Guidance on Costs

Thu, 18 Sep 2014

Gemma Roberts provides an update on the latest guidance on costs.

In early September the Employment Appeal Tribunal decided that the definition of costs in rule 38 of the Employment Tribunal Rules of Procedure (rule 78 of the 2013 Rules) includes the costs in respect of time spent by an in-house advocate (Ladak v DRC Locums Ltd.) It had been argued, unsuccessfully, that the definition: “ ‘Costs’ means fees, disbursements or expenses incurred by or on behalf the receiving party…” could not be interpreted to include the costs incurred by an in-house advocate. The EAT disagreed, holding that the definition is sufficiently wide to include such costs. The costs of an in-house lawyer are to be assessed in the same manner as those incurred by an independent firm.  

In June, HHJ Eady QC laid down general principles for appellants seeking to recover EAT fees upon a successful appeal (Horizon Security Services Limited v PCS Group). Firstly, there is no need for an appellant to demonstrate any unreasonable conduct or the like on the part of the respondent to obtain an order that the respondent pay the fee element of costs under rule 34A(2A) EAT Rules 1993. Secondly, the EAT has a broad discretion when considering whether or not to make an award for payment of the appellants fees; in general a successful appellant can expect to recover the fee where an appeal has been unsuccessfully opposed, but there will be occasions when an order for payment by the respondent will not be made (for example, when the means of the paying party are such that any order for payment would be unjust, or where an appeal has only enjoyed partial success).

Earlier in the year, the EAT held that a finding dishonesty on the part of a claimant was insufficient to establish ‘unreasonable conduct’ and hence to permit the making of an award for costs. In Kapoor v Governing Body of Barnhill Community School the Tribunal dismissed claims of race discrimination, victimisation and harassment raised by an exam invigilator, finding the claimant had falsified certain documents, was not believable and that she could  only be trusted if her evidence was corroborated. The Tribunal made an award of costs of £8,900 in favour of the respondent, having found that not telling the truth was simply unreasonable. The EAT disagreed, following HCA International Ltd v May-Bheemul; the context, nature, gravity and effect of any lie had to be taken into consideration. Although it is well established that there does not have to be a causal link between the dishonesty and costs incurred (per Mummery LJ in McPherson v BNP Paribas [2004] ICR 1398), all of those issues must be considered by the tribunal when considering the making of a costs award. The EAT also reiterated that an unsuccessful claim or claimant is not necessarily dishonest. 

Anecdotal evidence suggests that costs order are on the increase, particularly under Rule 78(1)(a) on the ground of unreasonable or vexatious conduct. Notwithstanding the EAT’s comments in Kapoor, most Tribunals are likely to be persuaded to make an award of costs against a party who has been found materially dishonest. Those facing an application for costs may be wise to cite Sir Hugh Griffiths, who, back in 1974 commented: “ordinary experience of life frequently teaches us that which is plain for all to see once the dust of battle has subsided was far from clear to the combatants once they took up arms” (Marler v Robertson [1974] ICR 72). 

Please click here to view Gemma Roberts Profile.

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