Employment Tribunals

Case Number: 3322603/2016 (RJR) Page 1 of 16 EMPLOYMENT TRIBUNALS Claimant: Respondent: Mr K Farrell v Docsinnovent Ltd Heard at: Reading On: 27, 28, 29, 30 and 31 March 2017 Before: Employment Judge Gumbiti-Zimuto Appearances For the Claimant: In person assisted by Mrs B Jassel (Claimant’s wife) For the Respondent: Ms S Berry (Counsel) RESERVED JUDGMENT The claimant’s complaints are not well founded and are dismissed. REASONS 1. In a claim form presented on 25 February 2016, the claimant made complaints of unfair dismissal, holiday pay and arrears of pay. The claimant’s complaints were set out in a claim form accompanied by a statement of claim. The respondent denied the claimant’s complaints. 2. The issues that I have had to consider are:- 2.1 Whether the claimant was dismissed: the claimant relies on a breach of the implied term of trust and confidence. 2.2 What was the reason for the claimant’s resignation? 2.3 If there was a breach of the implied term of trust and confidence, was there a delay in the claimant’s resignation? 2.4 If the claimant was dismissed, was the dismissal for a fair reason, namely conduct? 2.5 If conduct was a reason for the dismissal, did the claimant contribute towards his dismissal? Case Number: 3322603/2016 (RJR) Page 2 of 16 2.6 If the claimant was unfairly dismissed, should there be a Polkey reduction to any award of compensation to the claimant? 3. The claimant made applications at the start of the proceedings for the respondent’s response to be dismissed and/or the respondent to be prevented from being able to rely on witness statements. The claimant received the trial bundle late. The claimant contended that the respondent, who prepared the trial bundle, had in its preparation deliberately omitted documents; had not properly paginated the documents; included documents that were illegible; removed from the trial bundle documents without an explanation; documents vital to the claimant’s case, which had been submitted for inclusion in the bundle, were not included; the bundle and witness statements had been delivered so late the claimant did not have time to read the witness statements. 4. It was clear that there had been delays in relation to the preparation for the hearing. An order was made for the hearing bundle to be prepared by 15 March 2017 and for the parties to exchange witness statements by 20 March 2017. 5. I am told that there were discussions between the parties with a view to a settlement. As a result the timetable for carrying out the employment tribunal’s orders was varied by agreement. The parties agreed that the time for exchange of witness statements to be put back to 22 March 2017. The claimant unilaterally provided a copy of his witness statement at about 5.00 pm on 20 March 2017. The respondent did not provide its witness statements to the claimant until 23 March 2017. The respondent’s solicitors took the opportunity to take instructions from witness before providing their statements to the claimant. In preparing their witness statements the respondent’s witness could take into account matters which were contained in the claimant’s witness statements. 6. I made no order on the claimant’s applications. My reasons for not doing so were because the parties had agreed that the time for exchange of the witness statements should be varied while discussions took place. The final arrangements that the claimant and the respondent came to had two elements: the first was that the claimant was to reply to an offer of settlement by 10.00 am on Monday 20 March 2017 and the second element was to extend the time for the exchange of witness statements to take place by 22 March 2017 at 5.00 pm. There was no settlement. The claimant provided a witness statement at about 5.00 pm on 20 March 2017. This was earlier than agreed. The claimant thought he was working to a deadline of 4.00 pm on 20 March 2017. The claimant accepts that he may have misunderstood the effect of the previous arrangements which were made by email. 7. The respondent agreed that the claimant was not provided with the witness statements until 23 March 2017 which was later than the agreed date. The respondent did not comply with the varied agreed deadline. The Case Number: 3322603/2016 (RJR) Page 3 of 16 respondent took the opportunity to take instructions on the claimant’s statement and provided its statements after answering the points in the claimant’s witness statement. I am satisfied that there was some prejudice to the claimant arising from the advantage to the respondent. I am however satisfied that this was minimal and that a fair trial of this case is still possible. 8. I was also required to deal with an application for specific disclosure. I ordered the respondent to provide one document requested by the claimant, if it still existed, and to make enquiries in relation to other documents which the claimant was seeking. The case adjourned. 9. When proceedings resumed on 28 March 2017, I had to deal with further matters relating to documents. I was required to rule on whether document 38 was covered by litigation privilege. I concluded that it was. I decided that the document should be omitted from the trial bundle. I came to that conclusion for two reasons. The document was non-attributable and irrelevant; further the document had been created purely for the purposes of litigation. I was required to consider document 12. It was agreed that the first two pages of document 12 would be included in the claimant’s bundle but pages 3 onwards of the document were to be removed. 10. The claimant was assisted during the case by his wife, Mrs Jassel. At about 11.20 am the evidence began, the claimant was sworn and commenced giving his evidence in the case. The claimant’s evidence continued until 3.30 pm on the 29 March 2017. The claimant was crossexamined until about 3.00 pm on 29 March 2017. 11. The respondent relied on the evidence of Mr Surendra Kumar Devshi Sumaria-Shah. He gave evidence from about 3.30 pm on 29 March 2017 until about 11.25 am on 31 March 2017. Dr Muhammed Aslam Nasir gave evidence from 11.25 am on 31 March 2017 until about 1.00 pm. From 2.30 pm until 4.10 pm, I heard submissions from the parties. I reserved judgment. 12. In addition to the evidence of the witnesses referred to above, I was also provided with a trial bundle prepared by the respondent. It is unpaginated and contains a large number of documents. I was provided with three further bundles of documents from the claimant. A significant number of the documents were duplicated. The way in which the bundles had been prepared meant that it was not possible for the duplication to be easily prevented. The bulk of the documents that I was required to consider as the evidence progressed were contained in the trial bundle prepared by the respondent. 13. I made the following findings of fact. 14. On 30 October 2015, the claimant resigned from his employment with the respondent. In a letter from solicitors acting on his behalf, it was stated: Case Number: 3322603/2016 (RJR) Page 4 of 16 “It is very clear to our client that your clients deem it appropriate to proceed as they see fit regardless of, inter alia, the representations that our client advances, the treatment that our client is entitled to expect if he were subjected to good industrial relations and our client’s ill health which continues to deteriorate as a result of your client’s conduct. Our client therefore gives you notice that he terminates his employment with immediate effect having been dismissed in accordance with the definition contained in section 95(1)(c) of the Employment Rights Act 1996.” 15. In the statement of claim, the claimant states that he was forced to resign. The statement of claim states: “…I was forced to resign due to a catalogue of reversals on promises made in various forms to me for joining the venture and for the continued construction of the terms of engagement as both an employee/director and shareholder that had the mechanism towards institutionalising greater inequitable and unfair relations towards me but systematically also kept on degrading the benefits I would receive from the venture for an increasing disproportionate level of risk to me, encompassing embodiment of newly proposed terms that overtly takes attack on my future liberty to continue to practice my specialist professional vocation, of many years standing prior to even joining Docsinnovent.” 16. The respondent company was formed on 16 April 2009 to design and develop medical devices for human and veterinary use. The claimant, Dr Nasir and Mr Surendra Sumaria-Shah were the directors and initial shareholders. The claimant signed an employment contract with the respondent. 17. The claimant also entered into a shareholder’s agreement with the other directors, the respondent and Talria Limited. Talria Limited is a company owned by Dr Nasir and his family. A company called Ashkal Limited was incorporated for the purpose of holding Docsinnovent intellectual property in a separate company. 18. The claimant said in evidence: “There was a verbal agreement and understanding that I was only joining long enough (5 to 6 years) to develop some different types of products to build the company up to a point which would get business moving or delivered to raise its valuation so it would be enough of a capital gain for an exit through the sale of my shares.” 19. The respondent denies any such agreement and relies on clause 16 of the service agreement which provides that the agreement sets out “the entire agreement and understanding between the parties”. 20. The claimant’s role was to provide design and development knowhow in medical devices to create products for the respondent and bring them to commercial reality. Case Number: 3322603/2016 (RJR) Page 5 of 16 21. Dr Nasir was initially allocated 90% of the shares with the claimant and Mr Surendra Sumaria-Shah holding 5% each. This was subsequently changed so the claimant and Surendra Sumaria-Shah had 10 % each. 22. The claimant was employed full time with the respondent unlike Mr Surendra Sumaria-Shah who also carried out work in his accountancy practice. The claimant was employed on a salary of £80,000.00 per year. 23. The claimant agreed to a 50% reduction in his salary from April 2009. In the period from April 2009 to December 2009, Dr Nasir and Mr Surendra Sumaria-Shah both agreed 100% reductions in their salaries. From January 2010 Dr Nasir and Mr Surendra Sumaria Shah agreed, 50% and 70% reductions respectively. 24. On 30 August 2012, the claimant signed a further written agreement with the directors and Talria (the funding agreement). By this agreement, the respondent secured further funding from Talria. By this agreement, the claimant was to waive part of his salary for 2010, 2011, 2012 and 2013. Dr Nasir and Mr Surendra Sumaria-Shah were also to waive part of their salaries. 25. The claimant and his co-directors are in dispute about funding for the company. The claimant says that he was given a promise, or alternatively that there was an understanding that there would be unlimited funding provided to the respondent so that it could develop products and bring them to market. This is denied by the claimant’s co-directors (and the respondent). The respondent’s position is that the funding agreement made it plain that funding for the respondent was to be provided in tranches from Talria. 26. Drafts of amended shareholder agreements relating to the respondent and Ashkal limited were circulated during the course of 2015. The agreements were first circulated at a board meeting on 5 January and again produced at board meetings in April and June. The claimant was unwilling to agree the amended shareholder agreements. 27. A dispute arises between the parties about events that took place at a London restaurant called Zanzibar. The evidence of Mr Surendra Sumaria- Shah about the management meeting on 4 February 2015 at the Zanzibar restaurant was that the claimant was hostile and abusive towards Dr Nasir. The claimant is said to have accused Dr Nasir of changing the terms of the Ashkal agreements. The claimant’s tone and behaviour at this meeting prompted Dr Nasir to send him a warning about his behaviour. 28. Dr Nasir describing the meeting at the Zanzibar restaurant on 4 February said that the meeting was so explosive that he spoke to Mr Surendra Sumaria-Shah and Mr Ray Lambert who advised him that he could write a letter of warning to the claimant. Case Number: 3322603/2016 (RJR) Page 6 of 16 29. On 8 February 2015, Dr Nasir wrote to the claimant and made reference to the management meeting on 4 February 2015. The email included the following: “I was not only disappointed but also very concerned from your continued abrasive, aggressive and disrespectful attitude towards fellow directors.” 30. The claimant’s account is that Mr Surendra Sumaria-Shah aggressively berated him about the inadequate review of the new contracts and harassed him. As a result of this bullying, he decided to raise a grievance letter. 31. The claimant refers there to the letter of 2 April 2015 from his solicitor. In this letter, there is no reference to the type of behaviour that the claimant complains of from Mr Surendra Sumaria-Shah. 32. When he was questioned about this, the claimant accepted that in a telephone conversation, he said that he would behave in a different way going forward. He denied that he was aggressive and shouted at Mr Surendra Sumaria-Shah. 33. The claimant’s email sent on 16 February was put to him. It was pointed out that in that email, the claimant does not accuse Mr Surendra Sumaria- Shah of bullying. The claimant’s response was to say that this is a “smoothing letter”. He was not complaining. He put it down as a difference of opinion instead of saying bullying and harassment. 34. On 2 April 2015, the claimant instructed solicitors to write to the respondent. The claimant describes this letter as setting out his various grievances. The letter did not raise a formal workplace grievance. The letter set out the position as the claimant understood it relating to the formation of the respondent, his remuneration, service agreements, shares and further funding. 35. The letter set out potential claims that the claimant could bring in the Chancery Division of the High Court. The letter set out a way forward listing demands which included: the claimant to be paid his outstanding remuneration, revised shareholder agreements to be drawn up, service agreement to be reviewed, funding and/or licence agreements held by Talria to be reviewed, the claimant’s position is Ashkal Ltd to commensurately reflect his input and work for the company. The letter contained a request for documentation and asked questions about the IP agreements; the letter made a request for the solicitor’s costs he had incurred to be paid by the respondent. 36. The solicitor’s letter was discussed at the board meeting on 15 April 2015. There is a sharp disagreement between the claimant and his co-directors as to what took place at the meeting. The account given by the claimant does not get reflected on the board meeting minutes. However, board minutes are not able to convey aggression, tone or manner unless it is expressly recorded. Case Number: 3322603/2016 (RJR) Page 7 of 16 37. I am satisfied that the claimant may have perceived that Dr Nasir was aggressive with the use of language and his tone. However, I accept Dr Nasir’s evidence that he did not behave in the way that is described by the claimant in his witness statement. In coming to this conclusion, I take into account the fact that the claimant agrees that he was provided with a copy of the minutes of the board meeting on 15 April, that he read them, and that he approved them at the next board meeting. The claimant has accepted that they are an accurate reflection of what was said about the claimant’s letter of 2 April 2015. 38. The claimant says that he made it clear at the April board meeting that the 2 April 2015 letter was a grievance. The claimant was invited to attend a meeting with Dr Nasir to discuss his concerns. However, the claimant did not make time to meet with Dr Nasir until 8 June 2015. 39. The claimant and Dr Nasir met on 8 June 2015. In his witness statement describing this meeting, the claimant says Dr Nasir failed to engage in any productive and constructive meaningful discussions, or to arrive at solutions or plans for going forward and that the content of the 2 April 2015 letter was not reviewed. In answer to questions during his evidence, the claimant accepted that the meeting on 8 June 2015 did cover the topics that were raised in the claimant’s letter of 2 April 2015. 40. On 19 June 2015, the claimant’s solicitor wrote asking that the letter of 2 April be treated as a grievance. The solicitor’s letter makes no mention of the meeting on 8 June 2015. 41. On 25 June 2015, Dr Nasir wrote to the claimant responding to the points that had been discussed at the meeting on 8 June 2015. 42. A board meeting of the respondent took place on 29 June 2015. On that occasion, when the issue of the shareholder agreements came to be discussed, the claimant left the meeting. 43. On 3 July 2015, the claimant and Dr Nasir attended a meeting with the respondent’s patent attorney. Also present was Mr Krovatz who works as a consultant for the respondent. At the meeting, the claimant sat next to the patent attorney and began to stroke her upper arm/shoulder with a dog vgel device. The patent attorney was wearing a sleeveless dress. The shape of the dog v-gel product is phallic. The patent attorney pulled her arm away from the claimant and told him to behave himself. The claimant responded by saying “Please don’t sue me on this”. 44. Dr Nasir considers the claimant’s actions to have been inappropriate and he wrote to the claimant that day telling him that his behaviour had been unacceptable. In concluding his email on this topic, Dr Nasir stated as follows: “Can you accept that your behaviour and aptitude during times of duty to Docsinnovent’s interests MUST improve immediately. I have no choice but to Case Number: 3322603/2016 (RJR) Page 8 of 16 discipline you officially and therefore this email should be considered as an immediate formal warning, which I consider to be your second such warning. I request your response without delay given the seriousness of today’s events and I will then consider the matter further with our director.” 45. The claimant responded by email later that day. His response included the words: “I did not intimately touch [the patent attorney’s name] with the Dog v-gel. “Intimately” is a strong word and implies something which was not the case. It was an unconsidered poke to her arm in jest as we were talking and I have apologised to her then and by email.” 46. In evidence during the case, the claimant was questioned about this incident. He said that he had in his hand the dog v-gel which has a phallic appearance. He accepted that he was sitting next to the patent attorney. He denied that he had stroked the patent attorney on a number of occasions with the dog v-gel. The claimant said: “She shrugged. She said “Don’t touch me and don’t do that or don’t do that””. 47. The claimant denied that he had said “Don’t sue me”. He said that was fabricated by Dr Nasir. He went on to say that when he responded to Dr Nasir’s email on 3 July 2015, he did not say everything he was feeling. He said that he was extremely distraught, very frantic, upset, in a panic. He said: “I realised this wasn’t going anywhere. I pulled away. I was depressed.” 48. The claimant was asked about why he said that he touched her deliberately and also said that it was done unconsciously. The claimant’s response was: “I tapped her. It was non-considered. It was not accidental flapping around. I did try to get her attention.” 49. He was asked about the use of the words “in jest” in his email and it was put to him that that was not true. The claimant’s answer was: “I am trying to understand why I wrote it was in jest. It wasn’t funny what happened. I apologised. I mean nothing by it to upset her. It has been blown up out of proportion. I said I am so sorry I upset you. I was emotionally disturbed. I was hyper-defensive.” 50. In respect of the description of this incident, the claimant’s accounts have been contradictory. At one stage during the course of his evidence, he said that it was an accident which occurred because he was holding the v-gel item casually. That was not the account he gave when he was questioned and it differs from the account that he gave in his 3 July 2015 email. Case Number: 3322603/2016 (RJR) Page 9 of 16 51. In the circumstances, I prefer the account which was given by Dr Nasir whose email was sent on the day that the incident happened and is clear in its terms. 52. On 28 July 2015, solicitors acting for the respondent wrote a detailed response to the claimant’s solicitor’s letter of 2 April 2015. 53. On 12 October 2015, the claimant notified the respondent that he was unwell and unable to attend a board meeting. 54. On 14 October 2015, the claimant was informed that the respondent had changed his email password and had therefore locked him out of his email account. The reason that this had occurred is because the respondent wished to be able to react to emails sent to the respondent. In order to access those emails, it was necessary to change the claimant’s password on the email via the administrator. The claimant was told what his new email password was on 15 October and therefore had access to his emails once more. 55. On 16 October 2015, it was noticed that the claimant was deleting large numbers of emails. The claimant was informed that the respondent wished to have access to his laptop and his work history. The claimant was suspended from work on 16 October at 18.00 hours. The claimant was suspended on allegations of gross misconduct. 56. Having considered the emails that were on the claimant’s computer and also having considered some of the emails that were deleted on 16 October, the respondent was of the opinion that the claimant had been taking steps to establish a competing business. The respondent was able to get access to emails that were backed up on 26 June 2015 and these showed that the claimant had been actively pursuing investment opportunities for other ventures and that these were in competition with the respondent. These were some of the emails that the claimant had deleted on 16 October 2015. 57. The claimant resigned his employment with the respondent on 30 October 2015. The law 58. Section 95 (1) of the Employment Rights Act 1996 provides that an employee is dismissed by his employer if the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct. 59. In Western Excavating (ECC) v Sharp [1978] 1QB 761 it was stated that: “If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the Case Number: 3322603/2016 (RJR) Page 10 of 16 contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains; for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract.” In Waltham Forest v Omilaju [2005] IRLR 35 the following propositions were set out “1. The test for constructive dismissal is whether the employer's actions or conduct amounted to a repudiatory breach of the contract of employment: Western Excavating (ECC) Ltd v Sharp. 2. It is an implied term of any contract of employment that the employer shall not without reasonable and proper cause conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee... 3. Any breach of the implied term of trust and confidence will amount to a repudiation of the contract ... The very essence of the breach of the implied term is that it is calculated or likely to destroy or seriously damage the relationship. 4. The test of whether there has been a breach of the implied term of trust and confidence is objective. … the conduct relied on as constituting the breach must "impinge on the relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer". 5. A relatively minor act may be sufficient to entitle the employee to resign and leave his employment if it is the last straw in a series of incidents… " Many of the constructive dismissal cases which arise from the undermining of trust and confidence will involve the employee leaving in response to a course of conduct carried on over a period of time. The particular incident which causes the employee to leave may in itself be insufficient to justify his taking that action, but when viewed against a background of such incidents it may be considered sufficient by the courts to warrant their treating the resignation as a constructive dismissal. It may be the 'last straw' which causes the employee to terminate a deteriorating relationship."…”. 60. An employee has the right not to be unfairly dismissed. Section 98 of the Employment Rights Act 1996 provides that in determining whether the dismissal of an employee was fair or unfair, it shall be for the employer to show the reason (or, if there was more than one, the principal reason) for the dismissal, and that it is a reason falling within subsection (2). The conduct of an employee is a reason falling within the subsection. Case Number: 3322603/2016 (RJR) Page 11 of 16 The claimant’s submissions 61. The claimant stated that there was an agreement at the outset of his employment that he was to bring his experience and expertise and that Dr Nasir was to provide the finance for the venture. The claimant provided intellectual capital; Dr Nasir provided financial. The claimant states that Dr Nasir broke the bargain. The claimant says that he generously assisted the respondent by not taking all his salary and he did this as an act of entrepreneurship and he distinguished himself from a straightforward employee who would not take such an action. The claimant said that his interests were therefore perfectly aligned with those of the respondent. The claimant complained that he could not deliver what was required to deliver without the required finance. 62. The claimant contends that he was hit with a bombshell in 2011 which resulted in him entering into a new agreement. The claimant agreed to this in order to eliminate the huge debt on the balance sheet to allow the respondent to secure further funding. The claimant contends that the further funding was not forthcoming from Talria to the extent that it should have. The claimant accepts that payments were made. However, the claimant states that his trust and generosity had been abused. 63. The claimant compared his position to that of Dr Nasir and Mr Surendra Sumaria-Shah, they continued to enjoy good incomes from other sources whilst he was taking a pay cut. The claimant says that he was merely arguing to be paid his money back. Money which he had generously given in order to help the company. The claimant says that when he asked for his money back, he was treated badly. 64. The claimant says that there was a mismanagement of the finances which meant that he was not able to carry on with his duties. He states that his Capital Gains suffered because he could not sell his interest in the respondent. The claimant complains about having lost the ability to make a good salary as a result of waiving his right to pay. 65. He contends that mismanagement of the finances was a breach of the terms and conditions on which he had invested in Docsinnovent. The claimant complains that only £2.6 million had been put into research and development of v-gel by Dr Nasir and this was insufficient to enable development of other products. The claimant complains that over time, his interest was diluted and that he was treated like an employee as opposed to the entrepreneur that he was. The claimant says that by 2015, there was no money to do research, development and marketing; there was no continuity with projects; his job had changed; and the respondent was not in a position to afford to employ a marketing person. The claimant said as a result of the mismanagement of finances, he was not able to do what he was trained to do which was research and development. 66. The claimant complained that he was required to sign new service agreements. He stated that there was a multitude of contracts and interrelationships and it was only fair that he be professionally able to consult a Case Number: 3322603/2016 (RJR) Page 12 of 16 lawyer in order to decipher what they all mean. The claimant complained that there were onerous restrictive covenants which were placed in the shareholder agreement. He also complains that the financing of the company was constrained in a very narrow field, some sources of funding being out of bounds because they did not comply with Islamic finance. 67. He complained that board minutes were not circulated and once signed, there was no access to the board minutes. The claimant also complained that there was a failure on the part of the respondent to implement a share option scheme which had been promised when he entered into his employment with the respondent. The claimant complained that he had been systematically marginalised and that he was unable to gain job satisfaction. The claimant complained that he was abused by Dr Nasir who had abused his position by taking disciplinary action against him and behaving erratically. The claimant complained that his grievances were not dealt with. Finally, the claimant complained that he was bullied and harassed into signing a new service agreement in 2015 and that as a result of the harassment, he suffered mental illness that led to him having to take antidepressants, medication which he remains on today. The respondent’s submissions 68. The respondent’s answer to the claimant’s complaints is that the complaints, as he has set them out, upon considering the evidence, cannot be supported. The evidence does not establish that there was any breach of the implied term of trust and confidence. It is said on behalf of the respondent that the real reason that the claimant resigned his employment was because he had planned to set up a rival business. In any event, even if the claimant had not resigned his employment the claimant would have been dismissed for gross misconduct because of his efforts to set up a rival competitor business to the respondent. Conclusions 69. Parts of the claimant’s case were difficult to follow. There were occasions when it was necessary to have brief adjournments to allow the claimant and his wife to consider the points they wanted to put to Mr Surendra Sumaria-Shah. The claimant makes a number of points and I deal with them in turn. 70. The claimant complains that he was forced to leave his employment because the respondent mismanaged the finances. 71. The respondent contends that there was no aspect of its behaviour that amounted to a breach of trust and confidence. The respondent contends that the financing for the respondent company was clearly set out at the start. A further financing agreement set out clearly the basis on which the respondent was to be financed and the claimant’s contentions that there was financial mismanagement have simply not been established. Case Number: 3322603/2016 (RJR) Page 13 of 16 72. My conclusion is that this complaint is not made out by the claimant. The claimant entered into the arrangements in this matter with a view to being able to achieve financial and commercial success. He brought into the equation his know how; Dr Nasir brought into the equation the financial resources. Dr Nasir invested £2.6 million. There is no basis from the information which has been put before me by the claimant on which it is possible for me to conclude that there was any mismanagement of finances so as to allow me to come to the conclusion that there was a breach of an implied term of the agreement that had been entered into between the claimant and the respondent. 73. The claimant complains that he left his employment because new employment contracts were being imposed and that this was done without conducting a proper procedure. This complaint is not made out by the claimant. The evidence that was adduced showed that the claimant was never required to sign a new service agreement or employment contract. The claimant was only ever required to consider revised shareholder agreements in relation to Ashkal Ltd and the respondent. 74. The claimant complains that he had to leave his employment because the new draft service agreement contained within it unduly onerous, inappropriate, restrictive covenant descriptions and clauses which were not congruent to the agreed exit strategy and revised nature of the business. Again, this complaint was not made out by the claimant. 75. There was no draft service agreement. The claimant was not being asked to sign restrictive covenants that were new. What the claimant was being asked to consider was shareholder agreements which contained restrictive covenants. The restrictive covenants contained in the shareholder agreements were in the same terms as the restrictive covenants which the claimant had signed on his service agreement. The restrictive covenants had not been expanded or increased in a way which was in any sense intended to be not congruent to the agreed exit strategy. 76. The claimant complaints that: “I suffered a material benefit because in June 2015 I was denied the implementation of an outstanding contractual benefit of having a share option scheme.” There was no share option scheme. What had been agreed by the parties was that 10% of the share allocation would be set aside in order to incentivise new staff and also to incentivise directors and existing staff. The parties had never got to the point where they agreed a share option scheme. The claimant’s own evidence in relation to this issue contradicts the contention that he suffered a material reduction in benefit in June 2015. Dealing with his complaints about the share option scheme, the claimant said as follows: “There was a commitment for me to join by giving me a 10% share option. …….. understanding is you will get an increase in shares if you perform well. I did not know what the incentive was in number of shares or what good performance was so that I could understand what was crystallised, After six years of performing not reasonable not to give me an idea of package. If they said to me I am not Case Number: 3322603/2016 (RJR) Page 14 of 16 getting it then I am not getting it. OK. Just tell me I’m going to get it or not get it.” 77. It seems to me that even on the claimant’s own evidence, he was agreeing that there was never any crystallisation of the share option scheme so as to give rise to a loss by June 2015. There was no reduction in benefit. 78. The claimant says that he was unfairly disciplined in July 2015 for an event involving the patent attorney. He states that he protested about the matter but was not given the proper right of appeal. 79. The claimant accepted that he touched the patent attorney with a phallic object on her bare shoulder and that the patent attorney became upset. I am satisfied it was reasonable to send him an email saying that his behaviour was not acceptable. I am satisfied that this was not a trumpedup charge as the claimant suggests. I am satisfied that on balance of probabilities, the claimant did say “don’t sue me” to the patent attorney. I am satisfied that it was quite appropriate to describe his action as “intimately touching”. I am satisfied that what the claimant admitted doing on its own justified a warning. 80. The claimant was told that he was given a final warning. The claimant did not indicate a wish to appeal the incident. I also note that he was not told he had a right of appeal against the decision. There was an indication that the matter would be discussed further with other directors but the matter was not taken any further at that time. I am not satisfied that the claimant has shown that there was a breach of contract in respect of this incident that was serious enough to allow the claimant to terminate his contract because of his employer’s conduct. Even if there was the claimant did not resign because of it and waited too long before he did resign. 81. The claimant states that: “I resigned from my employment because my official grievance letter from my lawyer’s was not properly dealt with in accordance with to a fair policy and procedures and without bias.” 82. I am not satisfied that the claimant was the subject of bias. It is clear that the claimant and his business partners ended up having difficult relationships. The claimant’s solicitor’s letter of 2 April 2015 was discussed at the April 2015 board meeting. It was discussed again at a meeting which took place on 8 June 2015. The claimant’s solicitor’s letter received a full response from solicitors acting on behalf of the respondent in a letter dated 28 July 2015. 83. In the course of his evidence, the claimant accepted that the 2 April 2015 letter was discussed on all these occasions and he also accepted that he was invited to provide details of any outstanding grievances in a letter dated 9 October 2015. The claimant resigned his employment with the respondent on 30 October. 84. The claimant has not been able to establish so that I can be satisfied on balance of probability that his grievance was not dealt with adequately. He Case Number: 3322603/2016 (RJR) Page 15 of 16 has simply shown that his grievance was not upheld that is not a breach of contract. 85. The claimant complains that:“I was bullied and harassed by the respondent to sign new service agreements in March 2015 at a restaurant in Edgware. This led me to sending a grievance letter in April and this annoyed the respondent who then escalated its bullying and harassing behaviour towards me all the way and inclusive of being forced to sign new undesirable contracts in October 2015. Dr Nasir did nothing to stop it and instead encouraged it. In the end, this had a huge negative impact on my mental health and I had no choice but to resign.” 86. I have been unable to accept the claimant’s characterisation of events that occurred during the incident at the restaurant Zanzibar. I am satisfied that in respect of the conduct at the Zanzibar restaurant, it was the claimant’s behaviour that was unacceptable rather than that of Mr Surendra Sumaria- Shah or Dr Nasir. 87. The claimant complains that he was caused stress, depression and anxiety by the respondent at work over a long period, leading up to the time of his eventual resignation date, forcing him to sign new contracts in a board meeting in October 2015. This became too stressful for him. It was the last straw which led to a major health breakdown. 88. Whatever the cause of the claimant’s ill health, which appears to have occurred in about October 2015, I am not satisfied that it was caused by any act by the respondent which could amount to a breach of contract. The claimant’s allegations of harassment, of bullying, of being forced to sign contracts, are not made out by the evidence which has been heard. 89. The claimant says that the respondent failed to deal with his grievance. He says that the respondent failed to follow any sort of ACAS Code. 90. There is a grievance procedure in the claimant’s service agreement. Dr Nasir tried to meet up with the claimant but the claimant did not want to meet. At the 15 April 2015 board meeting, an attempt was made to try to resolve the issues. At the 8 June 2015 meeting, Dr Nasir and the claimant went through the issues. The outcome of those discussions was set out in an email of 25 June 2015. 91. In his letter, Dr Nasir offers the claimant the opportunity to come back on any issues. In his letter of 25 June, Dr Nasir says: “Further to our meeting on 8 June 2015 the following aspects of your complaints/issues/wants/needs were discussed. As promised, I have now looked into each one of these in extensive detail with as much neutrality and sympathy as possible. I am sure you would remember that I said to you that my response to each of those would be the one which would be in the best interests of Docsinnovent in particular and all shareholders at large and is as below.” Case Number: 3322603/2016 (RJR) Page 16 of 16 92. The respondent in my view addressed the claimant’s complaints as set out in his grievance. That they did not follow a process easily recognised as being compatible with ACAS guidance in my view does not alter the fact that the issues that the claimant raised were addressed. 93. The claimant stated that he left his job because the job “continued to lack satisfaction, diversity, volume and prestige”. Part of what the claimant complained about in respect of this matter involved Dr Nasir providing a lecture in Japan in which Dr Nasir was referred to as being the inventor of v-gel. The claimant says that he was not entitled to do this. 94. The reality of the claimant’s complaint in my view is that the venture he entered into did not meet his expectations either in financial rewards or in the ability to develop a number of different projects and increase his prestige and professional standing. The claimant puts this down to the failure to invest sufficient funds into the company and the venture. 95. I am not satisfied in respect of this the part of the claimant’s complaint he has identified any matter which amounts to a breach of contract. 96. The claimant’s complaints for unfair dismissal fail because the claimant has failed to show that the respondent was in breach of contract so as to entitle him to bring the contract of employment to an end. The claimant resigned his employment; he was not dismissed. 97. In any event, even if the claimant had been dismissed, I am satisfied that the evidence which has been produced by the respondent shows that he was in serious breach of his obligations to the respondent. Had the claimant not resigned, there is a real possibility that the claimant would have been subjected to disciplinary action. 98. The claimant’s complaint in relation to unfair dismissal in my view is not well founded and is dismissed. 99. The claimant in his evidence has failed to explain how any sums in relation to unpaid wages or holiday pay are said to arise. In the circumstances, those complaints are also dismissed on the grounds, the complaints are not well founded. ________________________________ Employment Judge Gumbiti-Zimuto Date: ………24 July 2017…………….. Sent to the parties on: .......... ............................................................ For the Tribunals Office Case Number: 3322603/2016 Page 1 of 3 EMPLOYMENT TRIBUNALS Claimant: Respondent: Mr K Farrell v Docsinnovent Ltd Heard at: Reading On: 13 September 2018 Before: Employment Judge Gumbiti-Zimuto Appearances For the Claimant: Mrs K Fudakowski (Counsel) For the Respondent: Miss S Berry (Counsel) ADJOURNMENT OF COSTS APPLICATION 1. The hearing of the Respondent’s application for costs is adjourned to 8 February 2019. REASONS 1. The Claimant has served on the Respondent a bundle of documents and submissions responding to the Respondent’s application for costs. The Claimant provided the bundle of documents to the Respondent at noon on 12 September 2018. The Claimant’s submissions were served at 18.02 on 12 September 2018. 2. The cost hearing was originally listed to take place on the 1 June 2018. The parties were notified of this date in a notice sent to the parties on the 1 February 2018. That hearing notice included the following note: “You may submit written representations for consideration at the hearing. If so they must be sent to the Tribunal and to all the other parties not less than 7 days before the hearing. You will have to chance to put forward oral arguments in any case.” 3. There were no other directions given relating to the provision of documents or exchange of submissions. The Claimant was aware of the grounds of the Respondent’s costs application which were set out in a document sent to the Claimant and the Tribunal on 14 September 2017. Case Number: 3322603/2016 Page 2 of 3 4. The 1 June 2018 was vacated because it had been listed in error on a date when I was not available to hear the case. The date for this hearing was notified to the parties on 19 July 2018. 5. Although the Claimant was aware of the application for costs for almost a year and had notice of the 13 September 2018 hearing for almost 8 weeks it was less than 24 hours before the hearing that the Claimant provided to the Respondent its reply to the costs application and the documents relied on. 6. The nature of the Claimant’s response requires the Respondent to review its notes of the full merits hearing in order to answer the points raised by the Claimant. The Respondent requires time to do that. In the time since the Claimant served his documents and submissions on the Respondent it has not been possible for the Respondent to do that. The Respondent’s Counsel has not had the opportunity to prepare a response to the contentions set out by the Claimant in the written submissions and seeks an opportunity to do so. 7. Having considered the Claimant’s objections to the Respondent’s application for a postponement, I decided that a postponement was in the interests of justice as there were factual disputes between the parties relating to this case which was heard by me between 27 and 31 March 2017. The case was heard 17 months ago, in respect of any matter that is not dealt with in the Judgment it will be necessary for the parties to assist me to recall what happened, I will also need to refer extensively to the notes I made at the hearing. 8. Having made the decision to grant the Respondent’s application for an adjournment I made the following case management orders by consent. CASE MANAGEMENT ORDERS Made pursuant to the Employment Tribunal Rules 2013 1. The parties are to agree a joint bundle of documents for the costs hearing by 14 December 2018. 2. The Respondent is to provide a written response to the Claimant’s submissions on costs by 11 January 2019. 3. The Claimant is to provide a witness statement as to his means (if so advised) and any further written submissions on the Respondent’s costs application by 25 January 2019. 4. Wasted Costs/Costs Applications 4.1 Any wasted costs application made in respect of today’s hearing is to be served on the Claimant’s solicitors within 28 days of today’s hearing. Case Number: 3322603/2016 Page 3 of 3 4.2 Any application for costs in respect of today’s hearing is to be notified to the Claimant and his solicitors within 28 days of today’s hearing. 4.3 Any costs or wasted costs application is to be considered at the conclusion of the hearing on 8 February 2019. CONSEQUENCES OF NON-COMPLIANCE 1. Failure to comply with an order for disclosure may result on summary conviction in a fine of up to £1,000 being imposed upon a person in default under s.7(4) of the Employment Tribunals Act 1996. 2. The tribunal may also make a further order (an “unless order”) providing that unless it is complied with, the claim or, as the case may be, the response shall be struck out on the date of non-compliance without further consideration of the proceedings or the need to give notice under rule 19 or hold a pre-hearing review or a hearing. 3. An order may be varied or revoked upon application by a person affected by the order or by a judge on his/her own initiative. _____________________________ Employment Judge Gumbiti-Zimuto Date: 27 September 2018 Sent to the parties on: .18 October 2018 ............................................................ For the Tribunal Office Case Number: 3322603/2016 Page 1 of 12 EMPLOYMENT TRIBUNALS Claimant: Respondent: Mr K Farrell v Docsinnovent Ltd Heard at: Reading On: 8 February 2019 Before: Employment Judge Gumbiti-Zimuto (sitting alone) Appearances For the Claimant: Mr T Gillie (Counsel) For the Respondent: Mrs S Ashiru (Counsel) JUDGMENT ON AN APPLICATION FOR COSTS The application for costs is dismissed REASONS 1. The Respondent makes an application for costs against the Claimant. The Respondent seeks an order for the costs of defending the claims to be paid by the Claimant. The Respondent relies on rule 76 of the Employment Tribunals Rules of Procedure which provides that: (1) A Tribunal may make a costs order or a preparation time order, and shall consider whether to do so, where it considers that- (a) a party (or that party’s representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted; or (b) Any claim or response had no reasonable prospects of success; … (2) A Tribunal may also make such an order where a party has been in breach of any order or practice direction or where a hearing has been postponed or adjourned on the application of a party. 2. In its application dated 14 September 2017, the Respondent’s costs (inclusive of Counsel’s fees) amounted to £77,408 and was seeking a Case Number: 3322603/2016 Page 2 of 12 detailed assessment of those costs. In the alternative, the Respondent sought an order for costs in such sum as the Tribunal considers just and equitable to adequately compensate the Respondent in respect of the costs reasonably and necessarily incurred as a direct result of the Claimant’s conduct of the proceedings. The Respondent sought the reasonably incurred expenses in respect of attendance of its witnesses and the costs in respect of the costs application itself. 3. The Respondent contends that the Claimant’s complaint of unfair dismissal had no reasonable prospect of success. The Respondent says that the final list of breaches that the Claimant relied on in support of his constructive dismissal claim were contradicted by documentary evidence and/or the Claimant’s own evidence at trial. The Respondent states that the remaining complaints raised by the Claimant are down to a general dissatisfaction with the financial returns and professional prestige he was receiving from the Respondent. The Respondent says that the Claimant was unable to show that there was evidence to support his assertion that the company had been financially mismanaged or that he had been treated otherwise than in accordance with the written contracts that he had signed up to in 2009. 4. The Respondent contends that the Claimant’s claims stood no reasonable prospect of success from the outset and should never have been issued. It is said that the Claimant wilfully ignored documentary evidence that did not support his claim up until the second day of his cross-examination of the trial and that he fatally undermined his own claim in his oral evidence. 5. The Respondent states that it pointed out to the Claimant on numerous occasions that his claims had little reasonable prospect of success. The Respondent refers to the unsuccessful application for a deposit at a preliminary hearing before Employment Judge Vowles on 13 March 2017 and costs warnings sent to the Claimant on diverse dates between 18 March 2016 and 20 March 2017. 6. The Respondent asks the Tribunal to consider the number of costs warnings issued and their terms which it is said demonstrate a catalogue of failings and unreasonable conduct on the part of the Claimant as a factor in determining whether to exercise a discretion to make a costs order. 7. The Respondent contends that the Claimant acted unreasonably in his conduct of the proceedings by failing to accept an offer of settlement. 8. The Respondent relies on a number of settlement offers that were made to the Claimant on a ‘without prejudice save as to costs’ basis between 18 March 2016 and 20 March 2017. It is the Respondent’s position that its first offer of £15,000 made to the Claimant on 18 March 2016 was a reasonable offer and that the Claimant had no reasonable expectation of achieving a higher sum at trial. Had the Claimant accepted that offer, the costs of preparing and lodging the ET3 on 31 March 2016 and all Case Number: 3322603/2016 Page 3 of 12 subsequent costs would have been avoided in their entirety. The Respondent contends that the Claimant had behaved in a misconceived and unreasonable manner in turning down that offer. 9. Alternatively, the Respondent asks that it recover its full costs from 9 September 2016 to the end of the trial. What the Respondent says is that from 9 September 2016 onwards, in settlement discussions, it offered sums, at various times, ranging between £50,000 and £23,000 to settle his claims against the Respondent. 10. The Respondent contends that on 14 March 2017 the Claimant requested the sum of £23,000 to settle his claim. He was offered that amount but unreasonably refused to sign the terms of the standard COT3 agreement proposed by the Respondent thereafter. Although the Respondent incorporated amendments to the COT3 wording suggested by the Claimant in March 2017, the Claimant continued to refuse to sign the terms. 11. At one point there was possibility of judicial mediation taking place, but the Respondent says that the Claimant’s refusal to engage sensibly in considering the terms of the COT3 agreement was one of the reasons why judicial mediation did not take place. 12. The Respondent’s offer to mediate on 18 October 2016 was declined by the claimant. 13. The Respondent specifically refers to its costs warning sent on 10 November 2016 made in the following terms: “It is our submission that the offer, which will remain on the table for acceptance that being an ex gratia payment of £35,000 in full and final settlement of all claims, save for any claims relating to your shareholding (without admission of liability on our Client’s part), is a reasonable offer and the original wording of the COT3 is neither unduly onerous nor unclear. It is therefore our submission that any continuation of the current employment proceedings by you is both unreasonable and vexatious behaviour, which will incur significant on-going costs for our Client, as well as waste unnecessary time at Tribunal in March 2017.” 14. It is said that the costs warning in this context must be read together with other costs warnings between 18 March 2016 and 20 March 2017. The Respondent contends that the Claimant’s refusal to engage with these warnings in the context of the substantial offers made to him by the Respondent was unreasonable behaviour. 15. The Respondent further contends that there was a fabrication of allegations. The Respondent states that two of the allegations made by the Claimant were that he was forced to sign up to a new service agreement by the Respondent and there was a further allegation to the effect that the shareholder agreements contained new restrictive covenants that were Case Number: 3322603/2016 Page 4 of 12 unduly onerous. The Respondent states that these were fabrications which were repeated by the Claimant in many documents up to the trial and that the Claimant had to admit that he was wrong about them in crossexamination. The Respondent says that these were at the core of the Claimant’s claim and as a result it must be held that the Claimant had acted unreasonably in pursuing his claim. 16. The Respondent also relies on a contention that the Claimant failed to comply with Tribunal orders and delay. It is said that the Claimant failed to comply with an order made by Employment Judge Vowles to point to events that he was relying on to show that the Respondent had acted in breach of his service agreement. As a result, it was necessary for the Tribunal to list a second preliminary hearing to deal with clarification of the alleged conduct of the Respondent which was amounting to a breach of contract. The hearing took half a day and required the Respondent’s attendance. It is said that the final list of breaches the Claimant was relying on was only produced on 14 March 2017 and the final hearing commenced two weeks later on 27 March. It is said that these events put the Respondent to significant additional cost and delayed the preparation of witness statements. It is said that the failure to comply with the order made by Judge Vowles on 25 August 2016 was therefore unreasonable conduct of the proceedings. 17. The Respondent complains about the way that the Claimant dealt with the disclosure. The Respondent provided the Claimant with a disclosure list on 14 April 2016. The Claimant sent a disclosure list to the Respondent on 27 October 2016 accompanied by a request for specific disclosure. The Claimant was asked to explain why he was asking for specific disclosure but did not respond to the Respondent’s enquiry. On 13 March 2017, Employment Judge Vowles considered the Claimant’s specific disclosure application and required the Claimant to explain why the documents were relevant. The Respondent says that the Claimant failed to do that, and the renewed the same application for specific disclosure on Day 1 of the trial. The Respondent was asked by the Tribunal to supply the documents to the Claimant, this resulted in considerable time and cost being spent by the Respondent in gathering the documents. Ultimately, the Claimant did not refer to any of the documents he had requested during the week-long hearing. The Respondent says that this shows that the request was irrelevant as had been earlier explained by the Respondent. The Respondent says that had the Claimant complied with Judge Vowles’ order of 13 March 2017 to explain why the documents were relevant, they could have understood his position and made meaningful submissions to demonstrate their relevance on the first day of the hearing and it would not have had to waste its time and cost in producing irrelevant material. 18. The Claimant resists the Respondent’s application for costs. 19. In reply to the Respondent’s application, the Claimant states that the fact that the Tribunal found against him does not mean that the claim had no prospects. It is pointed out that the Respondent did not apply to strike out Case Number: 3322603/2016 Page 5 of 12 any part of the Claimant’s claims prior to the hearing on the grounds that they had no reasonable prospect of success nor were they successful in the deposit application on the grounds that they had little prospects of success. 20. At the preliminary hearing, the Claimant was asked to specify the allegations he alleged amounted to a breach of the implied term of trust and confidence. The Claimant says that the Respondent has selected some of those allegations (omitting to mention others) and argues that they were clearly contradicted by the documentary evidence and by the Claimant’s own evidence at trial. The Claimant says that the Respondent’s has omission of any reference to allegations 1, 2 and 9 must be considered as the Respondent conceding that the allegations had reasonable prospects of success. 21. It is said on behalf of the Claimant that the preparation for the hearing by the Claimant, who was acting in person, was hindered by the fact that the Respondent providing the Claimant with unpaginated bundles late. It is said that some of the Claimant’s answers to cross-examination have been misinterpreted by the Respondent. As the Claimant was unrepresented at the hearing, he has no notes of the questions and answers. The Claimant submits that if he did say something along the lines which is relied upon by the Respondent (in respect of the services agreements), he was referring to the fact that the Respondent had not put the service agreements in the bundle. 22. The Claimant contends that the service contracts, shareholders’ contracts and licencing agreement were part of a family of contracts for the restructuring of the company, they co-existed and impacted upon each other. The point being that the Claimant may not have been entirely precise in the answer that he gave to questions, but the substance of his claim is maintained. 23. It is also submitted that whilst the Tribunal may have found that it was unable to accept the Claimant’s version of some of the events, this does not mean that the Claimant’s allegation had no prospects. It is said that harassment as legally defined in section 26 of the Equality Act 2010 involves an individual’s perception of events and that the Claimant perceived that he had been harassed and therefore had prospects with the allegation. 24. The written submissions submitted on behalf of the Claimant make detailed answers to a number of the points which are made by the Respondent. The Claimant relies on the fact that Employment Judge Vowles refused to order a deposit in the Claimant’s case and that there was no costs warning reflected in the order made by Judge Vowles on 13 March 2018. The Claimant pointed out that represented parties routinely make numerous costs warnings without prejudice letters as the pro forma final paragraph. In this case there was a large amount of without prejudice correspondence because the parties were very close to settlement hence Case Number: 3322603/2016 Page 6 of 12 the large amount of costs warnings and it is said that costs warnings do not automatically lead to costs orders. 25. In summary, the Claimant states that the claim for constructive unfair dismissal was advanced upon nine factual allegations amounting to a breach of trust and confidence which had prospects and the Claimant’s claim was permitted to advance through two preliminary hearings before Employment Judge Vowles on 25 August 2018 and 3 March 2018 and no deposit order was made or costs warnings given. Further, while settlement offers are often made for commercial reasons and may not reflect a recognition of risk, the Respondent was keen to settle this case and did make a further number of offers. 26. As regards the Respondent’s complaint that the Claimant acted unreasonably in the conduct of the proceedings by refusing settlement of this, the Claimant states that the starting point is that the Claimant is entitled to reject offers for compensation to obtain a declaration and that in this case was that he had been unfairly dismissed. 27. The Claimant says that whilst the parties were close in terms of the financial amount in relation to settlement, they were far apart in respect of the terms of the agreement. The parties in this case it is said were business partners operating in a niche business world and that in this case it was not a standard employer/employee COT3 terms case. There were involved in this case business interests, shareholdings, post-termination restrictive covenants and intellectual property issues that needed to be agreed by the parties. The Claimant was not assisted by lawyers but was using the services of ACAS. In all the circumstances of the case it is said that it was not unreasonable for the Claimant to refuse the terms on which the final offer was premised which had a number of stumbling blocks including undertakings by the Claimant’s wife as to confidentiality, considerations about a restraint of trade. 28. Insofar as it is said that the Claimant’s claims lacked merit, the Claimant repeats arguments made in respect of the contention that the Claimant had little reasonable prospect of success and it is said that the Claimant’s case is not one which is equivalent to the type of findings that were made in the ‘Daleside Nursing Home’ case relied on by the Respondent and that there were no findings by the Tribunal that the Claimant has lied or in any way deliberately misled the Tribunal. It was merely a case where two of the Claimant’s nine allegations contained mention of the draft service agreement. 29. In respect of the contention that the Claimant failed to comply with Tribunal orders, the Claimant says that the Respondent’s summary is misleading and inaccurate a proper analysis of the events shows that the Claimant did his best to comply with the Tribunal’s orders in respect of the provision of particulars of his claim. As to the Respondent’s contention that there was non-compliance with Tribunal orders resulting in delay, again, the Claimant contends that the Respondent’s characterisation of the events is Case Number: 3322603/2016 Page 7 of 12 inaccurate and misleading. The Claimant sets out correspondence that took place between the parties in relation to disclosure which culminated in the Claimant receiving an unpaginated incomplete hard copy of the bundle following a request made on 17 April 2017 and it is said that the only realistic opportunity for the Claimant to request documents that he considered were missing was on the first day of the hearing and that the Respondent was ordered to provide those by the Judge. 30. As to the failure to refer to the documents, it is said that those documents were provided to the Claimant on the second day of the hearing at the point when he was being cross-examined and so he did not in fact have an opportunity to refer to the documents. 31. It is in addition said that the Claimant as a litigant in person has additional difficulty in navigating a trial bundle and that it is an entirely reasonable and common expectation of a litigant in person to know that the trial judge will read the documents in the bundle even if not specifically taken to them. It is said that the situation relating to the disclosure of documents came about as a result of the Respondent’s failure to comply with the Tribunal orders. 32. It is said that the Claimant was a litigant in person seeking to advance a complex case involving extensive documentation including documents with multiple revisions. 33. His position was made more difficult by the fact that the Respondent who was legally represented throughout did not comply with the orders and left him with little time to navigate an unpaginated bundle. 34. It is said that the Claimant was further hampered by his undiagnosed disabilities, namely dyspraxia and advanced glaucoma which made it difficult for the Claimant to see the process and to respond to what was for him the novel and stressful situation of the Employment Tribunal proceedings. The Claimant continues to suffer from anxiety and depression and has a family and a young daughter to support. It is said that it would not be in the interests of justice to make any order for costs against the Claimant. 35. At the hearing, there were further oral submissions made on behalf of the Claimant by Mr Gillie who appeared on behalf of the Claimant. The original written submissions presented for the hearing originally listed to take place on 13 September 2018 were prepared by Counsel previously instructed. 36. Mr Gillie stated that the threshold for making an order for costs in Employment Tribunal proceedings had not been met in this case. Mr Gillie also states it is a relevant fact that the Claimant was a litigant in person and that I should have regard to his lack of knowledge and lack of objectivity when dealing with this case. Case Number: 3322603/2016 Page 8 of 12 37. I am asked to consider whether in the circumstances of this case it is really fair to make a costs order in the region of about £100,000 against a litigant in person. 38. In respect of the submissions that the Claimant had no reasonable grounds for bringing the case, it is said that in this case the Claimant merely lost. It is said that when one considers the costs letters which were written to the Claimant by the Respondent, there is a failure to explain why the Respondent thought that the Claimant’s case was weak. The fact that there is documentation that contradicts the claim does not necessarily mean that he does not have a reasonable prospect of success. Skilful cross-examination can bring realities to a litigant in person that he previously maybe did not have. In terms of the Claimant’s conduct in respect of a failure to settle, it is said on behalf of the Claimant that it has not been explained to the Claimant why his case is weak the level of costs that he is liable to be exposed to. 39. It is also said that I should view the cost warnings which were made in this case in the context of being threats in negotiations. It is also said that this is a case where the Claimant wanted to settle and the Claimant, a litigant in person, cannot be expected to have the same objectivity and knowledge as a person who is represented by professional lawyers and that requires an appreciation of the legal principles and understanding of the meaning of the COT3 agreement, the approach to the terms of a potential settlement and especially an understanding of the issues surrounding confidentiality. 40. The Claimant also states that the Respondent’s assertions that it was keen to settle this case should be treated with some caution and the point is taken that if the Respondent had really been as determined to settle the case as it now suggests for the purposes of this costs application, it would have taken up the repeated requests made for judicial mediation by the Claimant or some other mediation process. It is accepted on behalf of the Claimant that he initially refused judicial mediation but then changed his mind and at least twice stated that he wanted to enter into judicial mediation. It is said that this is precisely the sort of case where judicial mediation would have added value because both parties want to settle. One is a legal litigant in person who may not necessarily have a clear understanding of the matters at stake and the intervention of an independent judicial mediator may well have added value and provided assistance. 41. It is also said that it is wrong to simply blame the Claimant for the failure to agree terms; there are two parties in this litigation which arose after the ending of a fraught period of employment. 42. Overall, when viewed fairly and objectively, it is said that the Claimant’s conduct of the proceedings as a litigant in person was reasonable. 43. It is said on behalf of the Claimant that this is not a case where there was conduct of the type which is found in the Daleside Nursing Home Limited Case Number: 3322603/2016 Page 9 of 12 case. There are no findings in the liability judgment that would justify a finding comparable to that in Daleside where there was a cynical lie that was central to the claim being considered by the tribunal. There was no clear-cut finding that the central allegation was a lie or anything approaching that. 44. It is accepted on behalf of the Claimant that he has failed to particularise his claim clearly. It is accepted that it was not concise. However, it is said on behalf of the Claimant that the Claimant thought that it was clear and it is again restated that the Claimant as a litigant in person lacks the objectivity of a professional legal adviser and has to be given some latitude when he represents himself. 45. In respect of the points relating to the question of disclosure, the fact that documents were disclosed which the Claimant did not rely upon does not necessarily mean that they were not relevant. It does not follow that the Claimant would necessarily know how he would use documents that we disclosed in the course of litigation. It is said that I must look at the overall picture and that I need to take into account how the Respondent conducted itself in the litigation. This was a case where the Respondent produced the trial bundle late; they produced an unpaginated bundle; they delayed providing witness statements to the Claimant which caused him prejudice and it is in that context which the Claimant’s conduct should be seen. It is said that it is unsurprising that a litigant in person is confused about what they have to do and to take a more belligerent attitude in the course of conduct is not, in the context of such a litigant in person, necessarily an unreasonable conduct of the proceedings. 46. It is said that the Claimant should not be punished simply for commencing, continuing and losing the litigation. 47. The Claimant’s medical conditions of dyspraxia and depression are relied upon and the Claimant asks me to take into account the possibility that his medical condition affected his presentation of the case. (As an aside, I am not convinced that the evidence that has been produced for the purposes of this costs application enables me to reach such a conclusion and I do not reach that conclusion.) However, it is said that I should have regard to it because it is relevant to the conduct of the Claimant and it is necessary to look at all the circumstances and consider all relevant factors. 48. Finally, it is said that is it just and equitable to make an order for costs and in considering that question I should take into account the Claimant’s medical condition as a factor in assessing whether an order for costs ought to be made. Conclusions 49. In considering whether or not the threshold has been met to make an order for costs in this case, I remind myself of the fundamental principle that costs in employment tribunals are the exception rather than the rule Case Number: 3322603/2016 Page 10 of 12 and that costs do not follow the event in employment tribunals. I have the power to make a costs order and I shall consider whether to do so where I consider that a party has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings or the way that the proceedings have been conducted or any claim or response has not had any reasonable prospect if success. 50. While the threshold test is the same for a professionally represented party or a litigant, I recognise that the status of a litigant is a matter that I must take into account and I take into account that justice requires that I do not apply professional standards to a litigant in person who may be involved in legal proceedings for the only time in their life. A litigant in person is likely to lack the objectivity and knowledge of the law and practice brought by a professional adviser; a litigant in person may still be found to have behaved unreasonably even when proper allowance is made for their inexperience and lack of objectivity. I also note that it is not irrelevant that there has been no application to strike out the claim on the grounds that the claim is unreasonably brought. 51. Looking at the whole case: has there been unreasonable conduct by the Claimant in bringing and conducting the case? If so, what is the conduct? What was unreasonable about the conduct and what effect did it have? Reasonable prospects of success 52. The Respondent did not apply to strike out the claim on the grounds it had no reasonable prospect of success and no deposit application was made until the hearing on 13 March 2017 when the application was refused. While the Claimant was ultimately unsuccessful, the claim concerned; “nine headline allegations” were the number of sub-allegations. This was a fact-sensitive case which could not have been characterised as having no reasonable prospect of success before a factfinding exercise had been completed. I am satisfied that the Claimant had a genuine and honest belief in the case he advanced. I formed the view that at times during the case that the Claimant was out of his depth and lacked a sufficiently clear understanding of the matters in issue before me to present his best possible case. The Claimant’s insistence that he was required to sign a new service agreement with more onerous provisions is an example of this. The Claimant argued an unsustainable position on this – not out of obduracy, but due to what can be referred to as a lack of objectivity and informed legal analysis of the circumstances. That conclusion in my view is the only fair conclusion to come to having regard to all the circumstances of this case. The Claimant’s case in my view while unsuccessful cannot properly be considered as one where the litigant in person with the Claimant’s level of skill and ability can be said to have behaved unreasonably in commencing and continuing the proceedings on the basis that the Claimant did. Case Number: 3322603/2016 Page 11 of 12 Unreasonable conduct of the proceedings In respect of settlement:- 53. The Claimant’s refusal to settle this claim on the terms offered at first sight is difficult to understand. However, on proper consideration of the Claimant’s understanding of the issues in dispute, it was in my view understandable even if unwise. The Claimant valued his claim more highly than the Respondent was able to. However, the Claimant and Respondent did eventually hit upon an agreement as to the financial terms of a potential settlement. The potential settlement foundered because of the inability of the Claimant and Respondent to agree on other terms. The Claimant was jealous to protect what he saw as his rights arising from intellectual property, his shareholding, and what he believed to have been agreed with his erstwhile employers and business partners. 54. It was the inability to reach agreement on non-financial matters that led to the dispute not settling and had in large measure caused the breakdown in the relationship which had triggered the proceedings. To view the failure to settle ex post facto viewed simply through the lens of what might have been achieved if successful against what was on offer is to do injustice to the Claimant’s view of the dispute he had with the Respondent. 55. I am unable to conclude that the way the Claimant dealt with settlement was unreasonable conduct by the Claimant. In respect of lack of merit and fabrication:- 56. I do not consider that the Claimant in continuing the case having regard to the merits was unreasonable. I further do not consider that an allegation of fabrication in the sense encapsulated by the Daleside Nursing Home-type case is made out in this particular case. Non-compliance with Tribunal orders:- 57. The Claimant’s failure to comply with Tribunal orders relating to the providing of particulars was not contumelious conduct on the part of the Claimant. The Claimant tried, but failed, to give clear information. Likewise, the Claimant’s dealings with disclosure were inadequate due to lack of knowledge and experience of the process. There is no similar explanation available to the Respondent for their shortcomings which contributed to the Claimant’s disorganisation. 58. Having regard to all the circumstances of this case, I am not satisfied that the Claimant has been guilty of conduct which justifies a conclusion that the Claimant’s conduct reaches the threshold whereby he should be ordered to pay the Respondent’s costs pursuant to rule 76. 59. The application for costs is dismissed. Case Number: 3322603/2016 Page 12 of 12 60. As a post script I should state that the hearing of this costs application took place on the 8 February 2019. On the 18 March 2019 I sat in chambers to consider my decision on the costs application when I made the decision and produced the initial draft version of the judgment. ______________________________ Employment Judge Gumbiti-Zimuto Date: 3 May 2019 Judgment and Reasons Sent to the parties on: ..13.05.19...... ........................................................... For the Tribunal Office Public access to employment tribunal decisions All judgments and reasons for the judgments are published, in full, online at www.gov.uk/employment-tribunal-decisions shortly after a copy has been sent to the Claimant(s) and Respondent(s) in a case.