Costs awarded against parties who turned down settlement offer…

The Employment Relations Authority has ordered costs against two claimants who alleged they were employees.  The claim went to mediation, but did not settle.  Following mediation the alleged employer offered the parties $10,000 in settlement, but that was rejected by the two claimants.  A short time later they discontinued their claim against the alleged employer.

The alleged employer then went to the ERA seeking costs and the ERA awarded $2,000 costs against the claimants. 

$1,500 of those costs were to cover the mediation, which had been ordered by the ERA.  Costs will be awarded when the ERA orders mediation, but are not recoverable if the parties attend mediation voluntarily.  $500 was added to the costs because of the parties turning down the settlement offer, which was a reasonable one, and they did not achieve a better result, because they abandoned their claim.

If the two parties had taken the $10,000 offered they would have been $12,000 better off.  We are left to wonder why they turned down the offer and then discontinued their claim. They would have been so much better off if they had accepted the offer made.

Alan Knowsley

Employment Lawyer Wellington