Ladak v DRC Locums Ltd

A receiving party in Employment Tribunal proceedings may recover costs incurred by a qualified in-house legal representative. The definition of costs as fees, charges, disbursements or expenses is sufficiently broad to include the work of an employed legal representative. The 2004 and 2013 Rules did not alter the established position. Where costs are referred for detailed assessment, the Employment Tribunal may order payment of the whole or a specified part of the costs. It need not conduct the detailed proportionality exercise itself. Proportionality, including the value and importance of the litigation, may be assessed by the County Court or Costs Judge. Questions concerning VAT may likewise be dealt with on detailed assessment.

The claimant’s unfair dismissal and discrimination claims against his former employer were struck out after he failed to comply with Tribunal directions. The Employment Judge ordered him to pay the respondent’s costs from 21 January 2012 onwards, including costs incurred by its in-house legal team, subject to assessment by the County Court.

On appeal, the claimant argued that the applicable costs definition did not permit recovery for time spent by an employed solicitor. He also argued that the Employment Judge had failed to undertake a proportionality assessment and had not addressed VAT. The central issues were the scope of recoverable costs and the division of responsibility between the Employment Tribunal and the detailed assessment court.

1. Appeal dismissed. The Employment Judge had jurisdiction to include charges or expenses relating to the respondent’s qualified in-house legal team in the costs order.
2. The longstanding rule in Wiggins Alloys v Jenkins [1981] IRLR 275 remained correct. There was no statutory or procedural basis for distinguishing between qualified in-house lawyers and independent solicitors. The 2004 Rules expressly contemplated legal representation by an employee, and a restrictive interpretation would create a lacuna: an employer using an employed lawyer could be unable to recover those costs and could not obtain a preparation time order because it was legally represented.
3. The words fees, charges, disbursements or expenses in rule 38(3) were not to be read restrictively. They were apt to describe the costs of an in-house legal department. The absence of the word remuneration was immaterial because the cost of in-house legal work is not measured solely by the employee’s remuneration. The same position continued under the 2013 Rules.
4. The Employment Judge had a broad discretion to order the whole or part of the costs to be paid. He had considered the respondent’s litigation conduct in accordance with Barnsley Metropolitan Borough Council v Yerrakalva 2011 EWCA Civ 1255; the reasons were sufficient.
5. Once the Employment Tribunal decided that the whole costs should be assessed, detailed assessment on the standard basis under Civil Procedure Rules, rule 44.3, included the proportionality exercise. The Costs Judge or District Judge was capable of assessing proportionality. VAT was also a matter for detailed assessment and required no ruling by the Employment Judge at that stage.

• Employment Tribunal: The claimant’s claims were struck out on 2 July 2012. On 4 June 2013 the Employment Judge ordered payment of the respondent’s costs from 21 January 2012 onwards, including the in-house legal costs, subject to County Court assessment.
• Employment Appeal Tribunal: Appeal dismissed.