In Governing Body of St Albans Girls’ School v Mr Anthony Neary, Janet Smith LJ, in the Court of Appeal held that the winner’s litigation costs could not be recovered from a losing party because proceedings had begun in a cost-free jurisdiction.
In this case Mr Neary started a discrimination claim against the school in the Employment Tribunal (ET). He lost in the ET but appealed this decision and won in the Employment Appeal Tribunal (EAT) – both the ET and EAT are cost free jurisdictions. However, the school appealed the EAT’s decision and eventually won in the Court of Appeal.
Janet Smith LJ commented that in the “Court of Appeal, it is usual for costs to follow the event”.
However, she decided not to make an order for costs against Mr Neary because he initiated proceedings and appealed in a cost-free jurisdiction. But the effect of the defendant appealing the EAT’s decision was to pitch the claimant “against his will into a cost-bearing jurisdiction [and] it would have been very hard on him if he had had to cave in so as to avoid the risk of costs.”
This is an employment case and was decided on its own facts.
But if this approach is followed in future pension cases, it could mean that a party cannot recover costs if they appeal a Pensions Ombudsman (PO) decision and win. This is because parties generally pay their own costs in PO cases, even though the PO has sometimes awarded costs – for example see MR T J Hunt [S00486] where the PO ordered the trustees to pay a member £3,926.25 for “reasonable legal costs incurred as a result of that maladministration”.