LORD JUSTICE MAURICE KAY: This case has a lengthy history. Mr Clarke worked quite briefly for Frank Staddon Limited five years ago, and in due course presented a claim to the Employment Tribunal in respect of unpaid holiday pay. The total he claimed was £682.24. He lost before the Employment Tribunal on 28 February 2002. There was an appeal to the Employment Appeal Tribunal, by which time the case had become joined with some others because they raised important questions under the Working Time Directive.

The Employment Appeal Tribunal heard the matter in June 2003 and gave judgment a month later. The form of that judgment was to remit Mr Clarke’s case for further fact-finding by the Employment Tribunal on two issues.

The cases that had been heard by the Employment Appeal Tribunal then came before this court comprising Judge LJ, Laws LJ and Charles J on 28 April 2004. The court expressed a provisional view about the difficult legal questions that arose but did not make a final ruling so far as the law was concerned; instead it referred the matter to the European Court of Justice. The main reason for that was that the provisional view formed by this court was at variance with the view that had been expressed by the Court of Session in Scotland in MPB Structures Ltd v Munro [2003] IRLR page 350. The matter then went to the Court of Justice with the inevitable delay that that involves, and on 16 March 2006 the Court of Justice gave its answers to the questions that had been posed by this court.

Without going into all the detail it is abundantly clear that the law as declared by the Court of Justice is more akin to that which had been expounded in Scotland and is wholly at variance with what was assumed to be the legal position when this case was originally in the Employment Tribunal. Inevitably, in those circumstances the fact-finding exercise carried out by the Employment Tribunal was geared to a misapprehension as to what the law truly is, and for that reason it has turned out to be a deficient fact-finding exercise.

The matter has now come back to this court and there is agreement as to what should happen next. Mr Hogarth QC on behalf of Mr Clarke and Mr Gallagher on behalf of Frank Staddon Limited agree that the appeal to this court by Mr Clarke should be allowed and that the judgment of the Employment Appeal Tribunal and of the Employment Tribunal must be set aside. They further agree that the case will have to be remitted to the London Central Employment Tribunal for rehearing taking into account the judgment of the Court of Justice.

That agreement seems to me to be an inevitable outcome. Four and-a-half years later and in a different legal landscape, I cannot see the alternative to a complete rehearing, although as with any case that involves a relatively small sum of money, one hopes that some agreement between the parties may be forthcoming before further costs are incurred in the Tribunal. The case itself would be, I apprehend, of fairly short duration.

Where the parties are not agreeing today is as to the costs of this appeal. Mr Hogarth submits that essentially the appellant has succeeded and that there should be an order that the respondents pay his costs of the appeal, including the cost of the reference to the Court of Justice. He puts that submission on entirely conventional lines. The constraints that surround the award of costs in an Employment Tribunal do not exist in this court. The starting point is that a successful appellant should get his costs. There is of course discretion and we have to look at the matter in that context.

Mr Hogarth has told us that the costs in question may approach £30,000. Mr Gallagher seeks to resist an order for costs on the basis that this is, in his words, a “David and Goliath” situation. Frank Staddon Limited is a family company that employs a few dozen people and Mr Clarke, whilst being a private individual, is supported by a large trade union.

One sympathises inevitably with the plight of Mr Gallagher’s company. However, one cannot escape the reality that both parties to this litigation have pushed it to its limits to establish a point of principle. In so doing, what has emerged from the Court of Justice is more favourable to Mr Clarke than had been the law as the Employment Tribunal and Employment Appeal Tribunal had understood it to be. In that sense, Mr Clarke can only be described as a successful appellant. He has obtained from the appeal that which he sought. It has been an expensive process but at any stage either party could have resolved this essentially small dispute at little cost. There are of course wider implications, as there always are when somebody seeks to establish a principle.

For my part, whilst I sympathise with Mr Gallagher’s submissions, I can find no justification for departing from the usual approach which accrues to the benefit of a successful appellant. I would therefore grant Mr Hogarth the order that he seeks for the costs of the appeal, including the cost of the reference to the European Court of Justice, to be paid by the company to Mr Clarke, such costs to be assessed on the standard basis if they cannot be agreed when the matter goes before a costs judge, if indeed it does.

I would expect that he will have in mind the terms of settlement that had been reached between the other employees and their employer, Hanson Clay Products Limited. A settlement in that matter has been reached on the basis of a remittal to the Employment Tribunal and the payment of a stated sum in favour of the employees.

It would be wholly inappropriate for me to form any view as to the accuracy of the agreed sum as a reflection of costs actually incurred. What I have in mind is that any costs judge called to assess costs in Mr Clarke’s case ought not to disregard the fact that the costs that were occurred in the Hanson Clay Products case were being incurred in this court and in Luxembourg at the same time and in entirely similar circumstances. I do not for a moment suggest that Mr Clarke’s union is seeking to double count, but it is important that an overall view be taken.

Finally, it is impossible to leave this litigation without expressing the hope that in the light of the clarification of the law that has now taken place, all further disputes between this appellant and these respondents may be resolved by negotiation, both as to any liability which of necessity will be modest in relation to a single employee and in relation to the question of costs.

Accordingly, I would make the order in the form of which Mr Hogarth now seeks.

LORD JUSTICE LAWS: I agree.

MR JUSTICE BODEY: So do I.