The law says that Tribunals have the power to make costs orders against either party to a claim, in certain circumstances. In Doyle v North West London Hospitals NHS Trust, the Employment Appeal Tribunal (EAT) said that the Tribunal should have considered Ms Doyle’s ability to pay before making an order against her for the whole of the Trust’s costs.
Following a seven-day hearing, the Tribunal dismissed Ms Doyle’s claims for breach of contract and race discrimination against the Trust and six other individuals.
It then agreed that Ms Doyle should pay the whole costs of the proceedings, to be assessed under rule 41(1)(c) of the Employment Tribunals Rules of Procedure.
These were estimated to be about £60,000 at this stage, a figure later revised to £95,000. Whatever the total sum, it was clear that the costs would be “very substantial”.
Ms Doyle appealed against the order on two main grounds:
- that the Tribunal was wrong to order her to pay the whole of the costs of the proceedings
- that the Tribunal failed to take her ability to pay into account when deciding the order for costs.
Under rule 40 of the Employment Tribunal Rules of Procedure, Tribunals can consider making an order for costs if the claimant (or their representative) “has acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived.”
Under Rule 41(2), Tribunals “may have regard to the paying party’s ability to pay when considering whether it … shall make a costs order or how much that order should be”.
The EAT said that, when deciding whether to award an order for costs, the Tribunal had asked itself the right questions. Having decided that Ms Doyle had not brought her case in good faith, it was well within its discretion to order her to pay the whole of the Trust’s assessed costs.
However, it added that Tribunals should always be cautious before making an order for such a large amount as it could have serious consequences for the paying party and could also act as a disincentive to other claimants bringing legitimate claims.
It made clear that, when exercising their discretion to order costs, Tribunals do not “have to find a precise causal link between any relevant conduct and any specific costs claimed”.
Instead, the key thing was “to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by the claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had“.
Taking into account all the circumstances of the case, the EAT concluded that the Tribunal should have raised the question of Ms Doyle’s means before making a decision on the costs application.
It allowed the appeal and referred the case back to the same Tribunal to make “reasonable enquiries” into Ms Doyle’s means and her ability to pay before making an appropriate costs order.
‘Bad faith’ is legalese for ‘lied through their teeth’ and a party found to be doing this is always at real risk of a full costs order. This decision stresses that a party’s ability to pay must be considered before the discretion to award costs is exercised. However, if a Tribunal nevertheless feels that a full costs award is just, then there is nothing in this decision that prevents that happening. There is conflicting case law about whether a union’s ability to pay should be considered when a union is indemnifying their member.