Shields Automotive Ltd v Greig

An Employment Tribunal may consider a paying party’s ability to pay when making a costs or expenses order, but it is not required to do so. Where the party’s evidence about means is inherently unsatisfactory or misleading, the Tribunal may properly disregard ability to pay altogether. If means are considered, the assessment must address the party’s whole means, including capital assets, not merely income and expenditure. Capital remains relevant even where it is not immediately available as cash. Where the Tribunal cannot reliably assess means, liability may be assessed on the usual party-and-party basis by detailed taxation, without the statutory £10,000 limit.

Mr Greig’s unfair dismissal and associated claims against Shields Automotive Ltd were dismissed after the Employment Tribunal found that he had acted unreasonably and had lied in bringing and conducting the proceedings. The Tribunal ordered him to pay the Respondent’s expenses but restricted liability to £4,000, having regard only to income and outgoings.

The Respondent appealed, relying on fresh evidence that the information supplied about expenditure and withdrawals was misleading, and contending that the Tribunal had failed to consider Mr Greig’s capital interest in the former matrimonial home. The central issues were whether fresh evidence should be admitted and how ability to pay should be treated when assessing expenses.

1. Appeal allowed. The fresh evidence showed that the information supplied about expenditure, rent and disposal of cash was materially misleading. The Employment Tribunal’s assessment of means therefore rested on a materially erroneous factual basis.
2. Under paragraph 41(2) of Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations, a Tribunal has a discretion whether to take ability to pay into account. Following Jilley v Birmingham and Solihull Mental Health NHS Trust and Others, that discretion may properly be exercised against taking means into account where the paying party has given unsatisfactory evidence about them.
3. This was such a case. Given the misleading and inherently unsatisfactory evidence, no Tribunal could properly reach a firm conclusion about the nature and extent of Mr Greig’s means. Ability to pay was therefore to be disregarded. The only applicable limitation was assessment on a party-and-party basis.
4. The alternative ground also succeeded. If a Tribunal elects to consider ability to pay, it must consider the whole of the paying party’s means. That includes capital. To consider only income and outgoings while ignoring a substantial capital interest is to disregard a relevant factor and may be perverse, applying the approach illustrated by Stewart v Cleveland Guest (Engineering) Ltd and discussed in McPherson v BNP Paribas.
5. The case was exceptional enough to justify receiving fresh evidence on appeal. Although the usual course is an application to the Employment Tribunal for review, as explained in Adegbuji v Meteor Parking Limited, that course had been attempted and withdrawn for understandable reasons.
6. Paragraphs 2 and 3 of the Employment Tribunal’s judgment were set aside. Mr Greig was ordered to pay the whole expenses of the claim, taxed on a party-and-party basis by the Auditor of the Sheriff Court. The matter was remitted to the Employment Tribunal with a direction to remit assessment to the Auditor.

• Employment Appeal Tribunal: Allowed the appeal against the Employment Tribunal’s order dated 10 March 2010. Set aside the £4,000 restriction and remitted assessment of expenses to the Auditor of the Sheriff Court.
• Employment Tribunal: Dismissed the unfair dismissal and associated claims, found unreasonable conduct, and ordered payment of expenses restricted to £4,000.