed by consent or by decision of the Auerbach tribunal [which had conducted a substantial case management hearing]. Those costs are limited to a maximum sum of the compensation awarded to the Claimant added to the costs awarded to the Claimant”.
The effect of paragraph 4 of the order was to cap the costs the appellant could recover from Dr Al-Tarkait in an amount that would ensure that Dr Al-Tarkait was not, overall, out of pocket from the proceedings save in respect of his own costs.
The Tayler Tribunal directed that should either or both parties require a taxation of the costs award, applications should be made to the tribunal to that effect. Accordingly, no order was made as to who should conduct the detailed assessment of the costs to be paid. However, at paragraph 5, the Tayler Tribunal urged the parties to consider the additional costs that would be involved in taxation and the proportionality of such a course of action.
The relevant costs rules
The power to make a costs order derives from the Employment Tribunal Rules of Procedure, contained in Schedule 1 to the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013, rules 74 to 84 (“the Rules”). Rule 76 provides the power to make a costs or preparation time order. It provides:
“76 (1) A Tribunal may make a costs order or a preparation time order, and shall consider whether to do so, 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) or the way that the proceedings (or part) have been conducted; or
(b) any claim or response had no reasonable prospect of success; …”
Once the power to award costs has been exercised, rule 78 deals with the methods of determining the amount of costs to be paid, and is the rule on which this appeal is focussed. It provides a number of different ways in which the amount of costs can be determined. So far as material it provides:
“78 (1) A costs order may—
(a) order the paying party to pay the receiving party a specified amount, not exceeding £20,000, in respect of the costs of the receiving party;
(b) order the paying party to pay the receiving party the whole or a specified part of the costs of the receiving party, with the amount to be paid being determined, in England and Wales, by way of detailed assessment carried out either by a county court in accordance with the Civil Procedure Rules 1998, or by an Employment Judge applying the same principles; …
….
(3) For the avoidance of doubt, the amount of a costs order under sub-paragraphs (b) to (e) of paragraph (1) may exceed £20,000.”
Rule 79 deals with the amount of a preparation time order, rules 80 to 82 deal with wasted costs orders, and Rule 83 deals with allowances. These rules do not concern us.
Finally so far as this statutory costs scheme is concerned, rule 84 is headed “Ability to pay”. It applies to costs, preparation time and wasted costs orders. It gives employment tribunals discretion to take the paying party's ability to pay into account at two stages of any costs exercise: first, when deciding whether to make an order, and secondly, if an order is made, when deciding what amount should be awarded by way of costs. It states:
“84. In deciding whether to make a costs, preparation time, or wasted costs order, and if so in what amount, the Tribunal may have regard to the paying party's (or, where a wasted costs order is made, the representative's) ability to pay.”
The Tayler Tribunal judgment
It is unnecessary to describe the course of the proceedings in any detail or to refer to the liability judgment in this case (dated 27 September 2017 and sent to the parties on 29 September 2017). For our purposes, we need only consider the costs award made by the Tayler Tribunal in favour of the appellant.
Although the appellant claimed costs under a number of different heads, the only head of costs awarded to it was in respect of its application for costs thrown away as a result of having had to deal with historic matters that were either withdrawn by consent or struck out by an earlier tribunal. In relation to those matters Dr Al-Tarkait was found to have acted unreasonably and his conduct was found to have put the appellant to significant expense, justifying an order for costs. The Tayler Tribunal accepted that costs were incurred in seeking the exclusion of historic material and that it was reasonable to expend some costs on considering rebuttal evidence but expressed itself to be “ askance at the costs incurred in dealing with this matter” (paragraph 31). It noted that, excluding sums claimed solely in respect of the postponement of the full merits hearing, the amount claimed by the appellant was £228,500 and said, “ We do not accept that it was reasonable for the respondent to incur anything like that level of costs in dealing with those historical allegations.”
At paragraph 32 the Tayler Tribunal addressed Dr Al-Tarkait's means as follows:
“32. We also have had regard to the claimant's third statement in which he deals with his means. A number of the contentions he makes in respect of sums that have been lent to him by family members and in respect of matters such as a loan from his pension fund were not supported by documentation. This was despite a request from the respondent. We also note that we do not have a signed statement. However, we consider it is likely that the claimant has very limited financial resources. The most significant addition to his resources would be the payment of the compensation he is entitled to, by reason of his dismissal being unfair and the limited amount of costs we have awarded in respect of the respondent's failure to provide supporting documentation to the investigation report.”
At paragraphs 33 to 35 the Tayler Tribunal explained the basis for making the impugned capped award of costs in favour of the appellant as follows:
“33. Pursuant to rule 78 we can award costs in a sum not exceeding £20,000 or to order the paying party to pay the receiving party the whole or a specified part of the costs of the receiving party. We consider that provision is drawn widely enough that we may apply a costs limit even if the costs are above the £20,000 limit so would require taxation. Should the parties apply costs will be subject to taxation. However, we urge them to consider the additional cost that would be involved in taxation and the proportionality of such a course of action.
34. We limit the costs awarded to the Respondent to the sum of the compensation awarded to the Claimant and the costs awarded to the Claimant. We do this on two grounds. The most important reason we make this decision, irrespective of our second ground, is because we do not see how the respondent should acting reasonably have incurred any costs in excess of that sum in dealing with the additional...
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