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Costs: £10,000 costs justified despite claimant's current inability to pay

Published On: 12 May 2015

In this case the EAT looked at whether an employment tribunal was right to make a £10,000 costs award against a claimant, given her current inability to pay. 

The tribunal found that the Claimant had invented claims of unlawful race discrimination. They found that this amounted to unreasonable conduct, and triggered its discretion to make a costs award. The tribunal considered that the broad effect of the unreasonable conduct was to hugely expand the scope of the case from what would have been a significant, but relatively constrained, unfair dismissal claim.  

It estimated that roughly £35,000 of extra cost had been incurred by the former employing NHS Trust. The main reason not to make an award of costs was the Claimant's current inability to pay, given she was £600 in debt. However, the tribunal ordered her to pay the Trust £10,000 in costs. They took the view that at 39 the Claimant had plenty of working years ahead of her when her "dire" financial position was likely to improve. It also referred to the fact that her future divorce proceedings might have a positive impact on her finances. The Claimant applied for reconsideration of the order, putting in fresh evidence that she was over £4,000 in debt. The tribunal refused to vary its award noting that it was made in full appreciation that she could not currently afford to pay anything at all. The Claimant appealed to the EAT.

The EAT upheld the tribunal's decision finding that although reference was made to the possibility of a payment on divorce being available, it was not a material consideration in the decision to award costs. This was principally based on the Claimant’s age and the likelihood that she would earn sufficient money in the rest of her working life to pay the award. Furthermore, the tribunal did not make an error when they failed to reduce the costs award in light of the Claimant’s more serious debt position. This was because no precise estimate of what was affordable had been made, and the award amounted to less than a third of the costs incurred by the NHS Trust in defending the unreasonable and false claim of race discrimination.

What this means for employers

This case is a reminder of the tribunal's broad discretion to make a costs award, which means they are hard for either party to overturn on appeal. The case also makes it clear that when considering the paying party's ability to pay, tribunals can make a broad-brush assessment of costs: they do not have to make a precise estimate of what each claimant can afford. In practice it may well have a bearing on the approach parties take, in the course of tribunal proceedings, in correspondence written 'without prejudice save as to costs', with a view to settling the case. 

Chadburn v Doncaster & Bassetlaw Hospital NHS Foundation Trust and another

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