Bahamas: Awards Of Legal Costs In Employment Actions

Last Updated: 30 July 2012
Article by Audley D. Hanna, Jr.

Employment law has been an area of law rife with uncertainty for decades within The Bahamas. In 2001 the Employment Act (the "EA") was passed and came into force on 1st January, 2002. One of the objectives of the EA was to codify the law relating to employment so as to clearly define the relationship between employer and employee in regards to standard hours of work, vacation, dismissal and wages. However, section 4 of the EA preserves any greater rights to which an employee may have been entitled under the common law or contract wherever there is a conflict between such rights and the EA. In, Wells v Snack Food Wholesale [2006] 1 BHS. J. No. 59, Lyons J provided, at paragraphs 29 and 30, the following interpretation of section 4 of the EA:

"29 It is only if the contract between the employer and the employee made specifically for a greater provision on severance or if some other law (not the general common law), arrangement or custom similarly made for greater provision that section 4 could be called upon.

30 The long and the short of it is that an employer on terminating an employee (other than for justifiable summary dismissal or unfairly) pays the employee's severance pay calculated in accordance with section 29, then the contract has been properly and fairly terminated and the employee has no cause for complaints. The employer has complied with the law."

The effect of this interpretation, if followed, would have meant that during the termination process an employer would need only (save in circumstances where a more favourable custom or arrangement existed) consider severance pay in accordance with section 29 of the EA. In turn, an employee during this process, unless able to establish some actual arrangement to the contrary, would be more likely be resigned to accepting severance pay in accordance with the statute. It is arguable therefore that, if the ruling in Wells v Snack Food had stood and the EA did in fact oust the common law in relation to severance pay, the volume of litigation in relation to severance pay would have been either significantly diminished or often determinable upon a summary basis having regard merely to the provisions of section 29 of the EA.

However, the foregoing interpretation of the EA was subsequently overturned and in Paula Jones v The Bank of the Bahamas Court of Appeal Civil Appeal No. 19 of 2006 it was held that section 29 of the EA represented only the minimal severance pay with respect to which an employee was entitled and an employee was free to make an application under the common law for a greater benefit. As such, the EA, while providing a mechanism for establishing the minimum rights of an employee, did not necessarily establish strict guidelines as the decision in Wells v Snack Food had suggested it might. Consequently, due to the fact that employees are still entitled to make claims at common law outside of the EA, it is arguable that the EA has, thus far, failed to reduce the amount of employment litigation as the dicta in Wells v Snack Food suggests may have been initially envisioned.

Litigants in employment matters have two available venues within which to commence their actions: the Industrial Tribunal (the "Tribunal") and the Supreme Court. Actions brought within the Tribunal are brought under the jurisdiction of the Industrial Relations Act 1970 (the "IA"). Both the Tribunal and the Supreme Court have similar powers to hear matters and to make determinations on disputes although proceedings within the Tribunal tend to be less formal and to have a more limited form of discovery. The Tribunal is intended to be accessible to claimants and to avoid the time and expense which may otherwise deter a claimant from pursuing an action.

One of the key aspects of the Tribunal's accessibility is the issue of legal costs. Within the Bahamian Court system, while costs are ultimately within the discretion of the Court, as a general rule, the unsuccessful party pays the costs of the successful litigant. However, within the Tribunal legal costs are not awardable, therefore a litigant need not refrain from commencing an action solely due to a fear of having to pay a costs order. On the other hand, where an employment related action is commenced within the Supreme Court, the traditional position has been thus far upheld with costs being awarded to the successful litigant in most cases. As such, a claimant has had the strategic advantage of pursuing an employment related claim within the venue which had the potential of exerting the greatest degree of pressure on the other party. The effect of the legal costs issue has been, to some extent, coercive; a litigant with a less than meritorious claim, or a marginal claim, can readily take advantage of the spectre of a costs award as a tool to obtain a settlement, as often an employer may seek to settle such claims upon a nuisance basis rather than risk having to ultimately pay the employee's legal costs in addition to the sums claimed. While this is no doubt potentially true in relation to all forms of litigation, employment litigation is unique insofar as there is an alternative mechanism available (i.e. the Tribunal) within which the issue of paying the costs of the successful party need not be considered when determining whether or not to defend an action. Further, while it may be argued that the issue of paying a costs award would be an equal concern for the employee, the reality of course is that, in many cases, the recovery of costs from an individual may be difficult or worse.

Three recent cases have placed renewed consideration on the issue of costs awards within employment cases and have, perhaps, opened a dialogue as to whether an award of costs should be made in employment cases at the Supreme Court level, in normal circumstances. The first of these cases Gibson v Kleijn [2010] BHS J No.17 was decided in March, 2010. Although the Chief Justice determined that the plaintiff had been wrongfully dismissed, and therefore entitled to damages, he declined to award costs stating, at paragraph 26:

"This claim for damages for wrongful dismissal could have been pursued in the Industrial Tribunal, which is the mechanism established by Parliament for the adjudication of these kinds of claims arising out of employment disputes. The Plaintiff by electing to pursue this claim in the Supreme Court should not recover costs which he could not receive if he had properly brought the claim in the Industrial Tribunal pursuant to the provisions of the Industrial Relations Act. Accordingly, I make no order as to costs."

Based upon the foregoing dicta, it is arguable that the Chief Justice intended to establish a precedent whereby a claimant should not be entitled to costs within the Supreme Court in relation to an employment matter which could have been alternatively pursued within the Industrial Tribunal. While of course this decision is merely within the ambits of the overall discretion of the Court in relation to the award of costs, it appears to establish a principle which is somewhat of a departure from the manner in which costs have been traditionally awarded within the Supreme Court in employment related actions.

Appearing to accept that Gibson v Kleijn may have the potential to be interpreted as a general principle within employment cases, Justice Adderley seemingly attempted to temper such an application and to confirm that a determination as to costs in employment cases was an issue that remained within the Court's discretion. In Davis-Evans v Bahamas First Corporate Services Limited and another [2011] 1 BHS J. No. 27 Justice Adderley noted at paragraph 26:

"The court notes the view of Barnett, CJ expressed in Gibson v Keijn that a claimsuch as this could have been pursued in "the Industrial Tribunal, which is the mechanism established by Parliament for the adjudication of these kind of claims arising out of employment disputes, and that the plaintiff ought not to receive costs when [she] could not receive them at the Tribunal." Nevertheless upon the application of counsel for the plaintiff I will hear the parties on costs at a date fixed."

This decision was rendered in February, 2011, and while it is unclear as to whether Justice Adderley was in concurrence with the determination in Gibson v Kleijn, it is clear that he was minded to consider arguments on the point.

A more definitive consideration of Gibson v Kleijn was undertaken by Justice Evans in Ferguson v Bahmar Development Limited [2011] 1 BHS J. No. 23 a decision which, like that in Davis-Evans v Bahamas First Corporate, was rendered in February, 2011. In Ferguson v Bahmar, Justice Evans considered that, having regard to the fact that the Supreme Court remained vested with the power to hear employment actions, it should generally exercise its discretion to award costs in favour of the successful litigant in employment cases. Justice Evans observed at paragraph 51:

"While I understand the position taken by the Honourable Chief Justice in his recent decisions, I fully accept the dicta of Allen J in the Jeremiah Gray case. As indicated to Counsel for the defendant during submissions, I find it difficult to accept that a litigant should be deprived of his right to costs in order to discourage him from bringing an action for wrongful dismissal before the Supreme Court which is something he has a right to do. In my view once the Supreme Court allows the matter to proceed and does not exercise its power to stay the action the successful plaintiff is entitled to his costs unless there is some other good reason to deny him the same."

As a consequence of the respective decisions in Gibson v Kleijn and Ferguson v Bahmar there is now competing authority with respect to the manner in which costs should be dealt with in employment cases within the Supreme Court. Indeed, it is possible that no resolution to this issue may be forthcoming unless order relating to costs in an employment case is appealed to the Court of Appeal and determined by that Court. In the interim, it is likely that the judge's ruling in Gibson v Kleijn shall be relied upon as a basis to resist applications for costs in the Supreme Court. It may therefore encourage litigants to pursue their claims within the Industrial Tribunal thereby reducing the work load on the Supreme Court and removing a tool from the arsenal of the vexatious litigant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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