Lying claimants: recovering costs

The circumstances in which costs may be awarded against an unsuccessful party in employment tribunal litigation are limited. Costs do not follow the event. If, for example, a tribunal finds a dismissal to be fair, that in itself does not entitle the employer to an award of costs (or, if unrepresented, any expenses) against the employee who brought the claim. Costs or expenses orders can be made where a party has acted vexatiously, abusively, disruptively or otherwise unreasonably, or where the bringing or conducting of the proceedings has been misconceived. But what if a party’s evidence is found to be untruthful?

Two recent Employment Appeal Tribunal (EAT) cases have considered this issue. In Dunedin (Canmore) Housing Association v Donaldson, the claimant sued for payment under a compromise agreement which the respondent argued was not payable due to the claimant’s breach of a confidentiality provision. The employment tribunal found against the claimant, rejecting her evidence that she had not disclosed the existence and terms of the agreement in breach of its express confidentiality requirement. The employment tribunal rejected an application for an expenses order on the basis that, once the respondent alleged that the claimant was in breach of the agreement, she had no choice but to sue to enforce payment.

The EAT found that this finding was perverse – it was neither appropriate nor reasonable for the claimant to seek to make the respondent pay the amount due under the compromise agreement on a basis which, as the EAT put it, she must have known to be a false one. That the claimant was unrepresented did not alter the fact that these were circumstances in which the employment tribunal has a responsibility to make clear that it is unacceptable to cause expense by bringing proceedings on a basis that it is not honest and reasonable.

This decision echoes the EAT decision earlier in 2009 in Daleside Nursing Home v Matthew, where the claimant was found to have fabricated a “deliberate and cynical lie” about alleged racial abuse. The employment tribunal refused to make a costs order on the basis that the claimant had a genuine belief that her claim had merit. The EAT considered that such a finding was perverse where there was such a clear cut finding that the central allegation was a lie, and that the claimant had therefore acted unreasonably.

While these two decisions are of course based on very particular facts, they do show the willingness of the EAT to encourage employment tribunals to take a robust view on costs where parties are found to have lied and demonstrate the costs risk to either party – whether employee or employer – of giving false evidence. As all cases on costs involve the exercise of the employment tribunal’s discretion, no hard and fast rules can be gleaned from these cases, although they do serve as a useful indicator to parties considering or becoming engaged in litigation, that lying on oath can lead to more than just losing the case.

Charles Wynn-Evans, partner, Dechert

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