Flint v Coventry University

An Employment Tribunal may have regard to the paying party’s ability to pay when deciding whether to make a costs order and when assessing its amount, but it is not obliged to do so. If it treats means as relevant, it must consider the relevant evidence and exercise its discretion judicially. A limited present ability to pay does not confine the award to a sum immediately affordable, since future earnings may be relevant. The Employment Appeal Tribunal will interfere only for an error of legal principle, failure to consider a relevant matter, consideration of an irrelevant matter, or perversity. Where the Tribunal’s assessment of means was materially flawed, the proper course may be remission rather than substitution, particularly because the Tribunal may still consider a nominal award appropriate.

The Claimant appealed against a Birmingham Employment Tribunal judgment awarding the Respondent £9,000 costs after the Claimant withdrew his proceedings. The appeal was restricted at a Rule 3(10) hearing to whether the Tribunal had adequately assessed the Claimant’s means and ability to pay.

The Tribunal had considered ability to pay relevant, relying on the Claimant’s career history and profile as evidence that he had recently obtained well-paid freelance consultancy work. The Claimant argued that the evidence instead showed historic, limited consultancy work, low-paid temporary employment, unemployment and disability-related restrictions on work. The central issue was whether the costs decision was vitiated by a failure to consider relevant matters, reliance on irrelevant matters, or perversity.

1. Appeal allowed. Under Schedule 1 Rules 38–42 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004, Rule 41(2) permitted, but did not require, the Employment Tribunal to have regard to the paying party’s ability to pay when deciding whether to award costs and, if so, the amount.
2. The discretion had to be exercised judicially. An award was not restricted to the amount the paying party could presently afford; the Tribunal could take account of possible future earnings. An appeal against a costs order would succeed only where there was an error of legal principle, a failure to consider a relevant matter, reliance on an irrelevant matter, or a perverse conclusion.
3. Having decided that ability to pay was relevant, the Tribunal had to consider the evidence bearing on that issue. Its conclusion that the Claimant had recently been able to obtain and perform well-paid freelance consultancy work was a perverse reading of the evidence. The relevant material showed only two consultancy engagements, most recently in 2006, producing total fees of £4,300, together with lengthy unemployment and a history of intermittent, mainly low-paid temporary work. The Tribunal therefore failed to take account of relevant matters, alternatively relied on irrelevant matters or reached a perverse conclusion.
4. The EAT declined to substitute an order that no costs should be awarded. The question remained one for the Tribunal’s discretion, and even on the corrected evidence it might consider a nominal award appropriate. The Respondent’s costs application was remitted, so far as practicable, to the same Employment Tribunal for reconsideration in light of the Claimant’s means and ability to pay.

• Employment Appeal Tribunal: allowed the appeal against the Birmingham Employment Tribunal’s costs judgment and remitted the Respondent’s costs application for reconsideration by, so far as practicable, the same Tribunal.
• Birmingham Employment Tribunal: awarded the Respondent £9,000 costs after the Claimant withdrew his proceedings.