Appeal No.	UKEAT/0336/08RN
			UKEAT/0337/08/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 29 September 2008

Before
HIS HONOUR JUDGE ANSELL
MRS A GALLICO
MR A HARRIS

(1) CENTRICA STORAGE LTD	APPELLANTS
(2) LEWIS SILKIN LLP (a firm)

MR P G TENNISON	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellants	MR BRUCE CARR 
(of Counsel)
Instructed by:
Messrs Lewis Silkin Solicitors LLP 
Employment Dept
5 Chancery Lane
Cliffords Inn
London EC4A 1BL	
For the Respondent	MR ANDREW SUGARMAN 
(of Counsel)
Instructed by:
Messrs Rowley Ashworth Solicitors
Suite 18 Joseph’s Well
Hanover Walk
Leeds LS3 1AB	

SUMMARY
PRACTICE AND PROCEDURE:  Amendment
Tribunal correct in refusing leave to amend response very near to final hearing as Claimant had not altered his case as to liability in witness statements.

HIS HONOUR JUDGE ANSELL

1.	This is an appeal from a decision of a Hull Tribunal who heard this case on 29 May 2008.  Two substantive decisions were given on that day which was originally scheduled to have been the first of three days of hearing of a claim for unfair dismissal and disciplinary discrimination.

Introduction
2.	The two substantive orders made by the Tribunal were, firstly, a refusal for leave to amend the Respondent’s Response to allow a deletion of an admission that had been made in that Response agreeing that the Claimant, Mr Tennison, was disabled; and secondly, an order made that the Respondent’s solicitors, Messrs Lewis Silkin should pay wasted costs to the extent of any witness expenses incurred by the Department in respect of the abortive hearing on 29 May 2008.

3.	Leave for this hearing was given by me on the sift although at that time I had not received the written reasons for the amendment decision.  They were only received by the EAT on 27 August 2008.  The copy that we have in our papers does not have a date to it but we presume they were promulgated a day or so beforehand.  The written reasons in respect of the costs decision were sent out on 17 June 2008.

4.	The claim itself had been instituted on 5 December 2007 and the Response filed at the beginning of January 2008.  The case was due to commence, as we have indicated, on 29 May 2008.  On 13 May 2008, the Claimant’s witness statements were filed and, as a result, the application was made to the Tribunal for leave to withdraw the admission.  That application was contained in a letter dated 16 May 2008 from Lewis Silkin.  It contended that the Claimant had moved his position from that which had always been understood, which was that he was unable to perform offshore working, to one where he was contending that effectively for some time he had been symptom‑free and completely able to perform offshore duties.

Background facts 
5.	The background facts are that he had started employment in 1991 with the Respondents which operate gas storage facilities in the North Sea and also onshore terminal and processing facilities.  He began to have problems both with his knees and also because of diabetes and from the end of 2005 there were a variety of medical reports.  He had had an arthroscopy in November 2005 and certainly his surgeon, Mr Sherman, in December of that year reported that he had recovered well and could return to work offshore in two to three weeks time.

6.	From the employer’s side, there were a number of assessments carried out during 2006 and 2007 by Dr Moran on behalf of the Respondent, who had taken a more serious view of his situation and certainly by May 2007 took the view that he was not able to work offshore.  He noted at that time a significant increase in the level of symptoms and advised the authority that it had to consider its position under the Disability Discrimination Act.  However, from Mr Sherman’s point of view, by September 2007 he had produced a report suggesting that for some time the Claimant had been pain-free and experienced no swelling, locking or giving way.

7.	The ET1 dated 5 December 2007 has contained in its particulars these paragraphs which can be seen on page 40 of our bundle:
“They still believed I was unfit to undertake Terminal based work.  I produced new evidence from my consultant Mr Sherman, which stated not only was I fit for onshore work, I was also fit for offshore.”

8.	Then further on that same page:
“It is my belief the company had unfairly dismissed me and potentially discriminated against me on the grounds of my disability to undertake offshore work by not offering work which I and my medical practitioners believe I am fit to undertake.”

9.	The change in position was alleged in Lewis Silkin’s letter of 16 May 2008 and they set out six extracts from the Claimant’s witness statements.  We do not propose to read them out but they can be seen in the letter on pages 75 and 76.

10.	The Respondent’s case was that it was that witness statement, and in particular those paragraphs which prompted them to, they say, apply within three days to the court for leave to withdraw the admission that they had made as to disability.

The law
11.	The Tribunal decided to deal with the issue on the first morning of a three‑day hearing.  As a result, that eventually led to the three‑day hearing being postponed but we will return to that matter below.  The Tribunal set out the history of the case and then in paragraph 19 reminded themselves of the power contained in Rule 10 of the Tribunal Rules and then the general principles set out in the well‑known authority of Selkent Bus Company Limited v Moore [1996] IRLR 661.  The Tribunal went on as follows:
“This case states that a Tribunal should take into account all the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it.  Relevant circumstances include the nature of the amendment, i.e. whether it is a minor matter or a substantial alteration; and the timing and manner of the application.  Where an application for an amendment is made close to a hearing date an explanation as to why it is being made then and not earlier is required.”

12.	It was very much that last sentence that formed the basis of the focus of the remaining part of the Tribunal’s decision.  

13.	In paragraph 22 they ask themselves three questions:
“1)	Whether the statements in the Claimant’s witness statements undermine the medical reports.
2)	Whether these claims constitute new evidence (particularly with regard to the Claimant not suffering any problems) which had not been known to the Respondent previously.
3)	Applying the overriding objective, whether the Respondent should be given leave to amend their application.”

14.	Complaint is made before us that the Tribunal did not really identify what should have been the key issue which is expressed in this way in the headnote of Selkent:
“… an explanation as to why it is being made then and not earlier, particularly where the new facts alleged must have been within the knowledge of the applicant at the time the originating application was presented.”

15.	If one can transpose that into the facts of this case, it must be the reverse, namely, whether material in the witness statements was within the knowledge of the Respondent at the time the Response was presented.  As we identified in the course of argument before us the Tribunal did not in fact ask themselves that particular question with regard to the particular response that had been filed in the light of what was known at the time of the ET1.

16.	What the Tribunal then did proceed to do was to carry out a very detailed analysis of what was the state of mind of the Respondent at the time they would have had to deal with the Response on January 2008.  The questions that they did ask themselves in paragraph 22 are the ones Mr Sugarman tells us were very much those that were put to them by Ms Belgrove, who appeared below on behalf of the Respondents; and we accept that situation.  They were indeed responding to the case as it was presented to them because this case was very much presented to them on the basis of the change of position that was contained in the Claimant’s witness statement which, it is said, then caused the Respondents to wish to change their position regarding the admissions to disability that had been previously made.

17.	The Tribunal’s analysis contained, firstly, analysis of the medical reports.  We have touched upon them already above and it is quite clear that there was a wide gulf between the view of the Claimant that was being taken by Dr Moran and others on behalf of the Respondent who throughout had been taking the view that he had a degenerative condition that was likely to deteriorate and, in particular, was one that clearly would prevent him from performing offshore work; as opposed to Mr Sherman’s view which was far more optimistic, although again accepting that there was an underlying degenerative condition.

18.	The next stage of the Tribunal’s analysis was to analyse the comments made in the Claimant’s witness statements about which complaint had been made by Lewis Silkin to test whether they were indeed at odds with the position that would have been known to the Respondent at the time of the original Response, and finally, to consider in particular the state of mind of the Respondent in terms particularly of what had taken place at various hearings attended particularly by the Claimant and his union representatives.  The Tribunal came firmly down to the conclusion that the Respondent was aware of the contention that the Claimant was making which was, particularly relying on Mr Sherman’s report, that he was symptom free and that he did not need to go to his GP because he had “no problems with his knee”.

19.	The Tribunal in paragraph 43 highlighted that the 2007 report of Mr Sherman was in front of various meetings that had taken place, both the attendance hearing proceedings and the appeal hearing.

The case
20.	The complaint before us by Mr Carr is firstly that, in effect, the Tribunal had come to a perverse decision in forming a view that the Claimant had not changed his position.  Although the Notice of Appeal does not make specific reference to an allegation of perversity, that is the clear inference of what is being submitted on behalf of the employer Respondents.  In his submissions to us he pointed to several passages within the notes of the various appeal hearings which, he argued, suggested that it was being accepted on the Claimant’s behalf by his union representative that he was indeed, even in late 2007, unable to perform offshore work.  Those particular passages were not highlighted by the Tribunal, although there certainly was an issue raised because of Mr Sherman’s lack of qualifications in being able to deal with whether or not the Claimant was or was not able to carry out offshore work.

21.	However, the majority of the Tribunal’s findings, and particularly their assessment of what the Respondent’s own doctor, Dr Moran, was saying, together with what was their state of mind as a result of the union meetings, clearly led the Tribunal to come to the conclusion that there was not a change of position as far as the Claimant was concerned.  In other words, they were saying that the third limb of Selkent was not satisfied and that matters raised by the Claimant were indeed within the knowledge of the Respondent at the time that the Response was filed with particular reference to Dr Sherman’s reports and the meetings.

22.	Complaint was also made by Mr Carr that the Tribunal in carrying out their analysis certainly at some stages focused too much on seeking to come to a conclusion about whether there was or was not a disability rather than focusing on the key issue as to whether or not the Claimant had changed his position.  He particularly relied on a passage in the Tribunal’s decision on wasted costs at paragraph 9 and whilst it is right to say that in a brief passage in paragraph 9 they do appear to have begun to consider the whole issue of disability, in our view, if one looks at the bulk of the decision in the main body of reasons, it seems to us that they are, having set out the Selkent principles in paragraph 19, seeking to deal with that issue.

23.	It is again argued on behalf of the Respondent that it was reasonable for them to make the application on the basis that they believe that there was a change of position as far as the Claimant was concerned and that the Tribunal were in error in failing overall to come to the view that they did have that belief focusing again too closely on the issue as to precisely whether the Claimant did or did not change his position.  Again, we reject that contention.  We are satisfied that the Tribunal did very much approach the matter on the basis of what was in the mind of the Respondent, certainly by the end of 2007 and more particularly, in our view, effected by the strength of their own medical evidence that had been provided by Dr Moran in contradiction to that which had been presented by Mr Sherman.

24.	A further criticism is made by Mr Carr in relation to the Tribunal’s overall approach.  He argues that even if the Tribunal rejected the view that there had been a change of position, a change of facts alleged, which would cause the Respondent to seek to resile from their previous admission, that was only one of the factors that fell into consideration, according to the Selkent principles, and he argues there is an absence of a proper analysis of the remaining factors set out in Selkent which include the nature of the amendment, whether it is a major or a minor amendment, the application of statutory time limits, the general timing and manner of the application, whether there has been any delay and the overall interests of justice.

25.	Mr Sugarman argues that the Tribunal clearly had those factors in mind when they set out the general principles in paragraph 19 and in their conclusions set out at paragraph 49 when they said this:
“In accordance with the guidance given in Selkent and the overriding objective to deal with a case justly, the Tribunal concluded that it would not be appropriate to give leave to the Respondent at that stage to make this substantial amendment to its Response.  Although the Respondent did apply very promptly after receiving the witness statement, the reality is that it was still late in the day.  Both sides had been represented by large firms of solicitors with experienced employment departments.  Counsel was instructed.  The case was apparently ready for hearing.  The trial bundle had been prepared and indexed.  The witnesses were in attendance and there was no reason why the case could not have proceeded on the set day save for this late application by the Respondent to make a substantial amendment to its grounds of resistance.”

26.	Mr Carr’s particular complaints are firstly that within that paragraph there is no recognition of the prejudice that the Respondent could suffer in being unable to properly defend a disability claim with its unlimited compensation limits, as opposed to merely defending an unfair dismissal claim with its capped statutory maximum.

27.	We accept Mr Sugarman’s argument that although that prejudice is not specifically referred to, it is a matter of such common general knowledge as far as Tribunals are concerned that it really does not have to be set out in specific terms.  The Tribunal in referring in paragraph 19 to issues such as injustice and hardship and together with their comment that both sides were represented by large firms of solicitors with experienced employment departments were making it clear that they had in mind that particular factor.  Mr Sugarman adds, and we accept, that particular issue was not one which had been raised below by Ms Belgrove.

28.	Mr Carr submitted that there was a contradiction in paragraph 14 in the fact that the Tribunal on the one hand accepted that the Respondent did make a prompt application but that it was still late in the day.  We see no conflict in that particular comment.  The Tribunal was simply accepting that an application had been made promptly in terms of the timing of the witness statements but was still commenting that in the light of their finding that there had not been a change of position as far as the Claimant was concerned, it then still became very late in the day and effectively was saying that this is a matter which should have been raised at a far earlier stage.

29.	Mr Carr also complained that the Tribunal, in any event, adjourned the case and therefore the prejudice would not be great in allowing the amendment and as a result necessarily causing the case to be adjourned since they had already decided that there would have to be an adjournment.  But the fact of an adjournment did not form part of their consideration as far as the amendment was concerned.  The necessity for an adjournment only arose as a result of the Tribunal not concluding their deliberations in giving a decision until around 2.30pm or 3.00pm in the afternoon.  It was only after they gave their decision not to allow the amendment that the issue was then raised initially by Mr Sugarman as to the fact that there was not sufficient time to deal with the case in its entirety.  We accept, therefore, that the adjournment of the case was an irrelevancy as far as their decision was concerned concerning the proposed amendment.  

30.	Mr Carr accepted that if the Tribunal had come to a conclusion that the issue as to disability was unarguable then that would have been a factor and we accept the Tribunal did not go quite that far in suggesting that it was unarguable.  Mr Sugarman suggests that in fact because of the history of this Claimant, the fact that there clearly was a degenerative condition which was likely to reoccur that the Respondent would face an uphill task as far as seeking to argue against disability and, in particular, he referred to the final passage in paragraph 31 of the decision where the Tribunal refer to:
“Three separate physicians were all in agreement that he was suffering from a degenerative condition which means it would not improve but could only deteriorate.”

31.	Again, we are satisfied that the Tribunal would have had that factor in mind when carrying out the balancing exercise.

32.	Again, and Mr Sugarman points out, that although the Tribunal did not make specific reference to this matter, any adjournment allowing the amendment would have placed considerable evidential difficulties on the Claimant in having to effectively reconstruct his medical history particularly from a symptom point of view over the past previous two or three years.  Again, we are satisfied that this is a factor which the Tribunal must have had in mind when carrying out the balancing exercise.

33.	Their decision was of course a decision in the exercise of the Tribunal’s discretion and it is well-known that these decisions are ones which this court is loathe to interfere with unless it can be shown that the Tribunal have gone outside the parameters of their discretion or made a serious error in their analysis in coming to the decision that they did.  We are not satisfied that their discretion was exercised incorrectly and we are satisfied that the analysis they carried out, particularly as to the state of mind of the Respondent at the time they came to file their original Response, was a correct one and we would not allow therefore that appeal.

Wasted costs
34.	The decision in respect of wasted costs was, in our view, arrived at by the Tribunal on a completely erroneous basis.  Their decision given, following their agreement to the adjournment of the case as a result of the Tribunal’s deliberations having taken some hours on the first day, sought initially to place the blame on both solicitors for a failure to properly liaise with the Tribunal and to warn them as to the risks that the case might be adjourned, although in the end, in paragraph 16 of their decision they blamed the Respondent’s solicitors who they described as having the greater fault having “chosen to make a very late application and had taken no steps to advise of the consequences of their application”.  

35.	Having referred to the guidance in Ridehalgh v Horsefield (1994) 3 All ER 848 they considered the solicitors’ conduct fell within a category of negligence and made a Wasted Costs Order in respect of the witness expenses that might be claimed against the Secretary of State.  

36.	There are a number of errors in the way that this was handled.  First of all, we are not satisfied at all that there was negligence on the part of Lewis Silkin.  They had in fact quite early on sought, before the witness statements were filed, to use a Tribunal hearing simply as a liability hearing and adjourn out remedies.  That application was dealt with by the Tribunal on the basis that the matter would be dealt with by the Tribunal on the first day of the hearing.  Whilst it has turned out the Tribunal rejected their application for an amendment, in our view it cannot be said that the making of that application fell into the category of a misconceived application and the Tribunal did not make that finding.

37.	The problems really arose because the Tribunal, having heard argument which only lasted, we are told, for about an hour, then deliberated for a further two hours or so, not giving a decision until 2.30pm, which led, in due course, to Mr Sugarman making the application which was, as we understand it, supported by the Respondent that the case should be adjourned.

38.	The Tribunal in making a Wasted Costs Order, in our view, first of all, should have given appropriate notice to the potentially guilty party to enable proper consideration and representation to be made by the solicitors.  Normally, certainly within the civil courts that might mean that a partner would be required to attend to give explanation as to his conduct in dealing with the allegations of negligence or misconduct.

39.	The order was also made in respect of witness costs.  The regulations provide for an order to be made in respect of witness expenses paid by the DTI.  In fact, nothing had been paid by the Department at the time the order was made and in fact we are told that no claims for witness expenses have been made by the witnesses who attended.  The particular regulation rule is Rule 48(2)(b), which provides that within a Wasted Costs Order the Tribunal may order the solicitors to pay the Secretary of State any allowances to any person in respect of their attendance but it provides that it is allowances which have been paid by the Secretary of State.  It seems to us that until the Tribunal had received evidence that payment had actually been made and the amounts involved, it was wrong of them to make an order in any event.

Conclusion
40.	For this variety of reasons, this order cannot stand and we have no hesitation in setting aside the Wasted Costs Order.