McFerran v Invest NI [2010] NIIT 00423

THE INDUSTRIAL TRIBUNALS

CASE REF: 423/08

598/08

CLAIMANT: Brendan McFerran

RESPONDENT: Invest NI

DECISION (COSTS)

The respondent’s application for costs is well-founded and it is ordered that the claimant shall pay to the respondent the sum of £10,000 in respect of its legal costs.

Constitution of Tribunal:

Chairman: Mr P Buggy

Members: Mr J Devlin

Mr D Walls

Appearances:

The claimant was represented by Mr E Hanvey.

The respondent was represented by Mr B Mulqueen, Barrister-at-Law, instructed by Cleaver Fulton and Rankin.

REASONS

1. The present Decision should be read in conjunction with the earlier Decision in this case (the “Liability Decision”), which was issued on 17 November 2009.

2.              The acts which were the subject of the claimant’s claims for compensation in these proceedings (the acts complained of) were as follows:-

      (1)      the employer’s decision to suspend the claimant;

      (2)      the decision to report to the police;

(3) the dismissal itself; and

(4) various alleged procedural unfairnesses in respect of the process which culminated in the dismissal.

3. Initially in these proceedings, the claimant made a complaint of unlawful discrimination, contrary to the Disability Discrimination Act (“DDA”). However, the claims under that Act were withdrawn during the early part of the main hearing.

4. Accordingly, in these proceedings, we were left with two grounds of complaint:

(1) The claimant claimed that his dismissal was an unfair dismissal, in contravention of Article 126 of the Employment Rights (Northern Ireland) Order 1996 (“the Order”):-

(a) The claimant claimed that his dismissal was automatically unfair because (according to the claimant) the reason for that dismissal was that the claimant had made a protected disclosure.

(b) That claim of automatically unfair dismissal was made alongside a claim that the dismissal was an “ordinary” unfair dismissal (in that the dismissal was “unfair” within the meaning of Article 130 (4) of the Order).

(2) He also contended that, by carrying out “ the other” acts (all the acts complained of with the exception of the act of dismissal), the employer breached Article 70B of the Order, by subjecting him to detriments by those acts. (According to the claimant, those acts were done on the ground that the claimant had made a protected disclosure).

5. The unanimous decision of the tribunal was that none of those claims were well-founded. Accordingly, this tribunal dismissed all of those claims.

6. The claimant was dismissed by the respondent ostensively because, according to the respondent, he had carried out various breaches of discipline. The most serious of those alleged breaches of discipline was an alleged failure, upon the part of the claimant, to disclose a clear conflict of interest when he arranged the relocation of CAM Benchmarking Ltd to premises at Wellington Park.

7. The question of whether or not the claimant had, or had not, in reality declared the relevant conflict of interest was a question which came to be of considerable importance in the course of these proceedings, for two reasons. First, it was relevant in the context of the respondent’s assertion that the claimant’s alleged protected interest disclosure (which was the foundation for those aspects of his claim which relied upon whistleblower protection) was not made in good faith. Secondly, the viability or otherwise of the claimant’s assertions of innocence (in relation to the alleged failures to disclose the conflict of interest) was of central significance in the context of the main thrust of the claimant’s arguments, which was that the various disciplinary charges were “trumped-up” charges, which had been concocted as retaliation for the claimant’s whistleblowing disclosures.

8. At paragraph 116 of the Liability Decision, we set out our ultimate conclusions on that aspect of the matter:

“… [W]e are ourselves satisfied, to a very high standard, that the claimant lied to his employer, and has subsequently lied to us, when he said that he had notified Dr. Neville and Professor McNamee about his own involvement in the purchase of the [relevant] premises …”

9. On the question of whether or not dismissal in respect of the alleged failure to disclose the conflict of interest would have been outside the range of reasonable responses, (because of the severity of that penalty), we set out our conclusions in paragraph 98 of the Liability Decision. Our conclusions were in the following terms:

“In our view, the answer to that question is entirely clear. Of course, it would have been within the range of reasonable responses to dismiss the claimant for that offence. Indeed, in our view, in the circumstances of this case, an employer who failed to dismiss an employee for that offence would be acting outside the range of reasonable responses …”

The grounds

10. Against that background, the respondent has applied for a costs order. The respondent does not ask for a costs order in excess of £10,000.

11. The following grounds are put forward by the respondent in support of the costs application:

(1) According to the respondent, the claimant lied, seriously and extensively, in the course of his evidence to the tribunal during the main hearing.

(2) The claims which the claimant pursued were misconceived in that they had no reasonable prospect of success.

(3) The respondent contends that the claimant never had any reasonable grounds for believing that he could be regarded as a “disabled person” within the meaning of the DDA; therefore, he had no proper basis for believing that he could invoke the protection of the DDA.

(4) The claimant pursued an application for review of the Liability Decision, and persisted in that application for review until the date of the review hearing, although he knew, or should have known, that such an application had no prospect of success.

12. In view of the conclusions which we have reached in relation to grounds (1) and (2), of the costs application, and in view of the conclusions which we have reached in relation to the appropriate amount of any costs order granted pursuant to those grounds, we do not need to consider ground (3) or ground (4).

The arguments

13. The arguments which were put forward in favour of the respondent’s costs application can be summarised as follows. The claimant had lied to the tribunal. The claimant’s claims never had any reasonable prospect of success. Daleside Nursing Home Limited v Matthew EAT/0159/08 shows that if lying went to the heart of the case, there ought to be an award of costs. The industrial tribunal decision in Maguire v Speechmatters, NIIT 9610/03IT (11 May 2009) provided a good example of an appropriately robust approach to a costs application, in a case in which the claimant had behaved improperly. The reality was that, if this claimant had been honest about his guilt in respect of the conflict of interest disciplinary offence, there was no chance his claims could have succeeded. The respondent had incurred a legal bill of approximately £75,000 in defending this case. It was seeking only £10,000 from the claimant.

14. The arguments which were made on behalf of the claimant (by Mr Hanvey) can be summarised as follows. The claimant had received substantial advice, in relation to his claims, from a respected employment firm, Elliott Duffy Garrett, Solicitors, who had never suggested that the case didn’t have merit. A letter dated 4 January 2010 from the claimant’s GP (which obviously was not available to the tribunal prior to the issue of the tribunal’s Liability Decision) made the following points. First, it stated that the claimant’s “illness is significant” and that it involves impairment of concentration and short-term memory. Secondly, the letter expressed the GP’s opinion that the claimant’s:

“… ability to remember events that happened several years ago could also have been impaired by his medical condition ”[Our emphasis]”.

If the claimant had lied, then so had other people who were connected (on the employer’s side) with this case. The tribunal had concluded that the claimant had lied. However, that was a conclusion which was based on circumstantial evidence. It involved merely a judgement, as distinct from being a conclusion which was based on direct evidence. The law in relation to protected disclosures was very complicated. It presented considerable difficulties, especially to the claimant, who was not represented by a lawyer. In industrial tribunal proceedings, payment of costs by the losing party was very much the exception rather than the rule. There ought to be a high threshold, in terms of unreasonable conduct, before an unsuccessful claimant would be made liable for costs of his opponent. In Peifer v Castlederg High School [2008] NICA 49, Girvan LJ pointed out that industrial tribunals must give some latitude to personal litigants who may be struggling in a complex field.

The law on liability for costs, and our conclusions

15. Rule 38 of the Industrial Tribunals Rules (“the Rules”) empowers a tribunal to make a costs order. According to Rule 38(1) a costs order may be made in any of the circumstances listed in Rule 40. The circumstances listed in Rule 40 include the following:

“… 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”.

16. In the Rules, the term “misconceived” includes having no reasonable prospect of success. (See Regulation 2 of the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005).

17. We are in no doubt that the power to make a costs order is compensatory, not punitive. (In other words, the purpose of a costs order is to compensate the person who is being awarded the costs, not to punish the paying party).

18. In our view, the claimant acted improperly, and therefore unreasonably, in failing to admit, from the beginning of the hearing, that he was guilty of the conflict of interest offence.

19. If he had done so, it would have been overwhelmingly obvious that his claim for automatically unfair dismissal could not succeed and that his claim for “ordinary” unfair dismissal could not succeed.

20. The claim for automatically unfair dismissal could not have succeeded after such an admission, because a dismissal is automatically unfair, pursuant to Article 134A of the Order, only if the making of the relevant protected disclosure was the sole or main reason for the dismissal. Having admitted that he was guilty of the conflict of interest offence, the claimant would have had no chance of establishing, before any industrial tribunal, that the protected disclosure was the main reason for his dismissal (in a situation in which the employer was saying that the offence was the main reason, and the employee was admitting that the offence had indeed been committed).

21. If the claimant had admitted the conflict of interest offence, he would have had no prospect of establishing that the dismissal was unfair, even if he could have shown there were some procedural blemishes in the process leading up to dismissal, because of the effect of Article 130A(2).

22. In very broad terms, Article 130A(2) provides that a dismissal, which is not automatically unfair pursuant to Article 130A(1), would not necessarily be unfair merely on account of procedural shortcomings, if the sanction of dismissal was, in all the circumstances, not a disproportionate sanction.

23. It will be recalled that the acts complained of in these proceedings were as follows:-

(1) the employer’s decision to suspend the claimant;

(2) the decision to report to the police;

(3) the dismissal itself; and

(4) various alleged procedural unfairnesses in respect of the process which culminated in this dismissal.

24. As we pointed out at paragraph 66 of the Liability Decision, we were satisfied that, in view of the gravity of the disciplinary charges, most reasonable employers would have suspended the claimant at the time when he was suspended by this employer. Against that background, in our view, the suspension allegation (the allegation that, in suspending the claimant, the respondent had subjected him to unlawful detrimental treatment) never had any reasonable prospect of success.

25. As we pointed out at paragraph 68 of the Liability Decision, in the context of the allegations which were made by Ms Hewitt-Dundas:

“In view of the seriousness of her allegations, it was entirely appropriate for the matter to be referred to the police. Indeed, arguably, it would have been inappropriate for [the employer] to have failed to have reported the matter to the police”.

Against that background, we are satisfied that the police reporting allegations (the allegation, that in involving the police, the respondent subjected the claimant to unlawful detrimental treatment) never had any prospect of success.

26. That leaves the allegation that the respondent breached Article 70B of the Order by subjecting him to detriments (on the ground that he had made the protected disclosure), in connection with the various alleged procedural unfairnesses in respect of the process which culminated in his dismissal.

27. In our view, it is not inconceivable that an employer might appropriately and proportionately dismiss a claimant because of an offence such as the conflict of interest offence in this case, but that the disciplinary process (which led to that ultimate decision to dismiss) could have been marred by procedural unfairnesses which constituted retaliatory action, on the part of the employer, as a consequence of the making of a protected disclosure. However, if the claimant had only been making the procedural detrimental treatment allegation on its own, this would have been a much lower value case (because the amount which could realistically have been recovered, by way of compensation in respect of the relevant alleged procedural shortcomings, would have been very much less than the amount which was in reality at stake in these proceedings); and it would also have been a much shorter case.

28. In summary, the claimant acted unreasonably by failing to admit that he was guilty of the conflict of interest offence. If he had admitted that he had indeed committed that offence, his claims of unfair dismissal (both automatically unfair dismissal and “ordinary” unfair dismissal) would have had no reasonable prospect of success. Even if the claimant had not been guilty of the conflict of interest offence, his claims of unlawful detrimental treatment, in respect both of his suspension and in respect of the involvement of the police, would not have had any reasonable prospect of success.

29. We have taken careful note of the January 2010 letter from the claimant’s GP. We accept the general thrust of the points made in that letter. In particular, we accept that the claimant’s illness is significant, and that this type of illness involves impairment of concentration. We also accept that the claimant’s medical condition “could” impair his ability to remember events that happened several years ago. However, having taken all of those matters into account, we are satisfied that our conclusions as to the credibility of the claimant, as set out in the Liability Decision, continue to be appropriate.

30. We agree that protected interest disclosure law is very complex and that this area of law is very difficult for a non-lawyer to master. However, the claimant did have substantial and repeated access to advice from a leading firm of solicitors. In our view, no non-lawyer could reasonably believe that a claimant would be entitled to succeed in a claim for unfair dismissal if that claimant had carried out a disciplinary offence as serious as the conflict of interest offence which was at the

heart of this case.

31. We have concluded that this claimant has been guilty of unreasonable conduct in bringing and conducting these proceedings, and that the bringing of the proceedings in respect of most of the relevant complaints has been misconceived. However, it does not inevitably follow that we must make a costs order. We have a discretion either to make such an order or not to do so.

32. We note that the respondent has incurred substantial costs in having to defend the unfair dismissal aspects of these claims, and that these entire proceedings would have been very substantially shortened if the claimant had have admitted that he was guilty of the conflict of interest offence. In those circumstances, and having had regard to the entire factual context of this costs application, we have decided that it is appropriate to make an order for costs.

33. The claimant told us that he has a pension of approximately £1,050 net per month, that he is joint owner of a house which is valued at £250,000 (with a mortgage of £125,000 on it) and that he estimates that the property which he jointly owns at Wellington Park, Belfast, has an equity of redemption of approximately £125,000 (of which he is entitled to 50 per cent). On the basis of that information, we are satisfied that, without undue hardship, the claimant would be able to afford to pay an award of £10,000 in respect of costs.

Amount

34. The claimant should not be required to pay costs at a rate which was in excess of the amount which was the minimum amount of costs which a respondent would have to pay for the purpose of proportionately defending its rights. (In other words, we consider that any costs which may be payable should be payable on a “party and party” basis as distinct from being payable on a “solicitor and client” basis).

35. Until a very late stage in the case, the respondent continued to rely on its argument that the claimant had not made the alleged protected disclosure “in good faith”. If, from an early stage of the hearing, the respondent had not relied on that particular defence, the proceedings would, we believe, have been much shorter, and the costs incurred by the respondent would accordingly have been much less. However, in relying on the “good faith” defence, the respondent was acting reasonably: It was acting in accordance with its entitlements. Accordingly, the respondent’s insistence on relying upon the “good faith” defence is not a reason for reducing the amount of costs payable by the claimant.

36. We have noted the provisions of Order 55 and Appendix 2 of the County Court Rules. The scale fee available to the counsel for the respondent in a goods, facilities and services County Court discrimination case is £690, which is potentially subject to a one-third enhancement pursuant to Rule 11 of Order 55. If that enhancement were to be allowed, the scale fee for counsel, in a relevant claim for £15,000, would be £920. It is provided in paragraph 5 of Appendix 2
of the County Court Rules that, for each day on which a hearing is continued after the first day, both counsel and the solicitor in attendance are each entitled to an additional sum equivalent to one-third of counsel’s scale fee. On that basis, in relation to a goods, facilities and services County Court discrimination claim for a sum not exceeding £15,000, the overall figure available to the respondent’s legal team, to be payable by an unsuccessful claimant, would be of the order of £600 for each day of the hearing after the first day.

37. In our hypothetical County Court case, the amount claimed against the respondent is only £15,000; in the present case, the amount at stake was very substantially in excess of that figure.

38. Against that background, and having had regard to general issues relating to the complexity and importance of the case, we have decided that the amount of legal costs (payable on a party and party basis), for each day of this case, after the first day, would be of the order of £1,000.

39. We have no doubt that if the claimant had admitted that he was guilty of the conflict of interest offence, or if he had limited his Article 70B claim to a complaint about the alleged procedural shortcomings in the context of the disciplinary process, the length of this hearing would have been reduced by much longer than ten days. Accordingly, we consider that it is appropriate to make a costs order amounting to £10,000.

Chairman:

Date and place of hearing: 30 July 2010, Belfast.

Date decision recorded in register and issued to parties:

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You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> McFerran v Invest NI [2010] NIIT 00423_08IT (16 September 2010) URL: http://www.bailii.org/nie/cases/NIIT/2010/00423_08IT.html Cite as: [2010] NIIT 423_8IT, [2010] NIIT 00423_08IT

Industrial Tribunals Northern Ireland Decisions