M Willis v GWB Harthills LLP & Ors

An Employment Tribunal has a discretion, but no duty, to consider ability to pay when deciding whether to make a costs order and when setting its amount under rule 84 of the Employment Tribunal Rules 2013. It should give sufficient reasons to show broadly how it has treated ability to pay where it takes that matter into account.

The assessment may take a broad and reasonably optimistic view of future means. It may include capital assets, a party’s share in jointly owned property, and anticipated income. Limited means do not require the Tribunal to make no order or to confine an order to an amount immediately payable. An appellate court will not interfere absent an error of law in that evaluative discretion.

The claimant, a former managing partner of the first respondent solicitors’ firm, brought two Employment Tribunal claims arising from a dispute during his absence through cancer. The first resulted in a consent liability judgment but no remedy award. The second was dismissed.

Following findings that the claimant had acted dishonestly and unreasonably in the proceedings, the Employment Tribunal ordered him to pay the respondents’ costs, capped at £210,000 and subject to detailed assessment. It took account of his half-share in the family home and an anticipated profit-share payment.

The claimant appealed the costs order. He contended that the Tribunal had failed to consider ability to pay when exercising its discretion, had overlooked the impact on his family, and had wrongly assessed his assets, debts and prospective profit share.

1. Appeal dismissed. The Employment Tribunal made no error of law in ordering costs capped at £210,000.

2. A costs application may usefully be analysed in three stages: whether threshold conduct exists; whether a costs order should be made; and the amount of any order. Ability to pay may be considered at both the discretionary and quantum stages under rule 84 of the Employment Tribunal Rules 2013. The stages need not be separately labelled. Where the Tribunal has considered ability to pay when fixing quantum and concludes that the full award is affordable, it need not repeat that conclusion expressly at the earlier discretionary stage.

3. Ability to pay is discretionary. A Tribunal may assess it broadly, including capital assets which are not readily realisable, a party’s interest in jointly owned property, prospective income and the realistic ability to pay over time. Limited means do not compel either a refusal of costs or a cap at the sum presently payable.

4. The Employment Tribunal had considered ability to pay at the discretionary stage in paragraphs 64 and 65 of its judgment, and again when fixing the cap. Its scepticism about the claimant’s evidence entitled it to take a reasonably optimistic view of his future means. It was entitled to rely on his substantial half-share in the family home and likely profit share despite his other debts.

5. The Tribunal was not required to make express findings about every effect that a sale might have on the claimant’s wife and children. Nor did it err by observing that equity release, a charge, or other means might release value from a substantial asset. Its assessment of the prospective profit share was also open to it. The later recoupment of the costs from that profit share played no part in deciding the appeal.

• Employment Appeal Tribunal: dismissed the claimant’s appeal against the Employment Tribunal’s costs judgment.
• Employment Tribunal: by a judgment sent on 21 December 2022, ordered the claimant to pay the respondents’ costs, capped at £210,000, with detailed assessment in the County Court. Applications for reconsideration were later dismissed and were not appealed.