July 27, 2015

Costs and deposit orders

If, at a Preliminary Hearing, a Claimant is ordered to pay a deposit as a condition of continuing with a particular allegation, and at the Full Merits Hearing the Tribunal determines that the claim fails for the same substantive reasons for ordering the payment of a deposit, the Claimant is treated as acting unreasonably in pursuing the allegation for the purposes of a costs order under rule 76(1)(a). This provision requires a Tribunal to consider whether to make a costs order against a party in circumstances where they have acted unreasonably in bringing or conducting the proceedings.

The Claimant in this case had been ordered to pay a deposit order to continue a particular allegation in her claim – and lost for substantially the same reasons as it had ordered her to pay a deposit. The Tribunal ordered a detailed assessment of the Respondent’s costs, because these were in excess of £20,000 and she was ordered to pay the full amount subject to that assessment; her means not ruling out an order for costs in the Tribunal’s view.

On appeal, the EAT held that the Tribunal was wrong to assume that costs should be awarded against the Claimant subject only to her ability to pay because it had rejected her claims for effectively the same reasons as she had been ordered to pay a deposit. It acknowledged that she had not been able to rebut the presumption under the Tribunal rules that, in continuing with her claim, this was unreasonable conduct, but it was at the Tribunal’s discretion to consider whether, her behaviour notwithstanding, it was appropriate and proportionate to make an order for costs. The EAT allowed her appeal on the basis that more consideration needed to be given to whether or not it was appropriate to make a costs order against her and, if so, the type of order. The case has been remitted back to a different tribunal for reasons which are specific to the particular case.

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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