On the 4th day of the ET hearing, the Respondent conceded that the Claimant's dismissal by reason of redundancy was a sham. The Claimant had incurred significant costs up to this time, some of which were incurred before the receipt of the ET3. An award of costs was made against the Respondent, some of which was related to the period before the ET3 was received. The Respondent appealed against this part of the award, arguing that the reasoning in paragraph 21 of Health Development Agency v Parish [2004] IRLR 550 (which in the Respondent's opinion meant that there has to be a causal relationship between the conduct of a party in bringing or conducting proceedings and the costs which are awarded against that party) is still good law and costs incurred in consequence of an employer's conduct cannot as a matter of logic predate that conduct.

The EAT dismissed the appeal. The Court of Appeal in McPherson v BNP Paribas (London Branch) [2004] ICR 1398 held that Rule 14 "does not impose any such causal requirement in the exercise of the discretion".