Employment tribunal Fees-Another Twist of the Knife

Today High Court fees are increased by up to 600%, leading Michael Reed the Legal Officer Employment at FRU to quip on twitter

“Can I just say that when we told MoJ employment tribunal fees were disproportionate compared to court fees, this wasn’t what we had in mind”.

Pricing claimants out of the courts has severe implications for access to justice but my concern today is with a decision of the Employment Appeal Tribunal reported last week, L Goldwater & Others -v- Sellafield Ltd.  This was a decision of HHJ Shanks on the papers about a cost application for the recovery of the £1,600 fees paid by the employees for the privilege of successfully correcting the error of an employment tribunal judge (where they may have paid a fee of at least £390), on a claim for shift allowances.  It is not clear from the original judgment how much money was at stake, but there appear to be 16 claimants affected.

The original reserved decision allowing the appeal was handed down on the 26th November, and Thompsons solicitors on behalf of the successful appellants, made an application under rule 34A(2A) of the EAT Rules for the respondents to pay the £400 issue fee and the £1600 hearing fee.  Rule 34A(2A) states

“If the Appeal Tribunal allows an appeal, in full or in part, it may make a costs order against the respondent specifying that the respondent pay to the appellant an amount no greater than any fee paid by the appellant under a notice issued by the Lord Chancellor”

Eversheds solicitors, on behalf of the respondents made written submissions as to why the fee should not be paid even though they had comprehensively lost the appeal.  No doubt they were encouraged to be inventive in their submissions by recent decisions of the EAT where successful appellants have not had a cost order for the fees made in whole or part in their favour such as Look Ahead Housing -v- Chetty.  In that case an appeal was successful but the EAT judge exercised a residual discretion not to order the fee to be paid by the losing party in the appeal.  Eversheds submissions were:-

  1. The appeals were not wholly successful.  This is described as false and “almost disingenuous” and any fair reading of the original judgment in November would be that the Appellants had won.
  2. There is no entitlement to an order.  The judge has a wide discretion and it was “perfectly appropriate and reasonable” for the respondent to resist the appeal.  These submissions were rejected on the basis the Appellants had to bring the appeal to correct the employment judge’s error.  Incidentally, I always considered it unfair that the parties had to pay for the Employment Judge’s mistake and having to pay a fee only compounds matters.
  3. The fees were not paid by the Appellants but by their union, the GMB and so no award can be made under Rule 34A(2A).

I think it is fair to say this is a particularly speculative argument turning on the most literal reading of the language of Rule 34A(2A), especially as HHJ Shanks notes the definition of “costs” in Rule 34(2) says

“… “costs” includes fees … incurred by or on behalf of a party … in relation to the proceedings …”

There was no dispute that the tribunal claims and appeals were supported by the Appellants trade union, the GMB, no doubt under the union’s legal advice scheme.  Free legal advice is one of the main benefits of union membership.  It is akin to legal expense insurance.  Many unions extended their schemes to cover the cost of fees when they were introduced in July 2013.  Just like legal expense insurance, all the schemes are subject to terms and conditions that vary, but may include continuing to pay union dues, meeting criteria as to the prospects of success, following advice from retained solicitors and payment of all costs and expenses if the member instructs new solicitors.  Nearly all schemes reserve a residual discretion to the union as to whether to support or continual to support a claim.  In Mardner -v- Gardner & another the HHJ Eady in EAT held that the fact that a party was insured was not a relevant factor to take into account when considering whether to award costs.  There were public policy grounds for holding that a Respondent should not benefit from the prudence of the Appellant in taking out insurance.

Incidentally, HHJ Eady exercises her discretion at the end of the decision to award the £1600 appeal fees to the Appellant.  Although it is not clear from the judgment, it may well be a reasonable supposition to assume that the appeal was supported by legal expense insurance and the fee ultimately paid by the insurer.  There is just a finding that the claimant had “incurred” the fee.

HHJ Shanks refers to the difference in wording between “incurred by or on behalf of” in Rule 34(2) for the definition of costs and the limit on the “amount” of costs which can be made under Rule 34A(2A) to “…any fee paid by the appellant”.  He finds that the Appellants paid no fees at all in this case and so the maximum order that could be made is nil.  He therefore dismissed the application for fees to be paid whilst pointing out his decision is confined to Rule 34A(2A) and did not affect Rules 34A(1) and 34B-D about ordinary costs or expenses.

The reaction on twitter was immediate and damning.  The decision is wrong and leads to absurd results.  “Paid by” must include “paid on behalf of” or “paid by union/insurer/etc”. 

More importantly, the wording of Rule 34A(2A) is replicated in the Employment Tribunals (Constitution and Rules of Procedure) Regulations, 2013 Rule 75(1)(b), Rule 76(4) and Rule 78(c) where there  is reference to “tribunal fee paid by the receiving party”, “where a party has paid a Tribunal fee…” and “…a specified amount as reimbursement of all or part of a Tribunal fee paid by the receiving party”.  I anticipate it will not be long before a similar argument is made in the tribunal to resist a claim for fees when a claim is lost.  It will not just be union supported claims, but also legal expense insurance claims, No Win, No Fee lawyers or even solicitors who pay fees upfront in an emergency when a claim is going out of time before any retainer agreement is signed.

Until the matter is resolved (I understand the Appellants are considering an appeal), advisers should ensure they can demonstrate that the party claiming the fee has paid” it.

Ironically, if the case reaches the Court of Appeal where an inflated court fee will be paid there will be little or no argument that the losing party has to pay the winning parties costs and disbursements, including any court fee (although see Unison -v- Kelly for an exception).

Access to justice in employment cases just got even harder.

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