Kovacs v Queen Mary and Westfield College

Neutral Citation No: [2002] EWCA Civ 352 Case No: A1/2000/3689/EATRF

IN THE SUPREME COURT OF JUDICATURE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

Royal Courts of JusticeStrand, London, WC2A 2LL

Date: 22 nd March 2002

Before :

LORD JUSTICE SIMON BROWN LORD JUSTICE CHADWICK

and MR JUSTICE CHARLES

- - - - - - - - - - - - - - - - - - - - -Between :

DR IREN KOVACS Appellant - and -

QUEEN MARY & WESTFIELD COLLEGE-and-

THE ROYAL HOSPITALS NHS TRUST

Respondents

- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -

Joe Sykes Esq (instructed by Nigel Adams & Co) for the Appellant

Damian Brown Esq(instructed by Messrs Beachcroft Wansboroughs) for the Second Respondent

The First Respondent did not appear and was not represented

Hearing dates : 12th March 2002- - - - - - - - - - - - - - - - - - - - -

JUDGMENT: APPROVED BY THE COURT FOR HANDING DOWN

(SUBJECT TO EDITORIAL CORRECTIONS)

Judgment Approved by the court for handing down(subject to editorial corrections)

Kovacs -v- Queen Mary & Westfield College & Others

Lord Justice Simon Brown:

1. On 30 July 1999, following a 13-day hearing which concluded on 1 July 1999, the Employment Tribunal issued a (closely typed) 65-page decision: i) dismissing Dr Iren Kovacs’ claims of unlawful direct race and sex discrimination against Queen Mary & Westfield College (the first respondent); ii) upholding her claim for unfair dismissal against the first respondent and awarding her £1,588.05 compensation; iii) ordering her to pay £500 towards the first respondent’s costs; iv) dismissing her claims of unlawful race and sex discrimination (both direct and by way of victimisation) against The Royal Hospitals NHS Trust (the second respondent); and iv) ordering her to pay the second respondents taxed costs. The present appeal is concerned only with the fifth and final paragraph of the order and is brought with the permission of Peter Gibson LJ against the decision of the Employment Appeal Tribunal (presided over by Judge Levy QC) dated 1 December 2000 dismissing Dr Kovacs appeal against it.

2. The costs orders were made under rule 12 of the Industrial Tribunals (Constitution etc) Regulations 1993 which, so far as material, provides:

“(1) Where, in the opinion of the tribunal, a party has in bringing or conducting the proceedings acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably, the tribunal may make -

(a) an order containing an award against that party in respect of the costs incurred by another party;

(b) …

(2) …

(3) An order containing an award against a party (‘the first party’) in respect of the costs incurred by another party (‘the second party’) shall be -

(a) where the tribunal thinks fit, an order that the first party pay to the second party a specified sum not exceeding £500;

(b) …

(c) in any other case, an order that the first party pay to the second party the whole or a specified part of the costs incurred by the second party as taxed (if not otherwise agreed).”

3. The critical issue raised by this appeal is whether, in deciding what, if any, costs order to make under that rule, the Employment Tribunal should or should not take into account the means of the paying party.



4. That issue was dealt with by the Employment Tribunal in paragraph 29.2 of their decision as follows:

“The Tribunal made enquiry as to the Applicant’s means because this is a matter to which we are directed by precedent when considering an application for costs. We were informed upon enquiry (without having pressed the Applicant to give evidence, since she had decided not to do so at each previous stage of this hearing) that the Applicant has a pension in the region of £535 per month and that she runs a Harley Street clinic which just breaks even. She also has debts from previous litigation and a mortgage, both of these shared with Dr Gorog [the appellant’s husband who acted for her in the Tribunal proceedings] (who said he was on a small occupational pension). We are not satisfied that we have in fact been told everything, but we do not have the resources and it is not intended that this Tribunal should engage on a full means enquiry of the sort sometimes undertaken by Magistrates’ Courts. Nor is it intended that issues in respect of means should be binding or overwhelming when we are considering costs applications. It does not appear, on the face of the relevant Regulations, that it was intended that poor litigants may misbehave with impunity and without fearing that any significant costs order will be made against them, whereas wealthy ones must behave themselves because otherwise an order will be made. We are satisfied that the Applicant should, if it is otherwise appropriate, pay some costs despite what was said about her restricted finances.”

5. It is apparent from that paragraph, as I shall shortly explain, that the Employment Tribunal did not have before them the decision of the EAT (presided over by Lindsay J) given on 14 June 1999 (as it happens, the very day the Tribunal began hearing Dr Kovacs’s complaint) in Beynon -v- Scadden [1999] IRLR 701. Let me say at once that, had they seen it, they could only have been confirmed in their view that the appellant’s restricted means were no bar to the making of a costs order against her. Beynon decided that tribunals are not required to examine a party’s means before making an order for costs against them.

6. The EAT in the present case, of course, did have the benefit of the decision in Beynon and were able, therefore, to dismiss the appeal without difficulty.

7. At the heart of the appellant’s argument before us is the contention that Beynon was wrongly decided and that the correct approach is to be found stated in earlier decisions of the EAT, most notably Carr -v- Allen-Bradley Electronics Limited [1980] IRLR 263, Wiggin Alloys Limited -v- Jenkins [1981] IRLR 275, Dorney -v- Chippenham College (unreported, 28 May 1997), and Omar -v- Worldwide News Inc [1998] IRLR 291. Now that, for the first time, the point has arisen in this court we, of course, are free to deal with it as a matter of principle, unencumbered by whatever approaches have been adopted in the past. It is nevertheless appropriate to take brief



note of the earlier decisions, if only because it is Mr Sykes’s contention on behalf of the appellant that they indicate a recognition on the part of tribunals down the years that a party’s means really ought in justice to affect the exercise of the tribunal’s discretion as to costs.

8. Before looking briefly at each of the five decisions referred to, it should be observed that several were concerned with the question whether the tribunal could properly take account of: a) the conduct, and more particularly b) the means, of the paying party’s representative (generally a trade union) in the exercise of its rule 12 discretion. Although we are not here concerned with that aspect of the matter, it is, nevertheless, worth noting that implicit in the question whether account should be taken of the claimant’s union’s means is the assumption that means as such are relevant. The most directly relevant passages from the five judgments are these:

i) In Carr -v- Allen-Bradley Electronics Limited the EAT (presided over by Waterhouse J) said this:

“The normal rule is that there is no order for costs. In the comparatively infrequent case in which the claimant has acted frivolously or vexatiously, we think that the Tribunal should consider the means of the claimant himself rather than of his trade union, in deciding, first of all, whether or not to make an order in respect of the costs, and, secondly, the form of the order to be made.” (paragraph 20)

ii) In Wiggin Alloys Limited -v- Jenkins the EAT (presided over by Browne-Wilkinson J as he then was) rejected the employers’ appeal against the Industrial Tribunal’s refusal to award them costs, notwithstanding that the applicant had acted vexatiously, in these terms:

“… Mr Glover has urged that the Tribunal should not have refused to make an order simply on the grounds that the applicant was not in a position to pay the costs. He says that if no order is made, then there is no discouragement to the bringing of frivolous and vexatious proceedings which was obviously the intention behind the regulation. We do not feel able to accept that submission although we, too, feel sympathy for the employers. The matter was within the discretion of the Industrial Tribunal. The regulation says that the Tribunal may make an order. In our view, the inability of the applicant to meet any order for costs is a matter which is properly to be taken into consideration and, therefore, we cannot see that they have erred in any way in law in exercising their discretion. We should emphasise that it is no consequence of our decision that the mere fact that for the time being an applicant is penniless is in every case a sufficient ground for refusing an order for costs. Each case depends upon its own circumstances and lies within the discretion of the Tribunal.” (paragraph 5)



iii) In Dorney -v- Chippenham College the EAT (presided over by Judge Peter Clark) said this:

“[The Industrial Tribunal] heard that the union had provided an indemnity as to costs to these applicants, and found that the union took a prominent role in this case, which raised an important point of principle for its membership. In these circumstances we can see no grounds for criticising the Tribunal for taking the costs indemnity into account when considering the means of these applicants to pay costs.”

iv) In Omar -v- Worldwide News Inc the EAT (presided over by Judge Colin Smith QC) set aside the Industrial Tribunal’s order for costs against the applicant, stating in paragraph 17:

“[Counsel for the applicant] established on authority that, as a matter of practice, Industrial Tribunals must look at an applicant’s personal means to pay before making an order for costs against him as a party. See Dorney -v- Chippenham College and also Wiggin Alloys Limited -v- Jenkins.”

The EAT concluded in paragraph 21 of their judgment:

“… no doubt, because they felt that the union’s means were relevant, which they were not, the Industrial Tribunal never inquired at all into the means of the appellant himself. … The present costs order must be set aside and the matter should be remitted to the Industrial Tribunal to determine what order for costs, if any, should be made, in the light of their finding … that the appellant had fabricated his evidence before them, and in the light of his personal means and ability to meet any such order without any reference to the means of the union which represented him.”

v) In Beynon -v- Scadden the EAT dismissed the appellant’s appeal against a costs order which specified that “This order has been made having taken into account both the involvement of and the means of the applicant’s union, Unison”. Lindsay J’s judgment discussed each of the four earlier cases. The most relevant passages of his judgment for present purposes are, I think, these:

“19. … Each case, as Wiggin Alloys says, depends upon its own circumstances and lies within the discretion of the Tribunal. It is perhaps notable, so far as concerns parties’ means, that the present rule 12 neither requires nor provides any machinery for an inquiry into a party’s means. If in every case, as a precondition of any order as to costs, there had to be an inquiry into the prospective payer’s means one might reasonably expect the employment tribunal to have been empowered so to



enquire. It is not as if the draughtsman of the rules had no such empowerment in mind; only a little earlier in the Rules, rule 7(5) makes the taking of reasonable steps to ascertain ability to pay a precondition of an order. Whilst it will, no doubt, usually be desirable to look into means, when that is possible, before an order for costs is made, it cannot be said that a failure to do so necessarily makes the order an improper exercise of the discretion.

…

23. … in Omar it was held as established that an industrial tribunal must look at an applicant’s personal means to pay before making an order for costs against him. The rule contains no such requirement, in contrast with rule 7(4), as we have pointed out above [the reference should be to rule 7(5)]. Dorney, supra, and Wiggin Alloys, supra, were cited in support of that proposition. We cannot read Dorney as authority for such a view; means were considered by the industrial tribunal in that case but the case does not suggest that that was a necessary precondition of a proper award. In Wiggin Alloys the total inability of the employee to pay costs was borne in mind by the Industrial Tribunal but that is far from saying that it would necessarily have been wrong not to have had that in mind and the EAT had emphasised that the fact that the party was penniless did not of itself invariably provide a sufficient ground for not making an order for costs against him.”

9. In short, the EAT in Beynon concluded that “whilst it will … usually be desirable to look into means … a failure to do so [does not] necessarily make … the order … improper”, a conclusion which they regarded as reconcilable with all the earlier decisions save only for Omar which they thought to have been wrongly decided.

10. For my part I have the gravest doubts whether Beynon is reconcilable with any of the earlier cases but frankly that matters nothing. As I have already observed, we can and must consider the matter afresh. And that, indeed, is surely desirable given the odd result reached not only in Beynon but also in Wiggin Alloys before it. If one thing is plain it is that Tribunals either should or they should not take account of a party’s means before making a costs order against them. If they should, then clearly they will need to inquire into his means for the purpose (and logically, of course, as Mr Sykes was constrained to accept in argument, they would need also to enquire into the other party’s means). It cannot be right to say (as Wiggin Alloys seems to suggest) that in the exercise of the rule 12 discretion the Tribunal is free to have regard to means or to ignore them as it chooses. And if, of course, as Beynon appears to hold, it can indeed ignore them, then it is difficult to understand why “it will usually be desirable to look into means”.



11. I turn, therefore, to the central question arising: ought tribunals to take account of the respective parties’ means when exercising their costs jurisdiction under rule 12?

12. In my judgment the clear answer to this question is “No”. None of the earlier EAT cases - which, as I am prepared to accept, suggested that they should (or, in the case of Wiggin Alloys, at least that they could) - give any reasoning whatever in support of that view. Rather the only reasoning in the EAT cases appears in Lindsay J’s judgment in Beynon where he makes the telling point that rule 12 “neither requires nor provides any machinery for an inquiry into a party’s means”, in contrast to regulation 7(5) which provides:

“No order shall be made under this rule [a rule which provides for the payment by a party of a deposit not exceeding £150 as a condition of being permitted to pursue a contention which the tribunal considers to have no reasonable prospect of success] unless the tribunal has taken reasonable steps to ascertain the ability of the party against whom it is proposed to make the order to comply with such an order and has taken account of any information so ascertained in determining the amount of the deposit.”

13. No less helpful is the reasoning to be found in the passage already quoted from the Employment Tribunal’s judgment in the present case, where they observe first that “we do not have the resources and it is not intended that this Tribunal should engage on a full means enquiry of the sort sometimes undertaken by Magistrates’ Courts”, and secondly that:

“It does not appear, on the face of the relevant Regulations, that it was intended that poor litigants may misbehave with impunity and without fearing that any significant costs order will be made against them, whereas wealthy ones must behave themselves because otherwise an order will be made.”

14. Mr Sykes argues that a party’s means are important in this context because Employment Tribunals have a unique place in the life of this country, providing as they do a means of resolving industrial tensions and ventilating grievances in the sensitive fields of racial and sexual discrimination. It is, he submits, important that parties are not deterred from their use by the prospect of adverse costs orders beyond their means.

15. I reject this argument. Of course Employment Tribunals fulfil a unique function and give rise to special considerations. That is why no order for costs can ever be made except against a party who has behaved “frivolously, vexatiously, abusively, disruptively or otherwise unreasonably” (rule 12(1)). Once that threshold of unreasonable conduct has been crossed, however, I see no reason why the misbehaving party should not be required to compensate his opponent for costs which plainly he should not have had to incur. It is right that parties should not be deterred



from invoking the Tribunal’s jurisdiction. There seems to me altogether less reason, however, not to deter them from behaving unreasonably; indeed, quite the contrary.

16. Nor is there anything in Mr Sykes’s submission, vigorously and repeatedly though it was urged, that it is quite simply unfair and unjust not to have regard to a party’s means when deciding whether to order costs against him. The plain fact is that courts up and down the country, including this Court, daily make orders for costs (often very substantial costs) against impecunious parties without any regard whatever to their means and without any suggestion being made that this could be thought unfair. Even if the losing party is legally aided, the court generally makes a “football pool” order against them. Plainly the costs ordered to be paid may never be recovered. That, however, is a matter of enforcement and it is only then that means, and the possibility of instalment payments, become relevant. Costs orders made by the Employment Tribunal, I should note, are registered, taxed and enforced in the County Court. In this very case the second respondent’s costs were subject to detailed assessment in the County Court. Since, however, the appellant chose not to dispute them, a default assessment was eventually made in the sum of £62,000.

17. Before leaving this part of the case, I should make one other point. In 2001 amended Regulations were introduced which, so far as relevant: a) increased the amount for which the Tribunal can make a summary costs order from £500 to £10,000 (new rule 14(3)(a)), and b) re-formulated the threshold test for costs orders to read as follows:

“14(1) Where, in the opinion of the tribunal a party has in bringing the proceedings, or a party or party’s representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived, the tribunal shall consider making, and if it so decides, may make [an order for costs].”

18. The reference there, for the first time, to “a party’s representative” suggests that the draughtsman clearly had in mind the line of cases discussed above ending in Beynon (decided, as stated in 1999) conspicuously absent from the new Regulations is any suggestion that in making orders for costs the Tribunal should, contrary to what Beynon decided, take account of means.

19. In granting permission to appeal Peter Gibson LJ thought “the attack on the correctness of Beynon -v- Scadden … unlikely to succeed” but concluded:

“the disparity between the maximum award under rule 12(3)(a) of £500 at the relevant time and what I am told is the amount claimed by the second respondent in the award to it under rule 12(3)(c), viz more than £60,000, is so great that I cannot say that it is beyond argument that the ET erred in making the unlimited award of all the second respondent’s costs in the way



it did, particularly when the appellant had been successful in resisting the application to strike out the claim as frivolous.”

20. I turn finally, therefore, to deal with this (essentially subsidiary) ground of appeal, for which purpose it is necessary, I fear, to return to what the EAT rightly described as the Employment Tribunal’s “exceptionally well-reasoned judgment” to indicate something more of their reasons for making these disparate costs orders.

21. The section of the Tribunal’s judgment dealing with costs covers five pages and itself refers back to an earlier five-page section describing the manner in which “Dr Gorog, with the applicant actively prompting him on numerous occasions, has conducted these proceedings”, a manner which the Tribunal called

“… a determined, persistent attempt to manipulate the judicial process into the witch hunt against both respondents, as a means of getting at Professor Newland, which the applicant desired. Things which got in the way of that aim (objections by the respondents, rulings by the Chairman, the proper courtesies of the Tribunal room itself, etc) were attacked, criticised, misrepresented or ignored. We are satisfied that this was done deliberately.”

The Chairman, I may note, said by the EAT to be “very experienced in this field”, was Ms V K Gay.

22. In finding the appellant’s conduct of the litigation against the first respondent frivolous, vexatious and unreasonable the Tribunal referred not only to the matters just quoted but to various other matters too, including:

“The applicant has frequently and repeatedly made outrageous allegations against professional people employed or engaged by the first respondent. She has asserted that Professor Newland intentionally misrepresented Professor Davidson’s report on the value of her work. She has asserted that he slandered, defamed and persecuted her. She has accused Professor Meade of having a vindictive personal bias. All these matters have been pursued on her behalf at this hearing and none has been proved … she has persistently misrepresented the content of documents, insulted Professor Newland and demonstrated dislike of Professor Meade. She has abused or accused of bias everyone who expressed an opinion (or whom she perceived as expressing an opinion) which was less than glowing about her scientific achievements. The applicant has suggested that there has been a conspiracy against her. This has been without any foundation. It was pursued on her behalf by Dr Gorog in his opening submissions and during the evidence. … [She has made] many other similar groundless allegations, mainly directed at Professor Newland. There was never any scintilla



of evidence to support these accusations. The conduct of the applicant in these respects necessitated this extended hearing and the calling of witnesses to deal with the points.”

23. The Tribunal nevertheless limited the award of costs in favour of the first respondent to £500 because they found the appellant to have been unfairly dismissed and found too that some of the first respondent’s procedures were not transparent and that this was “likely to feed or fuel feelings of unlawful discrimination from a minority group or a woman who fails to make progress”, so that “there was some genuine underlying grievance” in the case against the first respondent.

24. With regard to the order for costs against the second respondent, however, the Tribunal saw the matter very differently. Again, in the interests of space, I shall quote only selectively from their judgment:

“We are satisfied that there was not and has never been a genuine claim of race or sex discrimination against the second respondent but rather that they have been dragged in as part of a determined vendetta against Professor Newland. … Throughout the proceedings Professor Newland was the subject of unsubstantiated allegations … we are satisfied that the litigation has been conducted in a way which is frivolous, vexatious and unreasonable. The second respondent has been and has had to be represented throughout these entirely unmeritorious proceedings. The use of the Employment Tribunal and extensive litigation to pursue one man is wholly improper, particularly when the motivation of that man is identified as being something entirely different from race and sex discrimination. We rely on the fact that Dr Gorog said both in evidence and in submissions to the Tribunal that the proof of the pudding was that what Professor Newland really wanted was to have control of the haemostatometer or TSA. If that was his motive, it undermines the race and sex discrimination claim … we cannot think of a more flagrant abuse of the purposes of litigation. We are satisfied that in these exceptional circumstances it is appropriate to order, within regulation 12(3)(c), that the applicant should pay the whole of the costs of the second respondent, to be taxed if not agreed. By this we mean all the costs incurred by the second respondent in this litigation.”

25. The Tribunal then turned to consider a written offer of £10,000 made “without prejudice save as to costs” on behalf of both respondents in February 1999 and refused by the appellant. Although urged by the respondents to take this into account the Tribunal concluded:

“that the time has not come in Employment Tribunals when we should regard ourselves as having moved to the general civil



rule whereby, if you win but recover less than was offered, you pay the costs from the date of the offer.”

They accordingly, stated that they had “not been influenced” by the letter. Whilst, therefore, the offer has no relevance on this appeal, I for my part would respectfully question whether indeed such offers should be wholly ignored when tribunals come to exercise their rule 12 discretion. That, however, must be for consideration another day.

26. The Tribunal’s reasoning in my judgment fully explains and amply justifies the unrestricted order made in favour of the second respondent, and that is so notwithstanding that the appellant had successfully resisted an earlier striking out application. The fact that another Tribunal, necessarily without the advantage of a 13-day hearing, had earlier regarded the appellant’s case as “neither frivolous nor vexatious” and, therefore, as one which could not properly be struck out as being manifestly devoid of merit is in no way inconsistent with the conclusions reached on the hearing of the substantive application. The Tribunal’s final judgment, so far as the application against second respondent was concerned: that this “was not and has never been a genuine claim”; rather they were dragged into the proceedings “as part of a determined vendetta against Professor Newland”; that these were “entirely unmeritorious proceedings”; and that “we cannot think of a more flagrant abuse of the purposes of litigation” to my mind fully justify the unlimited award that was in fact made.

27. I would dismiss this appeal.

Lord Justice Chadwick:

28. Employment tribunals – formerly known as industrial tribunals but renamed by section 1(1) of the Employment Rights (Dispute Resolution) Act 1998 – are established under, and derive their powers from, regulations made under statute - see section 1(1) of the Employment Tribunals Act 1996 and, formerly, section 12 of the Industrial Training Act 1964 and section 128(1) of the Employment Protection (Consolidation) Act 1978. Regulations made by successive statutory instruments under provisions in that primary legislation have conferred power on industrial tribunals to make orders containing an award against a party in respect of the costs incurred by another party – see rule 10 in the schedule to the Industrial Tribunals (Labour Relations) Regulations 1974 (SI 1974/1386), rule 11 in schedule 1 to the Industrial Tribunals (Rules of Procedure) Regulations 1985 (SI 1985/16), rule 12 in schedule 1 to the Industrial Tribunals (Constitution and Rules of Procedure) Regulations 1993 (SI 1993/2687) and, now, rule 14 in schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001 (SI 2001/1171).

29. It has been a consistent feature of those regulations that the power to make an order containing an award of costs against a party to proceedings before an industrial tribunal has been subject to a restriction relating to conduct. Formerly, the power could only be exercised if, in the opinion of the tribunal, the party had acted



frivolously or vexatiously in bringing or conducting the proceedings. The threshold was subsequently reduced by the addition of the words “or otherwise unreasonably”; and further reduced by the addition to frivolous, vexatious and unreasonable conduct of conduct that was abusive or disruptive. As Lord Justice Simon Brown has pointed out, the most recent regulations – not applicable in the present case – continue the trend towards reduction of the threshold by including (i) cases where the bringing or conducting of the proceedings by a party has been misconceived and (ii) cases where it is the conduct of the proceedings by the party’s representative that has been vexatious, abusive, disruptive or otherwise unreasonable.

30. I find it significant that, on the two occasions on which Parliament has re-enacted the primary legislation under which regulations containing the power to award costs had been made, it preserved (by an express provision) the regulations made under the previous legislation and then current – see section 128(2) of the 1978 Act and section 1(2) of the 1996 Act. The inference, as it seems to me, must be that Parliament was satisfied that the power to make orders containing an award of costs, subject to the restriction referable to conduct, gave proper recognition to the need to ensure (i) that, in connection with the determination of employment rights, a party – and, in particular, an employee – could have recourse to a tribunal without being deterred by the potential liability for the other party’s costs which is a feature of litigation in the courts and (ii) that that immunity was not abused. To put the point another way, Parliament may be taken to have endorsed the view – implicit in the regulations as made from time to time - that there was no reason why one party should not recover costs from the other party to an employment dispute if that other party had misused the special procedure which it had made available for the determination of that dispute.

31. If a restriction referable to conduct is the only restriction on the power to award costs in cases before employment tribunals which Parliament can be said to have intended (as I think it is), then I can see no reason why an employment tribunal should think it appropriate to superimpose a further restriction based on the ability to pay, for which there is no basis in the legislation or in the regulations, and no parallel in ordinary litigation. It must be kept in mind that, where Parliament has intended that the amount of the costs ordered against an individual in ordinary litigation (as distinct from the amount of the costs that can be enforced against him from time to time) should be limited to the amount which it is reasonable for him to pay, it has done so in express terms – see section 11(1) of the Access to Justice Act 1999. Further, where the Secretary of State (as the rule-making body for the purposes of the regulations) intended that the tribunal should take ability to pay into account – when deciding whether to order payment of a deposit as a condition of being permitted to continue to take part in proceedings – he made an express provision to that effect – see rule 7(5) of the 1993 rules, now rule 7(5) in the 2001 rules.

32. For my part, I too would reject the suggestion, implicit in the decision of the Employment Appeal Tribunal in Wiggins Alloys Limited v Jenkins [1981] IRLR 275, that a tribunal has a discretion whether or not to take account of ability to pay. If ability to pay were a relevant factor in deciding whether or not to make an order for costs under the power conferred (in the present case) by rule 12 of the 1993 Rules, then the tribunal would be obliged to take that factor into account. If ability to pay is



not a relevant factor, then the tribunal must not take ability to pay into account. And, if ability to pay were a relevant factor, I can see no basis upon which it could be right to make an order for payment of an amount which the tribunal had satisfied itself that the party would be unable to pay. How could it be reasonable to require a party to pay a sum which the tribunal has decided he cannot pay?

33. The better view, as it seems to me, is that ability to pay is not a factor which an employment tribunal is required or entitled to take into account when deciding whether or not to make an order under the power conferred by rule 12 of the 1993 Rules (now rule 14 of the 2001 Rules). The tribunal has no power to investigate a party’s means. It has no role in relation to the detailed assessment of costs – although it can make a summary assessment under rule 12(3)(a) of the 1993 rules (now rule 14(3) of the 2001 Rules). It has no role in relation to enforcement of any order as to costs which it may make. Any sum payable in pursuance of a decision of an employment tribunal – including any sum payable in respect of costs - when registered in accordance with industrial tribunal procedure regulations shall “if a county court so orders, be recoverable by execution issued from the county court or otherwise as if it were payable under an order of that court” - see section 15(1) of the 1996 Act. The county court has ample powers to order payment of costs by instalments and to stay any such order for such time and from time to time if the party against whom it is made is unable to pay – see section 71 of the County Courts Act 1984. There is no reason to think that an order for costs made by an employment tribunal (without regard to ability to pay) will be any more an instrument of oppression than an order for costs made in the county court. Orders for costs (without regard to ability to pay) are made as a matter of course in the county court.

34. It follows that I agree that this appeal should be dismissed.

35. I think it right to add this. Where an employment tribunal decides to make an order containing an award against one party in respect of the costs incurred by another party – in circumstances permitted by rule 12(1) of the 1993 (now rule 14(1) of the 2001 Rules) – the form which that order can take is prescribed by sub-rule (3). That order may “where the tribunal thinks fit” be an order for a specified sum – see paragraph (a) of the sub-rule. Under the 1993 Rules that sum was limited to £500; the amount has been increased to £10,000 by the 2001 rules. For my part, I think that the power conferred by paragraph (a) is intended to be exercised in cases where the tribunal feels able to make a summary assessment; and is satisfied that a summary assessment in an amount which does not exceed the specified sum would compensate the other party for the costs attributable to the vexatious, abusive, disruptive or unreasonable conduct which has led the tribunal to decide, under sub-rule (1), to make an order for costs. In other cases, unless the amount of the costs to be paid is agreed – see sub-rule (3)(b) – the amount is to be the subject of a detailed assessment by the county court – see sub-rules (3)(c) and (6). The point does not fall for decision on this appeal (and I express no concluded view upon it); but I should not be taken as supporting the view that, in a case where the tribunal has decided under sub-rule (1) to make an order for costs, it can use the power under sub-rule (3)(a) to award an amount which is less than a proper compensation for the costs incurred by the receiving party by reason of the culpable conduct which has led to the decision under sub-rule (1).



Mr Justice Charles:

36. The statements found in the cases set out in paragraph 8 of the judgment of Simon Brown LJ as to the Employment Tribunal taking into account ability to pay as a factor in deciding whether to make an order for costs were approved by the lay members of the EAT. It seems to me likely those statements were at least in part based on the experience and views of those lay members (and perhaps others sitting in both the EAT and Employment Tribunals) as to what was the correct and fair approach.

37. The lay members have considerable experience and expertise in the field of industrial relations and from my time in the EAT I am very aware of how helpful their views can be. But the cases do not contain reasons based on such experience and expertise for the views that ability to pay can, or should, be taken into account in deciding whether to make an order for costs under the relevant rule.

38. Notwithstanding the support of lay members and judges of the EAT for a contrary view, I agree with what I consider to be the compelling reasoning contained in the judgments of Simon Brown and Chadwick LJJ and thus with the conclusion that ability to pay is not a factor to be taken into account by an Employment Tribunal in deciding whether or not to make an order for costs under the relevant rule. I also agree with paragraph 35 of the judgment of Chadwick LJ.

39. It follows that I agree that this appeal should be dismissed.

Documents

Kovacs v Queen Mary and Westfield College