A claimant’s lack of financial means will not prevent a cost order being made against them

Takavarasha v London Borough of Newham | 2013

The claimant (‘Mr T’) had commenced claims of unfair dismissal and discrimination against four parties, including his former employer (‘LBN’). All of Mr T’s claims were dismissed by the employment tribunal and Mr T was ordered to pay a contribution to LBN’s costs in the sum of £1,500.

Mr T appealed this decision, including the costs order, to the Employment Appeal Tribunal (‘EAT’).

The EAT noted that the tribunal had found Mr T’s claims of race discrimination and victimisation to have been misconceived and that these claims represented 25 per cent of LBN’s total costs estimate which was £28,000. The 25 per cent of LBN’s costs amounted to £7,000 and the tribunal reduced this sum to £1,500, taking into account Mr T’s means. Mr T was unemployed, however, the tribunal thought that he was capable of finding employment.

The EAT rejected Mr T’s arguments that:

• the then £10,000 limit on a tribunal’s award of costs should have been the starting point for calculating its order, as opposed to the £28,000 submitted in LBN’s costs estimate;
• the tribunal judge had observed at a case management discussion earlier in the proceedings that Mr T had a “legally well-conceived complaint”; and
• the costs award was disproportionate given Mr T was unemployed.

In particular, the EAT said “Impecuniosity of the paying party is not a complete answer to a costs application.” In other words, a claimant’s lack of financial means is not an immunity from an award of costs.

The EAT also ordered that Mr T pay a contribution of £2,500 towards LBN’s costs of Mr T’s appeal, which again took into account his financial means, including the fact that he had secured part-time employment by this time and also Mr T’s rejection of an earlier offer by LBN to waive the original costs order if he withdrew his appeal.

This case is encouraging for employers and shows that an unemployed claimant will not be immune to a costs order simply because they are out of work or have no money. This decision may also be indicative of a turning tide in the tribunals where judges are showing an increased willingness to exercise their discretion to award costs against claimants in appropriate cases.