Appeal No.	 EAT/44/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 21 October 1999

Before
HIS HONOUR JUDGE ALTMAN
MRS T A MARSLAND
MR J C SHRIGLEY

CHEQUEPOINT (UK) LTD AND HARADA LTD	APPELLANTS

MR J M MCLEMAN	RESPONDENTS

Transcript of Proceedings

JUDGMENT

FINAL HEARING

Revised

	APPEARANCES

For the Appellants	Mr Rupert Higgins 
(Of Counsel)
Messrs Dibb & Clegg
Solicitors
27 Chancery Lane
London WC2A INE	
For the Respondents	Mr Anthony Moore
(Of Counsel)
Messrs Leigh Williams
Kings House
32-40 Widmore Road
Bromley BR1 1RY	

JUDGE ALTMAN:
This is an Appeal from the decision of the Employment Tribunal sitting at London (North) on the 2,3 and 4 November 1998.  The decision was that the Respondent had been unfairly dismissed.  The Appellants, who were the two Respondents before the Employment Tribunal, Appeal by way of a Notice of Appeal dated December 1998.  

The first Appellant appealed in relation to an order for costs made at the conclusion of the hearing.  The order for costs was made in general form and, on the face of it, seems to cover all proceedings.  However, Mr Moore who appeared below and appears today for the Respondents has helpfully confirmed that his application for costs related only to the wasted costs of the abortive earlier hearing, that took place on the 23 and 24 June 1998.  

The reason for the adjournment was that up until that earlier hearing the first Appellant was the only Respondent during and at the end of the hearing.  And by reason of an order made at the end of the hearing, the second Appellant was joined as second Respondent and the Employment Tribunal came to the conclusion, when looking at this matter at the end of the final hearing that the first Appellants had acted vexatiously and unreasonably in not disclosing the possibility of there being dual employers.  

The first Ground of Appeal is that the Employment Tribunal erred in holding that the second Appellant was a necessary Respondent to the proceedings.  We must observe that that error, if it was one, was initially made by the Tribunal in June, when they made the order and there was no Appeal from that order.  It does not seem to us tenable therefore, that in considering the question of costs, it is an error of law for the Tribunal in November to fail to revisit that exercise of discretion.   The original tribunal had to consider rule 17 of the Industrial Tribunal’s constitution etc regulations 1993 which provides;

“A tribunal may at any time, on the application of any person made by notice to the Secretary or of its own motion, direct any person against whom any relief is sought to be joined as a party, and give such consequential directions as it considers necessary”.

The history of the matter very briefly, is that the original Notice of Appearance was entered in 1997 by the first Appellants, not contending that they were not the proper employers.  The hearing came on for full hearing on the 23 June.  During the course of the cross-examination of a Mr Victor Bermudez, who began to give evidence on the morning of the first day.  Towards the end of his cross examination in answer to questions from Mr Moore he indicated that the first Appellants were not trading.  The evidence then gave rise to the need for the first Appellants’ counsel to have time to take instructions as to what the situation was.  Following an adjournment, information was imparted to the Tribunal that the first Appellants had ceased to trade on the 31 December 1997, and that the second Appellant’s ‘took over’ on the 1 January 1998.

  Directions were then given for the production of documents relating to the ceasing of trade, and as to any transfer of undertaking, and on the following day documents were produced including cases listed, cases pending with similar or the same Appellants, and documents were produced showing those company records.  

As a result of this Counsel was instructed about a number of matters.  This included the fact that Counsel, for the first Appellants at the time was able to say that he was already instructed on behalf of the second Appellants and that they would “consent to being joined (if necessary) to the proceedings”.  Directions therefore were made for the joining of the second Appellants.

With the end of the main hearing in November, the Employment Tribunal directed their attention to the outstanding claim for costs which had no doubt been reserved until then, and in Paragraphs 34 onwards, they dealt with the substance of the application.   On behalf of the Respondent it was argued that the unreasonable conduct of litigation led to the waste of costs, as it is now called, and  that they should be recoverable.  

It was pointed out on behalf of the first Appellants that no rule of procedure puts an obligation on a Respondent to inform the tribunal if assets had been sold and the business been transferred to another company and Counsel submitted 

“it was unfortunate that at the time when the IT3 was filed it was maintained that the proper Respondent at that time was Chequepoint UK Ltd”.

We infer from that, that at the time of the earlier hearing and indeed even at the time of the later hearing, it was not being maintained that the second Appellants were not proper Respondents to an application; quite the opposite for it was being maintained that they were.  The inference is that Counsel was maintaining, at the main hearing, that it was the first Appellants who were wrongly named as proper Respondent.  The Tribunal came to it’s judgement as follows:  

“We find that the Respondent parties (the Appellants) have acted unreasonably in the way that this matter had been conducted, bearing in mind that both Chequepoint UK Ltd and Harada Ltd are based at the same address and have the same personnel working for them.  The directors are the same, even the signatories to the documents are the same and there was correspondence with the Respondents from this tribunal over a period of time which gave plenty of opportunity for Chequepoint UK Ltd to inform the Tribunal that their assets have been sold to Harada Ltd”.  

It is difficult at this stage to deal with these points because now the contention is that in fact the first Appellants were the proper Respondents all along in any event. On behalf of the first Appellants Mr Higgins submits, first of all the information simply came out during the hearing as to the appropriateness of joining the second Respondent, and that it was not being contended by the first Appellants that a mistake had been made or anything of that kind, and that it was not necessary in any event for them to be joined because then, in fact, the Respondent would not have been employed by them at the material time, the assets only having been transferred to them after the date of dismissal.  

In the skeleton argument which was submitted, it is pointed out that there was no obligation to notify the Tribunal of the sale of assets, and indeed that the second Appellant was not a necessary or indeed a proper party to the proceedings, and that therefore the fact that they purchased the assets was irrelevant.  It is argued that therefore there was an error of law on the part of the Tribunal in coming to the conclusion that the first Appellants had acted unreasonably because, in effect, they had no obligation to act in this particular way at all.  

But what actually happened was that, due to the information that came out during the course of proceedings, Counsel needed an opportunity to take instructions. Thereafter, there was an adjournment to investigate matters that had come about, and documents were produced on the following day consuming a large part of the time set aside from the hearing in any event.  It must be right, as Mr Higgins says, that rule 17 does not give a wholly unlimited jurisdiction to join a party against whom any relief is sought, however fanciful such application may be.  However, it is clear to us that there was material before the Employment Tribunal at the time upon which they could assess the reasonableness of adjourning for the party to be joined.  The only concrete evidence that they had had before them, and that has been put before us, is a transfer of assets and a position being maintained of neutrality to put it at it’s highest, on the part of the first Appellants as to who the proper employee was.  That together with the inability to deal with that matter when it was first raised, clearly used up valuable tribunal time, and the need for that to be explored must have been something that could have been reasonably anticipated.

Accordingly it seems to us, that in order to challenge the exercise of discretion in relation to costs awarded by the tribunal, we would have had to have come to the conclusion that it was an order which no reasonable tribunal properly directing itself could reasonably have made or that there was an unassailable point of law raised at the time which was against the need to disclose the identity of the new party before the hearing.  We have come to the conclusion that there was material upon which the Employment Tribunal could conclude that a party should reasonably have anticipated that the failure to disclose a transaction of this kind would interfere with the process of a tribunal.  And the way in which the tribunal in this case came to its decision, it seems to us, was a proper exercise of their discretion.  

The Tribunal concluded that in general terms, the Respondent acted unreasonably, in the way that the matter had been conducted and important for their decision in that matter is that, although the Appellants have different names, the substance in terms of premises and personnel are identical.  

It is often difficult in complex company structures for an employee, let alone a tribunal, to know who is in law the employer, and we find that expecting that disclosure of a difficult point on the part of a party, is something a tribunal is entitled to expect.  The waste of time at the first hearing, not only because of the need to adjourn to join a party, but also because of the need to explore an issue that should have been clarified or raised in advance, is a matter they could properly take into account.   Accordingly we find that there is no error on the part of the tribunal in law which would lead us to interfere with their exercise of discretion. 

We turn now to the second Ground of Appeal, on behalf of the second Appellant, which is that the tribunal erred in law in finding that the second Appellant was liable for the dismissal of the Respondent by the first Appellant.  It is already apparent from the passage I have read out that Counsel, at the hearing, who was different counsel from counsel who has appeared before us today, was indeed intimating that the second Appellant was in fact the correct employer.  Furthermore, we have looked at the notice of appearance that was filed by the second Appellant and that asserts that the second Appellant was the employer.  It does not do so in those words, but it describes in some detail a number of actions taken by the second Appellant which are only consistent with actions of the employer at the material time.  Mr Higgins has properly conceded that this point was not taken before the Employment Tribunal.  It does not end there.  It is quite clear that the need to identify the correct employer does not appear to have been an issue in the substantive hearing.  The only stage in the decision at which the tribunal appears to have considered it necessary to look at the transfer of assets, was in relation to the history of the matter paving the way for their finding as to costs.  Furthermore, whilst it is true that there was evidence before the Employment Tribunal of a transfer of assets, the approach of the Employment Tribunal, it seems to us, is only consistent with that not having become regarded as a determining factor on the part of anyone appearing before the Employment Tribunal, least of all the second Appellants.  

This is a point of law which could be taken below and was not, and we have come to the conclusion that it would be quite wrong to entertain it at this stage.  We have considered the recently reported case of Jones V Governing Body of Burdett Coutts School [1998] IRLR 521 in which the Court of Appeal held

“The Employment Appeal Tribunal’s discretion to allow a new point of law to be raised or a conceded point to be reopened should be exercised only in exceptional circumstances, for compelling reasons, especially if the result would be to open up fresh issues of fact which, because the point was not in issue, were not sufficiently investigated before the Employment Tribunal”.

I have quoted from the headnote.  Was the transfer of assets the determining factor in identifying the employer?  We do not know.  Mr Higgings submitted today that the first Appellants are “not without assets”. Mr Moore tells us that the assertion at the Employment Tribunal was that the first Appellant had transferred all its assets to the second Appellant.  There is no evidence before us even, if we chose to deal with this matter today, upon which a determination of that point of law could be made.  It would have to have further investigation and would have to be remitted.  Because of what was said during the course of the hearing, and because of what appeared in the notice of appearance, the role of the second Appellant as employer in law was effectively conceded at the main hearing.  What is now being said, in effect, is that everyone got the law wrong.  

We have come to the conclusion that it is far too late and the wrong place to raise that matter for the very first time and we therefore decline to adjudicate upon it.  From what information there is before us, in any event, had we been constrained to do so we would have come to the conclusion that there was sufficient material before the Employment Tribunal for them to conclude that this was a joint exercise of the responsibility of the employer by the Appellant.  The personnel were in reality in a position to be able to “swap hats” when necessary and everything in the decision appears to be consistent with that proposition.  We would not have been satisfied that there was a clear error of law, even if we were permitted to consider it.

For all those reasons therefore this Appeal must be dismissed.  

At the conclusion of the hearing Mr Moore on behalf of the Respondent applied for the costs of the Appeal.  Mr Higgins submitted that the bringing of this Appeal did not fall within the categories in which costs were normally awarded.  The matters which have led to our finding against the Appellants were really canvassed in argument for the first time today and we have come to the conclusion that it would not be appropriate to make an order for costs.  The application is refused.