United Kingdom Employment Appeal Tribunal

BAILII case number: [1992] UKEAT 277_92_1712

Appeal No. EAT/277/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 15 and 17 December 1992

Judgment delivered on 3 February 1993

Before

THE HONOURABLE MR JUSTICE WOOD MC (PRESIDENT)

MISS J W COLLERSON

MR J D DALY

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PORT OF LONDON AUTHORITY          APPELLANT

MR P J PAYNE AND OTHERS          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant Mr A Pardoe QC

Mr A Clarke

(of Counsel)

Messrs Masons

30 Aylesbury Street

LONDON EC1R 0ER

For the Respondents Mr J Hendy QC

Mr J Bowers (of Counsel)

Mr D Brown (of Counsel)

Messrs Pattinson & Brewer

30 Great James Street

LONDON WC1N 3HA


 


MR JUSTICE WOOD (PRESIDENT) This is the last appeal in the long-running saga in the Port of London Authority (PLA) and the Transport and General Workers' Union (T & G).

By a decision promulgated on 27th February 1992 the Industrial Tribunal - inter alia - awarded the Applicants 40% of their costs in their preparation for and hearing of the issue on liability. Those costs to be on County Court scale II and to be taxed if not agreed.

This whole case revolves round the abolition of the Dock Labour Scheme in 1989 and the dismissal of the Applicants, who were all shop stewards. It has occupied in all over 200 days. There were six issues and it is only the first two with which we are concerned in this appeal. They were stated in the words of the Industrial Tribunal as follows -

"2(1)Whether the PLA's reason or principal reason for selecting each individual Applicant for dismissal for redundancy was that he had taken part in, or proposed to take part in, the activities of an independent trade union (the T & G) and the dismissal was therefore automatically unfair as provided for by sections 58 and 59 of the Employment Protection (Consolidation) Act 1978. (There is no issue as to whether the activities took place at an appropriate time).

(2)Whether the individual Applicants were otherwise unfairly dismissed for redundancy having regard to the criteria in section 57(3) of the Employment Protection (Consolidation) Act 1978."

These two issues have been termed the "liability issues".

At the hearing during February 1992, the Industrial Tribunal gave a substantial reasoned decision on its award for costs. Those reasons have been severely criticised by Mr Pardoe and it is right therefore that we should set out the thinking of the Tribunal at some length in order to see whether his criticisms are well founded.

"17 ... The PLA put forward a positive case as to that reason. That case was untruthful. The second issue, whether the Applicants had been otherwise unfairly dismissed, was also contested. Those issues carried with them the following contested matters which we mentioned at paragraph 3 of the Decision:

the burden of proof;

the shop stewards' position in the undertaking;

what can properly be regarded as trade union activities;

the shop stewards' authority (including powers, duties and activities);

discovery, inspection and destruction of documents and the inferences to be drawn therefrom.

Those matters occupied a very large proportion of the time taken at the 168-day hearing on liability because the Tribunal had to look closely at all the evidence (oral and documentary) to discover what had been the true reason for dismissal. Lengthy cross-examination of the PLA witnesses was necessary."

...

"21 Because of the course which the Decision on Liability took, it is not possible to say that particular days or passages of evidence at the liability hearing were devoted to any particular issues. But it is clear that had the PLA not contested that it had dismissed the Applicants for a trade union reason, the hearing would have been confined to determining the T & G's complaint that it had not been consulted and to the appropriate remedy for unfair dismissal in the case of each of the Applicants. As to remedy, the practicability of establishing a satisfactory employer/employee relationship with any of the Applicants in view of their past behaviour would have been strongly contested.

...

"28 .... We put that problem on one side and turn to the question of what are the legitimate the illegitimate stances for an employer in defending a complaint of unfair dismissal or failure to consult a trade union as to redundancies.

29 As we have said, it is usually legitimate to defend a claim where at the hearing the Tribunal is to be in a position of deciding as to the fairness or otherwise of a dismissal under section 57(3) of the 1978 Act or the practicability or otherwise of consulting a trade union as to redundancies. In such cases it is usually most unlikely that an employer can appreciate that the case is hopeless, futile or has no prospect of success before the hearing. It is similar where a Tribunal is asked to exercise its judgment as to what is the appropriate remedy. Hopelessness cannot be judged until the evidence is heard. Of course, there may be exceptions but that is the usual position.

30 It is always illegitimate for a Respondent to put forward at any stage in the proceedings a positive case as to any matter which is in fact untruthful and known by him to be untruthful when he puts it forward. This is so as to liability and as a remedy. If a Respondent does that and the Tribunal finds him out, he can expect to be regarded as having acted at least unreasonably and probably vexatiously and to be ordered to pay some or all of the Applicant's costs. In an unfair dismissal case the most common instance of untruthfulness by an employer is, of course, as to the reason for dismissal or selection for dismissal for redundancy. And we note in this context that the Tribunal has to be aware of the difference between an untruthful case and a mistaken one. Our remarks only apply to untruthful cases, where the employer knows why he dismissed and advanced an untruthful reason.

31 Fortunately, Tribunal cases where a Respondent advances an untruthful case are few. But they do occur. Employers sometimes find it worth the price of their integrity to rid themselves of an employee and to try to avoid paying the awards provided by the legislation by concealing the real reason for dismissal. However, we reiterate that he who knowingly advances an untruthful case, does so at his peril. The Tribunal is likely to look closely at his conduct and consider awarding costs, not as a punishment but because it is just that an Applicant should not have to bear the burden of costs which are invariably heavier where he has had to counter a dishonest case. It is of course well-known that where there is a dispute as to facts, this frequently lengthens the case because of the need for searching cross-examination."

...

"35 In this case the PLA through its managers knew why it had dismissed the Applicants. The reason it dismissed the Applicants is as found by the Tribunal and set out at paragraph 2 on page 280 of the Decision. It is clear from the documents and from the oral evidence that the PLA through Messrs McNab and Farrow knew what that reason was at the time it entered an appearance to these proceedings. The PLA advanced a positive case which was untruthful. Furthermore, the PLA knew that it might be found out and have to pay higher compensation. As we noted in the Decision at paragraph 29, pages 154 to 155, Mr Farrow on July 31, 1989 said to the PLA Board:

"It is known that claims could be faced for dismissal based on unfair selection procedures which in the case of shop stewards could make us liability for substantially higher than usual compensation payments".

It seems to us that the PLA acted vexatiously in the sense of improperly or at least "otherwise unreasonably" in denying and in persisting in its denial that it selected the Applicants for dismissal for redundancy for a trade union reason. We are firmly of the view that they should pay the Applicants' costs incurred in establishing what was the reason for selection including the related issues outlined at paragraph 17 above. Certainly that should include the cost of obtaining disclosure of documents from the PLA because it was for that issue that disclosure was so necessary."

The power to award costs is defined in Rule 11 of the Industrial Tribunal (Rules of Procedure) Regulations 1985 (S.I.1985 No.16). In its relevant parts it reads as follows -

"11-(1) ... A Tribunal shall not normally make an award in respect of the costs or expenses incurred by a party to the proceedings but where in its opinion a party ... has in bringing or conducting the proceedings acted frivolously, vexatiously or otherwise unreasonably the Tribunal may make ... an award of costs."

Mr Pardoe submits that an Industrial Tribunal is not exercising a discretion in an award of costs but is forming an opinion and that opinion must be based on fact. If it is not based on fact then there is no power to make an award of costs. We find ourselves unable to accept that submission in that particular form. We are content to say that an Industrial Tribunal before exercising its discretion whether or not to make an award of costs, will of necessity have to form an opinion in accordance with the Rule and that that opinion must be based on a reasoned application of fact.

Turning to his particular criticisms Mr Pardoe puts his case in this way. First, he submits that the Tribunal are finding two reasons for alleging unreasonableness in his clients. The first that Mr McNab and Mr Farrow gave untruthful evidence of the reason for dismissal and the second that they concealed the true reason. Secondly, he submits that there is no evidence upon which they could make that finding and that it is a perverse decision and indeed contrary to its findings on the liability issue.

To summarise the case for the PLA on this appeal he argues "that the Industrial Tribunal's opinion that the PLA acted unreasonably was founded entirely on its conclusion that the PLA witnesses had given untruthful evidence as to their reason for selection of the Applicants and/or that they had concealed the true reason. That conclusion is not merely unsupported by the Industrial Tribunal's primary findings of fact and comments upon the relevant evidence, but is squarely contradicted by them."

During his submissions Mr Pardoe referred at some length to passages from the earlier judgment of this Appeal Tribunal on the issue of liability. It is, we think, important that a decision of the Industrial Tribunal as to costs should be examined against its own findings on the issues of liability and not against any passages by way of comment from the judgment of this Tribunal. Although our approach to the issues on liability differed somewhat from that of the Industrial Tribunal we nevertheless reached the conclusion that the decision itself on liability was "plainly and unarguably right".

Mr Pardoe concentrated his criticism on the first two sentences in paragraph 35 of the Decision but it seems to us that it is important to include the third sentence where it is said "The PLA advanced a positive case which was untruthful". That in our judgment is the nub of the criticism made by the Industrial Tribunal.

We must therefore turn to see whether that opinion of theirs was justified on the evidence which was before them and upon their own findings.

As Mr Hendy stressed, the criticism was of a Respondent, the PLA, although it was their two main witnesses who are also the subject of criticism. There were other witnesses and the Tribunal were also entitled to take into account the way in which the PLA case was being put to the Applicants as each gave evidence.

The substance of the PLA case can be found from a part of the defence put forward to each of the cases. In one paragraph headed "Conclusion" the following words appear,

"This applicant was selected for redundancy in July 1989 not because he was a shop steward, nor because he was a trade unionist, nor because he took part in trade union activities, but because over the years in our employment he had demonstrated repeated the following particular personal characteristics and likely future behaviour ..."

Thereafter there were allegations by way of detailed particulars to substantiate the general allegation that the reason for the dismissal was misconduct and abuse of power as a shop steward or because they did not have the necessary skills or because of their attitudes.

When one reads the pleadings in detail there were a substantial number of specific matters alleged in support of that general allegation. Those particulars were increased by two further lists of allegations, one made on Day 39 and the other on Day 49. In the end there were nearly 100 specific incidents alleged in support of the general allegation.

That this was the PLA's case is also emphasised in the Liabilities decision of the Industrial Tribunal at L223/14.

In expressing their views about the witnesses the Industrial Tribunal said at L9/5 -

"It gives us no pleasure to state that some witnesses had been deliberately untruthful in particular areas."

and at L11/10 -

"In considering the oral evidence we have on the whole preferred the evidence of Messrs Lake and Watson to that of Messrs McNab and Farrow where they have conflicted. We consider that neither Mr McNab nor Mr Farrow were truthful."

The Industrial Tribunal reject the PLA's case comprehensively. They comment that the PLA's evidence is not to be relied upon where it is uncorroborated and that much of the PLA's case seemed to have been put together as a package of justification after the event of the dismissal.

The view of the Industrial Tribunal that the PLA's witnesses were being deliberately untruthful can also be gleaned from a number of comments made when dealing with specific allegations. In some cases they merely "reject" the evidence. On another occasion they find that "there was no idea of that sort in management's mind at that stage". In yet another case they refer to "a travesty of the facts". They point out on occasions that the alleged view was simply not the view taken at the time or was not the perception at the time.

The Industrial Tribunal also reject the evidence for PLA that each shop steward was individually considered and selected rather than being considered as a group. This rejection is evident at L146/18, where the Industrial Tribunal is dealing with the card prepared for each employee. Without referring to the Decision in detail, it is clear that the view of the Industrial Tribunal was that the cards were dishonestly produced and marked up.

This Industrial Tribunal saw and heard the witnesses over many days and were able to form a clear view about the honesty or deliberate dishonesty of witnesses and the case being put forward. It is impossible to say that there was no evidence upon which they could find as they do in paragraph 35 of the Decision under appeal, "The PLA advanced a positive case which was untruthful". Having formed that opinion, the Tribunal were perfectly entitled to make an award for costs and it is not suggested that the 40% is not an appropriate order in the circumstances.

This appeal is dismissed.