United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A STRAW (of Counsel) Instructed by: Ripon & District Citizens Advice Bureau 5 Duck Hill Ripon HG4 1BL
For the Respondent	MR N BROCKLEY (of Counsel) Instructed by: Messrs Kirbys Solicitors 32 Victoria Avenue Harrogate North Yorkshire HG1 5PR


 


HIS HONOUR JUDGE D SEROTA QC

1. This is an appeal by the Claimant against an Order for Costs made against him by the Employment Tribunal at Leeds (Mrs C Lee Chairman). The Decision of the Employment Tribunal was sent to the parties on 14 July 2004. The Employment Tribunal held that the Claimant was not disabled within the meaning of the Disability Discrimination Act 1995, and that he had not been unfairly dismissed. (He claimed to have been constructively dismissed as a result of a repudiatory breach of contract by the Respondent. The Employment Tribunal found there had been no such repudiatory breach). The Employment Tribunal then concluded that the Claimant's case was in part misconceived and had been conducted unreasonably, and ordered him to pay the sum of £3,600 towards the Respondent's costs.
2. The appeal was referred to a preliminary hearing by Her Honour Judge Wakefield on
   6 September 2004, and on 7 January 2005 His Honour Judge McMullen QC referred the matter to a full hearing.

Factual background

3. We now deal briefly with the factual background to this appeal, which we have taken from the Decision of the Employment Tribunal.
4. The Claimant has the misfortune to suffer from kerataconus. This is a condition causing weakness in the vision of the cornea. The Claimant suffered from kerataconus since he was a teenager.
5. At the material time he worked in the conversion section of the Respondent's bedding division in Harrogate.
6. In April 2001 he had his first cornea transplant. This was to his right eye. The operation was successful. The Claimant was advised he needed to have a second operation to his left eye. This operation took place on 6 April 2003.
7. In June 2002, the Respondent agreed to switch the Claimant to working on a temporary basis on night shifts only. The Employment Tribunal rejected the suggestion that this arrangement had been made for the specific purpose of assisting the Claimant.
8. As we have said, the Claimant underwent the operation to his left eye on 6 April 2003. Shortly before the operation he moved to Ripon and now travelled some 18 miles to work. On occasions he used public transport, on occasions his bicycle. The Employment Tribunal found that he was able to bicycle to work during the hours of darkness without difficulty.
9. The Employment Tribunal accepted the evidence of his Specialist, Mr Noble, to the effect that the Claimant was able to return to his usual work within three months of the operation, although he should not undertake heavy lifting for those three months. On
   25 June 2003, Mr Noble in fact wrote to that effect to the Claimant's GP and expressed the opinion there was no reason why the Claimant could not return to work. Notwithstanding, the GP continued to supply the Claimant with medical certificates.
10. The Employment Tribunal rejected the Claimant's evidence that it was inappropriate for him to undertake heavy lifting until his stitches had been removed, which could have been for up to ten years. It also rejected his case that he was unable to see for the minimum driving distance.
11. The Claimant maintained, before the Employment Tribunal, that in June 2003 he spoke to a manager, Mr Payne, who had since left the Respondent's employ. The Claimant maintained he told Mr Payne that although his Specialist had said he was able to return to work, he disagreed. The Employment Tribunal did not accept this evidence, and found that he had not told Mr Payne about the contents of the letter from his Consultant, which had been copied to him. In fact this letter, to which we have referred, was never disclosed by the Claimant at all but came to light because Mr Noble disclosed the letter when he came to write a report for the purposes of the Employment Tribunal hearing.
12. On 18 September 2003 the Claimant spoke to the Personnel Department, and spoke to Ms Yvonne Richards. He informed her that he had been given a return date when he would be able to return to work of 13 October. The Employment Tribunal was not able to accept this was correct because Mr Noble had told the Claimant he was able to return to work in June. The Employment Tribunal concluded that if the Claimant had been advised that he was not able to return to work until 13 October, such advice could only have come from his GP and would not have been related to any problems with his eye. No details of any other medical difficulties have been supplied by the Claimant.
13. On 8 October 2003 a meeting took place between the Claimant and Mr Gill of the Respondent's Personnel Department. The Claimant informed Mr Gill he had been told by the hospital that he could return to work on 13 October, but was not to undertake any heavy lifting. This evidence was rejected by the Employment Tribunal as it was contrary to Mr Noble's report. The Claimant also suggested to Mr Gill that he was taking a degree of medication. This evidence was rejected by the Employment Tribunal, again on the basis of the report of Mr Noble.
14. The Claimant sought to persuade the Respondent that he had applied for a driving licence, but that the DVLA was still considering his application. The Employment Tribunal find that Mr Myers intended to mislead the Respondent by suggesting that the DVLA was considering his ability to drive. There was no evidence he had ever applied for a driving licence or that one had ever been refused on the grounds of his sight. The Employment Tribunal considered that not only was the Claimant seeking to mislead the Respondent, but it gave considerable weight to the inconsistency between what he said, and the available evidence in evaluating his case. The Claimant wished to remain working on night shifts only because he said it was easier on his eyes. The Respondent would have liked to return him to his usual shift pattern.
15. Following the meeting with Mr Gill the Respondent asked the Claimant to authorise a medical report from his GP to be focused on his ability to do his job. The Claimant telephoned the Respondent to say that the GP was not qualified to comment because he wanted a report from the Claimant's Consultant Surgeon. The Employment Tribunal doubted this evidence because the GP already had Mr Noble's letter. Nevertheless the Respondent accepted what the Claimant said at face value and assumed that his GP would seek a report from Mr Noble. The Respondent, therefore, deferred a decision as to whether the Claimant should return to work and as to his shift pattern, and the Claimant remained at home. On 24 October the Claimant telephoned the Respondent to say he was not prepared to wait until the Specialist's report had been obtained and he demanded an instant decision. The Respondent was not prepared to take such a decision and the Claimant said he would have to "call it a day". He was advised by the Respondent to wait until the report had been obtained from Mr Noble, when the matter would be considered further. The Employment Tribunal rejected the evidence of the Claimant in the following respects. The Claimant suggested that the Respondent had waited for him to be out of the way so it could alter his shift rota to exclude him. This was rejected. The Employment Tribunal rejected his evidence that he had moved to Ripon in consequence of an agreement that he would be able to work nights. The Employment Tribunal was satisfied in any event that the Respondent would have acted in accordance with whatever recommendation was made by Mr Noble, as to shift patterns.
16. The Respondent chased up the report from Mr Noble, but on 11 November the Claimant wrote and resigned. The Employment Tribunal rejected the Claimant's evidence that he had been told there was no night shift for him regardless of need. It rejected his claim that he had been given no option but to cease being employed by the Respondent having been given little option to do anything else. It also rejected his argument that he had waited long enough for the medical report.
17. We need to set out three further findings of the Employment Tribunal which are of particular relevance to this appeal.

(i) While the Claimant was absent from work between April and November the Respondent had little contact with him. The Employment Tribunal put this down a reorganisation of the Respondent. It did not regard the Respondent's conduct as amounting to a repudiatory breach of contract.

(ii) The Respondent did not consult the Claimant in relation to changes made to his shift pattern while he was absent from work (the cessation of night shifts only). The Employment Tribunal again found this was not a repudiatory breach of contract, although it would have been courteous for the Respondent to have kept the Claimant informed about the changes and to have consulted him while he was absent from work.

(iii) From the time when the Claimant said he was able to return to work in October (but on night shifts only) he was asked to remain at home by the Respondent while it sought medical advice, as we have already noted. During this period he was not paid his full wage. He was paid his salary less SSP which he did not receive as he was no longer certificated as sick. He lost the equivalent of SSP during that period. The Employment Tribunal found this issue difficult and say it took them "quite a long time to resolve". It recognised, generally speaking, that a failure to pay wages would amount to a repudiatory breach of contract. The Employment Tribunal also recognised that an employer has a duty to pay wages if an employee is prepared to work under his contract, even if asked to stay at home. However the Employment Tribunal went on to conclude:

"The Claimant was not prepared to work under his contract because he was not prepared to go back to alternating shifts, we do not find that the Respondent was obliged to pay wages."

(iv) The Employment Tribunal found that none of these three matters was relevant to the Claimant's decision to resign:

"The reason for the dismissal, in our view, is that the Applicant was not prepared to wait until the medical report came in. That is why he resigned. That is not a fundamental breach, so there was no dismissal."

18. The Originating Application was issued on 7 January 2004. The Claimant maintained in that Originating Application that he was disabled. The Originating Application was prepared by Mrs Ravalde of the local Citizens' Advice Bureau ("CAB"). On 9 January 2004 Mrs Ravalde wrote to Mr Noble in a letter that was not disclosed to the Employment Tribunal. The Employment Tribunal, however, saw Mr Noble's response. The Employment Tribunal, at paragraph 7.22, say that the letter confirmed the Claimant was "healthy, fit and strong, and could carry out all normal physical activities, and there was no reason why he could not do any job, either manual or skilled". The Employment Tribunal observed it was surprising that the Originating Application, which in a number of respects was inconsistent with that report, was not amended.
19. On 3 March 2004 the Employment Tribunal held a directions hearing and gave directions, including directions in relation to disclosure. By 26 May 2004 Mr Noble had prepared a jointly commissioned report in accordance with earlier directions. Mr Noble confirmed the Claimant's medical history insofar as kerataconus was concerned and the two operations on his eyes. The Employment Tribunal noted that in that report Mr Noble confirmed he should have been able to return to his pre-accident work within three months of the operation, that is by July.
20. We quote from that report which was paraphrased by the Employment Tribunal:

"5. Mr Myers' work involved heavy lifting and it is my opinion that he should not have carried out heavy lifting work in the first three months after the corneal graft operation on 16.4.03. However, he was fit to carry out work that did not involve heavy lifting, such clerical or office duties.

6. After the three months' period was completed, he should have been able to return to work and to his normal previous occupation. Before, during and after the operation, his ability to carry out normal everyday activities, including walking, driving, clerical work, self-care and communication was unaffected and there was no impact of the surgery on his ability concentrate, learn or understand. He had a normal perception of the risks of physical dangers.

7. It is my opinion that Andrew Myers was fit to return to his normal occupation three months after the date of his corneal graft to the left eye.

8. At all times, the question of returning to work was discussed with him and he was encouraged to resume his previous occupation or to find other work if he felt his other occupation was unsuitable. Indeed the letter written on 25 June from me to his GP stated "I see no reason now why he should not return to work". This letter was copied to Mr Myers."

21. On 27 May 2004 the Claimant was put on notice by a letter from the Respondent's solicitors, addressed we believe to the CAB, that an application for costs might be made against him because his claim under the Disability Discrimination Act 1995 was bound to fail. On
    9 June 2004 a reply was sent to the effect that the threat to seek costs was unreasonable and if persisted in would lead to a referral to the Respondent's solicitors professional body.

Findings of the Employment Tribunal

22. At paragraph 24 the Employment Tribunal concluded that even if the dismissal had been unfair, the Claimant's conduct in failing to disclose that he had been told in June that he was fit to return to work amounted to such misconduct prior to his dismissal that he should not have been awarded any basic or compensatory award. It would not have been just and equitable to have made such an award because the Respondent had been paying sick pay for a number of months when it had not been put into possession of the whole of the facts.
23. The Employment Tribunal found that the Claimant was not disabled within the meaning of the Disability Discrimination Act. The Employment Tribunal was particularly impressed with the fact that the Claimant's evidence as to his condition was at variance with that from Mr Noble and that there was no additional evidence from his GP or the DVLA. The Employment Tribunal were satisfied at the material time the Claimant suffered no impairment to his normal day-to-day activities which were not corrected by glasses or lenses. The Tribunal noted that he was able to cycle 18 miles to work. The Employment Tribunal rejected his claim to have been unfairly dismissed. There had been no repudiatory breaches of contract. He resigned because he was not prepared to wait for the medical report.
24. The Employment Tribunal then considered an application for costs made on behalf of the Respondent. In the summary prior to the Extended Reasons in paragraph 3 the Employment Tribunal say this:

"The Applicant's case is in part misconceived and has been conducted unreasonably.…"

In paragraph 36 the Employment Tribunal stated that they accepted the proceedings had been conducted unreasonably:

"…particularly because we note there had been no disclosure by the Applicant in respect of any documents at all, and in fact the Applicant's representative was still trying to serve documents on the Respondent after the hearing had commenced yesterday morning and we had to adjourn for some time to consider any impact that might have on the fairness of the hearing."

In paragraph 37 the Employment Tribunal stated that:

"…the proceedings have been conducted unreasonably, because it does seem to us that once the medical evidence was in the hands of the Applicant's representative, it should have been clear that this case, in respect of the disability claim, was misconceived, and that the prospect of the Applicant succeeding in an unfair dismissal claim – or at least succeeding to any material degree resulting in a financial award – must be slim, given the clear disagreement between his own factual account and that of his consultant. We do not conclude that actually presenting the Originating Application was misconceived, as at that point, the Applicant did not know enough about the way the Disability Discrimination Act worked to be sure whether he was a disabled person or not, and Mrs Ravalde did not know enough about the Applicant's medical records to know."

25. The Employment Tribunal was also concerned that Mrs Ravalde had received a medical report in February which should have put her on notice that there were issues to be explored, either with regard to the Claimant's truthfulness or to resolve any confusion. That report tended to show the Claimant was not at that stage a disabled person, though it left open the possibility that at some time when he was a teenager he might have been. No further inquires were made. The Employment Tribunal considered that a more serious matter was the failure of the Claimant's representative to disclose the existence of that first report at the very least during the directions hearing. In paragraph 39 the Employment Tribunal had this to say:

"We are satisfied, however, that from the time the Applicant and his advisers were in receipt of the independent report it should have been crystal clear that this claim was misconceived. We therefore conclude that we do have the power to make an award of costs."

26. In paragraph 40 of its Decision, the Employment Tribunal decides how to exercise its discretion. The Employment Tribunal noted that it had a power rather than a duty to make an award of costs. Having directed itself that it was not entitled to have regard to the Claimant's means (which was correct at the time) and that the Order was made against the Claimant and it was not appropriate to distinguish between fault on his part or that of his representative, it concluded:

"We are satisfied that at least from Mrs Ravalde's receipt of the independent report prepared in accordance with the directions, the disability was misconceived and the unfair dismissal claim had no reasonable prospect of success, since it depended on the Applicant's evidence, which was considerably discredited by the medical report."

The Employment Tribunal therefore decided it appropriate to make an award of costs but it limited that award and made an Order only in respect of the period commencing on 9 June 2004, which was the date we believe when Mrs Ravalde was able to take instructions from the Claimant on Mr Noble's report. The Employment Tribunal decided to award the sum of £3,600 in respect of costs and explained how it had arrived at that sum.

The legal framework

27. At the relevant time the Employment Tribunal's power to award costs derived from Rule 14, Schedule 1 of the Employment Tribunal (Constitution and Rules of Procedure Regulations) 2001. The Employment Tribunal was empowered to make an order for costs if it considered that:

"a party has in bringing the proceedings, or a party or a party's representative has in conducting the proceedings, acted vexatiously, abusively, … or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived…"

In Regulation 2(2) it is provided that:

""misconceived" includes having no reasonable prospect of success"

Mr Straw, who appeared on behalf of the Claimant, drew our attention to the judgment of Sedley LJ in Scott v Commissioner of Inland Revenue [2004] IRLR 713 when he had said that "misconceived" meant "doomed to failure". We do not, however, consider that Sedley LJ was intending to give a definition that might be regarded as alternative to that in
Regulation 2(2).

28. Although the threshold for making costs orders was lowered by the 2001 Regulations (and has since been lowered yet further in the 2004 Regulations) the Employment Tribunal still remains a largely cost free environment: see Lodwick v London Borough of Southwark [2004] IRLR 554.
29. There is no need to cite authority for the proposition that appeals to the Employment Appeal Tribunal are on points of law only. The Employment Appeal Tribunal cannot entertain appeals on questions of fact alone. It can only revisit questions of discretion where the Employment Tribunal can be shown to have misdirected itself in law or its decision is in effect perverse.
30. The standard of proving perversity is very high: see Yeboah v Crofton
    [2002] IRLR 634. It is irrelevant if the Employment Appeal Tribunal would have exercised its discretion differently.
31. There is no appeal by the Claimant in relation to the award of costs made against him in respect of his application under the Disability Discrimination Act.

Costs in relation to the unfair dismissal claim

32. We now turn to consider the submissions made by the Claimant as to why we should allow his appeal against the Order that he should contribute towards the Respondent's costs in this regard. Mr Straw submitted that as a matter of general public policy employment tribunals should be slow to order costs because this would inhibit claims in what was intended to be a cost free environment. He went on submit that the Decision of the Employment Tribunal was one no reasonable employment tribunal could have come to because it was unreasonable for the Employment Tribunal to have concluded that the claim for unfair dismissal was bound to fail. Further, the Employment Tribunal had misdirected itself in law by applying the wrong test as to what rendered a claim "misconceived".
33. In relation to his submission that the decision that the unfair dismissal claim was misconceived and one no employment tribunal could reasonably come to, Mr Straw submitted firstly that acts relied upon as amounting to a breach of the implied term of trust and confidence could be cumulative, as was the Claimant's case.
34. At the date in June when Mrs Ravalde was in possession of the independent report, there still remained three issues in relation to the unfair dismissal claim that in his submission did not depend upon the Claimant's credibility. We have already referred to these three issues. Firstly, the Respondent had little contact with the Claimant while he was absent from work; secondly, the Claimant was not consulted in relation to changes in his shift pattern; and thirdly, at a time when the Respondent asked him not to attend work (because of suggestions that he could only work night shifts) he did not receive his full pay because of the deduction in respect of the notional SSP.
35. Mr Straw accordingly submitted that it was impossible to say without the benefit of hindsight that there was no reasonable chance of his claim for unfair dismissal succeeding. It was in any event inadmissible to have regard to hindsight and in support of this proposition he relied upon Lothian Health Board v Johnston [1981] IRLR 321. This proposition does not appear to us to have been controversial. Mr Straw went on to suggest that the Employment Tribunal's finding that Mr Noble's report so discredited the Claimant's evidence that his claim for unfair dismissal was bound to fail was perverse. There was no reason why the conflict between the Claimant's evidence and that of Mr Noble should affect the credibility of his evidence, at least insofar as it related to matters that did not depend upon Mr Noble's evidence. The claim for unfair dismissal largely depended on non-medical evidence and in relation to the three issues that Mr Straw had identified there was little real dispute as to the facts.
36. Insofar as misdirection in law is concerned, Mr Straw submitted that the Employment Tribunal had set out three separate tests to determine whether the claim for unfair dismissal had become misconceived. At the beginning of its Decision the Employment Tribunal held that the Claimant's case was in part "misconceived" and had been conducted "unreasonably". In paragraph 37 it had said that the prospect of the Claimant succeeding in an unfair dismissal claim, at least insofar as he might succeed to any material degree resulting in a financial award "must be slim", and in paragraph 40 it had described the claim for unfair dismissal as having "no reasonable prospect of success". The Employment Tribunal should have limited itself to the correct definition, that is whether the claim was "misconceived" and it failed to do so. The Employment Tribunal appears to have equated a "slim" chance of success with "no reasonable chance of success".

The Respondent's submissions

37. Mr Brockley submitted that there was no misdirection of law in this case. It was clear, he submitted, by reason of the definition in Regulation 2(2) that a claim that had no reasonable prospect of success was deemed to be "misconceived".
38. Further, the Decision of the Employment Tribunal was not only based, he submitted, on a finding that the unfair dismissal claim was misconceived but also on the unreasonable manner in which the proceedings had been conducted. In the light of its earlier findings and what the Employment Tribunal set out at the beginning of its judgment when it found in terms that the case was "in part misconceived and has been conducted unreasonably" it was clear that the Employment Tribunal had regard to both heads.
39. Insofar as the claim for unfair dismissal was concerned he pointed out that the Claimant's claim was that at a time when he was unable to work by reason of his "disability" or was unable to work ordinary shift patterns by reason of the "disability", he was treated unreasonably by the Respondent in a number of respects including in particular the three which we have referred to. When seen in the context of the fact the Respondent was perfectly well able to work at the material times and was guilty of concealing information from the Respondent and indeed had sought mislead the Respondent, the Claimant's conduct would of necessity prevent any of the actions taken by the Respondent being regarded as breaches of contract, let alone repudiatory breaches. The case that the Respondent was in repudiatory breach, in Mr Brockley's submission was impossible to sustain.
40. Mr Brockley put the matter in another way. He submitted that the Claimant would never be able to prove his dismissal was unfair by reason of a complete lack of credibility. He falsely asserted he was ill and disabled when he was not; he misled his employers. He was waiting for a consultant's report when he already knew what his Consultant, Mr Noble had said, but had chose to mislead the employers and not disclose the report. Once Mr Noble's conclusions were made known to Mrs Ravalde she should have appreciated that his claim for unfair dismissal had no merit and was bound to fail.
41. Mr Brockley submitted that we should look at the reasoning of the Employment Tribunal as a whole and not scrutinise it for error line by line and referred us to the judgment of Mummery LJ in McPherson v BNP Paribas (London Branch) [2004] EWCA Civ 659 at paragraph 36. He also submitted that there was no reason why an employment tribunal had to give lengthy reasons for any decision on costs. The reasons could be brief and he drew attention to a passage to that effect in the judgment of Lord Phillips MR in English v Emery Reimbold & Strick Ltd [2003] IRLR 710 cited by Burton J in Bryant v Weir (EAT/0253/04).
42. Mr Brockley concluded that even were we to disagree with the Employment Tribunal (and he submitted the Employment Tribunal's Decision was plainly correct) we could only interfere if the decision as to the lack of merits of the unfair dismissal claim after receipt of Mr Noble's report was perverse. He submitted that the Claimant came nowhere near to showing that this was the case.

Conclusions

43. It is important to recognise at the outset that the Employment Tribunal recognised that the discrimination claim was not misconceived at the outset. It is also important to recognise that the Employment Tribunal reduced the costs awarded against the Claimant to reflect not only the date when it considered the claim became misconceived or its continued prosecution an abuse. The Employment Tribunal also reduced the costs to reflect what it considered to be the appropriate level of costs reasonably incurred by the Respondent.
44. Although the Employment Tribunal at paragraph 37 referred to the claim as having no more than a "slim" chance of success, at paragraph 40 it took the view it could exercise its discretion where the claim for unfair dismissal had "no reasonable chance of success". Paragraph 40 as it seems to us is unimpeachable and we do not consider that the Employment Tribunal may have treated a case with a "slim" chance of success as being the same as one that had "no reasonable chance of success". We do not consider that there was any misdirection as to the law. We also consider that the decision of the Employment Tribunal was not simply based upon the claim having become misconceived but was also made by reason of the unreasonable manner in which the proceedings had been conducted. This is, in our opinion made clear by the references to which we have referred at paragraphs 36 and 37 of the decision and the explicit nature of the order itself at paragraph 3 that the claim was 'in part misconceived and has been conducted unreasonably' [our emphasis].
45. We now consider the submissions in relation to the three issues of unfair dismissal we have identified (lack of contact while Claimant off work, lack of consultation in relation to changes of shift pattern, and failure to pay full salary). It is said that these were all matters that were independent of Mr Noble's testimony. We also note that the Employment Tribunal's decision in finding the Claimant to have been "less than honest" with the Respondent throughout the return to work procedure was by a majority only.
46. In our opinion, to conclude that his claim in respect of unfair dismissal had no reasonable chance of success, once the medical evidence from Mr Noble was available that completely undermined the Claimant's case, was well within the band of what the Employment Tribunal might reasonably consider to be the case. It is impossible to say that the decision was perverse. After all, that evidence not only revealed that he had over a considerable period of time falsely asserted he was ill and disabled when he was not, and unable to work when his consultant advised to the contrary, but he had also suppressed the advice he received from Mr Noble.
47. In the circumstances we dismiss the appeal.