The Employment Appeal Tribunal (“EAT”) held in the recent case of Chadburn v Doncaster and Basset Law Hospital NHS Foundation Trust that a costs award will still be made against a party who cannot afford to pay, if it is reasonable to believe that her financial situation might improve in the future.  

Mrs Chadburn brought claims for unfair dismissal and race discrimination against her employer, an NHS trust. Whilst the unfair dismissal element of the claim had prospects of success, the tribunal held that Mrs Chadburn had completely fabricated the allegations of race discrimination in order to bring her broader harassment complaints within the tribunal’s jurisdiction. The tribunal considered such conduct unreasonable and exercised its discretion to make a costs award against Mrs Chadburn.  

The tribunal made a costs award of £10,000 against Mrs Chadburn, after considering that her conduct had increased the NHS trust’s costs of dealing with her claim by approximately £35,000 (out of a total of £72,500). Despite the evidence before the tribunal indicating that Mrs Chadburn had limited means to pay, due to a number of debts against her name, the tribunal still made the costs award. The tribunal’s reasoning was that Mrs Chadburn was 39 years old and would be likely to improve her financial position in the future working years left ahead of her. The tribunal also identified that her future divorce might improve her financial position, although this was not a principal ground.  

Mrs Chadburn appealed on the ground that her debts were in fact in the region of £4,000, far higher than the £600 shown in the evidence before the tribunal. Nevertheless, the EAT upheld the costs award and maintained that the tribunal had not failed to take account of a material consideration by refusing to reduce the award in light of Mrs Chadburn’s debt liability. The tribunal did not have to take her financial means into account at all and, in any event, other case law provides that where a paying party’s means are taken into account, this does not have to be solely by reference to their financial means at the time the costs award is made.  

Although this case does not present any new principles, it is an important reminder of how the tribunals may exercise their broad discretion to make costs awards and some of the factors a tribunal will consider when determining the amount of an award. It should also provide some assurance to those seeking costs against a party with limited funds. Tribunals will consider a party’s future ability to pay, rather than merely that party’s current financial position. Further, this case warns employees that manipulating the tribunal process to gain a monetary advantage from their employer could be harshly penalised.