United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR BRUCE CARR (Of Counsel) Messrs Rowley Ashworth Solicitors Kennedy Tower St Chad's Queensway Birmingham B4 6JG
For the Respondent	MR CHRISTOPHER GRAHAM (Representative) Messrs Ford & Warren Solicitors Westgate Point Westgate Leeds LS1 2AX


 


MR JUSTICE DOUGLAS BROWN

1. This is an appeal on a costs order brought by Mr D Gardiner and 12 others, who are maintenance fitters employed by the Respondent V A W Motorcast Ltd. The decision appealed from was that each of the Appellants pay £100 costs. That order was made by the Employment Tribunal at Leeds (Mr A J Simpson, Chairman) and the reasons sent to the parties on 16 December 1999.
2. It is only necessary to mention the background briefly. In March 1999 these Appellants commenced proceedings in the Employment Tribunal claiming unlawful deductions from their wages. The matter arose in this way; in May 1998 the Respondent wanted to change the terms and conditions of some of its employees, including the Appellants, so that they began to work a continental shift pattern, based on 7-day rotation. Until then they had been employed on a 5-day working pattern (Monday to Friday) and if they were required to work at weekends they had been paid a shift enhancement of 22.66% as well as 50% overtime premium.
3. In May 1998 there was negotiation with the Union and the dispute turned, in the end, on what was agreed. We will return to that. Whatever was agreed, the Respondent in fact continued to pay from May onwards the overtime and shift premier for weekend work on the previous basis. That was paid from June until December 1998. In December 1998 the payments stopped with the Respondent saying that it was paid in error and that change in the basis of payment led to these claims to the Employment Tribunal.
4. The matter before the Tribunal largely turned around whether after a letter had been sent to the Union dated 18 May, setting out what was said to have been agreed at a meeting on 12 May, whether in between the meeting and the letter a Union representative, Mr Creasa, had objected on behalf of the Union and the agreement to vary the rates, contrary to what the employer said, was not in fact concluded.
5. On 17 August 1999 a Chairman of the Employment Tribunal, Mr Laydom, sitting alone, ordered a pre-hearing review of the applications. This may well have been because in the IT3 of the Respondents, amongst other grounds of objection, there was the statement the proceedings were vexatious, abusive and unreasonable.
6. The review was held under the provisions of Rule 7 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 1993. That provides as follows, so far as it is material:

7(1) "A Tribunal may at any time, before the hearing of an Originating Application, on the application of a party made by notice to the Secretary or of its own motion, conduct a pre-hearing review, consisting of a consideration of –

(a) The contents of the Originating Application and Notice of Appearance;

(b) Any representations in writing; and

(c) Any oral argument advanced by or on behalf of a party."

7. The Rule also provides this via 7(4):

7(4) "If upon a pre-hearing review the Tribunal considers that the contentions put forward by any party in relation to a matter required to be determined by a Tribunal have no reasonable prospect of success, the Tribunal may make an order against that party requiring the party to pay a deposit of an amount not exceeding £150 as a condition of being permitted to continue to take part in the proceedings relating to that matter."

8. The Chairman here did make that order and he ordered the Appellants to pay £50 by way of a deposit. He did so after short written reasons in which he referred not only to the Originating Application, Notice of Appearance and representations in writing, but also to some of the documentary evidence, including the letter of 15 May to which we have referred. He expressed the view that on the documentation there was little or no real prospect of success.
9. Whether he should have looked at that material does not now arise for consideration. An explanation put forward by Mr Graham, the solicitor for the Respondents, who was present at that hearing, was that the Chairman had also to consider an issue raised of jurisdiction, which in the end disappeared from consideration, and for that purpose would have had to look at a number of documents and may well have had the opportunity to look at the relevant contractual documents.
10. At the hearing the Employment Tribunal decided that all the relevant payments to the Appellants accurately reflected the Respondent's contractual obligations and the application failed.
11. The Tribunal specifically dealt with the undoubted conflict of evidence between Mr Creasa and Mr Swap, who was the Respondent's representative. At paragraph 4 they decide the matter in this way:

"It is said on behalf of the Applicant that subsequently, at a date which they think might have been 15 May, but are not exactly sure, there was a further meeting between Mr Creasa and Mr Swap at which Mr Swap agreed that the terms as set out in the letter dated 15 May were not accurate and that in particular the provisions of Clause 3 of the letter, which made it plain that there would not be a double premium attached for weekend working, was to be varied. We do not accept that evidence. We do not accept it for two reasons. Firstly, because we are satisfied on all the evidence that Mr Swap was not authorised to make such an agreement. Mr Swap, in his role as Personnel Manager, was there to implement and record agreements that had been made by other people. If Mr Swap had believed that the point being made by Mr Creasa was a valid point, then we are satisfied that he would have referred it back to Mr Watson for a decision, and we are not satisfied that he did.

The second reason why we doubt that the agreement alleged to have reached Mr Creasa was reached, is in relation to a meeting considerably later, almost twelve months later when Mr Parker, who by this time was the Regional Officer of the Trade Union representing the individuals concerned, was at a meeting at which Mr Swap and Mr Watson were also present. At that stage Mr Swap made it plain to Mr Parker that the terms which he had recorded and which had been argued by Mr Watson, had been set out in letter form and not challenged."

And having made that finding of fact the Tribunal proceeded to the conclusion it did.

12. We now have to consider the position in relation to the Tribunal's knowledge of the Rule 7 decision by the Chairman Mr Laydom. At first sight it looked like a confusing and possibly serious issue of fact. On behalf of the Appellant in his skeleton argument and indeed in the grounds of appeal Mr Carr, Counsel for the Appellant, asserted that during the hearing the fact of the Rule 7 decision, and the reasons for it, were made known to the Tribunal.
13. The Tribunal say this in their reasons:

8. "The Tribunal having announced its decision on liability, Mr Graham representing the Respondent, made a submission with regard to costs. He drew the Tribunal's attention to the fact that there had been a pre-hearing review in this case…"

That was not altogether an accurate statement and we have had the advantage of hearing from Mr Graham, whose explanation we accept unreservedly, that what happened was that his written submissions for the assistance for the Tribunal, which were handed in at the conclusion of the evidence and at the start of submissions, contained by error on his part (which he frankly accepts) a reference, not only to the fact that the Chairman had made a Rule 7 decision, but set out in a little detail the reasons which led him to the conclusion he did.

14. Mr Graham tells us that when he reached that part of his submissions he was interrupted by the Chairman, in fairly robust terms, who was indignant that a submission on costs of that kind was being made in the middle of submissions on liability.
15. Mr Graham, who is an experienced solicitor in this field, immediately recognised that matters had gone wrong and there was a discussion between him, the Chairman and Mr Waumsley, who was the Senior Union Official acting for the Appellants. It was made clear by the Chairman that, if the matter was to go ahead, there should be no further reference to that paragraph of the written submission and in the end Mr Waumsley, who was presented with a difficult situation and a difficult decision to make, did not object to the Tribunal continuing to hear the matter. The matter then proceeded immediately to a consideration of its decision, which was then announced and there then followed a discussion on costs.
16. Before referring to the representations that were made and the Tribunal decision, it is convenient to mention the provisions of Rule 12. Rule 12(1) provides this:

12(1) "Where, in the opinion of the Tribunal, a party has in bringing or conducting the proceedings acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably, the Tribunal may make…"

And then it goes on to deal with the various orders for costs that might be made. It is clear from what has transpired and from the submissions of Mr Carr and Mr Graham, that the order for costs here was not made under the provisions of 12(1).

17. 12(7) provides this:

12(7) "Where –

(a) A party has been ordered under Rule 7 to pay a deposit as a condition of being permitted to continue to participate in proceedings relating to a matter;

(b) In respect of that matter, the Tribunal has found against that party in its decision, and;

(c) There has been no award of costs made against that party arising out of the proceedings of the matter.

The Tribunal shall consider whether to order costs against that party on the ground that he conducted the proceedings relating to the matter unreasonably in persisting in having the matter determined by a Tribunal; but the Tribunal shall not make an award of costs on that ground unless it is considered the document recording the order under Rule 7 and is of the opinion that the reasons which caused the Tribunal to find against the party in its decision were substantially the same as the reasons recorded in that document for considering that the contentions of the party had no reasonable prospect of success."

18. What then happened at the Tribunal was this. Mr Graham having drawn the Tribunal's attention to the fact that there had been a pre-hearing review told us that at that stage the pre-hearing decision was removed from the envelope in which it had been sealed up and considered by the Tribunal. That disposes of one of Mr Carr's grounds of appeal, namely that there was no consideration (which is mandatory) of that document, as appears from Rule 7 as we have just read out.
19. Mr Graham, having drawn attention to the fact the decision was on substantially the same grounds as that made by the Tribunal, asked that the Tribunal exercise its powers under Rule 12(7) to make an order for costs. He sought an order for detailed assessment.
20. Mr Waumsley, on behalf of the Applicants, indicated that he took the view that although he conceded that the finding made upon the pre-hearing review was in much the same terms as the finding made by the Tribunal today, he asked that the Tribunal should take into account that his members genuinely believed that they had a justifiable complaint against the Respondent.
21. He further urged that the Tribunal should not have regards to the means of the Trade Union as opposed to the means of his members, on the basis that this was not a case where the Trade Union was pursuing it through a crusade. It was merely that the Union was supporting its members who believed they had a justifiable grievance.
22. Then came the short paragraph in which the Tribunal gave its decision on this application for costs. They said:

10. "Having had regard to all the circumstances the Tribunal took the view that it was not a case where it would be appropriate to take into account the means of the Trade Union, nor was it the case where a detailed assessment should be ordered. Accordingly, the Tribunal ordered that each Applicant should pay the sum of £100 towards the costs incurred by the Respondent in this case.

And then it went on to refer to the fact that they had already paid £50 by way of deposit and so that there would be a further payment of £50 due from each of the Applicants.

23. Mr Carr, having referred us to the provisions of Rule 12(7) submitted firstly that the Tribunal did not follow the procedure in dealing with costs, namely considering the document recording the decision. As we have said, having regard to what Mr Graham has told us, the Tribunal did carry out that part of their function under Rule 12(7).
24. But the real thrust of Mr Carr's submissions is this: that the reasons do not deal with whether the Appellants had conducted the proceedings to a determination unreasonably, in persisting in having the matter dealt with by the Tribunal. He submitted that, even if the reasons were substantially the same, or as Mr Waumsley said "in much the same terms", it did not follow that the Appellants had behaved unreasonably in conducting the proceedings to a determination.
25. Here there was, what he called, "an ordinary Tribunal dispute and situation"; there was a conflict of evidence. The Appellants had Mr Creasa to call and also they had the fact to support his version of events that for six months the old rate had been paid. He submitted that the parties were entitled to know why they had lost and in losing, why an order for costs had been made, in particular why it was said, if was the decision, that they had behaved unreasonably.
26. He referred to a decision of the Court of Appeal, well known to this Tribunal, in Meek v City of Birmingham District Council [1987] IRLR 250. In fact, both Mr Carr and Mr Graham refer to different citations to be found in the judgment of Lord Justice Bingham and we refer to all of them.
27. Mr Carr relied, apart from the familiar words of Lord Justice Bingham at paragraph 8, which we will refer to shortly, to a quotation by the Lord Justice from Lord Justice Donaldson in the case of Marten v Glynwed Distribution Ltd [1983] IRLR 198 at page 202, where Lord Justice Donaldson said:

"The duty of an Industrial Tribunal is to give reasons for its decision. This involves making findings of fact and answering a question or questions of law. So far as the findings of fact are concerned, it is helpful to the parties to give some explanation of them. But it is not obligatory. So far as the questions of law are concerned, the reasons should show expressly or by implication what were the questions to which the Industrial Tribunal addressed its mind and why it reached the conclusions which it did. But the way in which it does so is entirely a matter for the Industrial Tribunal."

28. Lord Justice Bingham himself said this at paragraph 8:

"It has on a number of occasions been made claim that the decision of an Industrial Tribunal is not required to be an elaborate, formalistic product of refined legal draughtsmanship. But it must give an outline of the story which has given rise to the complaint and a summary of the Tribunal's basic factual conclusions and a statement of the reasons which have led them to the conclusion which they do on those basic facts. The parties are entitled to be told why they have won or lost. There should be a sufficient account of the facts and of the reasoning to enable the EAT or, on further appeal this court, to see whether any question of law arises and it is highly desirable that the decision of an Industrial Tribunal should give guidance, both to employers and Trade Unions, as to practices which should or should not be adopted."

29. Mr Graham referred us to the next passage in Lord Justice Bingham's judgment which is another citation from Lord Justice Donaldson in the case of UCAS v Brain [1981] IRLR 225, we quote at 227:

"Industrial Tribunal reasons are not intended to include a comprehensive and detailed analysis of the case, either in terms of fact or in law. The reasons are then recorded and no doubt tidied up for differences between spoken English and written English but their purpose remains what it has always been, which is to tell the parties in broad terms why they lose, or as the case may be, win. I think it would be a thousand pities if these reasons began to be subjected to a detailed analysis and appeals were to be brought based on any such analysis and this to my mind is to misuse the purpose for which reasons are given."

30. Mr Carr says simply:

"These Appellants could not tell from the reasons of the Tribunal firstly whether the Tribunal had taken into account the provisions of Rule 12(7), namely that the court had to consider whether they had conducted the proceedings relating to the matter unreasonably in persisting in having the matter determined by the Tribunal."

And even if it could be implied that that had been the approach of the Tribunal, there was no indication to them as to in what respect they had behaved unreasonably. It was not sufficient to say that the reasons at the preliminary hearing review were substantially similar to the reasons for the Tribunal's decision.

31. That was a matter to which the Tribunal were specifically directed to look at but the primary question they had to ask themselves was the question of unreasonableness and there was no clue in the reasons as to why the Appellants were said to have behaved unreasonably in persisting. That they persisted there is no doubt but mere persistence itself does not give rise to a conclusion of unreasonableness. Many factors come into play. In this case the parties were entitled to know what they had done or not done that amounted to unreasonable conduct.
32. Mr Graham submitted that the matter was fully in the mind of the Tribunal. He had specifically addressed them on unreasonableness and he drew our attention to his written submissions which had been before them. He submitted that the Tribunal do not have to spell out their reasons in legalistic language and he drew attention to the fact that the reasons began with the words "Having regard to all the circumstances" and that was sufficient.
33. In our view this order for costs cannot stand. No where in the judgment does it appear that the words of Rule 12(7), in relation to unreasonableness, were addressed or how the matter was decided. It is not enough to compare the decision on paper at the review with the decision of a Tribunal after oral evidence.
34. Clearly it is an important matter to compare the two and ask if they are substantially the same but it is not decisive of the matter. The question of unreasonableness must be addressed. If it had been, the Tribunal would have been obliged to have regard to its own reasons in dismissing the application. No where in those reasons is the bringing of the proceedings or the conduct of them criticised.
35. It is not suggested that they had brought evidence which was completely useless and should never have been called before the Tribunal. If indeed the Tribunal had formed the view as to the merits of the matter, in relation to the conduct of the proceedings, it would have been open to the Tribunal to make, what is in this jurisdiction a rare order, an order for costs under 12(1).
36. If ever there was a case, in our view, where a party was entitled to know why an order for costs was being made, it is this case. Mr Carr's submissions have great force and we accept them.
37. This Order, in those circumstances, cannot stand so we have to ask ourselves what we should now do. We were referred by Mr Graham to observations of Lord Donaldson MR in O'Kelly v Trust House Forte, where he said this:

"The Employment Tribunal can correct errors of law and substitute its own decision, in so far as the Tribunal must before the error of law, have reached such a decision. But if it is an open question how the Employment Tribunal would have decided the matter had it directed itself correctly, the Employment Tribunal could only remit the matter for further consideration."

38. We have considered that carefully and we find ourselves again in agreement with Mr Carr, that it would be wrong to say, in the circumstances here, that these Appellants were unreasonable in persisting in bringing this matter. These 13 men had the advantage of being able to present to the Tribunal the evidence of their Union representative, on the face of it, credible evidence.
39. His account found support from the payment of the old rate for six months. There was a straightforward conflict of evidence between him and the Respondent's witness. It is perhaps not surprising that the decision went the way it did, having regard to the letter of 15 May. But the result was not inevitable and it was certainly not unreasonable, having a witness of that kind to call and other material, to pursue this matter to a determination.
40. So we do not send this matter back and we quash the order for costs made below. This appeal succeeds.