Sykes v Wright & ors – Tribunal’s wasted costs order upheld after settlement agreement

In the case of Sykes v Wright & ors UKEAT/0270/15/BA the Employment Appeal Tribunal (“EAT”) upheld an Employment Tribunal’s award of wasted costs against a representative that the Tribunal had found had poorly prepared for a hearing.

The background facts of Sykes v Wright & ors

Mr Wright made a claim in the Employment Tribunal for unfair dismissal, race discrimination, and harassment against his employer, Sompo Japan Nipponkoa Insurance Company of Europe Limited (“Nipponkoa”). Mr Sykes represented Mr Wright in that claim.

The claim came to an Employment Tribunal hearing in October 2014 and Mr Wright’s claims were dismissed in their entirety. The Tribunal, in its judgment, criticised Mr Wright for apparently failing to properly prepare for the hearing. Nipponkoa made an application for costs against Mr Wright and an application for wasted costs against Mr Sykes, and a hearing was listed for 19 February 2015 in order to consider the application for costs (“the Costs Hearing”).

Prior to the Costs Hearing taking place Nipponkoa reached a compromise agreement (now known as a “settlement agreement”) with Mr Wright. As a result of that settlement it withdrew its costs application against Mr Wright, but continued with the application for wasted costs against Mr Syes.

The Costs Hearing took place on 19 February 2015 and both parties submitted written submissions. The Employment Tribunal decided, for reasons of time, to not produce its judgment at that hearing but that the Tribunal would meet on 17 April 2015 without the parties attending but their having been given an opportunity to submit further written representations. Nipponkoa’s solicitors subsequently sent written representations to the Employment Tribunal (on 14 April 2015) but Mr Sykes did not.

On 16 April 2015 Mr Sykes sent written representations to the Employment Tribunal, stating that he had not received Notice of the the hearing and that he had had no time to respond to Nipponkoa’s representations. Mr Sykes made an application for postponement of the hearing scheduled for 17 April 2015 on this basis.

On 17 April 2015 the Employment Tribunal considered Mr Sykes’ application but decided not to postpone the hearing for six reasons, among them: that Mr Sykes had been in attendance at the hearing when the parties had agreed not to attend the further hearing to save costs and when dates ere set; that he had been sent the Orders on 25 February 2015 that had recovered the scheduled hearing on 17 April 2015; and that this otherwise would be the second time on which the Tribunal had had to postpone consideration of the costs issue.

The Employment Tribunal hearing to consider the wasted costs application took place on 17 April 2015 and the Tribunal decided to make a Wasted Costs Order in the sum of £2,000 against Mr Sykes, based on his conduct at the hearing in October 2014 and his failure to prepare properly for such. 

Mr Sykes appealed against the judgment of the Employment Tribunal on the following bases:

1. That the Employment Tribunal lacked jurisdiction to make a wasted costs order against him as Mr Wright had entered into a settlement agreement with Nipponkoa (thereby, he argued, also settling the costs issue in respect of him) (“Ground 1”)
2. That the Employment Tribunal had erred in its judgment as its conclusions were inadequately reasoned and thus not ‘Meek compliant’ (“Ground 2”)
3. That the Employment Tribunal had acted procedurally unfairly by not giving him an opportunity to the Respondent’s submissions (dated 14 April 2015) (“Ground 3”)

The decision of the Employment Appeal Tribunal

The Employment Appeal Tribunal (“EAT”) rejected Mr Sykes’ appeal for the following reasons:

Ground 1 – that the settlement agreement with Mr Wright had also settled any application for costs against Mr Sykes

The EAT held that there was no merit to this argument: the principle of res judicata did not apply as the issues relating to the threatened application for costs against Mr Sykes and the separate threatened application for costs against Mr Wright were of a different nature, against different parties, and involving different causes of action. The settlement agreement that Mr Wright had entered in to did not therefore, as a matter of law, protect Mr Sykes against an application for costs.

Ground 2

The EAT held that the Employment Tribunal’s conclusions were adequately reasoned and that the Tribunal was aware of the legal principles that it had to apply. The EAT held that the Tribunal’s decision to make an order for wasted costs was a “commonsense view” based upon the relevant facts and law.

Ground 3

The EAT held that there had been no procedural unfairness in the Employment Tribunal’s decision (and, in particular, no breach of the right to a fair hearing in Article 6 of the European Convention on Human Rights and Fundamental Freedoms as set out in Schedule 1 to the Human Rights Act 1998).

The Employment Appeal Tribunal therefore dismissed the appeal.

Our lawyers’ comments on this case

Chris Hadrill, partner in the employment team at Redmans, commented on the case: “This case shows that parties to litigation must be careful to ensure whether, if a settlement agreement is signed, their particular matter is also covered by the settlement agreement. In this particular case the Employment Appeal Tribunal found that the signing of a settlement agreement by one party to a case (Mr Wright) had not covered a cause of action relating to a third party (Mr Sykes).”

The decision of the Employment Appeal Tribunal in Sykes v Wright & ors UKEAT/0270/15/BA can be found here.