Key points The EAT held that there was no distinct reason why Donaldson thought proceedings were necessary or that she had no other alternative option. This was based on the fact that she knew her evidence was not accurate. The EAT held that Donaldson had not approached the case honestly and reasonably and was ordered to pay the costs of Dunedin. This case follows the EAT’s earlier judgment in Daleside Nursing Home Ltd v Mathews which held that costs should be ordered where the central allegation was false.
Any case that comes to the tribunal needs to be approached honestly and reasonably. Evidence which is based on inaccurate and unreliable factual matters could result in an order for costs being made against the party which provides it.
Ms Margaret Donaldson brought a breach of contract claim in the tribunal against Dunedin Canmore Housing Association (Dunedin) after it withheld payment due to her under a compromise agreement.
Dunedin withheld the payment as it believed that Donaldson had breached the agreement by disclosing information regarding its terms, breaching the confidentiality clause. She denied the allegations.
The evidence presented to the tribunal showed that two people knew certain information about the agreement. It eventually held that Donaldson had disclosed details regarding to the agreement contrary to her obligations of confidentiality and so had breached the agreement.
Dunedin made an application to recover its legal costs. However, the tribunal refused that application and held that Donaldson was not liable to pay Dunedin’s costs as the proceedings had been necessary. The tribunal found that she had no alternative but to issue her claim.
Dunedin appealed.
The Employment Appeal Tribunal (EAT) held that in order for Donaldson to escape liability for Dunedin’s costs she must have approached the case honestly and reasonably. The EAT agreed with the tribunal that Donaldson had breached the agreement.
However, the EAT overturned the tribunal’s decision regarding Dunedin’s costs: it held that Donaldson should be liable to pay the costs because in the EAT’s view she had not approached the case honestly.
