Herry v Dudley Metropolitan Council (Practice and Procedure: Costs)

Where an Employment Tribunal decides to have regard to a paying party’s ability to pay when making a costs order, it must assess present means and any realistic future earning capacity, and reflect those matters in a reasonable and proportionate award. It may make a substantial order to allow future recovery, but must explain why the amount is realistically justified and why a cap or proportion is inappropriate.

A Tribunal need not expressly consider a partial costs order where it has found that proceedings were unreasonably brought and pursued throughout. A long absence from work attributed to stress does not of itself establish a mental impairment or disability. An entrenched reaction to perceived workplace injustice may be a matter of character or personality rather than a mental impairment.

The Claimant appealed two Employment Tribunal decisions arising from litigation against a local authority and a school governing body.

First, following the dismissal of extensive employment claims, the Tribunal ordered him to pay the Respondents’ entire costs. Those costs were later assessed at £110,111.89. The Tribunal found him presently impecunious but considered that he could return to teaching or other work. The appeal concerned whether the full costs order was adequately reasoned, particularly in light of his means.

Secondly, in later disability and race discrimination proceedings, an Employment Judge held that the Claimant had not shown that dyslexia, stress or depression made him disabled during April to June 2014. The issue was whether that conclusion disclosed an error of law.

1. The costs appeal was allowed in part. The Tribunal had adequately explained why, apart from ability to pay, the Claimant should bear all the Respondents’ costs. It found that he had unreasonably brought and pursued the proceedings throughout, while the Respondents had acted reasonably and proportionately. In those circumstances it was unnecessary to give separate reasons for declining a time-limited, proportionate or capped order.

2. The Tribunal nevertheless erred after electing to take account of ability to pay under Rule 84. It was entitled to consider future earning capacity as well as current impecuniosity. But it did not make findings about likely future earnings, explain how a teacher earning about £2,000 net monthly could realistically pay a debt exceeding £100,000, or explain why a cap or proportion of costs was not appropriate. The full award was therefore insufficiently reasoned and disproportionate on the Tribunal’s own chosen approach.

3. The finding that the Claimant should pay the whole costs, subject to ability to pay, was upheld. The Rule 84 question—whether and how to have regard to ability to pay—was remitted to the same Tribunal. A party relying on future earning capacity in support of costs should disclose any near-term intention to pursue bankruptcy proceedings, because bankruptcy may extinguish the debt before that capacity can be realised.

4. The disability appeal was dismissed. The Employment Judge was entitled to find no substantial adverse effect from dyslexia and to treat the Claimant’s stress as a reaction to perceived adverse treatment rather than a proven mental impairment. A prolonged absence certified as stress was not conclusive. The Judge was not required to infer a disability from procedural adjustments made when the Claimant conducted complex Tribunal litigation, since that activity differed materially from his professional work as a teacher.

• Employment Appeal Tribunal: The costs appeal was allowed in part and remitted to the same Employment Tribunal. The appeal against the disability decision was dismissed.
• Employment Tribunal: By a reserved judgment dated 21 April 2015, it ordered the Claimant to pay the Respondents’ costs, to be assessed. By a judgment dated 27 April 2015, it held that the Claimant was not a disabled person during the material period.