Olatunji v Network Rail Infrastructure Ltd

Where an Employment Tribunal invites a party to show cause why a costs order should not be made, it must consider the reasons advanced in response and give reasons for its conclusion. A response raising inability to pay cannot be treated as containing no reasons without judicial consideration.

Although Employment Tribunal costs orders are exceptional, unreasonable conduct and disobedience causing substantial wasted costs may justify one. The payer’s ability to pay is relevant to the amount. The jurisdiction is compensatory, not punitive.

The Claimant’s claims were struck out after she failed to comply with Employment Tribunal orders. The Tribunal indicated that it would award the Respondent £10,000 costs and gave her 14 days to show cause why that order should not be made.

She sent two letters explaining her financial difficulties. An Employment Judge later ordered £10,000 costs, stating that she had failed to give reasons why the order should not be made. At a preliminary stage of this appeal, the challenge to the Tribunal’s jurisdiction to award costs was dismissed, but the ability-to-pay issue was permitted to proceed.

The appeal concerned whether the Judge had considered the Claimant’s financial response and, if so, what costs sum should be ordered.

1. Appeal allowed. The order of 10 June 2011 was set aside because it gave no reasons for finding that the Claimant’s letters did not set out reasons against a costs order.

2. On their proper construction, the letters expressly advanced inability to pay. Whether those reasons were sufficient required a judicial decision with reasons. The Employment Judge did not address the material, nor was there any indication that the lay members had considered it.

3. The Tribunal had nevertheless been entitled to make a costs order in principle. Costs orders in the Employment Tribunal are exceptional, but the Claimant’s unreasonable conduct and disobedience had caused a substantial waste of time and money. Her absence from the hearing also made it proper to give her an opportunity to show cause.

4. The Employment Appeal Tribunal determined the amount itself by consent rather than remitting the matter. The costs jurisdiction was compensatory and not punitive. Taking account of the Claimant’s difficult financial circumstances and continuing employment, her ability to pay extended only to £750. She was ordered to pay that sum by 10 March 2013.

• Employment Appeal Tribunal: The appeal against the £10,000 costs order was allowed. The order was set aside and replaced with an order for £750.
• Employment Appeal Tribunal, preliminary stage: The challenge to the Tribunal’s power to award costs was dismissed, but the appeal concerning consideration of ability to pay was allowed to proceed.
• Employment Tribunal: The Claimant’s claims were struck out. The Tribunal decided that a costs order was justified and subsequently ordered £10,000 costs after inviting written reasons against that order.