The exceptional tribunal costs regime, and the separate wasted costs jurisdiction against representatives. Yerrakalva v Barnsley MBC; Ridehalgh v Horsefield.
Damages; legal costs. The costs of litigation are recoverable only under the costs regime of the court or tribunal seised of the claim, and not as damages. The general rule against which any claim to recover legal costs as a head of loss must be tested.
Wasted costs; meaning of 'improper, unreasonable or negligent'; advocate's immunity; three-stage test. The Court of Appeal gave authoritative guidance on the wasted costs jurisdiction under s.51(6) of the Supreme Court Act 1981 (as substituted by s.4 of the Courts and Legal Services Act 1990). 'Improper' covers any significant breach of a substantial duty imposed by a relevant code of professional conduct, including conduct so regarded by the consensus of professional opinion. 'Unreasonable' describes conduct which permits of no reasonable explanation. 'Negligent' is to be understood in an untechnical way as a failure to act with the competence reasonably to be expected of ordinary members of the profession. The court must apply a three-stage test: (1) has there been an improper, unreasonable or negligent act or omission; (2) if so, has a party as a result incurred unnecessary costs; (3) if so, is it just in all the circumstances to order the legal representative to compensate the applicant for the whole or part of those costs. Section 62 of the 1990 Act preserves the traditional immunity of advocates in respect of court proceedings, but an advocate whose conduct in court has been improper, unreasonable or negligent may be liable to a wasted costs order. The jurisdiction is compensatory not punitive, draconian, and should not be exercised to erode advocacy immunity or frighten lawyers acting for legally-aided parties. Where privilege is not waived, the court should give the legal adviser the benefit of the doubt.
Damages; costs of foreign proceedings. The defendants sued in New York in breach of an exclusive jurisdiction clause; the claimant had the proceedings struck out but, under the American rule, recovered nothing for doing so. The Court of Appeal allowed the reasonable expense of the strike-out as damages for breach of contract: the English rule that litigation costs are recoverable only as costs protects the costs discretion of the court seised of the litigation, and has no application where the costs were incurred under a different costs regime which never had them in its hands.
Costs; settlement offers; the Calderbank principle (automatic costs for rejecting a reasonable offer) does not apply in employment tribunals, but rejection of a 'without prejudice save as to costs' offer is evidence of unreasonable conduct that a tribunal may consider when exercising its costs discretion.
Costs; causation; the tribunal must look at the whole picture of unreasonable conduct.
Costs; means; a lack of means is not a bar to a large costs order if the conduct was egregious.
Damages and the costs regime; CFA success fees. A success fee, made irrecoverable as costs by s.58A(6) Courts and Legal Services Act 1990, cannot be recovered by folding it into a substantive award under the Inheritance (Provision for Family and Dependants) Act 1975 as part of the applicant's financial needs. The Supreme Court, unanimously: relabelling legal expenditure as part of the substantive claim would undermine the costs regime, including the operation of Part 36. The modern high-water authority for the policy that the costs regime cannot be circumvented through the law of damages.
Practice; AI and citation of authorities. Applying the Divisional Court guidance in Ayinde, HHJ Charman found that a solicitor's firm had submitted two fictitious AI-generated case citations. The firm's administrative staff had used a legal software's built-in AI research feature without verification. The judge held the conduct was improper, unreasonable and negligent, ordered wasted costs against the firm, and struck out the claim with indemnity costs.
Discrimination; compensation; legal costs as damages. At the remedy stage the claimant sought £42,672, the element of her legal costs not attributable to the tribunal proceedings, as financial loss under s.124(6) EqA 2010. Refused at [88]-[90]: legal expenses are recoverable as litigation costs and not as damages, subject to two exceptions — costs incurred in proceedings involving a third party, or a separate and independent cause of action — and neither applied, the advice all relating to the same sequence of events and the processes involving the respondents themselves. The tribunal's own counter-example at [89]: costs incurred in an FCA process instigated by a bad-faith employer report, the FCA not being a party, would arguably be recoverable as financial damages. First instance and not binding, but the fullest tribunal treatment of the point.