The Claimant in the original ET proceedings succeeded in part but both Claimant and Respondent were awarded costs against the other. The only head of costs awarded to the Respondent was in respect of its application for costs thrown away as a result of having had to deal with historic matters that were either withdrawn by consent or struck out by an earlier tribunal. In relation to those matters the Claimant was found to have acted unreasonably and his conduct was found to have put the Respondent to significant expense, justifying an order for costs. The ET considered rule 78(1)(b) (where costs may exceed £20,000) and rule 84 (ability to pay) of the Employment Tribunal Rules of Procedure and limited the amount of costs to a maximum sum of the compensation awarded to the Claimant added to the costs awarded to the Claimant. The Respondent appealed against the imposition of the cap to the EAT which was dismissed and they appealed to the Court of Appeal. The single ground of appeal was that both tribunals below erred in law in limiting the costs to be awarded under rule 78(1)(b) to the Respondent, to a maximum of the total sum of compensation and costs awarded to the Claimant. The Respondent submitted that the tribunal wrongly assumed the jurisdiction that would be exercised on a detailed assessment. Where an order is made under rule 78(1)(b) for the whole or a specified part of the receiving party's costs to be paid by a paying party, the amount payable can only be determined on a detailed assessment; it cannot be determined in advance of such an assessment by the tribunal applying a cap on the amount of costs recoverable.

The Court of Appeal dismissed the appeal. As a matter of the plain meaning of the words used, there was and can be no dispute that the words "specified part of the costs" in rule 78(1)(b) enable a tribunal to order that a fixed percentage of the total costs incurred (once assessed) should be paid and to direct detailed assessment of the costs on that basis; alternatively it can make an award that is issue specific or relates to a particular part of the proceedings only. In each case, although the costs are to be subject to detailed assessment, a limit is placed on the maximum that can be awarded. In the same way, the court could see nothing in the words of rule 78(1)(b) that precludes a tribunal from making an order that the losing party should pay the costs incurred in dealing with, here, the part of the proceedings concerned with the historic allegations, subject to a maximum specified limit, with a detailed assessment to be conducted on that basis. Rules 78(1)(b) and 84 are wide enough to permit a tribunal to order a detailed assessment of costs exceeding £20,000 while at the same time restricting the maximum sum of any such award by placing a cap on the final award by reference to the paying party's ability to pay.