Transcription

• Speaker #0

  Today in the Lefebvre HR and Employment Law podcast, we're discussing the judgment in the case of Willis and GWB Harthills LLP, and others in which the Employment Appeal Tribunal was asked to determine what consideration a tribunal may give to the paying party's ability to pay when deciding whether to make an award of costs, and what impact the ability to pay should have on the amount awarded. In this case, the former managing partner of GWB, a firm of solicitors, was diagnosed with cancer in 2018 and went off sick. He received payments from a permanent health insurance, or PHI, scheme. However, a bitter dispute developed, including about whether the managing partner could receive profit share paid into his pension, in addition to the PHI payments. Although the managing partner's first employment tribunal claim was partially upheld, his second was dismissed in its entirety. The tribunal made no award to the managing partner and was highly critical of him, indicating that he had provided untruthful evidence. Both parties applied for costs and the tribunal ordered the managing partner to pay the firm's costs capped at £210,000, with the amount to be determined by way of detailed assessment on a standard basis. The managing partner's applications for reconsideration were dismissed and he appealed to the Employment Appeal Tribunal against the costs award. The Employment Appeal Tribunal noted that the decision to award costs can be split into three stages. Stage 1. Is there conduct that could warrant making a costs order, that is, is there threshold conduct? Stage 2. If so, should an award of costs be made, i.e. the discretionary decision? At this stage, the Tribunal may have regard to ability to pay. And Stage 3. If so, what amount of costs should be awarded, that being the quantum decision? Again, at this stage, the tribunal may have regard to the ability to pay. Dismissing the appeal, the Employment Appeal Tribunal found that the tribunal had considered other discretionary factors, as well as the managing partner's ability to pay as an aspect of the Stage 2 discretionary decision, before also considering ability to pay as part of the Stage 3 quantum decision. In respect of the other grounds of appeal, i.e. ability to pay and impact on family, The Employment Appeal Tribunal considered that the Tribunal had painted a picture of the managing partner's means with a broad brush. He had provided some detail of his income and outgoings, his assets and debts. The Tribunal had clearly been highly sceptical of his evidence because of its earlier findings about his honesty and the fact that he had suggested such a modest increase in the value of his family home over the last 20 years. Because of this scepticism, the Employment Appeal Tribunal found that the Tribunal might have chosen to disregard the managing partner's ability to pay altogether. When it chose to have regard to his ability to pay, it was entitled to adopt a reasonably optimistic assessment of the managing partner's likely future circumstances. Although the Tribunal did not expressly weigh up his current income and outgoings, it assessed his ability to pay based on his share in the family home and likely future profit share. The tribunal had repeatedly noted that the managing partner had a half share in the family home and was not required to specifically refer to the impact on his family that the sale of the house would have, particularly since on any valuation this was a very substantial capital asset. And, where such a valuable capital asset is held, there are options to release some of the equity. Look out for further episodes in this series to stay up to date on all things HR and employment law related.