Late concessions of liability

Pressure iStock 000010076139XSmall 146x219Joanne Oliver considers the costs risks of conceding liability late in the day.

In the case of Barry and Others v University of Wales, the respondent avoided a costs order for reasons relating to the 'no win no fee' arrangements that the claimants had entered into but the case highlights the risk of conceding liability late in the litigation process.

The claimants entered into the damages based agreement with their solicitor to fund their claim. The agreement provided that their solicitor would receive 25% of any compensation awarded if the claim succeeded.

The agreement also contained a clause which allowed the solicitor to charge the claimants on an hourly rate basis, in addition to the success fee, for time spent dealing with any unreasonable or vexatious conduct of the respondent. The agreement went on to say that if the claimants were unsuccessful in recovering these additional charges via a costs order, they would be written off.

The respondent conceded liability on the second day of the hearing. The claimants applied for a costs order on the basis that the respondent's conduct was unreasonable in persisting to such a late stage in the proceedings, with a defence which had no reasonable prospects of succeeding.

The Employment Judge refused to grant the costs order. It was held, regardless of the respondent's unreasonable conduct, that the Tribunal had no power to grant costs because the agreement created a 'fiction' whereby the claimants would never incur the additional costs if the costs application failed. As such, the Tribunal determined that the claimants would not benefit from the order if granted and as the purpose of the order is not to penalise the paying party, there were no grounds on which the Tribunal were permitted to grant it.

Best practice

This case is a reminder to employers that they should be mindful of the risk of costs associated with continuing to defend a claim where their defence has no realistic prospects of success. Although the respondent escaped a costs award in the above case, had it not been for the terms of the damages based agreement, the outcome may have been very different and could have resulted in an order to pay £16,000 in costs.

It is therefore important to review the prospects of the defence at regular intervals throughout proceedings. In circumstances where it is apparent to all that the employer is liable and there are no technical grounds to apply for the claim to be struck out, consideration should be given to the commercial benefit of negotiating a settlement.

Joanne Oliver is an associate at Veale Wasbrough Vizards. She can be contacted on 0117 314 5361 or This email address is being protected from spambots. You need JavaScript enabled to view it..