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In a surprising (but heartening for employers) decision the EAT, in Vaughan v London Borough of Lewisham has held that an Employment Tribunal was entitled to make a cost award which the paying party cannot afford to pay. The Claimant appealed against the costs award made by the Tribunal. She had bought 3 sets of proceedings against numerous Respondents, culminating in a 20 day hearing, at the end of which all the claims were rejected. The Tribunal ordered her to pay one third of the Respondent’s costs, which amounted to around £260,000 in total (so the Claimant had to pay around £87,000), on the basis that the claims were misconceived and the Claimant should have appreciated this. The cost award was made despite the fact that there had been no warning about costs issued to the Claimant.
The EAT held that the Tribunal had correctly applied the two stage test. Its conclusion that the case was misconceived was impeachable regardless of the fact there had been no deposit orders or observations made by the Tribunal prior to its judgment that the claims appeared weak. The Respondent had offered to settle for £95,000 but this was specifically stated to be for commercial reasons only. It held that the Tribunal was right to award the Respondents one third of their costs even though the Claimant, currently unemployed, would find it difficult to pay and it may take her several years to satisfy the order. Nonetheless the Tribunal was entitled to find that there was a realistic prospect of the Claimant returning to employment and making a payment for costs.
An interesting case which clearly gives no obvious consideration to the issue of whether or not the Claimant has the means to pay, at least not in the summary of the facts.
This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.
For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.
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