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Costs Awards in Employment Tribunals

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Thanks to Daniel Tivadar of 3 Hare Court for preparing this case summary.

Can an employment tribunal make a costs award that the paying party cannot afford to pay?  Yes, held the EAT in Vaughan v London Borough of Lewisham.

The Claimant brought two appeals arising out of the same proceedings. The first appeal dealt with the admissibility of secret recordings in Tribunal proceedings (see summary).

The second appeal challenged the costs award made by the Tribunal. The Claimant brought three sets of proceedings against numerous Respondents. The claims culminated in a 20-day hearing following which they were rejected in their entirety. The tribunal ordered the Claimant to pay one-third of the Respondents' costs - which amounted to around £260,000 in total - on the basis that the claims were misconceived.

The EAT held that the tribunal applied the correct two-stage test. The tribunal's conclusion that the case was misconceived was unimpeachable. It did not matter that there had been no deposit orders or observations made by the tribunal prior to its judgment that the claims appeared weak. Although the Respondents did offer to settle for £95,000, this was specifically stated to be for commercial reasons only. It was irrelevant that the matter was "fact-sensitive" and that the Claimant genuinely believed in her case - the claim was still misconceived.

The tribunal was not wrong in awarding the Respondents one-third of their cost. The EAT accepted that the currently unemployed Claimant would find it difficult to pay and it may take her several years to satisfy the order in full. Nonetheless, the tribunal was entitled to hold that there was a realistic prospect of the Claimant returning to employment and making a payment of costs.

NOTE that changes to the employment tribunal procedural rules coming into force on 29th July 2013 mean that, from that date, tribunals will be allowed to conduct detailed assessments of costs themselves, rather than having to refer any costs assessment over £20,000 to the county court.