Appeal Nos. UKEAT/0035/06/RN & UKEAT/0036/06/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 16 May 2006
Judgment delivered on 24 July 2006

Before
HIS HONOUR JUDGE J R REID QC
MRS A GALLICO
MS P TATLOW

MRS A COOPER	APPELLANT

1) THE CHIEF CONSTABLE OF WEST YORKSHIRE POLICE
2) WAKEFIELD METROPOLITAN DISTRICT COUNCIL	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR P DRAYCOTT
(Of Counsel)
Instructed by:
Messrs Thompsons
Solicitors
17 Wellington Sreet
Leeds
LS1 4DL	
For the 1st  Respondent	MR G THOMAS
(Of Counsel)
Instructed by:
West Yorkshire Police Legal Services
Police HQ
Laburnum Road
Wakefield
W Yorks
WF1 3QP	
For the 2nd Respondent	NEITHER BEING PRESENT NOR REPRESENTED	

SUMMARY

Appellant was seconded from Respondent to the Council.  She became pregnant.  Funding for her post ceased so she reverted to Respondent.  She claimed Sex Discrimination against the Council and Respondent.  The claim against Respondent was on the basis it was not protested against the Council’s decision to cut funding.  At the ET hearing her claim against the Council failed because the decision to cut funding ante-dated the Council’s knowledge of her pregnancy.  The existing claim against Respondent was abandoned and an attempt to amend to claim Respondent was vicariously liable for the Council’s acts was disallowed.  Respondent was awarded costs.  A appealed against the refusal of permission to amend and the costs order.

HIS HONOUR JUDGE REID QC
Introduction
1.	These are two appeals from decisions of an Employment Tribunal held at Leeds following a hearing on 15, 16, 17 and 19 November 2004 and a subsequent hearing as to costs held on 18  May 2005. The first appeal is against the decision of the Tribunal made on 15 November to refuse the Claimant permission to amend her claim against the First Respondent (“the Police Force”). The second is against the decision on 18 May to award the Police Force costs against the Claimant in the sum of £10,000. The Tribunal made it clear in their reasons that they anticipated that the costs awarded would be paid by the Appellant’s legal advisers and not by her personally.

2.	The Appellant had claimed that she was discriminated against on the ground of her sex when the Second Respondent (“the Council”) withdrew funding for the post in which she was employed by the Council whilst on secondment from the Police Force. The essence of her claim against the Council was that the withdrawal of funding occurred as a result of the Council discovering she was pregnant. The claim against the Police was in effect that the Police Force had failed adequately to support her when the Council made its decision. The effect of the withdrawal of funding was that the post ceased to exist and the Appellant was returned to the Police Force to await another deployment. 

3.	The proposed amendment was to plead not that the Police Force had done anything discriminatory itself but that it was vicariously liable for the acts of the Council. 

4.	There is no appeal against the substantive decision that her claim for sex discrimination failed. The Tribunal was satisfied that the policy decisions which resulted in the abolition of the Appellant’s post were taken before the Appellant became pregnant and long before the Council was aware of her pregnancy. Nor is there any assertion that if the application to amend had succeeded the Appellant would have succeeded in a claim for sex discrimination against the Police Force. The only point of the appeal against the refusal of permission to amend is that it is said that if the application had succeeded the order for costs would not have been made.

5.	So far as the appeal against the award of costs is concerned, it is conceded by the Police Force that if the appeal against the refusal of permission to amend succeeds, then the order for costs cannot stand. However the Appellant asserts that even if she fails in her appeal against the refusal of permission to amend, she should still succeed in her appeal against the costs order.

The factual background.
6.	The Appellant was employed by the Police Force as a scenes of crime officer from 1993 until November 2002 on a series of fixed term contracts, latterly at Grade 6. As a result of a knee complaint it was necessary to find her another role. She was offered and accepted the role of “Anti-Social Behaviour Co-ordinator” based with the Community Safety Department (Wakefield District) of the Council. She was then given a two year contract by the Police Force paid at Grade 4. It contained a provision “This is a fixed term contract for a period of 2 years and it will cease on 24 November 2004 or by giving one month’s notice should the project end prior to this date. At the end of the project you will be subject to further redeployment.”  In January 2003 the Council told the Police that arrangements for funding of the post (by the Council) could be covered for the following twelve months, subject to review. The Anti-Social Behaviour Team was located in the Chief Executive’s Department of the Council but was funded and for practical purposes supported by the Council’s Head of Housing.  The Appellant was the only non-Council employed person working in the Team.

7.	There was a large-scale re-organisation of the Council during early 2003 and on 29 September 2003 Mrs Brown was appointed Head of Partnerships and Neighbourhoods. By this time the Anti-Social Behaviour Team was part of the Community Safety Department, and by late October the Appellant was concerned that a Corporate Enforcement Department was being established with Mr Warmington as Head of Enforcement (he had previously been Anti-Social Behaviour Co-ordinator for Leeds City Council) and that the Team might be moved to Castleford, to form part of the new Enforcement Service. This would have caused her childcare problem and on 30 October the Appellant made it clear to Mrs Brown she would not move to Castleford. By this time it was confirmed that the Council would provide funding for the Appellant’s role to the end of the financial year.

8.	In the new Enforcement Service the Anti-Social Behaviour Co-ordinator’s role would be a more strategic role with managerial responsibilities for the Team. On 9 December the Appellant had a general discussion with Mr Warmington and was told the new job would be advertised and she could apply for it. She decided not to apply.

9.	The Appellant was away from work through ill-health and taking leave from 15 December 2003 to 7 January 2004 and it was during this period she first told the Police Force’s personnel officer, Ms Ryan, she was pregnant. She told Ms Ryan she did not want to tell the Council till after Christmas. On 9 January she told Mrs Brown of her pregnancy and was informed that there would not be funding for her post after the end of the financial year. It was on the terms of this conversation that the Appellant’s case was largely based. The Tribunal preferred Mrs Brown’s recollection as to the course of that conversation. On 19 January the Council told the Police Force of the funding decision. On 9 February the Police Force offered to write to the Council asking for an explanation of the withdrawal of funding but the Appellant asked that the letter be not sent until after the end of the financial year. On 31 March the Appellant’s secondment to the Council came to an end and on 15 April the Police Force sent a letter to the Council complaining of the Council’s treatment of the Appellant. From 1 April 2004 until she began her maternity leave the Appellant returned to work for the Police Force as a project officer. 

The hearings
10.	Immediately before the start of the hearing the Appellant’s legal advisers informed the Police Force of their intention to apply for permission to amend the ET1 to add a claim that the Police Force was vicariously liable for the acts of the Council under section 41(2) of the Sex Discrimination Act 1975 on the basis that the Council was the agent for the Police Force. No form of words for the amendment was available. The formal application for permission to amend was made at 2pm on the first day of the hearing. Still no written form of words was available but following a short adjournment a form of words was made available at 2.15pm. At this stage the Council conceded that the Appellant was a contract worker. After hearing argument the Tribunal refused permission to amend. No request for reasons was made, and the hearing proceeded.

11.	The Appellant then gave evidence and in the course of it made it clear that she did not personally believe the claim advanced in her ET1 against the Police Force but that she was satisfied with the support from it. The Chairman’s note recorded her as saying : “As far as I am aware there was no discussion between the Police and the Council regarding funding. I do not think a man would have received better treatment from the Police.” The hearing was adjourned overnight.

12.	The following morning the Appellant abandoned her claim against the Police Force.  The case then proceeded against the Council, which called one of the Police officers who would (but for the abandonment) have given evidence for the Police Force and who was cross-examined on behalf of the Claimant. 

13.	After the Tribunal had given judgment dismissing the claim against the Council the Police Force gave notice it was going to apply for costs against the Appellant. The hearing took place on 18 May 2005. It was at this stage that the Appellant first asked for reasons for the refusal of permission for the amendment.

The refusal of permission to amend
14.	 The Tribunal’s grounds for refusing permission to amend were that (1) the application involved a substantial alteration in the Claimant’s case involving factual allegations not made clear in either the claim or the Appellant’s witness statement; (2) the application was made at the last possible moment and no reason was given why it should not have been made earlier; (3) the proposed amendment did not appear to further the overriding objective in determining the case between the parties, and (4) the Tribunal found it difficult to conceive how a local authority exercising a statutory function could be acting in a vicarious capacity for the Police Authority, the Appellant’s employer and another  public authority.

15.	Counsel for the Appellant referred to Selkent Bus Co Ltd v Moore [1996] IRLR 661, Smith v Gwent Health Authority [1996] ICR 1044 and Lehmann Bros Ltd v Smith [2005] UKEAT/0486/05. He submitted that the Tribunal erred in failing to consider the balance of hardship and justice in refusing permission to amend. It should have regarded the amendment as being no more than a re-labelling exercise involving issues of fact which were already raised, and that the ET1 already impliedly raised the issue of vicarious liability.

16.	The principles to be applied on an application for permission to amend have been well-settled since Selkent. They can be summarised as being:  (a) In exercising its discretion to grant leave to amend the Tribunal must take all circumstances in to account and must balance the injustice of allowing the amendment against the injustice and hardship in refusing it. (b) Relevant factors include (1) the nature of the amendment (2) the applicability of their statutory time limits; and (3) the timing and manner of the application. 

17.	The view of the majority (Judge Reid and Ms Gallico) is that in the present case the Tribunal at paragraph 28 of its reasons for refusing the amendment referred to the three relevant factors set out above, but did not expressly refer to the need to balance the injustice to each party. In our view, however, it clearly had this need in mind. It specifically referred to the Selkent decision. Further it did specifically refer to the overriding objective of determining the case between the parties. It also made an express point as to how it perceived the merits of the case intended to be advanced by the amendment when it said that it found it difficult to conceive how a local authority exercising a statutory function in withdrawing funding from a post could be acting in a vicarious capacity for another public authority.  In our view it is inconceivable that the Tribunal did not have in mind the “balance of injustice” factor.

18.	The position was that the Appellant’s advisers decided at the last moment to seek to amend to put the case against the Police Force on an entirely different basis to that on which it had previously been put. That new case was one which could have been advanced at the start of the proceedings. Instead of that, the Appellant had put forward a case alleging specific acts of discrimination by the Police Force directly and not through the agency of the Council. The new case was only advanced at the very last moment and it was noticeable that the first news that the Tribunal had of the proposed amendment was when counsel for the Police Force told the Tribunal he had been informed of the proposed intention to seek an amendment. Contrary to what was rather faintly suggested at one stage in the course of argument the ET1 contains nothing which could be construed as hinting at a vicarious liability claim. 

19.	No explanation was offered as to why this new and different case was being advanced outside the limitation period nor of any basis on which it would be just and equitable to allow it to be advanced so late. It is notable that when it came to the question of costs the Appellant revealed legal advice given to her union for her benefit by her solicitors (though, curiously, not the written instructions on which the advice was based) and that advice does appear to suggest that the Police Force should be made respondents as vicariously being liable for the Council’s acts. This makes the lateness of the application for permission to amend even less excusable. 

20.	In the majority’s view it is obvious that the very belated amendment would have required further factual matters to be investigated if this new and implausible case was to get off the ground. As the Tribunal observed factual allegations to support the new claim were not made clear in the claim or in the Appellant’s statement of evidence Contrary to what was submitted to us, the new claim was not in any way presaged in the ET1. The precise legal and practical nature of the “partnership relationship” between the Council and the Police Force and the details of the funding and its budgetary sources would have had to be investigated to see whether it could possibly be said that the Police Force was acting as principal and the Council as agent in the creation and maintenance of the post held by the Appellant as a contract worker with the Council. 

21.	Against this background the Tribunal was in the view of the majority perfectly entitled to take the view that the last minute proposed amendment should not be allowed. There is nothing to indicate any error of law in the way the Tribunal approached its task, and the conclusion to which it came was one to which it was fully entitled to come.

22.	The minority (Ms Tatlow) did not accept that the proposed amendment was a substantial alteration in the Claimant’s case or that the proposed amendment did not potentially clarify the case between the parties.  She noted that there was reference to the Claimant’s position as a contract worker in the ET1 – both at the head of claim and in Box 11.  Further and importantly, in her view, the application to amend was made in the context of the Council failing to concede that the Claimant was indeed, a contract worker.  In this case, in her view, the ET1 correctly joined both Respondents.  The end user, i.e. the Council, only conceded at the last minute that the Claimant had the status of a contract worker.  There was an obvious triangulation between the Claimant and the two Respondents and the relationship between the latter in the management of the events which led to this claim.

23.	She took the view that the Tribunal was confused in its reasoning in respect of statutory function.  All local authority expenditure is justified with reference to statute, but this does not mean to say that the implementation by local authorities of restructuring exercises which are the result of redistribution/reallocation of local authority funds but include contract/seconded staff automatically remove the employer of the latter from vicarious liability, especially when discrimination is alleged.

24.	The timing of the application was not the ‘be all, and all’.  Importantly, and the Tribunal reasoning was inadequate in failing to address the hardship and injustice to the Claimant of disallowing the application.

25.	She therefore would have allowed the amendment and took the view that the tribunal acted outside the scope of its judicial discretion in refusing it.

Costs
26.	 In approaching the question of costs, the Tribunal was required to consider any award under the “old” Tribunal rules of 2001 rather than the current rules. Under rule 14 of those rules there are three bases on which costs can be awarded. They are: a) the party has acted vexatiously, abusively, disruptively or otherwise unreasonably in bringing the proceedings; b) the party's representative has acted vexatiously, abusively, disruptively or otherwise unreasonably in conducting the proceedings; c) the bringing of proceedings by the party has been misconceived. As the Tribunal noted proceedings may be considered misconceived if they have no reasonable prospect of success.

27.	The Tribunal was, of course, dealing with the issue of costs on the basis that the proposed amendment had been disallowed and so was looking only at the case as originally pleaded. Since in our view the Tribunal was entitled to come to the conclusion which it did on the application to amend, the Appellant cannot attack the decision on the basis that the Tribunal ought to have allowed the amendment and would have come to a different conclusion if it had done so.  

28.	The Tribunal found that the most telling point was that there was no explanation why allegations were made against the Police Force in the Appellant’s ET1 and her witness statement which she did not personally believe. It described the claim as “unique in the experience of the Members of the Tribunal” in that the Appellant on advice took proceedings against two respondents. In the context this is clearly a reference to the proceedings as they were brought, ie making separate allegations against each respondent rather as opposed to making a claim that one respondent was vicariously liable for the acts of another.  The Appellant, the Tribunal found, had become engaged on the advice of her solicitors in a speculative piece of litigation, unsupported by evidence from the Appellant or from any other source. The Tribunal held that there should be an order for costs on the basis that the Claimant had no reasonable prospect of success when the claim was issued and noted that her evidence in cross-examination which “was in no sense forced from her” revealed the hopelessness of the claim which had been pursued.

29.	The Appellant attacked the order for costs on the basis that since the employment relationship between the Appellant, the Council and the Police Force was obscure it was desirable to have all three parties before the Tribunal. Parallels were drawn with the employment cases and reference was made to Dacas v Brook Street Bureau (UK) Ltd [2004] IRLR 359 and the guidance given by the EAT in Astbury v Gist Ltd [2005] UKEAT/0446/04 that where the legal consequences of tripartite relationships have to be determined it is highly desirable that all three parties should be involved. It was pointed out that it was only at the hearing that the Council conceded that the Appellant was a contract worker, having previously merely asserted (as was the undoubted case) that she was an employee of the Police Force.

30.	In the view of the majority, if the claim on the ET1 had been based on the tripartite arrangement there would have been considerable force in this point. However the claim had been put (to summarise it) on the basis that (1) the Appellant remained employed by the Police Force throughout; (2) the Appellant was contract worker for the Council (3) the Council subjected her to detrimental treatment by reason of her pregnancy in terminating funding for her post with the Council and so her secondment prematurely (4) the Police Force was liable for not doing anything worthwhile about the Council’s premature termination of the post. Once it was conceded by the Appellant that she had no belief in this claim against the Police Force in the absence of the claim sought to be added by amendment there was no basis for having made the Police Force as a party to the proceedings, nor any need for the Police Force to be a party. This was not a case (unlike the employment agency cases) where there was an issue as to which of two persons would be liable for a single alleged dismissal or act of discrimination. The case pleaded was of two separate acts of discrimination, albeit one act of discrimination arose from the other act.

31.	The Tribunal was critical of the timing of the decision to withdraw the claim against the Police Force, which was described by the Appellant’s solicitor as “strategic”.  The Tribunal suggested that it was in fact tactical in that it was motivated by a desire to exploit as against the Council the evidence of the Police Force witnesses, “all of whom had clearly been supportive of the [Appellant] throughout.”  This passage in the Tribunal’s decision was attacked on the basis that the Appellant only sought to cross-examine one of the Police Force’s witnesses and that was one eventually called on behalf of the Council. Whatever the merit of this particular criticism of the decision, the point was one which was not a part of the Tribunal’s ultimate conclusion. The concluding comment made by the Tribunal indicated the limited extent which the timing of the abandonment of the claim played in its decision: “It may be that there was a certain limited pragmatism in the [Appellant’s] legal team in deciding that her claim against the [Police Force] should be withdrawn, given that she might face an even greater liability in costs had the claim been pursued to judgment.”  

32.	The Tribunal’s decision was that the order for costs should be made “on the basis that the [Appellant] had no reasonable prospect of success when the claim was issued,” and so could properly be described as misconceived.  In the judgment of the majority this was a conclusion which the Tribunal was perfectly entitled to reach in the light of the Appellant’s own evidence and the manner in which the proceedings were conducted. On her own evidence there as given to the Tribunal there was never proper basis for making the claim against the Police Force, something which it may be was belatedly recognised when the belated attempt was made to amend to put forward an entirely different case.

33.	The minority took a different view and noted that the Police Force conceded that if the amendment had been allowed it was unlikely that the application for costs would have been upheld.  The crucial point, however, was that the application was made for costs and accepted by the Tribunal on the basis that the case was misconceived (rather than vexatious).  In her view ‘misconceived’ requires that on the claim should have had no reasonable prospect of success from the start.  This is a discrimination case and potentially dependent on inferences.  The merits of the case were determined in the Tribunal on the basis of evidence heard.  The Tribunal preferred the evidence of Mrs Brown rather that the Claimant and the Claimant’s own evidence under cross-examination, was obviously less than helpful to her claim.  However, ‘misconceived from the start’ is a fairly high hurdle and not one which the minority thought in the particular circumstances of this case, has been reached, bearing in mind the triangulation, the issues arising in respect of the Claimant’s status (or otherwise) as (i) a contract worker of the Council (not conceded until the ET) and (ii) an employee of the Police Force but also bearing in mind (iii) that her claim arose in the context of her pregnancy and an allegation of sex discrimination.  She therefore took the view that (had she been a member of the Tribunal she would not have made an order for costs and that in doing the Tribunal acted outside the scope of its judicial discretion.

Conclusion
34.	It follows that in the judgment o the majority both the appeal in relation to the refusal of permission to amend and the appeal in relation to costs fail and must be dismissed.