Appeal No. EAT/1378/01 
	& EAT/1377/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 20 May 2002

Before
HIS HONOUR JUDGE PETER CLARK
MRS J M MATTHIAS
MR N D WILLIS

1)  MR Y VITHLANI 
2)  MR R THANKI	APPELLANT

1)  MR NITIN CHAUHAN 
2)  BELGRAVE ADVENTURE PLAYGROUND	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	MR T PITT-PAYNE
(of Counsel)
Appearing under the
Employment Law
Appeal Advice Scheme 

JUDGE PETER CLARK:
1.	We have before us for preliminary hearing 2 appeals arising out of the same proceedings in the Leicester Employment Tribunal, those being proceedings between Messrs Vithlani and Thanki (the Applicants) and Mr Chauhan as Chairman for himself and on behalf of the Management Committee of the Belgrave Adventure Playground (BAP) (the first Respondent) and Leicester City Council (the second Respondent).  We shall use the same description of the parties in this judgment.

2.	In these appeals the Applicants (EAT 1544/01) and the first Respondent (EAT/1377/01) appeal against costs orders made against each of them in the sum of £5000 in favour of the second Respondent by a decision of a Tribunal chaired by Mr J A Threlfell promulgated with extended reasons on 8 October 2001 (the original decision) and subsequently affirmed following a review hearing held on 11 February 2002 by a decision with extended reasons promulgated on 14 February (the review decision).

The Background
3.	At all relevant times the Applicant’s were employed as play leaders at BAP.  Mr Vithlani was a senior play leader.

4.	By Originating Applications presented on 16 May 2000 (the first complaint) each Applicant complained of non-payment of salaries by the first Respondent as Chairman of the Management Committee.  

5.	By his Notices of Appearance to the first complaints the first Respondent contended that in December 1999, the Applicant’s contracts of employment had been taken over by Leicester City Council, then not a party.
6.	Following service of those Notices of Appearance each Applicant then presented a second complaint, alleging unfair dismissal, naming Mr Gallagher, the Council’s Director of Arts and Leisure as a Respondent.  

7.	Mr Gallagher applied to the Tribunal to be removed from the proceedings.  At a hearing before a chairman, Mr C Goodchild, it was directed that the Council be joined as second Respondent and that the proceedings be combined and heard together.  On 15 February 2001 Mr Gallagher was formally removed from the proceedings.  It was the second Respondent’s case that at all times the Applicants were employed by BAP, not by the Council.

8.	On 31 May 2001 the Tribunal directed that there be a preliminary hearing on the issue as to who was the Applicant’s employer.  That question came on for hearing before Mr Threlfell’s Tribunal on 1 – 3 October 2001.

9.	At the end of the second day of hearing, by which time the Applicants had completed their evidence and the first Respondent had completed his evidence in chief, been cross-examined by the solicitor for the second Respondent and was in the course of being cross-examined by Mr Singh, who then represented the Applicants, the chairman gave a costs warning.

10.	On the morning of the third day Mr Singh informed the Tribunal that the Applicants wished to withdraw their claims against the second Respondent.  Both claims were then dismissed on withdrawal.  

11.	Application was then made on behalf of the second Respondent, by their solicitor, Mr Berriman for costs orders against the Applicants and the first Respondent.  The total costs of the second Respondent were then put at not less than £20,000.  The basis of that application was as follows:
Mr Singh had been advising both the Applicants and the first Respondent from an early stage.  It was he who had first raised the suggestion that the Applicants were employed by the second Respondent.  Mr Berriman contended that the first Respondent had consistently lied to the second Respondent about matters such as the date of termination of employment and notice being given to the Applicants.  Mr Berriman had sent a letter to the Applicants and to the first Respondent warning them that a cost application would be made.  He submitted that there was nothing in the evidence to date which indicated employment by the second Respondent.  Both Mr Vithilani and the first Respondent had lied about events since January 2000 and the Applicants and the first Respondent were in league together, having been advised by Mr Singh from an early stage.

12.	The first Respondent, who was then representing himself, admitted lying to the second Respondent and that he had done so in the hope that the Applicants would be paid, so the Tribunal found at paragraph 6 of the original decision reasons.

13.	For the Applicants, it was submitted that the second Respondent had been late in disclosing documents.  However the Tribunal found that late disclosure was immaterial; both Applicants’ were unreliable witnesses; their claim against the second Respondent never had any prospect of success and was misconceived.

14.	The first Respondent initially raised the plea that the Applicants were employed not by BAP but by the second Respondent.  He deliberately lied in his evidence, particularly about his involvement in BAP in early 2000.  He admitted lying to the second Respondent.  The Tribunal considered written submissions prepared by solicitors advising the first Respondent to the effect that the second Respondent was the Applicant’s employer, but they found that the facts did not come remotely near to establishing that case.  The first Respondent’s claim that the second Respondent was the Applicant’s employer never had any prospect of success and was misconceived.

15.	The Tribunal rejected a submission on behalf of the Applicants that since the second Respondent was a public body it had suffered no loss.  The costs of the second Respondent had to be borne by the people of Leicester.  There was some evidence about the limited means of the Applicants and first Respondent but the Tribunal, having considered rule 14 of the 2001 Employment Tribunal Rules of Procedure, found that the conduct of proceedings by the Applicants and the first Respondent was misconceived and that by the first Respondent was unreasonable.  They ordered each to pay the sum of £5000 to the second Respondent.

16.	Following a review application the original decision was revisited by the same Tribunal on 11 February 2002.  In the review decision the Tribunal dealt separately with the points raised on behalf of the Applicant and by the first Respondent.  They rejected them for the reasons given.  The costs orders were affirmed.  

The Appeals
17.	We have before us skeleton arguments, prepared on behalf of the Applicants and on behalf of the first Respondent in support of these appeals.  However, today all have the advantage of representation by Mr Pitt-Payne of Counsel under the ELAAS pro bono scheme.  He has advanced four submissions in relation to all Appellants and three further points, specifically on behalf of the first Respondent.  We should deal with each of those points in turn.  First the points made on behalf of all Appellants.  It is first said that the Tribunal misunderstood the scheme of rule 14 of the 2001 rules, which provides for two enquiries.  The first is to determine whether or not a party or his representative has, in conducting proceedings acted vexatiously, abusively, disruptively or otherwise unreasonably, or whether the bringing or conducting of the proceedings by a party has been misconceived.  

18.	In relation to that question, Mr Pitt-Payne accepts that the Tribunal found that all Appellants had brought or conducted proceedings which were misconceived, that is to say, had no reasonable prospect of success.  But, he submits, the Tribunal did not go on to consider the second question which is, having so found whether or not to exercise their discretion in favour of making an order for cost.  We reject that submission on the basis of the Tribunal’s findings.  

19.	At paragraph 10 of the original decision reasons they say this:

“We are quite satisfied that this is a case where costs should be ordered.”

We think in that cryptic phrase the Tribunal have encapsulated all that went before in relation to the conduct of these Appellants and having found that their claims were misconceived and in the case of the first Respondent that he had conducted the proceedings unreasonably, they were satisfied that this was a proper case in which to exercise their discretion in favour of awarding costs to the second Respondent.  We can see on the facts of this case, nothing wrong with that exercise of discretion.  Secondly, Mr Pitt-Payne takes a point on the means of the parties.  He has very properly referred us to a decision of the Court of Appeal in Kovacs v. Queen Mary and Westfield College (2002) EWCA Civ 352, which was strictly decided on the provision in the 1993 Rules of Procedure, that is rule 12, dealing with cost orders.  In that case, the Court of Appeal approved the approach of Mr Justice Lindsay (President) in Beynon v. Scadden (1999) IRLR 701 to the effect that it was not necessary for an Employment Tribunal to take into account the means of a party before making a cost order against him under the terms of rule 12 of the 1993 Rules.  

20.	Mr Pitt-Payne submits that a different consideration arises in relation to the provisions of rule 14 of the 2001 rules.  In particular, he draws attention to the widening of the gateway through which a party must pass before he can secure an order for costs, in particular the addition of the words in rule 14(1), bringing or conducting of the proceeding of a party has been misconceived.

21.	In these circumstances, he submits, different considerations apply and it is appropriate for a Tribunal in exercising its discretion to take into account the means of a party, having ruled that that party has brought or conducted the proceedings which are misconceived.  We reject that submission.  It seems to us that what has happened in the 2001 Rules is that Parliament has decided that the Tribunal’s power to award costs should be increased.  There is nothing in that rule anymore than there was in the preceding rules, all of which are set out in the judgment of Lord Justice Chadwick at paragraph 28 of Kovacs, to suggest that the means of a party are a relevant consideration.  

22.	Thirdly, he accepts that by regulation 14 of the Employment Tribunals Constitution etc Regulations 2001, it is clear that the regulations have retrospective effect.  That Regulation provides:

“These regulations shall apply in relation to all proceedings to which they relate irrespective of when those proceedings were commenced.”

23.	Accordingly, rule 14 applies to the present proceedings although they were instituted before the date on which the rules came into effect, 16 July 2001.  However, he submits that because this is a straddling case, the Tribunal in exercising its discretion, ought to take into account the fact that the proceedings were commenced before 16 July 2001.  Again we reject that submission.  It seems to us that Parliament decided that the new rule would apply to cases in train.  Accordingly, no distinction, it seems to us, falls to be made between a case which was started before or started after the relevant date.  

24.	In this particular case, the regulations, having been flagged up in advance of their commencement date, it was at the latest open to these Applicants to discontinue their proceedings once it was clear that they were at greater risk as to costs.  So far as the first Respondent is concerned, on the Tribunals findings, it was he who was responsible by his original notices of appearance for raising the possible case, which the Tribunal found to be misconceived, that the Applicant’s might have against the second Respondent.  

25.	Fourthly, it said that the Tribunal fell into error by not considering whether or not the costs incurred by the second Respondent amounting in total to £27,464.00, so the Tribunal were told and accepted at the review hearing stage, were relevant to the quantum of cost ordered against the Appellants before us.  The submission appeared to be that the Tribunal was required to determine whether or not the second Respondent had properly incurred such cost.  We do not see that as a relevant consideration when considering an award of costs under Rule 14(3)(a).  The alternative was for the Tribunal to put the question of costs over for a detailed assessment, in which case, as Mr Pitt-Payne points out, in the ordinary run it might be expected that the second Respondent would recover in general terms, about two-thirds of their actual costs, some £18,000.00, slightly more than they were in fact awarded by the Tribunal.  Again we reject that submission.  

26.	In relation to the first Respondent, he takes these three points, first that the Tribunal ought to have adjourned the proceedings so as to allow the first Respondent to seek legal advice and representation on the question of costs.  That application was made and rejected.  It seems to us that the Tribunal were entitled, in the exercise of their discretion, to reject that application for an adjournment which would have put the second Respondent to yet more expense.  It is a matter for a party as to whether or not he is to be represented.  We observe that the first Respondent had sought advice from solicitors and did put before the Tribunal a letter of submission from those solicitors at the review hearing.  Secondly, it is said that the Tribunal fell into error by making an award of cost against the first Respondent before hearing the whole of his evidence and that of the witnesses whom he wished to call.  Mr Pitt-Payne tells us that the first Respondent intended to call two fellow members of the management committee of the BAP.  

27.	It seems to us that the Tribunal had heard sufficient evidence.  They had heard from the Applicants, they thought they were unreliable witnesses; they had heard from Mr Chauhan in evidence in chief and he had been subjected to cross-examination on behalf of the second Respondent, they thought that he was deliberately lying in his evidence.  He was at the close of the second day of the hearing under cross-examination by Mr Singh on behalf of the Applicants.  It does not seem to us, if the Tribunal had rejected his evidence roundly that the position would have been altered by his calling two other members of the management committee to support his case.  In these circumstances, we think it was entirely proper for the Tribunal to deal with the question of costs at that stage of the proceedings; the Applicant’s having withdrawn their complaints.  

28.	Finally, it is said that the Tribunal fell into error in making an award of costs against the first Respondent personally, rather than against him and all the other members of the management committee of BAP.  As we understand the Tribunal’s decision, the order for costs was made against the first Respondent as well as the Applicants.  The first Respondent is described in the heading to the proceedings in the Tribunals decision, as Mr Nitin Chauhan, Chairman for himself and on behalf of the management committee of the Belgrave Adventure Playground.  We therefore interpret the Tribunals order for cost as being an order against Mr Chauhan and the other members of the management committee, that cost liability is joint and several and may be enforced by the second Respondent against Mr Chaughan alone or Mr Chauhan and other members of the management committee.  It will then be for Mr Chauhan, if he alone is pursued for those costs, to seek an indemnity from his fellow management committee members.  

29.	Those are the submissions advanced with his usual skill by Mr Pitt-Payne.  He does not abandon any of the arguments that were advanced in the original skeleton arguments on behalf of the Applicants and the first Respondent.  As to the Applicant’s skeleton argument, we can see no arguable point in addition to those which have been advanced by Mr Pitt-Payne.  So far as the first Respondent is concerned, the argument appears to be an attempt to rerun the factual question as to whether or not these Applicants were employed by the second Respondent.  On the Tribunal’s findings of fact, that was a hopeless argument and it is not our task to retry factual questions.  For all these reasons, we shall dismiss these appeals.  We bear in mind that this is a preliminary hearing at which the issue is whether or not there is any point or points of law which ought reasonably to be argued at a full hearing.  

30.	In so far as Mr Pitt-Payne’s submissions go to questions of construction of the 2001 Rules, we think they are plainly wrong for the reasons that we have given.  So far as the merits of these appeals are concerned, there are none.  If we were to allow these appeals to go forward on the basis of arguable points of law, it would be almost impossible for the second Respondent having attended at some expense the full appeal hearing to contend that it would be an appropriate case for the costs in the appeal to be ordered under rule 33 of the EAT rules.  We see no reason to put the second Respondent to any further cost in this case. 

31.	Accordingly, the appeals are dismissed.