Costs incurred

Although the rules relating to tribunal costs stipulate that they have to relate to those incurred "while legally represented", the Employment Appeal Tribunal (EAT) has held in Sunuva Ltd v Martin that there was nothing in the wording to say that they had to be limited because they were incurred at a particular stage of the proceedings or indeed to costs incurred after they had begun.

Basic facts

In January 2016 Sunuva Ltd put forward a proposal for restructuring the company which specifically stated that Ms Martin, its international sales manager, would be made redundant. The company was then advised to undertake a selection process which involved identifying a pool of people and selection criteria, which it did. Ms Martin was made redundant in April.

Following her dismissal, she instructed solicitors who wrote to the company in May arguing that the redundancy exercise had been a sham. Ms Martin subsequently brought claims of unfair dismissal, unlawful deduction from wages, sex discrimination and victimisation.

In its defence to the claim (submitted on a form called the ET3), the company denied that the redundancy selection exercise had been a sham. However, on the fourth day of a five-day hearing, one of the company’s witnesses accepted that despite the creation of a pool and the trappings of a fair procedure it had been decided at the outset that Ms Martin would be dismissed.

Tribunal decision

Perhaps not surprisingly, the tribunal found she had been unfairly dismissed and compensation was subsequently agreed. Ms Martin then applied for costs of just over £25,000 (including just over £7000 for work done before receipt of the ET3) on the basis that the company’s defence to the claim of unfair dismissal had no reasonable prospects of success.

The tribunal awarded her two thirds of the total amount claimed on the basis that had Sunuva admitted liability there would have been no need for a hearing. This included two thirds of her costs in respect of the period prior to the company’s ET3 being lodged.

Relying on Health Development Agency v Parish, Sunuva appealed against this aspect of the award arguing that there has to be a causal relationship between the conduct of a party in bringing or conducting proceedings and the costs which are awarded against it. It was not logical, therefore, for the company to be liable for costs incurred by Ms Martin before it even knew the case she was bringing against it.

EAT decision

The EAT, however, disagreed holding that the decision of the EAT in Parish was no longer good law as it conflicted with a subsequent decision of the Court of Appeal in McPherson v BNP Paribas (London Branch) which stated that the rules on costs do not impose a “causal requirement” "attributable to" specific instances of unreasonable conduct.

Although the rules relating to costs stipulated that they had to relate to costs incurred "while legally represented", there was nothing in the wording to say that costs had to be limited because they were incurred at a particular stage of the proceedings or indeed to costs incurred after they had begun.