It was appropriate to set a costs order aside where an employment tribunal had failed to give the claimant a fair and reasonable opportunity to give reasons as to why a costs order should not be made against her in line with the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 r.38(9),.
The appellant employee (G) appealed against a costs order made in favour of the respondent trust.
G had been employed by the trust as a nurse. She was HIV positive and was therefore considered a disabled person. She was eventually dismissed. G brought a claim against the trust for unfair dismissal and disability discrimination. The judge posed some questions to G's counsel at the hearing which were to be answered the next day. However, the next day G requested an adjournment on the basis that she was unrepresented, ill and required medical advice. The tribunal stated that any prejudice to the trust could be balanced by a costs order and asked G how she would pay one if ordered. The adjournment was granted until the following day. The following day G applied for another adjournment, this time supported by medical evidence stating that she was unfit to participate for the next few days. The tribunal granted the second adjournment but made a costs award of its own volition in the trust's favour without hearing submissions on account of the trust's wasted costs.
G submitted that (1) the tribunal failed to comply with the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 r.38(9) as she was not given the opportunity to state why the order should not be made; (2) the award was punitive when it should have been compensatory as per r.40(1) and that the tribunal had failed to identify how it arrived at the costs award and whether and how it took account of her means.
HELD: (1)The tribunal had failed to give G, as required by r.38(9), a fair opportunity to be heard on the question of costs. That principle applied whether a tribunal was minded to grant a costs order under r.40(1) or under r.40(2) and r.40(3). A brief discussion of the question of costs during an application for an adjournment in the context of the prejudice that the trust might suffer was not sufficient. If the tribunal had wanted to make a costs order, it should have told G that it was minded to do so and on what basis and in what amount. The tribunal had decided to adjourn the case on the basis that G was not medically fit and it should have therefore also adjourned the question of costs to the next hearing (see paras 15-19 of judgment). (2) The tribunal's costs award was intended to be compensatory, not punitive. However, it was essential for the tribunal to keep in mind the reason for the adjournment when exercising its discretion, which it could not do without hearing submissions from G. The tribunal also failed to make any findings as to why the costs order was made up in the way it was. If it was going to take into account G's means it should have explained how, and conversely, if it was not going to take G's means into account, it should have stated why not. The correct course of action was to set aside the costs order and direct that the case be reheard before a fresh tribunal, Sinclair Roche & Temperley v Heard  I.R.L.R. 763 applied (paras 22-24, 27).