Charles Price
Friday 17th November 2017
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PUBLISHED ARTICLES

Article 14
The EAT Gets Tough on Lying Litigants - A Look at Costs Law


In the case of DUNEDIN CANMORE HOUSING ASSOCIATION LIMITED (APPELLANT) V MRS MARGARET DONALDSON (DEBARRED) (RESPONDENT)

A Tribunal refused to award expenses where it dismissed claimant's contractual claim. The Respondent had refused to pay certain funds when they found out that the Claimant had breached a confidentiality clause in her compromise agreement. The claim was based on the claimant's assertion that she had not breached the confidentiality clause in a compromise agreement, an assertion repeated by her in evidence before the Tribunal but which was not accepted.

In rejecting her evidence it found that, notwithstanding her denials, she had made prohibited disclosures to two separate people. However, in a 2nd judgment, the Tribunal refused the respondents' application for expenses which was made under Rule 40(2) and (3) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004. It found that the claimant had not acted unreasonably, giving the following explanation for that conclusion in its paragraphs 46 and 47: 46. Did she act unreasonably? 47. In the Tribunal's view she did not. Mr Kennedy contended that she was not guided by or based on logic or good sense. However on the basis that she argued that she had not told Mr Rankeillor or anyone else of the fact or terms of the agreement and bearing in mind the respondent company was adhering to its position of not making a payment the Tribunal is not able to say that the claimant acted unreasonably by requiring the respondent company to prove the allegations that she had breached the terms of the agreement."

The EAT found that In these circumstances the Tribunal was in error in failing to find that the claimant acted unreasonably in bringing and conducting the proceedings and should have made an award of expenses against her. The EAT referred to another lying case: A Tribunal was asked to make an award of expenses in the case of Daleside Nursing Home Ltd v Mathew UKEAT/0519/08. There, the claimant had alleged that she was the victim of explicit racial abuse during a telephone conversation; she said that she had been called a "black bitch". The Tribunal did not believe her. The respondents applied for costs but the Tribunal refused the application finding that the claimant had not acted unreasonably; she had genuinely felt that she had a claim but was "merely wrong" and lost. On appeal to this Tribunal, that finding was reversed. A costs order should have been made. At paragraph 20, Wilkie J said: "In our judgment, in a case such as this, where there is such a clear-cut finding that the central allegation of racial abuse was a lie, it is perverse for the Tribunal to fail to conclude that the making of such a false allegation at the heart of the claim does not constitute a person acting unreasonably."

Conclusion: Thus, the task for the Tribunal is to determine firstly whether the party against whom the award is sought has, in any way, acted as described in Rule 40(3) and if he has, secondly, determine whether or not it is appropriate to make an award of expenses. The amount of any such award is then determined under Rule 41, subject to a current maximum of £10,000. The new law is pretty lenient on lying litigants - being long in the tooth I remember pre 2004 when the means of a party were not considered when dealing with costs and a fibbing litigant had to sell a house when handed a hefty costs bill!

Charles Price is a barrister at no5 Chambers
www.charlesprice.net

 


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