Nicolson Highlandwear Ltd v Nicolson UKEATS/0058/09.
This case looks again at the issue of costs in employment tribunals, particularly where dishonesty may be involved.
The Tribunal found that there had been an automatic unfair dismissal but also that claimant's conduct directly led to his dismissal. The conduct in question was (a) deliberately engineered financial irregularities, such that the business was deprived of money due to the respondent company (b) chaotic management of the finances of the business, for example failure to process customer's orders, and (c) deliberate failure to set the record straight on particular issues, when asked to do so. Accordingly the tribunal decided to award nothing to the claimant. It considered that it would not be just and equitable to award money when his conduct contributed 100% to his own dismissal. The tribunal did not however award any costs and this was the subject on an appeal to the EAT.
The EAT noted that the Respondent in its form ET3, referred to the Claimant as being in a position involving a considerable level of trust, and to his conduct and performance. They argued that he had been guilty of gross misconduct and submitted that even if his dismissal was found to be unfair, any award of compensation should be reduced to nil. Accordingly the Claimant was put on notice that the Respondent would be countering his case by relying on conduct on his part which involved breach of trust and apparent dishonesty, which could properly be characterised as gross misconduct and was so bad that, whatever the outcome of the issue as to whether or not he had been fairly dismissed, he should not receive any monetary award.
Paragraph 40(2) and (3) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 ("the 2004 Regulations") provide at:
(2) A tribunal or chairman shall consider making a costs order against a paying party where, in the opinion of the tribunal or chairman …..any of the circumstances in paragraph (3) apply. Having so considered, the tribunal or chairman may make a costs order against the paying party if it or he considers it appropriate to do so.
(3) The circumstances referred to in paragraph (2) are where the paying party has, in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived."
The EAT looked at two recent cases. In Daleside Nursing Home Ltd v Mrs C Mathew UKEAT/0519/08/RN the court had observed that it would be perverse of a Tribunal to fail to conclude that the making of a false allegation at a hearing before it did not constitute a person acting unreasonably.
In Dunedin Canmore Housing Association Limited v Mrs Margaret Donaldson UKEATS/0014/09, the EAT stated "There is a flavour, in the Tribunal's second judgment, of sympathy for the claimant as a lay person and for the difficulty she might have in paying any award. With all due respect to the Tribunal, these matters are beside the point. The issue was not whether a lay person could reasonably have been expected to understand the law. It was whether she had or had not, in simple human terms, approached the essential factual matters that lay at the heart of her case honestly and reasonably. She had not done so and these are exactly the sort of circumstances where a Tribunal has a responsibility to make it clear that it is quite unacceptable to cause expense to another party by bringing proceedings on that basis. Then, as to the financial burden of the award, the Tribunal is entitled, in the interests of justice, to take account of ability to pay when fixing the amount; ability to pay is not relevant when determining whether or not an award should, in principle, be made."
The EAT was clear these cases demonstrate, an Employment Tribunal can be expected to conclude that there has been unreasonableness on the part of a party where he/she is shown to have been dishonest in relation to his/her claim. In such cases it is open for a tribunal to award costs.
In the present case the claimant brought and persisted in a claim in which he knew that he had been dishonest and that that had caused his dismissal. Although he did not lie on oath, it was recorded at the end of paragraph 67 of the tribunal judgement that he seemed, at times, to be unable to distinguish between truth and fiction. In the circumstances, the only conclusion open to the Employment Judge was that the Claimant acted unreasonably in bringing the claim at all and, having brought it, by persisting with it once he had it spelt out to him that the Respondent would be relying on fraud on his part and submitting that, on any view, he should receive no award of compensation. The unreasonableness was such as would have led any reasonable Employment Judge to conclude that an award of expenses ought to be made.
This is now the third case in recent years that has highlighted the EAT's abhorence with a claimant's dishonesty or unreasonable pursuit of a claim. We can assume the same standards of honesty apply to employers. The message is clear. If an employee knows he has a high degree of culpability in his or her dismissal then he should consider carefully whether he should continue with any claim. Whislst costs in the past have been rare it seems the EAT want to lay down an unequivocal message that only genuine claims will be tolerated.
