Appeal No. EAT/1492/01/ZT

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 13 February 2003

Before
THE HONOURABLE MR JUSTICE RIMER
MR I EZEKIEL
SIR GAVIN LAIRD CBE

MISS S LERICA	APPELLANT

BRITISH TELECOMMUNICATIONS PLC & OTHERS	RESPONDENTS

Transcript of Proceedings

JUDGMENT

JUDGMENT ON COSTS APPLICATIONS BY THE SECOND AND THIRD RESPONDENTS

Revised

	APPEARANCES

For the Appellant	MISS NICOLA BRAGANZA
(of Counsel)
Instructed By:
Messrs Hereward & Foster
Solicitors
101 Barking Road
Canning Town
London E16 4HQ	
For the First Respondent:
British Telecommunications Plc

For the Second Respondent:
Kelly Services (UK) Limited

For the Third Respondent:
Imagination Limited	NO APPEARANCE OR
REPRESENTATION
BY OR ON BEHALF OF
THE FIRST RESPONDENT

MRS LINDA GOLDMAN
(of Counsel)
Instructed By:
Kelly Services (UK) Ltd
Advisory Consulting & Training
Associates Limited
4 Crafton
Mentmore
Nr. Wing
Bucks LU7 0QL

MISS CATHERINE CALLAGHAN
(of Counsel)
Instructed By:
The Simkins Partnership
Solicitors
45-51 Whitfield Street
London W1T 4HB

THE HONOURABLE MR JUSTICE RIMER:

1.	We heard the argument on this appeal on 13 February 2003 and reserved our judgment. We delivered it on 10 April 2003 and dismissed Miss Lerica’s appeal. On 24 July 2003, we were notified by the Registrar that Kelly and Imagination had applied for orders that Miss Lerica should pay their costs of the appeal. Kelly’s claimed costs total £3,842.25, including VAT. Imagination’s claimed costs total £14,051.05, including VAT. The parties have exchanged written submissions on these applications, and are content that we should rule on them on paper.

2.	Rule 34 of the Employment Appeal Tribunal Rules 1993 reads, so far as material:

“34. Costs or expenses

(1) Where it appears to the Appeal Tribunal that any proceedings were unnecessary, improper or vexatious or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings the Tribunal may order the party at fault to pay any other party the whole or such part as it thinks fit of the costs or expenses incurred by that other party in connection with the proceedings.

(2) Where an order is made under paragraph (1) of this rule, the Appeal Tribunal may assess the sum to be paid or may direct that it be assessed by the costs officer, from whose decision an appeal shall lie to a judge.

…”

3.	We do not understand it to be suggested that there was any unreasonable delay by Miss Lerica in prosecuting her appeal, so that element of rule 34(1) is not in point. We do understand both respondents to assert that Miss Lerica’s conduct in bringing the appeal at all was unreasonable, or that its bringing was unnecessary, improper or vexatious. They also accuse Miss Lerica of dishonesty in its conduct. If they are right on any of those criticisms, we would have a discretion to award costs against Miss Lerica.

4.	We will not rehearse the background to the appeal, which we hope appears sufficiently from our reserved judgment. The main thrust of the respondents’ arguments is that they say that, contrary to the stance she maintained throughout the appeal, Miss Lerica in fact advanced no “additional factual case” to the employment tribunal so that to the extent that her appeal was founded on the basis that she had, it was founded on a dishonest falsity. The respondents also say that the appeal was hopeless, since the additional factual case anyway disclosed no arguable case that Imagination might be liable for “aiding” under section 42 of the SDA or section 33 of the RRA.

5.	We made no finding in our reserved judgment, nor do we now, that Miss Lerica was dishonest in her assertion that she had advanced the “additional factual case” to the employment tribunal. In her affidavit of 29 January 2002, she deposed that she had so advanced that case although we also had a considerable body of written evidence suggesting the reverse. But there was no cross-examination of Miss Lerica (or of anyone else) about what happened before the employment tribunal in this respect, and in those circumstances it was not open to us to make a finding as to whether she was or was not telling the truth. Nor did we attempt to do so. We instead disposed of the factual conflict by reference to the principle referred to in paragraph 21 of our judgment. The application of that principle did not involve or imply any finding against Miss Lerica that her claim that she had advanced the “additional factual case” was or had been dishonest.

6.	In those circumstances, we reject the suggestion that Miss Lerica’s contention about her “additional factual case” was dishonest, involved any bad faith, or amounted to unnecessary, improper, vexatious or unreasonable conduct. We were critical of the form of her affidavit (see paragraph 18 of our judgment), but we do not regard that criticism as, by itself, establishing any case under rule 34 sufficient to justify an exercise of discretion to award costs against Miss Lerica.

7.	Of course, the principle by reference to which we resolved the factual conflict was based on reported authority which might, and perhaps should, have forewarned Miss Lerica and her advisers that she would face an uphill task in persuading us that she had advanced the additional factual case. If she could not do so, then, for reasons we have given, we consider that no ground of appeal would have been be open to her at all. In her written submissions in opposition to the costs application, Miss Lerica devoted considerable effort to the proposition that a so-called “wider interpretation” of the order at the preliminary hearing enabled her to argue that, even if she had not advanced the “additional factual case”, she was entitled to argue on the appeal that the employment tribunal was anyway in error in not considering whether she had any arguable case under sections 42 or 33. In this regard, she relied on paragraph 9 of the directions given at the hearing of 29 June 2001, including their express references to those sections (see paragraph 6 of our judgment). 

8.	We do not accept that the order at the preliminary hearing permits any such wider interpretation, and we do not follow the argument to the contrary. It is, however, fair to note that paragraph 1 of Miss Lerica’s amended notice of appeal (served after the order on the preliminary hearing) appears to advance an argument based on the “wider interpretation” and that Imagination’s Answer to it was somewhat ambiguous. Imagination asserted in paragraph 3 of its Answer that it “… intends to resist the appeal … and deals in this answer with the sole issue as outlined in paragraph 2 of Mr Commissioner Howell QC’s Judgment and as stated in the Amended Notice of Appeal. Other statements unrelated to the sole issue of appeal in the Amended Notice of Appeal will not, therefore, be addressed here.” Having so stated, Imagination then, in paragraph 5.1, appears to us to have advanced an argument directed to the proposition that in fact the employment tribunal had considered sections 42 and 33, and thus apparently to the ground of appeal said to be justified by the “wider interpretation.” The like point can be made about paragraphs 3.2 and 8 of Imagination’s skeleton argument for the hearing before us on 13 February 2003. To the extent, therefore, that Imagination appeared to be preparing to meet the “wider interpretation” argument on its merits, it is not obvious to us that it can be said to have been unreasonable, improper or vexatious for Miss Lerica to have claimed to be entitled to advance that argument at the full hearing of the appeal.

9.	Since we have made, and make now, no adverse finding as to Miss Lerica’s good faith in her assertion that she did advance the “additional factual case” to the employment tribunal, we see no basis for any criticism of her in the original launching by her of her appeal. Whilst most of her grounds were struck out at the preliminary hearing, she obtained permission to proceed to a full hearing on the “additional factual case” issue, and that appears to us to be a sufficient endorsement of her prosecution of the appeal, at least down to that point, to rebut the allegation that it was unreasonable, improper or vexatious. She then sought to make good the factual basis of her appeal by her affidavit of 29 January 2002, although other material was also obtained, including from the chairman, which gainsaid her account. Quite how she expected this appeal tribunal to resolve the evidential conflict in her favour we do not know, but we would anyway not be prepared to characterise the further prosecution of her appeal down to 3 February 2003 as unreasonable, improper or vexatious. There is no evidence that, down to that point, she or her advisers were aware of the Aberdeen case, and we are prepared to assume in her favour that she believed in good faith - however optimistically - that her affidavit would be sufficient to do the necessary work for her.

10.	Imagination’s skeleton for the appeal was dated 24 January 2003 and was served on Miss Lerica’s solicitors on 3 February 2003, seven clear working days before the hearing. Paragraph 6 drew attention to the principle that, in the light of the conflict on the evidence about what had happened before the employment tribunal, the chairman’s evidence should be regarded as authoritative; and it referred to Aberdeen. Miss Lerica was, therefore, at least by then, on notice that she was likely to be in difficulty in satisfying us that she had advanced the “additional factual case” and we do not know how she hoped to do so. In the event, her counsel advanced no serious opposition to the application of the principle of which Imagination’s skeleton argument had forewarned her, and instead sought to advance the arguments which we summarised in our judgment. We would be reluctant, and decline, to make a finding to the effect that, having read Imagination’s skeleton, she ought promptly to have abandoned her appeal. That skeleton told her that Imagination was ready and willing to join battle on the “wider interpretation” point and as to whether there was an arguable case under sections 42 and 33. Whilst we have found that there was no such arguable case, we would also be reluctant, and similarly decline, to hold that it was vexatious or improper for Miss Lerica to advance the argument that there was – particularly having regard to the fact that this was an appeal against what was (in effect) a strike out in a discrimination case. We have reminded ourselves that such cases are particularly fact-sensitive and that a strike out should only be made in the clearest case. Moreover, Imagination’s skeleton argument was not one which appeared to be directed to meeting an obviously hopeless appeal. It ran to just over five pages, with paragraph 18 on page 6 reading as follows:

“18. The Appellant is put on notice that if the appeal is dismissed, [Imagination] intends to make an application for costs on the grounds that the appeal was improper or vexatious, or that the Appellant acted unreasonably in bringing the appeal.” (Our emphasis)

11.	The conditional nature of that threat is surprising. Its implicit acceptance that the appeal might even succeed is difficult to reconcile with the assertion that, if it did not, its bringing was an abuse of the process. Neither the skeleton as a whole, nor that paragraph in particular, told Miss Lerica that her appeal was a vexatious one which should never have been brought or pursued.

12.	Miss Lerica submits that, in all the circumstances, there is no sound basis for any criticism of her as having acted unreasonably, improperly, vexatiously or unnecessarily in prosecuting her appeal to a full hearing. In principle, we agree. Costs are not ordinarily recoverable by successful parties in this appeal tribunal, and the jurisdiction to award costs only arises if the tribunal is first satisfied on one or other of the grounds provided for in rule 34. We have not found the issues raised by this application all that easy, because (i) the whole course of this case has been somewhat messy, (ii) Miss Lerica has been less than clear in spelling out exactly what she says her case against Imagination was, (iii) we ultimately had little doubt that she in fact had no arguable case against Imagination, and (iv) we regarded her somewhat confused attempts to fix Imagination with liability as over-ambitious. In the circumstances, we are not surprised that Imagination was anxious, if it could, to recover costs, and we have considerable sympathy for Imagination. But we are nevertheless not satisfied that any case has been made out against Miss Lerica under rule 34 such as to enable us to exercise a jurisdiction to award any part of the costs of the appeal against her. We refuse Imagination’s application. 

13.	We have made little mention of Kelly. Kelly’s written submissions in support of its application for costs are unimpressive. They assert that Miss Lerica had been untruthful as to her claim to have advanced the “additional factual case,” a finding which we did not and do not make. They assert that Miss Lerica acted unreasonably in advancing a new argument at the hearing before us, one which had not previously been permitted: but by then the costs of 13 February had been incurred. However, even if Kelly had established a case under rule 34 (and we find that it has not), we would have exercised our discretion against awarding it any costs. The issues raised by the appeal involved a dispute exclusively between Miss Lerica and Imagination, being issues on which we consider Kelly had no right to be heard. We do not understand why Kelly was represented at the appeal hearing. It did no more than support Imagination’s case, and it could have said all it needed or wanted to say in that respect by putting in a written submission. Kelly is sensitive to this, evidenced by three points it makes in defence of its own activity in the appeal. First, it says it was cited as a respondent in the Notice of Appeal. This is true, but it is probably because it had to be (see rule 5 of the Employment Appeal Tribunal Rules 1993). British Telecommunications Plc was similarly so cited, but did not find it necessary to incur expense in resisting the appeal. Secondly, it makes the point that its legal representatives were present at the hearing on 29 August 2001 and “could therefore assist the Appeal Tribunal with what took place at that hearing.” That may be so, but it did not require Kelly to take the active role that it did in resisting the appeal – to the extent of being represented by counsel. Thirdly, it makes a misconceived point that we made findings as to Miss Lerica’s credibility as a witness, said to be relevant to “the substantive Tribunal action.” We take the view that most, if not all, of Kelly’s costs were incurred unnecessarily, and we see no reason why Miss Lerica should be expected to pay any of them. We dismiss Kelly’s application too.