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In Office Equipment Systems Ltd v Hughes [2018] EWCA Civ 1842 (01 August 2018)

the Court of Appeal considered the question of costs when an appeal from a non-costs jurisdiction – the Employment Appeal Tribunal here – reaches the Court of Appeal, which is costs bearing.

This problem has been partly dealt with by the relatively new provision in CPR 52.19 which provides:

“(1) Subject to rule 52.19A [Aarhus Convention claims], in any proceedings in which costs recovery is normally limited or excluded at first instance, an appeal court may make an order that the recoverable costs of an appeal will be limited to the extent which the court specifies.

(2) In making such an order the court will have regard to—

(a) the means of both parties;

(b) all the circumstances of the case; and

(c) the need to facilitate access to justice.

(3) If the appeal raises an issue of principle or practice upon which substantial sums may turn, it may not be appropriate to make an order under paragraph (1).

(4) An application for such an order must be made as soon as practicable and will be determined without a hearing unless the court orders otherwise.”

The problem with this rule is that it gives the Court of Appeal a discretion to limit costs, rather than the starting point being that there are no costs in an appeal to the Court of Appeal from a non-costs jurisdiction.

The facts of this case demonstrate the absurdity and gross unfairness of the current rule, which clearly defeats the will of Parliament.

Here the applicant won an Employment Tribunal claim on liability when the respondent failed to file a response within time and was debarred from taking part in any hearing without the permission of the Employment Judge hearing the case.

An Employment Tribunal has this power under rule 21 of the Employment Tribunals Rules of Procedure 2013.

The issue here which went to the Court of Appeal was whether the respondent should be allowed to take part in the quantum trial, known as a remedies hearing in Employment Tribunals.

Both the Employment Tribunal and the Employment Appeal Tribunal decided that the respondent could not take part.

Both of these jurisdictions are costs free.

The respondent succeeded in the appeal to the Court of Appeal and the applicant was ordered to pay costs to the respondent totalling £14,227.

Thus an entirely innocent applicant – indeed an applicant who was the victim of sex discrimination, unfair dismissal, breach of contract, unpaid wages and unpaid holiday pay- has been ordered to pay the guilty party £14,227.

True it is that the applicant failed to comply with CPR 52.19(4) which requires an application for a limited or non-costs order to “be made as soon as practicable” and here the Court of Appeal said that had such an application been made in time it was “highly probable that an order under CPR 52.19 would have been made which might have limited the recoverable costs to the court fees, or even directed that no costs were to be recoverable at all.”

However, as the word “might” shows, there is no certainty in such cases and the victim here may still have faced a bill of costs, and the court fee alone was £1,727.

Given that there is no right to appeal to the Court of Appeal unless and until permission is given, a no costs rule would not lead to unmeritorious cases reaching that court.

In UNISON, R (on the application of) v Lord Chancellor [2017] UKSC 51

the Supreme Court outlawed the Employment Tribunal fee system as preventing access to the courts, and so we have returned to a no tribunal fee system in the Employment Tribunal and Employment Appeal Tribunal, which also remain costs free, that is, unless exceptional circumstances apply, a winning party does not recover costs from the losing party.

To impose costs in the Court of Appeal, and to charge a court fee to proceed to the Court of Appeal, in cases where Parliament and the Supreme Court have said that there should be no costs, and no court fees, is defying the will of Parliament and the Supreme Court.

The rule should read:

“Unless there is unreasonable conduct, there shall be no order for costs in any court dealing with any appeal in relation to proceedings where costs recovery is excluded at first instance.”

Fixed Costs Cases

There is a similar problem in relation to fixed costs cases, that is that first instance costs are fixed, but appeal costs are not.

I propose the following wording:

“Unless there is unreasonable conduct, any costs order in any court dealing with any appeal in relation to proceedings where recoverable costs are fixed in the first instance, shall not exceed 20% of those fixed costs.”

You can argue about the figure of 20%, but it is the principle that I am driving at.

This will become of far greater significance once fixed costs are extended to all claims of all kinds worth £100,000 or less.

Indeed, now that the Civil Justice System is seen as a profit silo, rather than one of the corner stones of a democratic society, like defence and the police, it should be the Ministry of Justice which pays all of the costs of all appeals caused by an error by a judge.

Why should private citizens and companies pay for that judge’s error twice over, once through taxation and again in the actual proceedings?

Presidential Guidance Note No. 2 of 2018

The President of Tribunals has issued  Guidance Note No.2 of 2018, providing further guidance on wasted costs and unreasonable costs, and on the correct approach to applications for costs made in proceedings before the First-tier Tribunal.

The detailed guidance is for the judiciary, but is obviously very useful for lawyers operating in the tribunal system, and the guidance is here.



Written by kerryunderwood

August 16, 2018 at 8:10 am

Posted in Uncategorized

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