United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR PITT-PAYNE (of Counsel) Instructed by: Messrs Beynons Solicitors 27 Chancery Lane London WC2A 1NE
For the Respondent	MR A HICKEY (of Counsel)


 


HIS HONOUR JUDGE ANSELL

1. This is an appeal against a Decision of a Regional Chairman dated 29 April 2002, in which he refused the Appellant's application for a review of a decision of an Employment Tribunal sitting at Stratford on 24 May 1999, promulgated with Extended Reasons on 11 January 2000. At that hearing a finding of liability was made against the Appellants in a claim for unfair and wrongful dismissal, brought by the Respondent.
2. The Tribunal awarded a sum of £24,036 in respect of the breach of contract (wrongful dismissal claim) and a basic and compensatory award of £12,980 in respect of the unfair dismissal. The Respondent's losses were considerably higher and were reduced because of the then statutory cap in relation to the compensatory award of £11,300. The Appellants chose not to be present or represented at that merits hearing in the circumstances that we shall outline below. Permission to proceed with this appeal was given at a preliminary hearing on 8 October 2002.
3. The history of these proceedings has been lengthy and complex, and it is unfortunately necessary to set it out in some detail before dealing with the issues raised before us. The Applicant was employed as a solicitor by the Appellants from 27 February 1990 to 26 February 1998, on which date he resigned from his position, alleging constructive dismissal. In particular, he contended that he had been instructed by the Appellants to find ways of avoiding payment owed to the Inland Revenue on sums representing PAYE deducted tax and National Insurance, notwithstanding that he had advised that there were no legitimate claims that could be made. The IT1 was filed on 2 March 1998, alleging unfair dismissal and unlawful deductions from wages and the Notice of Appearance raised the issue of the Tribunal's jurisdiction and also a defence on the merits. An amended IT1 was filed on 14 April, including the claim for wrongful dismissal and an amended Notice of Appearance dated 28 April made no reference to any contest on the merits, but contended that the Tribunal had no jurisdiction to hear either the statutory or the common law claims.
4. A preliminary hearing was held on 26 June 1998, and in its Decision promulgated on 10  September, it decided that it did have jurisdiction. That Decision was appealed as regards the merits of the jurisdiction decision and also alleging bias on the part of the Tribunal. By a letter dated 12 October 1998, the Chairman directed that the hearing on merits should not be listed until after the disposal of the Appellants' intended appeals. Mr Turner appealed that Decision.
5. The matter came before this Court on 23 March 1999, when the EAT allowed Mr Turner's appeal and directed that the Tribunal's hearing on the merits be listed but transferred the case to another venue, London Stratford, for a hearing as quickly as possible. The EAT refused leave to appeal and ordered that any application for leave would not stay the merits hearing without further express Order of the Court of Appeal.
6. Both parties were represented before the EAT and the last of five matters submitted by Mr Snelson, then appearing on behalf of the Appellants, was the self same point that is being pursued before us in this appeal, namely that by directing that the Tribunal should proceed with the merits hearing, the Appellants could be prejudiced because it could be argued that they would have then submitted to the jurisdiction of the Employment Tribunal, notwithstanding that they were still contending, through their appeal, that the Court did not have jurisdiction. Reference was made in particular to Article 18 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, embodied into our law by virtue of the Civil Jurisdiction and Judgments Act 1982. Mr Justice Morison dealt with that matter as follows:

"In relation to the prejudice which the employers say they will suffer if they participate. We should just simply say that that does seem to us to be a sustainable proposition, having regard to the decision of the Employment Tribunal on the jurisdiction issue."

We note that at that hearing, although the employers were apparently anxious not to be seen to do anything which might be construed as their having submitted to the jurisdiction of the Court, it appears that they still became involved in a discussion with the President, concerning the change of venue to Stratford.

7. Leave to appeal was sought in the Court of Appeal against that decision, and the Notice of Appeal again made reference to the Article 18 argument, although the Notice makes it clear that that issue only went to the common law claim, and not to the claim for unfair dismissal, a point that has not been highlighted in the history of this matter until the hearing before us. Lord Justice Mummery considered the matter on paper and refused leave on 21 May in the following terms:

"This appeal has no reasonable prospect of success. The ET Chairman was plainly wrong in exercising his discretion to postpone the hearing of Mr Turner's on its merits until after the determination by the EAT of the appeals on questions of jurisdiction and bias. As the ET held that it had jurisdiction it should proceed to determine the case and not await the outcome of the EAT against the jurisdiction decision."

Although it was not clear from the papers before us, it is conceded that the Appellants renewed their application for leave and requested a hearing before the full Court.

8. Meanwhile, the merits hearing was scheduled to take place at Stratford on 24 May. Mr Snelson, again appeared on behalf of the Appellants, and sought a postponement of the merits hearing, again raising the Article 18 issue. The Tribunal, having reviewed the history of the case, and "with the exhortations given by the Employment Tribunal ringing in our ears" decided that the case would proceed, and as we have already indicated, the Appellants chose to take no part in the merits hearing, lest it could prejudice their position on jurisdiction.
9. As Counsel for the Respondent pointed out in his argument before us, there was nothing to prevent the Appellants taking part in that part of the hearing that related to unfair dismissal, and inviting the Tribunal to adjourn the wrongful dismissal claim. The Appellants contend that it would not have been a practical proposition to split the two issues, but that proposition was never canvassed before the Tribunal. For our part, we cannot see why they could not have been invited to adjourn the common law claim and proceed on the unfair dismissal claim.
10. By the middle of June 1999, the Appellants had decided to withdraw their application for permission to appeal the EAT Order of 23 March. Before us, Mr Pitt-Payne contends that this was done because in the light of 24 May Decision to refuse postponement of the merits hearing, it was not sensible to pursue that aspect of the matter before the Court of Appeal. Instead, on 1 July 1999, an appeal was filed against 24 May decision to refuse postponement, and on 15 July 1999, a preliminary hearing was held at this Court to deal with the original appeals against bias and jurisdiction, and the new appeal against 24 May refusal. Leave to appeal was granted on bias and jurisdiction issues but refused on the appeal relating to 24 May decision. Judge Levy QC, dealing with that issue, dealt with the matter as follows:

"However, as we have pointed out to him in argument, there had been no appeal against the decision of Mummery LJ and in those circumstances it appears to us that the discretion of the Chairman and his colleagues on 24 May was properly exercised and that no appeal can succeed against the way that it was exercised in the circumstances. We therefore will not allow this appeal to go beyond this stage and dismiss it now"

.

There was no appeal against the EAT's refusal. On 2 November 1999, this Court dismissed the appeals on jurisdiction and bias. That decision was eventually overruled by the Court of Appeal on 6 April 2001, when they held that there was apparent bias from the comments of the Tribunal Chairman and they directed the jurisdiction issue to be reheard before another Tribunal in Stratford. At the end of the Court of Appeal hearing, Mr Pitt-Payne submitted to the Court of Appeal that if at the rehearing the Tribunal held that it did have jurisdiction, then there would need to be a rehearing on the merits because the only hearing on the merits thus far was a hearing in which the Appellants had not taken part. Lord Justice Pill answered that point simply by saying as follows:

"That is not as obvious to me as it appears to you. Why do you say that?"

Mr Pitt-Payne answered:

"One needs to follow through, how did it come about that there was a hearing on the merits without Harada's participation in that hearing? It came about because Harada was contesting jurisdiction, it did not wish it to be said that it had in any way submitted to the jurisdiction of the tribunal."

Lord Justice Pill answered:

"They have reserved their position."

The Court of Appeal in a short decision declined to make any Orders regarding a possible rehearing of the merits case, and stated the following:

"……we do not consider we have jurisdiction. Even if we did, it would not be right to make any ruling with respect to that order which therefore stands, subject to the question of jurisdiction."

11. The rehearing on jurisdiction took place on 16 August 2001 and in a decision promulgated on 30 October, the Tribunal held that they did indeed have jurisdiction on both complaints of unfair dismissal and wrongful dismissal. In particular it decided that there were several Articles within the Convention that gave them jurisdiction to deal with the issues. At the end of their decision, they said as follows:

"Accordingly, as it is agreed between the parties that all other matters have been determined and are res judicata, no further adjudication upon the merits as decided on 25 May 1999 is required."

12. Mr Pitt-Payne submits that this was a misunderstanding of the Appellant's position which was that they were only asking that Tribunal hearing to deal with the jurisdiction issue, and we have been shown correspondence that was sent by the Appellants' solicitors to the Employment Tribunal office after receipt of the promulgated Decision, in which it was pointed out that the Appellants had in fact reserved their position regarding the merits hearing because of the possible effect of Article 18. In those circumstances, we do not propose to draw any adverse conclusions from the concluding words of the Tribunal's Decision.
13. The request for review which is the subject matter of these proceedings was not made until 22 April 2002, with the Regional Chairman's response on 29 April. Mr Pitt-Payne sought to explain the delay by referring to the continuing correspondence between his solicitors and the Stratford Tribunal with regard to the error in the final paragraph of the Decision, to which we have made reference, which correspondence continued up until the end of February 2002. However, we see no reason why, once the new jurisdiction decision had been received at the end of October 2001, an application could not have been made for review, in accordance with the normal fourteen day time limit, by 13 November 2001. The review letter, having set out the relevant history of the case, dealt with the matter as follows:

"The essence of the position is, in my opinion, that once the Employment Appeal Tribunal had, prior to the Ryan tribunal hearing, determined that it was fair and just to proceed to a hearing on the merits, notwithstanding a consideration of the article 18 argument, the respondents were entitled to rely upon that determination and contest the merits hearing. Alternatively, once the Ryan tribunal refused the renewed application for a postponement, the respondents were not compelled to be absent from that hearing, having made it perfectly clear what was their position.

Therefore, although the respondents were absent, they were deliberately absent, and I do not see that ground for review could possibly be upheld."

The question we now ask ourselves is whether that Decision was wrong in law.

14. Article 18 provides that:

"Apart from jurisdiction derived from other provisions of this Convention, a court of a Contracting State before whom a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered solely to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 16"

The use of the word "solely" which we are told appears in some translations but not others, has been considered in a number of ECJ decisions, but particularly Elefanten Schuh GmbH -v-Pierre Jacqmain The facts of the case were that from February 1970, Mr Jacqmain, a Belgian resident was employed as a sales agent by a German company. The contract of employment, drafted in German, contained a jurisdiction clause stipulating that a Court in Germany would have exclusive jurisdiction in the event of any dispute. Mr Jacqmain brought an action before the Antwerp Labour Tribunal seeking damages from his employers for breach of the employment contract. On 26 May 1976 a German company filed a defence on the merits of the claim, and by a further document lodged on 1 March 1977. It invoked the jurisdiction clause in the employment contract, seeking to challenge the jurisdiction of the Belgian Court. The headnote of the Court's decision reads as follows:

"Article 18 of the Convention of 27 September 1968 be interpreted as meaning that the rule on jurisdiction which that provision lays down does not apply where the defendant not only contests the court's jurisdiction but also makes submissions on the substance of the action, provided that if the challenge to jurisdiction is not preliminary to any defence as to the substance it does not occur after the making of the submissions which under national procedural law are considered to be the first defence addressed to the court seised."

The Court in its judgment dealt with the position as follows:

"14 Although differences between the different language versions of Article 18 of the Convention appear when it is sought to determine whether, in order to exclude the jurisdiction of the court seised, a defendant must confine himself to contesting that jurisdiction, or whether he may on the contrary still achieve the same purpose by contesting the jurisdiction of the court as well as the substance of the claim, the second interpretation is more in keeping with the objectives and spirit of the Convention. In fact, under the law of civil procedure of certain Contracting States a defendant who raises the issue of jurisdiction and no other might be barred from making his submissions as to the substance if the court rejects his plea that it has no jurisdiction. An interpretation of Article 18 which enabled such a result to be arrived at would be contrary to the right of the defendant to defend himself in the original proceedings, which is one of the aims of the Convention.

15 However, the challenge to the jurisdiction may have the result attributed to it by Article 18 only if the plaintiff and the court seised of the matter are able to ascertain from the time of the defendant's first defence that it is intended to contest the jurisdiction of the court.

16. The Hof van Cassatie asks in this regard whether jurisdiction must be contested in limine litis. For the purposes of interpreting the Convention that concept is difficult to apply in view of the appreciable differences existing between the legislation of the Contracting States with regard to bringing actions before courts of law, the appearance of defendants and the way in which the parties in an action must formulate their submissions. However, it follows from the aim of Article 18 that if the challenge to jurisdiction is not preliminary to any defence as to the substance it may not in any event occur after the making of the submissions which under national procedural law are considered to be the first defence addressed to the court seised.

17. Therefore the answer to the second and thirds parts of Question 1 should be that Article 18 of the Convention must be interpreted as meaning that the rule on jurisdiction which that provision lays down does not apply where the defendant not only contests the court's jurisdiction but also makes submissions on the substance of the action, provided that, if the challenge to jurisdiction is not preliminary to any defence as to the substance, it does not occur after the making of the submissions which under national procedural law are considered to be the first defence addressed to the court seised."

15. The opinion of the Advocate General, Sir Gordon Slynn, stated the position as follows:

"It would seem to be contrary to the spirit and intention of the Convention to place difficulties in the way of litigants. Substantial difficulties can arise in practice is a defendant is limited to entering an appearance on the question of jurisdiction alone. If he fails on that issue, he may deprive himself of the chance of contesting the claim against him on the merits or even on other procedural grounds. He cannot rely on those, either, if proceedings for enforcement of the judgment against him are begun in the state where he is or where he has asserts, since Article 28 of the Convention provides, subject to exceptions, that the jurisdiction of the court of the state in which judgment is given may not be reviewed. Moreover cases can arise in which the jurisdictional point is complex but the point on the merits is short. It would seem an unattractive result that a defendant who desires to contest the jurisdiction should be barred from raising a point on the merits which could speedily be dealt with if he failed on jurisdiction. This is particularly so in a case where a defendant desires to secure property seised or threatened with seizure, not least in the commercial field. It is no less unattractive a result that a court which concludes in the course of argument that it does not have jurisdiction should be required to take jurisdiction merely because a defendant has, in entering an appearance, raised a subsidiary point on the merits or some other procedural objection."

English law takes a stricter view on this question, as I understand it, than the law of certain other Contracting States where a defendant is not necessarily to be taken to have submitted to the jurisdiction merely because the he advances arguments on the merits. There must be knowingly a conscious acceptance of jurisdiction. I refer to, without repeating, the extracts of commentaries included in the observations of the United Kingdom Government."

16. For the Appellants, Mr Pitt-Payne concedes that the Elefanten decision gives no guidance as to whether a defendant, having properly raised the issue of jurisdiction at the outset, can, therefore, safely take part in proceedings not only by filing a merits defence, but proceeding to the stage of actually taking part in a full hearing, as they were required to do in this case. He refers to the position as "uncharted waters", in that until the time when the jurisdiction issue had finally been determined, there was always a risk that even if the jurisdiction issues have to be resolved in the Appellant's favour, an argument could then be mounted against them that they had submitted to the jurisdiction for the purposes of Article 18. We cannot agree with that submission. We are of the view that all the Appellants were required to do to protect themselves following the decision in Elefanten was to raise the issue of jurisdiction at or before filing a merits defence which is what they did. Had they taken further steps to deal with the merits other than with the guidance or approval of the Court, then conceivably, an issue might have been raised as to whether they had submitted to the jurisdiction. However, that was not the position in this case. A Tribunal had ruled that there was jurisdiction, and at the time of the merits hearing, whilst there was an appeal outstanding against that decision, that was still the effective Tribunal Decision. Further, this Court, having considered the Article 18 submission, had ruled that the merits hearing should go ahead. The only possible inference from that decision was that this Court considered that the Appellants could safely attend that hearing without compromising their position. The view of the EAT was confirmed by the Court of Appeal, certainly as far as the single Judge was concerned. Further, even accepting the Appellant's concerns re Article 18, there is no reason why they should not have taken part in a merits hearing relating to unfair dismissal. The position was again confirmed when Judge Levy refused leave to appeal. We further note that the Appellants did not avail themselves of the opportunity to challenge the refusal of Lord Justice Mummery to grant leave by taking the matter to a full Court hearing, nor did they seek to appeal the refusal of Judge Levy. We also remind ourselves that the Appellants did in fact take a further step in the proceedings before Mr Justice Morison by seeking a change of venue for the merits hearing, and finally we remind ourselves of the substantial delay in this case, and particularly the unexplained delay in seeking a review after the promulgation of the Decision in October 2001.
17. In his powerful submissions on behalf of the Respondent, Mr Hickey also reminds us that although the Appellants had originally put in a defence on the merits to the original statutory claims, that defence was abandoned when an amendment was filed, following the introduction of the common law claims, i.e. 28 April 1998, and since that date, and more particularly since the second jurisdiction decision was promulgated in October 2001, the Appellants have not attempted to put forward any defence on the merits. We see considerable force in that submission. Further, he submits that the present appeal is a collateral attack on the decision of this Court of 23 March 1999, and raises the issues of res judicata, alternatively abuse of process - see Johnson -v- Gore Wood & Co [2002] 2 AC 1. It has not been necessary for us to fully examine the issues and case on this aspect, both for the reasons that we have already stated, and also because that issue was not before the Regional Chairman, as part of the review process, but we would repeat, however, that we believe that the issues which are before us today are no different from those before this Court in March 1999.
18. The Regional Chairman in his decision, carefully reviewed matters relating to the history of this case, and quite properly highlighted the decision of this Court given by Mr Justice Morison subsequently confirmed by the Court of Appeal. We can find no error on the part of the Regional Chairman in his approach and we would accordingly dismiss this appeal.
19. We understand that the Respondent may wish to seek an Order for costs against the Appellants and we would direct that he should make submissions on paper within fourteen days after the handing down of this Decision, to be served on this Court, and the Appellants should file their submissions fourteen days thereafter.