United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR J TAYLER (of Counsel) Instructed by: Messrs Rowley Ashworth Solicitors 247 The Broadway Wimbledon London SW19 1SE
For the Respondents	MR T KIBLING (of Counsel) Messrs Eversheds Solicitors Fitzalan House Fitzalan Road Cardiff CF2 1XZ


 


HIS HONOUR JUDGE SMITH QC

1. This is an appeal by the Applicant before the Employment Tribunal against the decision of an Employment Tribunal, the Chairman sitting alone, on 9^th December 1998 which was sent to the parties on 7^th January 1999, whereby the Chairman ordered that the Applicant before her, Mrs Janet Bownes, should pay the Respondents, Sun Valley Foods Ltd, 75% of the costs of the proceedings in the Tribunal, to be agreed or to be taxed on County Court scale 2. Before addressing the arguments which we have heard from Counsel in this appeal, which we have found very helpful and skilful, and expressing our conclusions in relation to those arguments, it is necessary first of all to set out something of the background of the matter and then to set out the basis of the Chairman's reasoning.
2. Putting the matter very shortly, Mrs Bownes (the Appellant) had been employed by the Respondents as a Post Chill Operative from 1991 until her dismissal for gross misconduct on 7^th May 1998. From September 1997 she had been a Convenor for the TGWU, having previously been the shop steward. Part of her case was that she had to work long hours and additionally carry out her Trade Union activities. On 22^nd April 1998 she had been asked to attend a reception held by the Respondents in the House of Commons as a representative of the company along with other employees. It was her case, as made out in her originating application, that she was not given any briefing before the event. She accepted in her originating application that, due to what she describes as the lavish hospitality and the non-stop availability of wine, which she was not used to, she became drunk on that occasion and has no clear recollection of how the over indulgence in drink affected her conduct. She was then in receipt of a letter suspending her and was subjected to disciplinary proceedings.
3. There was a hearing on the 5^th May 1998 and by letter of 7^th May 1998 she was dismissed for gross misconduct. She appealed and there was an internal appeal hearing by which her dismissal was confirmed. Throughout all this she was represented by Mr Braggins, a full time Union Officer of the TGWU. She then brought proceedings for unfair dismissal arising out of the circumstances of her dismissal and on the grounds that she had been dismissed by reason of her Trade Union activities. On 28^th July 1998 she complained in her originating application of a failure by the Respondents to follow their disciplinary procedure and that the Respondents should bear some responsibility for alcohol being so freely available and that the real reason for her dismissal was because she was an effective Convenor and putting the matter shortly, that the Respondents were out to get her. All this was resolutely and totally denied by the Respondents. They said they dismissed her solely because of what they considered to be her outrageous conduct at the House of Commons by letting the company down badly in getting drunk and becoming abusive to important guests of the company. The Respondents' stance was that they had followed their disciplinary procedure fairly and precisely and that her Trade Union activities were wholly irrelevant to her dismissal. Those were, putting it very shortly, the issues in the proceedings before the Tribunal and there is no doubt that they had attracted some considerable local press publicity.
4. The case was eventually fixed for a three day hearing on the 9^th, 10^th and 11^th December 1998, it having been fixed sometime in the middle of September. On 25^th November 1998 an application was made by the Appellant to withdraw her claims by her letter to the Tribunal of that date. In response the Respondents wrote their letter, important to the consideration of this appeal, of 1^st December 1998, seeking an order for costs, and we will have to say more about that letter later in this judgment. The Appellant then made written representations to the Tribunal in response to that letter as to why she had withdrawn from the proceedings and as to her reasons therefor, in her faxed letter of 7^th December 1998. The Tribunal confirmed in writing that full consideration would be given to her written representations in her faxed letter of 7^th December 1998 when the matter was considered by the Tribunal. Thus it was that on the 9^th December 1998 the application for costs came before the Chairman sitting alone. At the hearing of the Respondents' application for costs which came before her in the circumstances we have briefly described above, the Chairman found:-

1) That there was no answer to the assertions of drunken misconduct which led to Mrs Bownes' dismissal.

2) That there was no material fact relied upon by Mrs Bownes which was capable of establishing that there had been a dismissal for Trade Union activities.

3) In the light of 1 and 2 above, the Chairman concluded that the Appellant's case was without any merit and should have not have been brought.

5. This was the effect of paragraphs 1 and 2 of the decision, in our judgment. In paragraphs 3-6 inclusive of the decision, the Chairman considered and rejected the explanations put forward by the Appellant for the late withdrawal of her claim. Having concluded in paragraphs 7 and 8 that the Appellant herself would have difficulty in meeting a cost's order due to her limited means, that Chairman proceeded at paragraphs 8-10 of the decision to consider the role of the Appellant's Trade Union in the proceedings. She then found that:-

"no reasonable Trade Union representative could have genuinely believed that the present case had any merit".

Accordingly, she held that both the Appellant and her Trade Union had acted unreasonably in bringing the case and in the conduct of the case, and she accepted the submission that she should properly take account of the Union's means in deciding whether the Appellant should pay costs, and, if so, as to the amount of the same, and concluded as follows at paragraph 11:-

"I find that the beginning of and the conduct of the proceedings were unreasonable and I order that applicant to pay 75% of the costs to be agreed or taxed on the County Law Scale".

6. We turn to consider the able submissions made to us on this appeal. It is convenient first of all to set out certain matters under a heading "The Law". We accept that important principles relative to the discretion of an Employment Tribunal under Rule 12(1) of Schedule 1 to the 1993 Regulations relating to costs were laid down recently by the Employment Appeal Tribunal in Beynon & Others –v- Scadden & Others [1999] IRLR 700 and we note in particular:-

(i) that the discretion in a Tribunal to award costs may apply where it is the party's adviser or representative who has

"acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably"

in bringing or conducting proceedings in circumstances where it is the party's adviser or representative who is at fault as well as the party himself;

(ii) that the discretion in an Employment Tribunal is conferred in wide and unrestricted terms so that the discretion is unfettered and is simply subject to a requirement that it be exercised in accordance with ordinary notions of justice and common sense;

(iii) We are content to assume that as the law stands at present that there is no rule or pre-condition to the exercise of the discretion to the effect that it is only in exceptional cases that in considering whether to make an order for costs against a party, the means of the adviser or representative, usually a trade union representative, should be taken into account. We are content, for the purposes of the present appeal to follow the reasoning of Beynon & Others –v- Scadden & Others [1999] in that regard, although we note that in Omar –v-Worldwide News Incorporated [1998] IRLR 291, the Employment Appeal Tribunal took a somewhat different approach;

(iv) Further it is clear that the test for the Employment Appeal Tribunal in deciding whether the Employment Tribunal has erred in exercising its wide discretion, is not to consider whether we would have ordered as the Chairman did, but rather to ask ourselves whether the Tribunal took into account matters which it should not have taken into account or failed to take into account that which it should have taken into account or whether in some other way it came to a conclusion that was contrary to ordinary principles of justice and common sense or that no Employment Tribunal properly directing itself could have arrived at.

7. It is with those principles in mind that we consider whether the Chairman here properly exercised her discretion in making the award of costs that she did. In our judgment it is necessary to examine rather carefully the circumstances in which the application for costs came to be made by the Respondents and importantly for us to reach a conclusion as to the grounds upon which, properly construed, the application for costs was made. In our judgment looking at the correspondence it is clear that what motivated the Respondents to apply for costs was the late withdrawal by the Appellant of her claims. The application for costs is contained in the letter to the Tribunal by the Respondents' solicitors dated 1^st December 1998 as we have previously observed. We consider that on a fair reading of that letter it is clear, despite the skilful submissions of Mr Kibling, that the sole ground there relied upon as justifying an application for costs was the late withdrawal of the proceedings. In our judgment the plain sense of that letter is that, due to the late withdrawal, the Respondents were saying that they had incurred very considerable costs in preparing for the trial of the issues which, had there been an earlier withdrawal, would not have been incurred. Thus in our judgment it is plain beyond doubt that the conduct complained of by the Respondents as giving rise to an arguable liability for costs under the discretion contained in Rule 12 was the allegedly unreasonable conduct of the Appellant in withdrawing from the proceedings so late in the day and hence causing the Respondents to run up unnecessary costs. In particular we find that we cannot construe the letter as putting forward as a ground for costs that either the Appellant herself or her Trade Union representative had acted unreasonably in bringing the proceedings in the first place or indeed in conducting them in the manner they did up until the late withdrawal. It was the late withdrawal which gave rise to the application for costs and nothing else. This in our judgment was clearly the way that the Appellant's advisers and her Union representatives understood the matter. This is clear from Mr Ormiston's letter to the Tribunal on behalf of the Appellant dated 7^th December 1998 which by way of a response to the Respondent's application for costs treated it as an application based on late withdrawal and sets out reasons for the Appellant's decision to withdraw and drawing attention to the Appellant's limited means. The response from Eversheds on behalf of the Respondents by their fax dated 8^th December 1998 was to reiterate their wish for the costs hearing to be held stating:-

"in our view, the letter from the T&G provides no justification for the late withdrawal of the Applicant in this matter".

8. Once again, in our judgment, the terms of this letter are only consistent with the application for costs being based on the unreasonable conduct of the Appellant in the late withdrawal of her claims. Although the letter was not copied to the Appellant or to her advisers, we consider it right that we should take it into account and in our judgment it throws light on the ambit of the ground relied upon. It was in these circumstances and against that application that the T&G took a decision on behalf of the Appellant for neither her nor her Trade Union representative to attend the cost's hearing on the understanding that the Tribunal would give full consideration to her written submission as contained in the letter of 7^th December 1998. In our judgment, in the particular circumstances here as we have outlined them, the Appellant and her Trade Union representative were fully entitled to assume in that state of play that the only ground upon which a cost's order would be sought , would be that of the Appellant's allegedly unreasonable conduct in withdrawing her proceedings at such a late stage.
9. In our judgment it is only fair and just that if an application for costs in an Employment Tribunal is to be put forward on the basis that the proceedings brought were entirely without merit and should not have been brought by an applicant in the first place, the applicant concerned is entitled to have notice of such an application, either at the end of the hearing, if there is a contested hearing, or in some other appropriate manner otherwise. By the same token, if the application for costs is to be based upon misconduct by an applicant's representative, be it a trade union representative or some other representative in allegedly pursuing a hopeless case or in misconducting themselves in someway or another, so that the means of the representative may be taken into account on the application for costs, there is in our judgment, if anything, an even clearer need that proper warning and notice be given of such an application before it is made so that the representative concerned has a full opportunity to argue the matter and oppose an application for costs put forward on such a basis.
10. Indeed, in our judgment, it is because the discretion is so wide and unfettered to award costs, at least as it is laid down by Beynon –v- Scadden, which we assume to be correct, that in our judgment it is essential that proper notice be given to the representative on the other side if a cost's order is to be sought based on the conduct of such representative. In this regard we derive assistance from the wise words of Mr Justice Waterhouse delivering the judgment of the Employment Appeal Tribunal in the case of Carr –v- Allen Bradley Electronics Ltd [1980]IRLR 263 EAT, where at page 267, the learned Judge, delivering the judgment of the Employment Appeal Tribunal said (at paragraph 20 of the judgment):-

"The normal rule is that there is no order for costs. In the comparatively infrequent case in which the claimant has acted frivolously or vexatiously we think the Tribunal should consider the means of the claimant himself rather than of his Union in deciding first of all whether or not to make an order in respect of the costs and secondly the form of the order to be made. There may be cases where the role of the union in pursuing the litigation, and the union's knowledge or means of knowledge of the lack of merit of the claim, may make it appropriate to take account of the union's position in deciding the order of the costs. In such circumstances it may be that the trade union itself will be willing to indicate that it will indemnify the claimant in respect of the costs, even though the order itself will be against the claimant because that is the limitation imposed by rule 10. We do not wish to say anything that may fetter the exercise by tribunals of their discretion in future hypothetical cases. It is right, in our judgment, however to say that it is not appropriate to adopt that kind of approach in the ordinary case, such as this, where the claimant is merely represented by a lay official of the trade union at the hearing in order to assist her in the presentation of her case. To do so would affect adversely the established and convenient practice before industrial tribunals, where so many claimants are now represented by lay officials of the union, who give very considerable assistance to the Tribunals in the trial of cases before them"

In our judgment those words serve to emphasise the necessity of proper notice and warning being given to a trade union representative if an order is to be sought for costs taking into account the means of the trade union.

11. In our judgment, in entering in to consideration of matters which went outside the grounds of the application for costs in front of her, the Chairman here unfortunately erred in the exercise of her discretion under Rule 12. On the basis of the application before her, correctly construed, she should have only considered the ground put forward, namely the late withdrawal and the facts relating thereto. In our judgment, neither the Appellant nor her Union representative had any forewarning or notice that such matters as the merits of the claim or the conduct of the Union in support of the claim were to be relied upon in support of the application for costs. Thus they had no opportunity to deal with such matters. In our judgment, on this ground, which was the first ground relied upon by Mr Tayler on behalf of the Appellant, this appeal succeeds for the reasons we have given. With regard to the further alternative ground, namely that the Chairman reached perverse findings of fact, we do not consider it necessary to express any final conclusion.
12. We do consider, however, that there is strength in the argument that some of the findings made by the Chairman, with respect to her, were put in rather extreme terms. Thus it was going a very long way to say that there was no matter of fact in the IT1 capable of establishing an dismissal for Trade Union activities even if those matters were proved. (our emphasis). In addition the Chairman appears not to have considered at all whether there were any merits in the various points made in the IT1 as to whether the dismissal was a fair dismissal, even given the very unfortunate conduct of the Appellant on the day in question. However, we repeat, we do not consider it necessary or desirable to say anything further about those grounds of appeal based on perversity, having regard to our unanimous decision to uphold the first ground of appeal based on the wrongful exercise of discretion by reason of the fact that the Chairman considered grounds for making an order for costs which had not been relied in the notice and upon which neither the Appellant nor her Trade Union representative had had any proper notice or forewarning. We consider that the proper course in the light of our decision on this appeal is for us to allow the appeal, quash the decision, and remit this case for a fresh hearing before a differently constituted Tribunal. We consider that a fresh application should be made, if so advised, by the Respondents for an order for costs, setting out the grounds upon which such application is based so that the Appellant and her advisers know that case which they have to meet. If, as seems likely, the application is to be put on the basis that the Trade Union's conduct will be subjected adverse criticism arising from their support of the Appellant in her conduct in bringing and conducting there proceedings, then we strongly recommend, in the light of the judgment of the Employment Appeal Tribunal in Sutcliffe –v- Big C's Marine [1998] IRLR 430, particularly at paragraphs 15 & 16, that the application for costs on any such grounds should be heard by a full Tribunal since it is likely that:-

(a) Disputed questions of fact will arise; and

(b) The industrial relations' experience of the Lay members will lead to a decision on this difficult question of whether costs should be awarded against the Trade Union of a higher quality of justice than one taken by a legally qualified Chairman sitting alone. The Appeal is allowed and the case remitted accordingly.