Veitch Penny LLP - Exeter | Crediton, Devon

Case

McPherson v BNP Paribas London Branch
Court of Appeal - (13th May 2004)

Issues

(1) Practice & procedure
(2) Costs
(3) Unreasonable conduct

Facts

Rule 14 of the Employment Tribunal Rules of Procedure state:

“(1) Where, in the opinion of the tribunals, a party has in bringing the proceedings, or a
party’s representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived, the Tribunal shall consider making, and if it so decides, may make:

(a) An order containing an award against that party in respect of the costs incurred by another party…”

Alasdair McPherson had made claims against his employer based on unfair dismissal and breach of contract.

He withdrew his claims prior to the hearing taking place and the Tribunal made an order for costs against him in the sum of £90,747. This in itself was an unusually high award and in unusual circumstances. If a Costs Order is made, it is usually after a full hearing rather than on withdrawal before the hearing itself.

This decision was affirmed on appeal to the Employment Appeal Tribunal. The employee appealed to the Court of Appeal.

Decision

The appeal was allowed.

In order to decide whether to award costs, the question the Tribunal should consider was whether in all the circumstances the Claimant withdrawing the claim had conducted the proceedings unreasonably. It was not a question of whether the withdrawal of the claim in itself was unreasonable.

In this particular case while there was evidence of unreasonable conduct by the employee, it had only commenced when the employee had requested the adjournment on medical grounds. Consequently, the Costs Order was varied so that the employee would only be liable for the costs incurred after that date.

Comments

The Civil Procedure Rules state that it is unreasonable conduct for a Claimant to withdraw a claim and consequently they are liable to pay all the costs incurred. It was confirmed that this principle did not apply at the Employment Tribunal. It would be wrong for a Claimant to be deterred from withdrawing their claim by the prospect of an Order for costs being made (which may not be made if the matter proceeds to full hearing). Likewise though, it was confirmed that Tribunals shouldn’t, by its practice with costs, encourage claims which are speculative thereby allowing Applicants to pursue claims almost to trial in the hope of receiving an offer to settle. If no offers were forthcoming the Applicant could withdraw without the risk of costs against him.