Appeal No.	 EAT/10/97

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 12 May 1997

Before
HIS HONOUR JUDGE PETER CLARK
MRS R CHAPMAN
MR P R A JACQUES CBE

MR A C DORNEY & OTHERS	APPELLANTS

CHIPPENHAM COLLEGE	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	TESSA GILL
(of Counsel)
Messrs Michael Scott & Co
Solicitors
27 Britannia Street
London
WC1X 9JP	
For the Respondents	MELANIE TETHER
(of Counsel)
Messrs Wood Awdry Wansbrough
Solicitors
Northgate House
Devizes
Wiltshire
SN10 1JX	

	JUDGE PETER CLARK:   This is an appeal by seven applicants before the Bristol Industrial Tribunal against an order for costs made in favour of the respondent employer, Chippenham College.

	All seven applicants were full-time lecturers at the College. Each was a member of the trade union NATFHE. The principal of the College was Mr Baskerville.

	By Originating Applications presented on 26th October 1995 each applicant claimed that he or she had been unfairly dismissed. In their detailed grounds of application each contended that the College had unilaterally breached the contract of employment contained in what is known as the Silver Book; that such breach was repudiatory, and that in five of the cases the applicant had been constructively dismissed; in the remaining two, those of Mr Marsh and Mr Sengebush, the applicant had been dismissed directly by the respondent.

	By their Notices of Appearance the respondent admitted the dismissal of Mr Marsh and Mr Sengebush, but denied that they had dismissed the other five. Alternatively, if those five had been dismissed the respondent contended that each applicant had been dismissed for some other substantial reason, namely sound business reasons which required the applicant in each case to accept new terms and conditions of employment and that the dismissal was fair. The grounds for resistance outlined the consultation process involving both the union and individual applicants which led to an ultimatum requiring the applicants to accept new terms and conditions. The reason advanced for this course was a background of severe financial problems which required savings to be made. By the end, all but the seven applicant out of a staff of 107 had accepted the new terms. The first five applicants finally accepted the new terms reluctantly. Only Messrs Marsh and Sengebush refused to accept the new terms at all.

	The matter came before the Regional Chairman, Mr M E Woods, on a Pre-Hearing Review [“PHR”] held on 8th March 1996. He ordered Mr Marsh to pay a deposit of £50.00; the remainder were ordered to pay deposits of £150.00 [“the PHR Order”].

	The applicants, supported by their union, which paid the deposits on their behalf, nevertheless proceeded to a full hearing of the complaints. The substantive hearing took place over four days between 18th and 21st June 1996. Both sides were represented by Leading and Junior Counsel.

	In a reserved decision with extended reasons dated 6th August 1996 that full Industrial Tribunal, chaired by Mr C G Toomer, dismissed all seven complaints [“the merits decision”]. Having set out with great care its findings of fact and the submissions of the parties the tribunal reached the following conclusions:

(1)	that the five applicants had not been constructively dismissed, but that in the alternative if they were dismissed their dismissals were fair for the reasons given in the cases of Marsh and Sengebush.

(2)	As to those cases:

(a)	the reason for dismissal was some other substantial reason, namely sound good business reasons for requiring the applicants to accept the new CEF contracts; and
(b)	the respondent acted reasonably in treating that reason as a sufficient reason for dismissal, given the degree of consultation entered into between the parties and with the union, and balancing the interests of the respondent with those of the applicants.

There is no appeal against the merits decision.

	Following promulgation of the merits decision the respondent made an application for costs which came before the same Industrial Tribunal chaired by Mr Toomer on 7th November 1996. For the reasons given on 18th November 1996 the tribunal ordered the applicants to pay the respondent’s taxed costs of the proceedings. The deposits ordered by Mr Woods were forfeited. [“The Costs Order”].

Costs Orders
We are principally concerned with the inter-relationship between Rules 7 and 12(7) of the Industrial Tribunal Rules of Procedure 1993.

	Rule 12(7) is a new provision introduced by the 1993 Rules. It provides:

	“(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 on the matter,
the tribunal shall consider whether to award 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 has 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 to reasonable prospect of success.”

	Rule 7 introduced the PHR procedure which modified and extended the former pre-hearing assessment [“PHA”] procedure. Whereas under the PHA procedure the Industrial Tribunal’s powers were limited to giving a costs warning, the PHR procedure provides for a tribunal to order a party to pay a deposit not exceeding £150.00 as a condition of being permitted to continue to take part in the proceedings where it is determined that that party’s case has no reasonable prospect of success. (Rule 7(4)). For this purpose the tribunal considers the pleadings and the oral and/or written representations of the parties (Rule 7(1)) and is expressly required to consider the means of that party (Rule 7(5)). Where payment of a deposit is ordered, Rule 7(6) requires that the order is accompanied by a note explaining that if the party against whom the order is made persists in pursuing the matter, he may have an award of costs made against him and could lose his deposit. Such a note was added to the Costs Order in this case.

The Appeal
The Costs Order appealed against is an interlocutory order involving the exercise of the tribunal’s discretion. Accordingly the principles to be applied in determining this appeal are those set out by Stephenson LJ in Carter v Credit Change Ltd [1979] ICR 908, 918, namely whether the tribunal took into account irrelevant matters or failed to take into account relevant matters or otherwise reached a perverse conclusion. It is not disputed that the tribunal had power to make this Costs Order.

	In support of the appeal Ms Gill advances the following arguments.

	First she submits that the full tribunal misapplied the provisions of Rule 12(7) in failing to compare the reasons given for making the PHR Order with the full tribunal’s reasons for dismissing the complaints.

	In his summary reasons, Mr Woods held that:

“On the basis of the case pleaded by the respondents it is my view that they will be able to establish at the hearing that they required these changes in the applicant’s contractual terms in order to effect the savings required to enable them to work within their budget.”

Ms Gill argues that that finding was based on the respondent’s standard form Notice of Appearance, which in each case focused solely on budget savings. In particular, she took us to paragraphs 10 and 11 of the Notice.

	However, when the matter came before the full tribunal the respondent had expanded its case. She drew attention to paragraph 41 of the merits decision reasons, where the tribunal record that Leading Counsel for the respondent identified three elements which made up the good business reason advanced. Namely:

“Government policy on financing and employees relations; budgetary strategy; and reorganisation of college and services.”

Further, she points out, the tribunal state at paragraph 43 of those reasons that each individual strand of the respondent’s argument might well be insufficient to bear the whole weight of their case, but cumulatively the whole was sufficient to establish the reason for dismissal relied on by the respondent. Accordingly, the respondent would not have succeeded at the full hearing in establishing the reason for dismissal mentioned by Mr Woods in the PHR Order.

	In our judgment that argument is untenable on two grounds. First, we are quite satisfied that the Notices of Appearance sufficiently identified the nature of the respondent’s case on the reason for dismissal to support the ultimately successful argument advanced by Counsel on its behalf. In any event, the elements identified by the tribunal as constituting a sound business reason were each interconnected and ultimately directed to the College’s budgetary needs.

	Secondly, we are unable to accept that a ‘fine tooth comb approach’ to a comparison between the PHR and the full reasons is appropriate. Plainly, if the respondent succeeded on a different basis from that pleaded at the time of the PHR, for example, if a different reason for dismissal was advanced, or the respondent relied on illegality, then the rule 12(7) condition would not be met. But in this case it is plain that the full tribunal’s reasons for finding that the respondent had established a potentially fair reason for dismissal were substantially the same as those given at the PHR stage; at the least, such a finding by the full Industrial Tribunal fell within the range of permissible options open to it. We therefore reject the principal ground of appeal.

	Next, it is said that the full tribunal fell into error when considering the costs application by basing its decision on the fact that the applicants had access to skilled legal advice. That is not how we understand paragraph 10 of the Costs Order reasons. The tribunal was at pains to make clear that it was not saying that the decision to go ahead following the PHR Order was automatically unreasonable; however, it took into account in finding that it was unreasonable so to do that the applicants had the advantage of being able to explore with their legal advisers the ramifications if they were to proceed with the matter.

	Thirdly, Ms Gill contends that the tribunal erred in taking into account the fact that the applicants had an indemnity against costs from their  union when considering their means. As a matter of practice tribunals will look at an applicant’s means before making an order for costs against him. The mere fact that an applicant had the backing of his union does not necessarily mean that he should be regarded as having the means to pay costs because his union will indemnify him. The position in Industrial Tribunal litigation is very different from High Court litigation where costs follow the event.

	However, there will be exceptional cases. Waterhouse J put the matter this way in Carr v Allen-Bradley Electronics Ltd [1980] ICR 603, at 609C-F:

“... 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 that the tribunal should consider the means of the claimant himself rather than of his trade 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 the merit of the claim, may make it appropriate to take account of the union’s position in deciding the order for 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 not represented by lay officials of the unions, who give very considerable assistance to the tribunals in the trial of cases before them.”

	This Industrial Tribunal followed and applied that guidance when considering the facts of this particular case. It heard that the union had provided an indemnity as to costs to these applicants, and found that the union took a prominent role in this case, which raised an important point of principle for its membership. In these circumstances we can see no grounds for criticising the tribunal for taking the costs indemnity into account when considering the means of these applicants to pay costs.

	Finally, it is said that this case raised complex issues, as the tribunal found by directing that it was an appropriate case for Leading and Junior Counsel to be instructed. That submits Ms Gill is inconsistent with a finding that it was unreasonable to continue with the case.

	The Industrial Tribunal did not expressly find  this to be a complex case and neither do we. The reference to the appropriateness of instructing Leading and Junior Counsel was in relation to the taxation of costs, and was prompted by the fact that apparently it was the applicant who initially elected to engage Leading Counsel, and the respondent then fell into step.

	It follows that in our view this appeal raises no error of law which could entitle us to interfere with the tribunal’s Costs Order. Indeed, we would go further. It ought to have been apparent to the applicants from the outset that these claims had no reasonable prospect of success; having received a clear warning to that effect at the PHR stage, they, their union and their advisers nevertheless felt that there was a principle which ought to be pursued. They lost, for the reasons carefully stated in the full merits decision. They cannot be surprised by that tribunal’s further decision to order costs against them.

	The appeal is dismissed.