A Question of Costs - What Employers Need to Know
Two recent cases have grappled with the question of claimant costs.
In Sunuva Ltd v Martin the EAT held that a tribunal is entitled to award costs in a claimant's favour, incurred before receipt of the ET3, on the grounds that the respondent's defence had no reasonable prospects of success.
The High Court in Marcura Equities v Nisomar Ventures Ltd held that claimants, in principle, are entitled to costs even if these vastly exceeded damages awarded.
Sunuva Ltd v Martin
Towards the end of a five-day tribunal hearing, the respondent conceded that the claimant's dismissal for redundancy had been unfair, since there was never any prospect of anyone other than the claimant being selected for dismissal, and that the redundancy selection exercise had been predetermined. The claimant applied for costs, on the basis that the respondent's defence had no reasonable prospects of success. The claimant was awarded costs of £17,136.90, of which £4,695 related to work done before receipt of the respondent's ET3 form. Sunuva appealed arguing it was unlawful to award costs for periods prior to receipt of the ET3.
The Decision
The EAT confirmed that a costs award to a successful claimant may include costs incurred for work done before the claimant received the ET3 form from the respondent. The EAT noted that the definition of costs in the Employment Tribunals Rules of Procedure (ET Rules) is not limited to costs incurred at a particular stage of the proceedings, although a party cannot get a costs order in respect of costs incurred while not legally represented.
The High Court in Marcura Equities v Nisomar Ventures Ltd
The High Court was asked to rule on costs where the parties had settled the substantive issues in a claim relating to disclosure and use of confidential information. The claimants claimed damages and injunctive relief, alleging the defendants procured confidential information from one of the claimant's former employees and used this confidential information without its permission. The parties eventually settled on terms including a full injunction and £35,000 damages but left the question of costs, which had risen to £450,000, open to the Court.
The Decision
The High Court held that the defendants should pay the whole of the claimants' costs (subject to assessment), as the claimants were the successful party, and there were no aspects of the settlement offers made, nor of the conduct of the claimants, justifying some other order under CPR 44.2. The fact that the costs vastly exceeded damages obtained did not prevent an award being made given the 'important delivery up and other injunctive relief that has been obtained' in this case.
Best Practice
Each case will of course turn on its facts but the findings on costs in these cases act as a stark reminder to employers that strategic advice is essential in employment disputes to optimise the outcome and to minimise costs exposure as far as possible.