Khan v Kirklees Metropolitan Borough Council

This is a renewed application for permission to appeal. The applicant is Mr Masoud Khan, and he is represented today by Mr Edward Brown. He wishes to have permission to appeal against orders made by the Employment Tribunal in Manchester and upheld by the Employment Appeal Tribunal, which on 19 March 2007 dismissed his appeals against a costs order of £3,000 and what is described in the papers as a final costs order, which is for 80 percent of an estimated £100,000 bill for the Kirklees Council’s costs in resisting an application to the Employment Tribunal by Mr Khan, initiated on 19 October 2001, making claims for race and disability discrimination. The respondent to the claims was the Kirklees Metropolitan Borough Council, which is the local education authority for a school, in which Mr Khan was a teacher between September 1993 and September 2001.

Mr Khan applied to this court for permission to appeal against the costs orders. They were made consequent on the striking out of his claims, after hearings that had taken place over a period of 49 days, interrupted by numerous adjournments. Sedley LJ refused permission on the issue of bias, but adjourned the application for permission in respect of the issue of costs. He gave reasons in his decision of 12 June 2007. He said (in relation to bias) this:

The bias claim, as I shall mention in a moment, is brought forward on this reviewed application for permission.

I should first of all deal, however, with the way in which Sedley LJ approached the proposed appeal against the costs orders. He said this:

What Sedley LJ did, exceptionally, was to give further directions in relation to the application for permission as to written submissions. Written submissions were made, and in the light of those submissions, Sedley LJ refused permission to appeal on the question of costs. He rejected, for example, the argument that the order for costs was a nullity, because the order referred to the current Employment Tribunal’s Regulations 2004, instead of to the 2001 Regulations which should have been applied.

The application is now renewed on a number of grounds. Mr Brown fairly said at the outset that he had to accept that Mr Khan’s conduct in the proceedings was unsatisfactory, and that much of the blame rested with him and his unfortunate and regrettable conduct. He pointed out that his client’s only asset was his home, and that the costs orders were severe.

Before going to Mr Brown’s detailed submissions, it is important to note two things: first, the terms of the relevant Employment Tribunal’s Regulations, the relevant ones, as I have said, being the 2001 Regulations. It provided there, in regulation 14, as follows:

Those are the provisions of the relevant regulations. It is apparent from the regulations themselves, and from the authorities on it, that a two-stage test is applied. The first poses the question, broadly: was the conduct of the party against whom costs is sought unreasonable? The second stage of the test is: if it is unreasonable, should the Employment Tribunal exercise its discretion to make a costs order, having regard to all the relevant circumstances? It is impossible to list exhaustively what all those circumstances are, but considerations of conduct and merits of the case, whether a person is unrepresented or represented, considerations of proportionality, and so on are possibly relevant matters.

That is the first thing to notice -- the actual terms of the regulations. The second is this: that it is clear from the regulations, and the use of the words “may make”, that this is a discretion. For the purposes of today’s application for permission to appeal, that means that this court would only interfere with the discretion of the tribunal if there was an error of principle vitiating the way in which the discretion was exercised, or if, for some other reason, such as having regard to irrelevant factors or leaving out of account relevant factors, it can be said that the decision of the tribunal was plainly wrong. This court, at a full hearing, would not interfere with the exercise of the discretion simply on the basis that it was an unusual order or on the basis that it itself would have made a different order. Within the broad limits which I have mentioned, decisions about costs are with the tribunal which conducts the trial, and not with the appeal court.

What are the errors of principle in this decision? There is no error of principle in mistakenly referring to the 2004 Regulation when they should have referred to the 2001 Regulation. In my view, there was no material difference between them. The exercise of discretion is criticised on grounds that the tribunal failed to consider the matter properly at the second stage; that it did not properly take into account the means of the applicant; that it failed to provide adequate reasons; that the amount which Mr Khan is in fact ordered to pay is out of keeping with the normal practice of the Employment Tribunal, which Mr Brown described in his written submissions as having a “cost-free culture”. He pointed out (correctly, in my view) that costs orders are the exception rather than the norm in Employment Tribunals; but the reason for that is not the one suggested by him (that there is a “culture of cost-free litigation” in Employment Tribunals). The reason for that is that most people bringing cases in the Employment Tribunals, and resisting cases that have been brought against them, behave in a reasonable way. In the Employment Tribunals, costs do not follow the event. If you behave in a reasonable way and you lose your case you do not have to pay the costs, but if you behave in an unreasonable way, as the Employment Tribunal found this litigant did, then you take the consequences.

I agree with the Employment Appeal Tribunal in this case that there was no error of law in the decision of the Employment Tribunal, in relation to either the costs amounting to £3,000 or the final costs order that Mr Khan pays 80 percent of the council’s costs. The matter was dealt with in great detail by HHJ Ansell in his judgment prepared on behalf of the Employment Appeal Tribunal. He dealt fully with every aspect of the grounds which were canvassed before him, and, in reasons which are to be found on pages 29 to 74 of the bundle, he explained why the Employment Appeal Tribunal concluded that Mr Khan’s appeals should be dismissed.

I have taken full account of the grounds which have been repeated in seeking to appeal to this court, in which it is said that the Employment Tribunal did not address the correct test and therefore did not exercise its discretion correctly because it failed to go through the two-stage process, did not direct itself properly at the second stage of the process, and took into account irrelevant matters and left out of account relevant matters. Another ground was that, having decided to take Mr Khan’s means into account in respect of the final costs order, the Employment Tribunal failed to see that through and do it properly. A point that Mr Brown emphasised in his oral submissions today was the ground that costs were of a magnitude that made it incumbent on the Employment Tribunal to provide adequate reasons for the exercise of the discretion, and this they had failed to do; and as I have indicated, it was also a ground that the amount is so out of keeping with the Employment Tribunal’s normal practice that it must be erroneous.

I have considered those grounds, and the detailed submissions made in the skeleton argument and in the written statement in accordance with paragraph 4.14 A2 of the CPR Part 52 practice direction, and I remain unpersuaded that there is any real prospect of the appeal succeeding on any of those grounds. I would emphasise this: it must be, in the vast majority of cases, the normal rule that costs will not be ordered against a party because he fails. This was no ordinary failure. The case was struck out after a long hearing in which the applicant’s conduct gave adequate grounds for the tribunal concluding that he had behaved unreasonably, and taking into account all the discretionary matters, he ought to bear a large percentage of the costs.

The other matter which has been advanced by Mr Brown is the complaint of apparent bias, for which Sedley LJ refused permission to appeal. And on that, he helpfully drew my attention to the recent case on appeal from the Court of Appeal Criminal Division of the House of Lords, The Queen v Abdroikov & Another[2007] UKHL 37, in which their Lordships handed down their opinions on 17 October 2007. Mr Brown drew my attention to paragraph 26 and 27 of Lord Bingham’s opinion, which was given in relation to the inclusion in the jury of a police officer in a case where there was a crucial dispute about the evidence between the appellant and a police sergeant. The policeman [inaudible 49.51] was not known to the police sergeant, but they shared the same local service background. What Lord Bingham said was this:

The second appellant was not tried by a tribunal which was and appeared to be impartial, and so he allowed the appeal on the basis of that objection.

Mr Brown put this forward as offering new guidance on the vexed question of apparent bias, and submitted that this provided adequate reasons for granting permission to appeal. He submitted that, if the appeal succeeded on this ground, even if it failed on the other grounds which I have dealt with, that would be sufficient to entitle his client to have the orders the tribunal had made set aside as having been made by a tribunal that was disqualified from hearing his case. His client, who is now receiving the support of the Equality Council, would be in a position to present a fresh claim in the Employment Tribunal, free of any liability to pay the costs which had been incurred in the earlier proceedings.

It is not necessary for me to express a view on whether what Mr Brown says would be the consequence of succeeding on the appeal on that ground. It is sufficient for me to say that I do not regard what Lord Bingham has said in paragraph 26 of his opinion as really altering the principles which have been laid down on the question of apparent bias in earlier decisions of the House of Lords and other courts. The test is that of the fair minded and informed observer, and whether he would think that what is objected to by the litigant would be a real and possible source of unfairness. That seems to me to be saying in rather different words the same thing that has been said in earlier decisions giving guidance to courts on the question of apparent bias; and reference is made in Lord Bingham’s speech, and in the speeches of other members, to the well known cases of R v Bow Street Magistrates Court ex parte Pinochet Ugarte (No 2) [1999] 2 WLR 272, and Porter v McGill[2002] 2 WLR 37, and other cases.

In this case, I agree with Sedley LJ and what was said by the Employment Appeal Tribunal. There is no real prospect in this case of satisfying the test, whether it is that stated in the words of Lord Bingham or stated in other speeches in the same case or other cases. There is no real possibility of satisfying the test which is applying to cases for the purposes of disqualifying on the grounds of apparent bias.

I am grateful to Mr Brown for the help he has given in dealing with this matter, but I have no difficulty in coming to the conclusion that the proposed appeal has no real prospect of success on any of the grounds which have been advanced relating to the failure to exercise the discretion correctly or exercising a discretion in a way which has been infected by apparent bias. I therefore refuse the application.