Monday 23 April 2012


[Thanks to David Campion, Pupil Barrister at Garden Court North Chambers, for preparing this case summary]

Before making a costs order, should an Employment Tribunal raise the issue of the potential paying party's ability to pay costs, even if the issue is not raised by or on behalf of that party?

Yes, in some circumstances, says the EAT in Doyle v North West London Hospitals NHS Trust.

Under Rule 41(2) of the Employment Tribunal Rules of Procedure, when considering whether to award costs or the amount of such costs, an employment tribunal 'may have regard to the paying party's ability to pay'.

Following dismissing the Claimant's claims, the employment tribunal made an order that the Claimant should pay the entirety of the Respondent's costs, which were very substantial and then estimated at around £60,000. The Tribunal had not considered the Claimant's ability to pay when reaching this decision, nor had the issue been raised by the Claimant's legal representative.

The EAT concluded that the tribunal had not erred in deciding to award costs. However, in the particular circumstances of the case, which included a potentially very large costs award and nothing to indicate that the Claimant could pay such an award, the EAT concluded that the tribunal had erred in law by not raising the issue of ability to pay before deciding on the costs application.

The EAT commented that tribunals should always be cautious before making a very large costs award, given the very serious potential consequences to a Claimant of such an order and because such orders may act as a disincentive to those bringing legitimate claims.

The EAT referred the case back to the same employment tribunal to make reasonable enquiries into the Claimant's means, to decide whether to take into account the Claimant's ability to pay, and if so, to consider the appropriate costs order having regard to the Claimant's ability to pay.

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