Appeal No. EAT/1326/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 1 May 1998
Judgment delivered on 22 May 1998

Before
THE HONOURABLE MR JUSTICE MORISON (P)
MR K M HACK JP
MR J D DALY

MR J P SUTCLIFFE & MR D I LONSDALE	APPELLANTS

BIG C’s MARINE & OTHERS	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR A FARRELL
(Representative)
Southampton Unemployed Centre
11 Porchester Road
Woolston
Southampton
SO19  2JB	
For the Respondents	MRS M SIDDALL
(Solicitor)
Messrs Paris Smith Randall
9 College Place
Southampton
S015  2YR	

	MR JUSTICE MORISON (PRESIDENT):   This appeal raises an important question relating to the practice and procedure of Industrial Tribunals and of this court.

	In February 1995 Mr Sutcliffe, the appellant, presented a complaint to an Industrial Tribunal alleging unfair dismissal, and monies due under his contract of employment.  He identified as his employer “Big C’s & subsidiaries, Cougar Marine Limited and European Coach Conversions”.  In May 1995 Mr Lonsdale presented a complaint against the same entities alleging unfair dismissal.  Cougar Marine Limited entered a notice of appearance.  They were in ‘insolvent liquidation’.  An entity describing itself as ‘Big C’s Marine, whose address was the same as Cougar Marine Limited, entered a notice of appearance denying that they had ever employed the applicants.  At the same address was an entity calling itself European Coach Conversions which also entered a notice of appearance denying it had ever employed the applicants.  A company called Cougar Holdings Limited denied that they were the employers at the date of dismissal, alleging that, if the applicants were ever employed by them, the employment transferred to Cougar Marine Limited in 1992, by reason of a transfer of an undertaking.   

	Very sensibly, the Industrial Tribunal at Southampton held a directions hearing at which 4 legal entities were identified as potential respondents: Big C’s Marine Limited, European Coach Conversions, Cougar Marine Limited and Cougar Holdings Limited.  Mr Farrell, from the Southampton & District Unemployed Centre, an experienced advocate in Industrial Tribunals, had asked, on the applicants’ behalf, for particulars and discovery, and by order dated 7 June, at the directions hearing, the Chairman required the respondents to give certain particulars and discovery.  The final direction was that:
“There shall be a hearing on Thursday 17 August 1995 at 9.45 am under Rule 6 (Chairman alone 1 day allowed) to establish which of the four Respondents if any was the employer of the applicants.”

Rule 6 of the Rules of Procedure contained in Schedule 1 to the Industrial Tribunals (Constitution and Rules of Procedure) Regulations 1993 provides that:
“(1) A tribunal may at any time before the hearing of an originating application, on the application of a party made by notice to the Secretary or of its own motion, hear and determine any issue relating to the entitlement of any party to bring or contest the proceedings to which the originating application relates.”
	By virtue of Rule 13(8), such a determination could be made by a Chairman sitting alone.  The matter came before Mr Rich, a most experienced Chairman, on 17 August 1995, and for a further day on 19 October 1995.  He reserved his decision, which was given in writing on 1 November 1995.  He concluded that Cougar Marine Limited was the correct Respondent and he dismissed the other named Respondents from the proceedings.

	Meanwhile, a division of the EAT had held that under their Rules of Procedure an Industrial Tribunal Chairman sitting alone was not entitled to make determinations on issues which required the giving of evidence and the making of findings of fact.  That decision was made in July 1996 in the case of Mobbs v Nuclear Electric PLC [1996] IRLR 356.

	The day before that decision was made, the applicants’ appeal against Mr Rich’s decision was heard by the EAT and the appeal was dismissed.  It was not argued at that appeal that the Industrial Tribunal was improperly constituted, or that its decision was not valid for that reason.  But having become aware of the Mobbs decision, Mr Farrell, on his clients’ behalf, applied to the Industrial Tribunal for a review.

	The matter came before a full panel of the Industrial Tribunal, presided over by Mr Rich, on 11 October 1996.  The Industrial Tribunal adjourned the application because they were of the view that the better and safer course was for the applicants to seek leave to appeal to the EAT against the first decision on the grounds that the Tribunal was not properly constituted.  Their written decision, granting an adjournment, was promulgated on 24 October 1996.

	Very shortly afterwards, another division of the EAT, presided over by the President, held that the Mobbs decision was not right, and that until the appeal in Mobbs was heard, for which leave had been given, Industrial Tribunals should continue to assume that Rule 6 authorised Chairmen to sit alone even when there was a conflict of evidence to be resolved.  It was apparent that the decision in Mobbs was causing practical problems and the position needed to be clarified as a matter of urgency.

	The Mobbs appeal was withdrawn shortly before it was due to be heard by the Court of Appeal.  Mr Farrell’s application to us for leave to appeal out of time was held in abeyance pending the appeal to the Court of Appeal, and was re-activated as soon as it became clear that the appeal had been abandoned.

	Despite being invited by the Respondents to withdraw his application, Mr Farrell persisted in it.  He explained that at the meeting for directions in 1995, there had been some discussion prior to the Chairman directing that there be a Rule 6 hearing, Chairman alone.  He accepted that he made no representations to the Chairman that it would be more appropriate for a full tribunal to deal with the question at issue.  He also said that he usually did not reveal in advance how much evidence he was proposing to bring forward and that the Industrial Tribunal Chairman could not, realistically, have been expected to appreciate that the particular hearing was going to involve substantial issues of fact, and a review of a substantial quantity of documents.   

	It seems to us that, as the law stood at the time, and as the law is believed to be at the present time, pursuant to Rule 6, an Industrial Tribunal had a discretion to determine any issue relating to the Respondents’ entitlement to contest the proceedings, including their entitlement to assert that they were not the applicants’ employers, in advance of a determination of the Originating Application itself.  Further, under Rule 13(8), a Tribunal has a discretion to hear such matters by Chairman sitting alone.  We are wholly unpersuaded that, in this case, it could fairly or properly be said that the Tribunal’s order made at the Directions hearing was other than proper, on the information available and known to the Chairman.  It is unrealistic to argue, as Mr Farrell did, that Mr Rich should have refused to continue hearing the matter at the end of the first day when he appreciated how hotly contested the issues were.  By then, a day had already been spent dealing with the facts.  If he had decided that the issue would be better determined by a full panel, at least one day’s costs would have been thrown away and a new tribunal, chaired by a different person, would have had to acquaint itself with the complex factual issues.

	It follows, therefore, that if there was a discretion to order a preliminary issue and that it should be heard and determined by a Chairman sitting alone, on this appeal it cannot be shown that the Chairmen concerned, or either of them, misdirected themselves in law or arrived at a perverse conclusion.  In these circumstances, as this was the exercise of a discretion, we cannot interfere with it.  Accordingly, the application for leave to appeal out of time must be refused, as the point which Mr Farrell seeks to argue stands no realistic prospect of success.  We, therefore, do not need to consider, on a hypothetical basis, the legal effect which the Mobbs decision would have had on decisions of Industrial Tribunals made in breach of the powers conferred by Rule 6.  That is sufficient to dispose of this application.

	We turn to more general matters.  From experience here, it seems apparent that there is a tendency for Industrial Tribunals to isolate ‘preliminary issues’ capable of being determined under Rule 6 and then, invariably, to require them to be determined by a Chairman sitting alone without Lay Members.  It is further clear to the Court that this tendency is more pronounced in some Regions than others.  This makes for unnecessary and undesirable unevenness in the judicial process.  Further, it is a source of potential injustice.  We do not know if some Regions take these decisions because of cost implications: it being cheaper to dispense with the Lay Members.  The only relevant criterion is the interests of justice.  It does not follow that because a Rule 6 issue has been identified, it is sensible or just for it to be determined by a Chairman sitting alone.  It is the experience of this Court that Chairmen are often greatly assisted by having available to them the wisdom and experience of their lay colleagues.

	Where the Chairman, sitting alone, has reached a decision on facts, it may well be that the first occasion that an ‘industrial jury’ considers the case is at this level of appeal, yet our powers to intervene are limited.  There are examples of such appeals where the Lay Members here believe that the factual conclusions would have been different had the Industrial Tribunal Chairman sat with lay colleagues.  We respectfully remind the Industrial Tribunals that one of the reasons why a wide margin of appreciation and great respect is accorded to their decisions is because they represent the verdict of an industrial jury on issues of which legally qualified Chairmen may not have had direct experience.  The quality of justice must not be allowed to deteriorate because of resource implications.

	Many of the questions which, at present, Industrial Tribunals are allocating to Chairmen alone involve pure questions of fact or a mixture of fact and law, but with a predominance towards fact.  For example, the issue whether an applicant is an employee or working under a contract for services is, we think, essentially a matter for an industrial jury.  

	In Fleming v Secretary of State for Trade & Industry EAT/341/96 Lord Johnston, giving the judgment of the whole court said this:
“....we do not consider that it was incompetent for this [industrial tribunal] chairman to sit alone to determine the issue; but we are entirely satisfied that it was inappropriate, in all the circumstances, for him to do so.   The issue of whether or not a person is an employee or not is absolutely crucial to all sorts of questions arising in the context of employment law, and one to which the input of Lay Members can be of crucial importance.   If, therefore, there is a practice developing whereby a chairman alone will determine issues of employment, we sincerely hope this will now cease.   All such questions, in our opinion, should be determined by a full tribunal.”

We agree.

	Another example of a case where an industrial jury’s input may be crucial is whether it would be just and equitable to extend time for the making of a discrimination complaint.  This court has identified the sort of questions which arise for consideration and we consider that the good sense of the Lay Members will often be important. 

	We recognise that it will not always be easy to decide which cases are suitable for a preliminary issue and which are not.  In general terms, the presumption must be that parties are entitled to have the whole of their case heard and determined at the same time.  There may be examples of cases where a preliminary point should be determined because otherwise the parties would be exposed to a long and unnecessary trial.  But these cases are likely to be the exception, and, in our view, a decision to have a split trial should not be made without reference to the parties’ views: they should be given an opportunity to be heard on the question.

	As to whether it would then be right for a determination of a preliminary issue to be made by a Chairman sitting alone, again, we think the presumption must be that parties before Industrial Tribunals are entitled to a determination by a full panel at every stage of a case, other than those cases identified by Parliament in Section 4(3) of the Industrial Tribunals Act 1996, unless both parties otherwise consent.  In a Rule 6 case which falls within Section 4(3) then it seems to us that the Tribunal’s discretion should be exercised by reference to the criteria specified in Section 4(5) of that Act, after the parties have had a chance to make submissions.  It will often be the case that the parties themselves will have information relevant to the exercise of the discretion which is not immediately apparent from the case papers.  As Mr Farrell indicated, he preferred to ‘play his cards close to his chest’.  He is not unique in this, although we deplore trial by ambush.  He was more aware of the complexity of the issues than was the Chairman.  Had these been explained either to the first Chairman at the Directions Hearing or to Mr Rich at the second, it may be that a different decision would have been arrived at.

	The tendency towards split trials has had a knock-on effect on appeals to this Court.  Where the Industrial Tribunal has ruled on a preliminary hearing in a way which allows the case to proceed, we are sometimes faced with an appeal against that preliminary ruling, and asked to list it for hearing before the case comes back before the Industrial Tribunal.  This will often involve a disruption to our list, and inconvenience and delay to other parties.  If we dismiss the appeal, we may then find that another appeal is presented against the Tribunal’s next decision; thus one complaint can lead to two separate appeals.  Alternatively, as a result of the final determination by the Industrial Tribunal, the issues on the first appeal were moot, and the Court’s time has been wasted.  We, therefore, wish to make it clear that, in future, it will only be in exceptional circumstances that the EAT will list an appeal for hearing in relation to a decision on a preliminary issue, before the Industrial Tribunal’s final determination of the applicant’s complaint.   

	The EAT will continue to hear, as a matter of urgency, appeals against purely interlocutory decisions where the main hearing before the Industrial Tribunal is imminent: for example, appeals against refusals of adjournments, witness orders and so forth.  We do not encourage such appeals, since they rarely succeed, as the Industrial Tribunals’ exercise of judgment about the proper handling of a case is essentially a matter for them and not for us, although in rare cases we have intervened when the interests of justice so require.