Claimant entitled to costs despite having insurance cover and not paying fees himself

Thanks to Rad Kohanzad of Serjeants’ Inn Chambers for preparing this case summary

When deciding whether to award costs, is it relevant for an employment tribunal to take into account the fact that the receiving party has had their legal expenses paid by an insurer?

No, held the EAT in Mardner v Gardner.

The Claimant succeeded in her case before the employment tribunal and applied for costs. Despite the costs threshold having been crossed, one of the reasons the employment tribunal refused to award the Claimant her costs was that she was not personally out of pocket because her case was funded by her legal expenses insurers.

Applying Parry v Cleaver [1970] AC 1, the EAT held this was an error because public policy dictates that the paying party should not avoid the costs consequences of their unreasonable conduct merely because the receiving party prudently entered into an insurance contract. That would allow the paying party to appropriate the benefit of the receiving party's contract, which would be wrong.