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; 'improper, unreasonable or negligent'; three-stage test. The Court of Appeal gave the leading guidance on wasted costs under s.51(6) Supreme Court Act 1981, later approved by the House of Lords in Medcalf v Mardell. 'Improper' covers, but is not confined to, conduct that would ordinarily justify disbarment, striking off, suspension from practice or another serious professional penalty. 'Unreasonable' describes conduct that is vexatious, designed to harass the other side rather than advance the resolution of the case. 'Negligent' is untechnical: a failure to act with the competence reasonably expected of ordinary members of the profession. The test has three stages: such conduct; unnecessary costs caused by it; whether it is just to order compensation, a discretion that survives the first two. A representative is not at fault merely for acting for a party whose case is doomed, and where privilege is not waived the court makes allowance for the representative's inability to answer fully [IDS 18.103-18.104].
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; ability to pay; future means. The EAT upheld an order that the claimant pay one third of the respondents' costs, estimated at about £60,000, although she could not pay it at the time. A tribunal is not required to limit costs to what the paying party can afford (Arrowsmith v Nottingham Trent University). The tribunal had accepted that she could make no substantial payment now but found a realistic prospect that she could in due course, once her health improved and she resumed employment: a decision open to it, the claimant's objection being to its application rather than the approach. On enforcement the county court could assess her position from time to time and order payment by instalments. The EAT raised, without deciding, whether outstanding claims from which compensation might be recovered were a relevant factor [IDS, Practice and Procedure, 18.146, 18.151].
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.