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Employment Appeal Tribunal upholds costs award of around £87,000

23rd August, 2013

In the recent decision handed down by the Employment Appeal Tribunal (EAT) in the case of Vaughan v London Borough of Lewisham and others UKEAT/0533/12, a costs award of around £87,000 made against an unemployed and unrepresented claimant was upheld.

The EAT held that Ms Vaughan’s claims against the London Borough of Lewisham (the Respondents) for discrimination and harassment on grounds of race and/or disability and for detriment suffered for alleged whistleblowing were misconceived and that she should have appreciated this.

Three substantive hearings followed in this matter, which lasted 20 days in total. The Employment Tribunal ordered that Ms Vaughan had to pay a third of the Respondents’ costs (to be assessed in the County Court). The Respondents claimed to have incurred around £260,000 in costs for this matter meaning that Ms Vaughan could be obliged to pay a sum up to £87,000. Although Ms Vaughan was unemployed and suffering from depression, the Employment Tribunal decided that there were realistic prospects that the Claimant would be able to work in due course.

Rule 40 in schedule 1 of The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (the Regulations) provides a costs order may be made where, in the Employment Tribunal’s opinion: “the paying party has in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived” (Rule 40(3)). “Misconceived” is further defined in the Regulations as meaning “no reasonable prospects of success”.

The Employment Tribunal must consider a two-stage test when determining costs awards:

1. Whether the conditions in rule 40(3) above had been met, namely whether the claim had been misconceived; and

2. Whether the tribunal had exercised its discretion justly.

Ms Vaughan appealed the decision to award costs on the basis that there had been no costs warning, no deposit order, no account taken of settlement orders or the fact she was unrepresented and that the decision was unfair due to her limited means. She also claimed the decision was not sufficiently reasoned and that not enough weight had been given to various factors which were set out in her claims.

The EAT dismissed her claims. Ms Vaughan failed to provide supporting evidence and refused to accept lawful explanations for the acts that been carried out. Although the Respondents had not provided costs warnings or sought a deposit order from the Claimant, the EAT ruled that this did not mean that her claims had any reasonable prospects of success. The EAT said that the absence of a deposit order or costs warning is not irrelevant, although the weight to be given to these factors must be judged on the circumstances of the case and the fact a party is unrepresented is a consideration when they exercise their discretion.

The new sifting stage effective from July 2013 may now limit the number of claims which are deemed as being “misconceived” from being brought before the Employment Tribunal. For further information or advice in relation to costs in the Employment Tribunal, please contact Claire Brook on 01244 405575 or via email to [email protected]


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