Appeal No. UKEAT/0452/04/SM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 20 July 2004

Before
THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)
MR R N STRAKER
MRS L TINSLEY

IRON AND STEEL TRADES CONFEDERATION	APPELLANT

ASW LTD (IN LIQUIDATION)	RESPONDENT

Transcript of Proceedings

JUDGMENT

COSTS

Revised

	APPEARANCES

For the Appellant	MR ANDREW HOCHHAUSER
(One of Her Majesty's Counsel)
and
MR PAUL TROOP
(of Counsel)
Instructed by:
Messrs Russell Jones & Walker Solicitors
Swinton House
324 Gray's Inn Road
London WC1X 8DH

For the Respondent	MR JONATHAN SWIFT
(of Counsel)
Instructed by:
Clifford Chance Limited Liability Partnership
200 Aldersgate Street
London EC1A 4JJ	

SUMMARY

Although the claim had no reasonable prospect of success and was dismissed without judgment being reserved, Applicant did not act unreasonably in bringing or continuing it (particularly since it was sifted through to FH).  But suggestion of a practice at the EAT that costs would not be awarded (absent deception) where the appeal survived the sift or a PH scotched (dicta in Cootes v John Lewis plc EAT/1414/00 disapproved).

THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)

1.	We shall not award costs.  That is a unanimous decision.  We shall give our short reasons.

2.	First, we are satisfied that Mr Swift is right that the course that he has taken does not offend against the Practice Direction 18 (2).  He has, when seeking the Order, stated the legal ground on which his application is based, and the facts on which it is based and he has, prior to his application, produced a schedule which we have not seen, but with which Mr Hochhauser QC has already geared himself up to do battle.  So that aspect is dealt with.

3.	We are unanimously of the view that this application was one which, objectively speaking, was without reasonable prospect of success.  The fact that our judgment was relatively long, and hence took some time in court to deliver, was in deference to the lengthy argument of an experienced and senior Queens Counsel, and, as is so often said, simply because a matter has been argued for some time, it does not mean that it was arguable.  We are satisfied that in the event the appeal was unarguable.  But we do not conclude that in the circumstances the Appellant was acting unreasonably in bringing forward this appeal and pursuing it to the hearing, within the confines of what is still an exceptional jurisdiction so far as the award of costs is concerned. 

4.	Mr Hochhauser has shown us a statement made by Judge Clark, with which we were all of us previously unfamiliar, in an unreported decision called Coots v John Lewis plc 27 February 2001, which says that it is generally not the practice of the Employment Appeal Tribunal to award costs in circumstances where the appeal has survived effectively a preliminary stage.  If that was the practice of the Employment Appeal Tribunal on 27 February 2001, which I am sure the long experience of Judge Clark entitled him to say, it is no longer the practice, and indeed it may well be that that would be an impermissible trammel of the power of the Employment Appeal Tribunal to award costs under Rule 34.

5.	Inevitably there has been some kind of preliminary process at the Employment Appeal Tribunal.  It used to be a preliminary hearing, with the very occasional sift, such as is described in that case.  Now every appeal that comes forward is sifted by a judge in accordance with the new Practice Direction, which has been in force since December 2002, at paragraph 9.  Some cases go straight through to a full hearing and some are the subject matter of a preliminary hearing.

6.	When there is a preliminary hearing, there is sometimes, depending upon the precise order made, an obligation on the respondent to put in submissions setting out concisely why the appeal should not go forward, but more usually simply an opportunity for the respondent to do so; but at least on a preliminary hearing there is now the opportunity for consideration and for knocking out an appeal with the benefit of the respondent’s having put forward a case.  Of course, respondents do not have, in most cases, the right to appear, but they do have the right of putting in written submissions.  It is sometimes the case that a fresh adviser to the Appellant on the day of the appeal goes beyond the previous Notice of Appeal, perhaps obtaining leave to amend, and in certain circumstances, therefore, the respondent will not have had the opportunity of making submissions, so that the basis on which the appeal goes forward is a surprise to the respondent.

7.	But, save in those circumstances, at least the appeal will have been tested on a preliminary hearing.  Where, however, a case goes straight through to a full hearing on a sift, which is a very substantial number of cases now, then there will have been no opportunity for the respondent to have made any such input; and we do not believe there ought to be any practice which says that where a case has gone through the sift, or indeed for that matter gone through an ex parte preliminary hearing, there should be any practice that costs would only in exceptional circumstances, or extraordinary circumstances, or in circumstances in which the court has been misled, be awarded.

8.	However, it must be a factor, and it always will be a factor, that the case has been sifted through, or perhaps considered on a preliminary hearing, in the consideration as to whether the appeal was unreasonably brought, not least of course because there is the power at the sift stage for a Registrar at the moment, and under proposed new rules a Judge, effectively to strike out an appeal under Rule 3 of the Employment Appeal Tribunal Rules if it appears that the Employment Appeal Tribunal has no jurisdiction to hear it; and indeed under proposed new rules if the appeal has no reasonable prospect of success, though that is not the test at the moment.

9.	In those circumstances, we are satisfied that the question of the case being sifted through, as it was here, to a full hearing, is a factor in our consideration.  Also a factor in our consideration is the fact that under the present Rules there is, unlike the Employment Tribunal Rules, no provision whereby costs can be awarded if proceedings are misconceived – misconceived being defined in the Employment Tribunal Rules as being proceedings having no reasonable prospect of success.  That is a specific head in the Employment Tribunal Rules, which would enable a decision by an Employment Tribunal on an objective basis, that costs ought to be awarded because the proceedings had no reasonable prospect of success.  The test in the Employment Appeal Tribunal Rules remains however whether the proceedings have been brought or conducted unreasonably.

10.	Having weighed the matter, in the light of all those points, we conclude that these proceedings were not brought or conducted unreasonably by the Appellant, albeit without much hope of any success, within what we have already emphasised is the exceptional jurisdiction under which we presently operate.

11.	We have considered carefully whether it could be said that there was a stage at which the appeal, having been launched with relative lack of optimism perhaps, became even less worth pursuing; but, against that background, there is the fact that Mr Hochhauser has pointed out that there was no warning shot fired by the Respondents.  We do not encourage, indeed we would not welcome, a situation in which threats of costs are fired across the bows as a matter of course between the parties.  There are many cases in which this will be seen almost to amount to emotional or financial blackmail, and certainly in any sort of race or sex discrimination cases it could be said, and has been I think in some cases said, that a threat of costs could amount to victimisation.  

12.	Therefore, we do not agree with Mr Hochhauser that there is some kind of condition before it can be said that a case has been brought or continued unreasonably for there to have been a threat of costs.  But it is always feasible to put in a Respondent’s Answer, a statement to the effect, quite apart from reliance on the reasons given by the Employment Tribunal, that the appeal is one entirely of fact, and that the Employment Appeal Tribunal has no jurisdiction because that is a supplementary point which is of course almost always run by respondents in such a case, where so often the argument is, “well the Tribunal was right for the reasons it gave, but even if it was not right you, the Appeal Tribunal, have no jurisdiction to interfere because it cannot be said to be perverse”.  So to that extent it can be justified as being included and, if it is included, then it perhaps makes a point which might worry an Appellant more.

13.	We conclude that for the future those who have cases which are at risk of being found to be brought or continued without reasonable prospect of success will be at risk as to costs, and should not feel comforted by the existence of a sift order, or even a preliminary hearing order, entitling them to go ahead.  Such Appellants are obliged to consider their position very carefully just because there is no ordinary costs regime and therefore the Tribunal is, to an extent, in the hands of the parties, particularly represented parties, taking a sensible approach to litigation.

14.	But on the facts of this case, we are, notwithstanding the views we have expressed about the strength of the case for the Appellant, not persuaded that the Appellant has acted unreasonably in the bringing or conducting of proceedings and consequently we make no order as to costs.