In-house costs in ET…status quo remains as EAT deems recoverable

Cloisters’ Nathaniel Caiden (instructed by Wragge Lawrence Graham & Co LLP) represented the Appellant in Ladak v DRC Locums Ltd.   In a significant judgment that clarifies the position on the recovery of costs of employed representatives, the Employment Appeal Tribunal found that the costs of an in-house legal representative were recoverable under s38(3) of the Employment Tribunal Rules of Procedure 2004.

Mr Ladak’s claim for discrimination was struck out in January 2012 and his claim for unfair dismissal struck out on 2 July 2012. The Employment Judge ordered that Mr Ladak pay DRC Locums’ costs from 21 January 2012 onwards. Further, the Employment Judge held that it had jurisdiction to include in the order for costs, the charges or expenses relating to DRC Locums’ in-house legal team.  

Mr Ladak appealed against the Employment Judge’s decision on the grounds that there was no jurisdiction to order in-house legal costs, at least in relation to time spent on preparation and that the Tribunal should have undergone an assessment of the proportionality of the costs incurred before sending the whole costs for detailed assessment.  

The Appellant argued that the wording in rule 38(3), which is echoed in rule 74(1) of the Employment Tribunal Rules of Procedure 2013, provides an exhaustive list of recoverable costs namely ‘fees, charges, disbursements or expenses incurred by or on behalf of a party.’ None of those words, in his submission cover the time spent by an in-house legal representative.

In relation to the second ground of appeal the Appellant argued that the Employment Tribunal was entitled to send only a proportion of the costs to a Costs Judge and that the Employment Judge should have conducted a proportionality exercise in deciding which proportion of costs to send over.

HHJ Richardson, sitting alone, dismissed the appeal and held that the costs of an in-house representative were recoverable as a ‘charge’ or ‘expense’ under Rule 38(3). Further, that once an Employment Tribunal has decided that the whole costs ought to be dealt with by way of detailed assessment, assessing the proportionality of the costs involved is a matter for the Costs or District Judge.

By Jennifer Danvers