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costs employment law

Ordered to pay costs despite inability to do so

calculatorIt is a central maxim of international jurisprudence that, other than in the most exceptional circumstances, a judgment or order should not be made if it cannot be complied with by the person against whom it is made. This is why, for example, individuals who may owe thousands of pounds are often ordered to make nominal payments of, say, £1 or £5 per month, simply because they cannot afford any more.

The rationale is that to do otherwise is to undermine the authority of the court. If a court makes an order that it knows cannot be complied with it is effectively forcing a contempt of court since the element of choice does not exist. Contempt of court, according to its definition, entails disobedience or disrespect to a court in a form which opposes or defies authority, justice and the dignity of the court. It is therefore pretty clear why a court would not generally wish to bring about a contempt of court which does not involve any exercise of choice on the part of the contemnor.

Against this background the decision of the Employment Appeal Tribunal in the case of Mrs D M Chadburn -v- Doncaster and Bassetlaw Hospital NHS Foundation Trust and Mann makes interesting reading. In general costs are not awarded in employment tribunal proceedings unless a party has behaved unreasonably. Consequently there is a punitive element in such an award (even though some protest otherwise), reflecting the tribunal’s disapproval of a party’s behaviour.

Mrs Chadburn made a number of discrimination claims against her former employer. The tribunal rejected her claims and, significantly, found that she had made up allegations of race discrimination as a means of giving the tribunal jurisdiction over her complaints of harassment. The tribunal took the view, understandably, that this was unreasonable behaviour and went on to award costs against her in the sum of £10,000, thought to be under a third of the actual costs incurred by the respondents.

Mrs Chadburn’s appeal against the costs award was initially rejected. However, following a hearing in July 2014, it was allowed to proceed on the basis that it was suggested that the tribunal did not take into account the full evidence concerning the claimant’s current means, so it was arguable that the costs award was made on a false basis.

Further evidence was introduced suggesting that the claimant’s debts were not £600 as had been thought but were nearer to £4,285. However an application for reconsideration of the award was refused. The appeal was therefore made against both the initial costs judgment and the refusal to reconsider it. Mr Justice Simler was robust in his rejection of the appeal. He referred to Rule 84 of the Rules of Procedure which provides that the means of a paying party may be taken into account when considering whether or not to make an order and, if an order is made, when deciding how much to award. However there is no obligation to do so. Taking into account relevant case law (Arrowsmith -v- Nottingham Trent University) there must (my emphasis) be “a realistic prospect that the Appellant might at some point in the future be able to afford to pay”. As I go on to indicate, that prospect in this case was based on what can only be regarded as speculation. Mrs Chadburn’s barrister contended that, financially, she was in dire straits. The Trust’s barrister argued that her position would improve over time, taking into account in particular the possibility of a change in financial circumstances resulting from her divorce. However it was submitted that she could not afford divorce proceedings, there was no evidence that her husband, Mr Khamis, was a man of means and the marriage was childless and short-lived.

Mr Justice Simner also noted that Mrs Chadburn was “only 39” and “had plenty of working years left in her”. He concluded that there was no error of law and that, although involving a certain amount of speculation, it was right to take into account her age, the prospects of her returning to work and of her financial circumstances improving. The tribunal was entitled to reach its conclusion irrespective of the possibility of divorce proceedings impacting positively on her future financial position.

In fact, the tribunal was not obliged to have regard to the claimant’s means at all in deciding to make an award. Accordingly the appeal was dismissed. There was no suggestion that enforcement should be stayed or that payment by instalments would be permitted. Frustratingly the judgment is also silent concerning whether any order was made concerning the costs of the appeal!

 

Martin Malone

By Martin Malone

I'm a solicitor and the chief operating officer at Canter Levin & Berg. I was formerly head of the employment department.
I maintain this website so if you have any suggestions, criticisms or recommendations please email me at martinmalone@canter-law.co.uk.
Outside work my interests include national hunt horse racing, France and French wine and current affairs. I also design and maintain websites.