(1) CREDIT SUISSE FIRST BOSTON (EUROPE) LTD (2) MR D CROMPTON (3) MR A CUTHILL v MR P KARAM [2001] UKEAT 289_01_0604

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 289_01_0604Case No Appeal No. EAT/289/01Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
(1) CREDIT SUISSE FIRST BOSTON (EUROPE) LTD (2) MR D CROMPTON (3) MR A CUTHILLAPPELLANTSMR P KARAMRESPONDENT
Before
Mr Recorder BurkeDate 6 April 2001
[1]APPEARANCES For the Appellant MR A HOCHHAUSER QC And MR AKLAQ CHOUDRY (of Counsel) Instructed By: Herbert Smith Exchange House Primrose Street London EC2A 2HS For the Respondent MR J HENDY QC And MR P LEIPER (of Counsel) Prismalls Two Calico Row Plantation Wharf London SW11 3UF MR RECORDER BURKE QC: The Respondent, Mr. Karam, is employed by the First Appellants. From July 1998 until late 1999, when he claims (but the Appellants deny) that the nature of his duties was changed without his consent, he had the job title of "desk assistant" according to his Originating Application to the Employment Tribunal and according to the Appellants' Grounds of Resistance. The precise scope of his job within that title is in dispute; Mr. Karam claims (but the Appellants deny) that he worked as a trader. He reported to the 3 rd Appellant, Mr. Cuthill. The 2 nd Appellant is a sales trader and a director of "CSFB". For the purposes of this appeal, no distinction has been made between the Appellants, who will for convenience together be called CSFB. Mr. Karam has not actually attended work since the Spring of last year; he claims that he has been suffering from stress and that his absence has been caused by his ill health.[2]On 2 nd June 2000 Mr. Karam, who is of Asian ethnic origin, commenced proceedings in the Employment Tribunal seeking compensation and damages for injury to feelings, injury to health and future financial loss on the grounds of racial discrimination. He claimed, in effect, that during his employment by CSFB he was subjected to racial discrimination and harassment on a regular basis. The allegations were denied by CSFB who sought further particular from Mr. Karam; by way of response, Mr. Karam sent to the Tribunal a proposed Amended Originating Application which, at a directions hearing in September 2000, was treated, together with CSFB's response, as largely identifying the issues; the amended pleading appears to have deleted some of the original allegations but to have added many others; it contained well over 30 specific particulars of discrimination.[3]At the September directions hearing it was said on behalf of Mr. Karam that he might wish to make further allegations after disclosure; it was ordered that he should amend his pleading to include all additional incidents no later than 27 th November 2000. Detailed directions were given for the hearing which was - and still is - fixed to start on 23 rd April 2001 and is expected to last for 20 working days.[4]Late at night on 27 th November 2000 or in the early morning of 28 th November, Mr. Karam's solicitors served on the Tribunal a Re-Amended Originating Application which contained a number of new allegations. All three versions of the Originating Application were settled by counsel (although not by the same counsel on each occasion).[5]On 29 th November 2000 CSFB applied to the Tribunal for an order striking out the new allegations. This application was widened to become an application for an order striking out Mr. Karam's Originating Application in its entirety; we will refer later to the grounds on which that order was sought. At a further directions hearing on 12 th January 2001 Mr. Lamb, the Regional Chairman of the Employment Tribunal, made various orders many of which are irrelevant to this appeal and ordered that there should be a hearing on 14 th February before a full Tribunal of the strike-out application; he gave leave to re-amend the Originating Application subject to the deletion therefrom of various specific allegations which are identified in paragraphs 20 to 22 of his extended reasons promulgated on 26 th January 2001. It should be noted that less than 48 hours before the hearing of 12 th January Mr. Karam's solicitors withdrew a number of the new allegations put forward in the re-amended pleading, to all or some of which Herbert Smith on behalf of CSFB had taken strong objection immediately upon service.[6]The substantive hearing of CSFB's strike out application took place before the Tribunal, chaired by Mr. Lamb, over 3 days between 21 st and 28 th February. There was extensive oral evidence, in particular from Mr. Karam and from his solicitor, Mr. Prismall; notes of the oral evidence, made by the parties and largely agreed, were by consent put before us. The Tribunal unanimously declined to strike out the Originating Application; and it is from that decision that the present appeal has been brought before us. In his answer to CSFB's Notice of Appeal, Mr. Karam has cross appealed against specific findings made by the Tribunal. There has not been time for the Tribunal to produce extended reasons; but the parties have asked us to hear CSFB's appeal at short notice, without extended reasons and on the basis of the summary reasons promulgated on 1 st March, because of the shortness of time (having regard to the scope and seriousness of the issues) before the date fixed for trial and because a further directions hearing was fixed for 13 th March. We agreed to hear and did hear the appeal on that basis, as a matter of urgency, on 9 th March. The legal teams of the parties are to be commended for providing us at short notice with very full and well presented documentation, and for their helpful submissions.[7]We indicated to the parties that we would inform them, if possible, of our decision by midday on 12 th March and would give our reasons in writing later. On 12 th March we informed the parties of our decision that the appeal and cross-appeal would be dismissed. We now give our reasons for those decisions. The Grounds for CSFB's Application[8]We were not taken in detail to the correspondence in which CSFB's solicitors set out the grounds on which they sought an order striking out the Originating Application; but the grounds appear from the Tribunal's reasons and from CSFB's Notice of Appeal to the EAT; they can be summarized, for present purposes, as follows :(i) at a without prejudice meeting between Mr. Prismall, Mr. Karam's solicitor, and CSFB's solicitors on 24 th November 2000 Mr. Prismall threatened to make sensational and irrelevant allegations about CSFB, including allegations of drug abuse on the part of a senior CSFB employee, unless CSFB made an increased settlement offer.(ii) the proposed Re-Amended Originating Application contained sensational and irrelevant allegations including allegations of criminal conduct on the part of non–parties which ought not to have been included.(iii) Mr. Karam's solicitor declined to give undertakings not to reveal the contents of the proposed re-amended pleading and declined to provide a draft of the pleading to CSFB's solicitors in advance of service.(iv) Mr. Karam disclosed the proposed re-amended pleading to the press.(v) Irrelevant allegations had been vexatiously made but withdrawn just before the 12 th January hearing.(vi) Mr. Karam anonymously sent packets of documents relevant to his claim to a number of senior employees of CSFB in envelopes on the outside of which was an inked picture or imprint of a black hand.(vii) Mr. Karam gave information to the media as to without prejudice negotiations between the parties.(viii) Mr. Karam disclosed to the media documents or the contents of documents which had been obtained by his solicitors from CSFB through the discovery process in the course of the litigation.(ix) Mr. Karam sent photographs of the 2 nd and 3 rd Appellants anonymously to a number of departments within CSFB just before the 24 th November 2000 without prejudice meeting.[9]In the course of his evidence at the hearing, Mr. Karam strenuously denied that he had acted at all as set out in paragraph 8(iv), (vi) and (viii) above. The Tribunal expressly found that he had so acted; Mr. Karam's evidence in these respects was found to have been untruthful. Not surprisingly CSFB relied heavily before the Tribunal, and before us, on the fact that Mr. Karam had lied to the Tribunal on these important issues. Mr. Hendy QC on behalf of Mr. Karam made the point that the telling of lies was not originally part of the grounds on which CSFB sought the strike-out order; but as Mr. Hochhauser QC on behalf of CSFB pointed out, CSFB could not have known in advance that Mr. Karam was going to lie to the Tribunal; and we did not take Mr. Hendy QC to be arguing that the telling of lies to the Tribunal by Mr. Karam was not something on which CSFB were entitled to rely. If he was putting forward such an argument, we reject it. The Tribunal's Decision[10]We must now set out, in summary form, in relation to each of the grounds which we have identified and using the same numbering as in paragraph 8 of this judgment, the Tribunal's conclusions :(i) The Tribunal concluded that Mr. Prismall, at the without prejudice meeting on 24 th November 2000, threatened to make sensational and irrelevant allegations in the case unless CSFB made an increased offer of settlement; they found that the conduct of Mr. Prismall was outside the legitimate bounds of negotiation but that Mr Prismall attended the meeting without instructions from or the consent of Mr. Karam and was not acting within his authority as Mr. Karam's solicitor. They concluded that Mr. Prismall's conduct was "not misconduct for which the Applicant should be held responsible" (paras. 3 to 5 of the summary reasons).(ii) The Tribunal concluded that the proposed re-amended pleading did contain irrelevant allegations which ought not to have been included but that it had been drafted by counsel and that Mr. Prismall may well have reasonably believed that it was a proper pleading. They further concluded that the mere service of the proposed pleading was not scandalous (para.7).(iii) The Tribunal concluded that Mr. Karam's solicitor was under no duty to give an undertaking not to reveal the contents of the proposed pleading and rejected the complaint on that ground (para. 8).(iv) The Tribunal found as a fact that Mr. Karam did disclose the proposed re-amended pleading to the press, intending thereby to publicize the complaint set out in it, and that this was improper conduct but that Mr. Karam may have believed that he could so disclose it or discuss it with the press he having been advised in ambivalent terms by his solicitor and not having been specifically advised not to do so although he had been cautioned against doing so (paras. 9/10).(v) It was found that withdrawal of some of the allegations shortly before the 12 th January hearing occurred on the advice of newly retained counsel and was not vexatious conduct (para. 11).(vi) The Tribunal found that Mr. Karam had sent the "black hand" packages to a number of highly placed officers or employees of CSFB and that Mr. Karam had lied in denying that he had done so but that there was no evidence that the recipients were upset, inconvenienced or prejudiced or that this conduct had had any effect in the litigation. They concluded that these acts were not vexatious or scandalous but were childish and bizarre (paras. 12 to 14).(vii) The Tribunal found that Mr. Karam had not made improper reference to without prejudice negotiations in his dealings with the media (para. 15).(viii) The Tribunal found that Mr. Kram had disclosed to the media confidential e-mails which he had obtained through the discovery process (para. 16).(ix) The Tribunal made no finding on this allegation.[11]Having set out their individual conclusions on the grounds put before them by CSFB, the Tribunal then directed themselves in the light of their findings that they had to consider whether to exercise their discretion in favour of striking out the whole of Mr. Karam's Originating Application, "taking into account the extent to which his proven misconduct had put in jeopardy the fair hearing of the action and the extent to which such an order would be proportionate to the circumstances before us". They found that the Applicant had a firm intention to go through with the hearing, that his conduct was not in order to improve the prospects of settlement, and that his misconduct was not of great significance in the overall contents of the case. They concluded that there was no prospect of the Tribunal being influenced by media comment or deflected from their duty to make a decision on the evidence, there was not a risk of prejudice to a fair hearing of the case by reason of Mr. Karam's conduct and that it would be disproportionate and not a proper exercise of discretion to strike out the Originating Application (paras. 17 to 21). The Appeal[12]Mr. Hochhauser QC, on behalf of CSFB, attacked the Tribunal's decision principally in two broad areas. Firstly he submitted that the Tribunal had erred in law in their approach to the lies which Mr. Karam had told to the Tribunal and that they ought to have concluded that by reason of his telling such lies to the Tribunal, it was manifest that Mr. Karam was prepared to achieve his purpose in this litigation by means of lies and that a fair trial could not be achieved or was at serious risk. Secondly he submitted that the Tribunal erred in concluding that Mr. Karam should not be held responsible for Mr. Prismall's misconduct at the without prejudice meeting on 24 th November 2000 because(i) Mr. Prismall was instructed to act and was acting generally as Mr. Karam's solicitor and Mr. Karam was saddled with responsibility for Mr; Prismall's conduct at the meeting whether or not he had authorised Mr. Prismall to go to the meeting or to engage in without prejudice negotiations and(ii) the evidence demonstrated that Mr. Karam had, after the meeting, approved of and adopted Mr. Prismall's conduct.[13]Three further criticisms of the Tribunal's decision were advanced, namely that :(i) The Tribunal erred in regarding the service of the proposed re-amended pleading, containing as it did irrelevant allegations, as not scandalous on the basis that it was essentially, at that point, a private document when Mr. Karam's solicitors regarded it at all material times as a final document for which leave was not required and therefore as, in effect, a public document.(ii) The Tribunal erred in finding that Mr. Karam's solicitors were not under a duty to provide a draft of the re-amended pleading before service or to give an undertaking not to disclose its contents when asked.(iii) The Tribunal erred in its approach to the effects of the misconduct upon CSFB and its employees.[14]Mr. Hochhauser expressly abandoned any ground of appeal based on the Tribunal's failure to make any finding upon the ground set out at para. 8(ix) above.[15]It was common ground that the Tribunal's decision involved an exercise of discretion on their part and that CSFB's appeal could only succeed if they demonstrated that, in exercising their discretion, the Tribunal had either taken into account some immaterial fact, had failed to take into account some material fact or had reached a conclusion overall which was so unreasonable that no reasonable tribunal could have reached it.[16]Early in his submissions Mr. Hochhauser made it clear that he was not seeking to undermine any of the Tribunal's findings of fact; as the argument proceeded, it became clear that he resiled to some extent from that position; he specifically stated that the finding that Mr. Karam had not consented to Mr. Prismall's conduct on 24 th November 2000 was not accepted.[17]It is important to remind ourselves that we must not, in the absence of an error of law as we have defined it, succumb to the temptations of substituting our own views of the serious misconduct on the part of Mr. Karam and Mr. Prismall in this case for the view of the Tribunal. However, as the parties agreed, if the Tribunal are shown to have erred in law, then the task of exercising the discretion to strike out or not, under Rule 13(2)(e) of the Employment Tribunal's Rules of Procedure, contained in Schedule 1 to the Employment Tribunals (Constitution etc.) Regulations 1993, falls upon us. The Cross-Appeal[18]By his Cross-Appeal, Mr. Karam challenges the findings of the Tribunal that the allegations made by Mr. Karam and repeated by his solicitor were scandalous and irrelevant; if they were not scandalous and irrelevant, it is argued, they were not outside the legitimate bounds of negotiation about litigation and there was no misconduct by either Mr. Karam or his solicitor in putting them forward, in referring to them at the without prejudice meeting on 24 th November or in disclosing them to the press (paras. 3, 5, 7 and 10 of the decision).[19]It is clearly both logical and convenient to consider the cross-appeal before considering CSFB's appeal; we regard it as important to decide which, if any, of the Tribunal's conclusions challenged by the cross-appeal survive so that we can consider CSFB's appeal with a clear picture before us of the conduct upon which CSFB are entitled to rely.[20]We do not regard it as necessary in this judgment to set out the details of the allegations in the Re-Amended Originating Application to which CSFB took objection. It is sufficient simply to state that they included in particular serious allegations of CSFB's trading in breach of SFA guidelines, the use on the CSFB's e-mail system of pornographic material and of drug abuse by a senior CSFB employee; it was not alleged that any person involved in such conduct was directly concerned in the events which constituted the discrimination of which Mr. Karam complains.[21]Mr. Hendy QC on behalf of Mr. Karam submitted that :(i) the new pleading was drafted by counsel.(ii) the allegations were included in order to show a distinction between CSFB's treatment of Mr. Karam over disciplinary matters relating to use of the e-mail system and CSFB's treatment of white employees in the case of more serious misconduct.(iii) the withdrawal of many of the new allegations, including the allegations principally objected to was also on advice. The allegations referred to in (ii) above arose after the Originating Application, and Mr. Prismall on behalf of Mr. Karam, in a letter to Herbert Smith, put that forward as the sole reason for the withdrawal.(iv) it was not suggested that the allegations were not believed by Mr. Karam to be true; if they were believed to be true, it was perverse for the Tribunal to find them to be scandalous.(v) therefore the allegations were neither scandalous nor irrelevant and the Tribunal was in error in concluding that they were.[22]Nobody has suggested that these arguments were not put before the Tribunal (who, for example, expressly found that the new pleading had been drafted by counsel). It was for the Tribunal to decide on the facts in which category to place the making of the impugned allegations; the Tribunal's decision can only be attacked on the familiar grounds which we have set out above. While Mr. Karam's belief in the truth of the allegations would not have been an irrelevant factor (and there is nothing in the summary reasons to suggest that the Tribunal regarded it as irrelevant), it would not have been necessarily a decisive factor. In Keskar v. Governors of all Saints Church of England School (1991 ICR 493) the EAT held, the issue being whether a party to proceedings before an employment tribunal had acted frivolously, vexatiously or otherwise unreasonably so as to be susceptible under what is now Rule 12(1) to an order for costs, that the Tribunal was not in error in making a costs order despite the sincere belief of the relevant party in the truth of his allegations. The subject matter of that case was different from but similar to the subject matter of this case; and Keskar supports our view that the Tribunal had to decide, for the purposes of Rule 13(1)(e), whether the conduct relied upon did or did not merit being categorized as scandalous, frivolous or vexatious objectively and taking into account all the relevant material put before then.[23]The Tribunal would, for example, have been entitled to approach sceptically Mr. Karam's assertions as to the reasons why the principal impugned allegations were put forward at all in the light of their withdrawal very shortly before the hearing of CSFB's strike-out application was due to take place, purportedly on the grounds that they related to events which occurred after the present proceedings were commenced - which fact would have been apparent when the allegations were first put forward.[24]We are wholly unpersuaded that the Tribunal, in reaching the conclusions that it did as to the category into which the making of the impugned allegations fell, took into account any irrelevant matters failed to take into account any relevant matter or acted perversely. Applying the well known text in Neale v. Hereford and Worcester County Council (1986 ICR 471) we do not take the view that we can say of the Tribunal's decision on this issue "My goodness, that was certainly wrong".[25]Accordingly we decided that the cross-appeal should be dismissed. The Lies[26]We turn to consider CSFB's appeal and, firstly CSFB's contention that the Tribunal erred in their conclusions as to Mr. Karam's lies. Mr. Hochhauser submitted with some force that Mr. Karam had told a series of major lies to the Tribunal, on the issues identified in paras. 8(iv), (vi) and (viii) and 10(iv), (vi) and (viii) of this judgment, thereby committing serious perjury.[27]While he readily accepted that the fact that an Applicant has told lies in the course of interlocutory proceedings does not lead automatically to the conclusion that he should be struck out under Rule 13(1)(e). Mr. Hochhauser submitted that, in this case the lies were so blatant and serious and so closely connected with the subject matter of the proceedings that the Tribunal had misdirected themselves when they said, in paragraph 20 of the summary reasons :
"The misconduct on the part of the Applicant, personally which we have found proved is in our judgment not of great significance in the overall context of the case. We take very seriously the fact that Mr. Karam has been untruthful in his evidence to the Tribunal, but, taking a realistic view, in the experience of all members of this Tribunal, it happens quite frequently that litigants and witnesses do not tell the truth and the general practice is to accept such conduct as a natural incident of litigations, rather than to stigmatize it on each and every occasion as vexatious"
. Mr. Hochhauser particularly focussed his attack on the words "not of great significance" in this paragraph; this, he said, was extraordinary and a misdirection in the context of the nature, extent and occasion of the lies on which CSFB rely; he made the same point about the words "a natural incident of litigation".[28]The Tribunal had also erred, it was submitted, in saying, as they did in paragraph 21, that they were unable to conclude that there had been a risk of prejudice to a fair hearing of the case by reason of Mr. Karam's conduct; a fair trial had been put at risk because Mr. Karam had shown himself to be capable of sustained and substantial deception which conduct would or could be repeated, to the prejudice of a fair trial, at any hearing of his complaints on their merits.[29]CSFB relied upon the recent decision of the Court of Appeal in Arrow Nominees v. Blackledge (2000 2 BCLC 167 ) ("Arrow") which was cited to the Tribunal; although the Tribunal purported to apply Arrow , Mr. Hochhauser submitted, they did not do so or did not do so correctly and appropriately. In Arrow , two minority shareholders presented a petition for relief under s.459 of the Companies Act 1985 alleging unfair conduct by and on behalf of the majority shareholders of a company. Before trial it emerged that one of the minority shareholders had, in the course of the discovery process,(i) removed from certain files important letters which he had then replaced with letters which he had concocted and(ii) made false entries, purporting to be contemporaneous entries, in his diaries for relevant periods. On the majority shareholders' application to strike out the petition, Evans-Lombe J. concluded that despite "conduct of the most profound dishonesty, involving what was obviously a careful and deliberate strategy on his part to perpetrate a fraud on the court" he was not satisfied that that conduct justified the Draconian course which he was being invited to take because he was not satisfied that there was a significant risk that a fair trial could not take place. However, he indicated that the application could be renewed at trial if further dishonesty emerged. The application was renewed at trial when it appeared that the tampering with correspondence and diaries had been greater in extent than had previously appeared to be the case; but the judge adhered to his former conclusion.[30]The Court of Appeal reversed the second decision. Central to the Court of Appeal's approach were the findings of Evans-Lombe J. on the second application that the originals of the letters with which the shareholder had tampered were no longer available, that none of the relevant entires in the diaries could now be trusted and some pages of the diaries had been removed (the shareholder had said that he could not distinguish between entries which were genuine and entires which were false), that there was now a substantial risk to a fair trial of the issues to which those documents were relevant and that the existence of forged documentary material was likely to infect the oral evidence. Chadwick LJ at para. 53 of his judgment (p.193f-g) held that once the judge had reached the conclusion that there was a substantial risk that the relevant issues were incapable of a fair trial, he ought to have struck out the petition; he went on to hold, at para. 54 (pp.193g-194b) :
"... In my view the judge ought to have reached the conclusion that, once the allegations in respect of which there was a substantial risk that Nigel Tobias' fraudulent conduct had made a fair trial impossible were put on one side and left out of account, there was no case for relief which remained to be tried. 54. It would be open to this court to allow the appeal against the judge's refusal to strike out the petition on that ground alone. But, for my part, I would allow that appeal on a second, and additional, ground. I adopt, as a general principle, the observations of Millett J in Logicrose Ltd v. Southend United Football Club Ltd (1988) Times, 5 March, that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules, even if such disobedience amounts to contempt for or defiance of the court, if that object is ultimately secured, by (for example) the late production of a document which has been withheld. But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled, indeed, I would hold bound, to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of the court is to do justice between the parties; not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke."
Ward LJ said, at paras.

(a) to (h)) :

"It is not at all clear to me to what extent, if at all, the judge had the overriding objective in mind as setting out the parameters for the exercise of his discretion. He correctly saw at the beginning of his judgment that the source of his power to strike out lay in r 3.4 but he did not race back through the case management rules to r 1.1. Even though this was a reserved judgment it may still be unfair to the judge to engage in too close a textual analysis of his judgment and infer from the omission of express reference to the overriding objective that he did not direct himself to it. Consequently I prefer to assume he had it in mind. Nevertheless, there is still every indication that he regarded the risk of a fair trial not being possible as the factor of crucial, even overriding, weight. It undoubtedly is a factor of very considerable weight. It may often be determinative. If the court is satisfied that the failure to disclose a document or the effect of a tampered document can no longer corrupt the course of the trial, then it would be a factor of much less and perhaps even little weight in considering a strike out. Where, in my judgment, Evans-Lombe J. erred, was to treat the question of a fair trial as the only material factor. It was not: other matters have now to be put in the scales and weighed. 73. The attempted perversion of justice is the very antithesis of parties coming before the court on an equal footing. The matter has become hugely more expensive (to an extent we did not appreciate until we were told when application was made for a freezing order that the amount of the appellants' costs overall and on a solicitor and own client basis may be in the region of £1.5m). The judge commented at the beginning of his judgment that the hearing had run for 29 days greatly exceeding the parties' estimate. The original estimate was three weeks and we were told another week to ten days would be required to conclude the matter even on the limited basis that the judge would still permit. The judge did not, however, treat cost and time as element of the overriding objective. He did not appear to allot to the case an appropriate share of the court's resources while taking into account the need to allot resources to other cases. In this day and age they are elements of case management which must not only be seen to have been placed in the scales but also given due and proper weight when assessing how justice is to be done to the parties and to other litigants. The balance must be struck so that the case is dealt with in a way which is proportionate to the amount of money involved in the case, its importance and complexity and the financial position of the parties."
Roch LJ agreed with both judgments, in both of which reliance was placed on the observations of Millett LJ (as he then was) in Logicrose v. Southend United Football Club (1988) Times 5 th March to which Chadwick LJ referred in the extract quoted above.[31]In our judgment the Tribunal did not commit any error of law in its treatment of Mr. Karam's lies. It was for the Tribunal, particularly well placed as they were to rely upon their experience of witnesses in general and of the witnesses who gave live evidence before them, to assess the nature and extent of the lies and the degree to which they were likely to impact upon the case as a whole. The Tribunal, in paragraph 20 of their decision, made it clear that they took his lies very seriously; they did not, contrary to Mr. Hochhauser's arguments, say that the lies were of no great significance.; they concluded that the lies were "not of great significance in the overall context of the case ": and that was a conclusion which they were entitled to reach. Unlike the position in Arrow , Mr. Karam's lies were designed not to affect the outcome of the trial on the merits but the outcome of the strike-out application; and they had to be seen in the context of the case as a whole. The Tribunal was, further, entitled, in reliance on its experience, to point out that litigants do not always tell the truth and that general untruthfulness is accepted as a natural incident of litigation; they did not conclude that serious untruthfulness could never be stigmatized as vexatious. They clearly considered the specific untruthfulness in this case earlier in paragraph 20. The Tribunal were not expressing legal principles in para. 20 but were setting out how they weighed the misconduct relied upon. In effect they concluded that serious lying is not acceptable but that it is not sufficient to result in striking out in every case and that in the present case it was not sufficient to result in striking out.[32]We further conclude that the Tribunal did not err in its application of the principles set out in Arrow . In paragraph 17 the Tribunal said :
"Having set out our findings of misconduct on the part of the Applicant, we must then consider whether to exercise our discretion in favour of striking out the whole of the Applicant's Originating Application, taking into account the extent to which his proven misconduct has put in jeopardy the fair hearing of the action and the extent to which such an order would be proportionate to the circumstances before us; see Arrow ..."
This approach appears to us to embody, in summary form, the ratio of and guidance given by Chadwick and Ward LJJ in Arrow ; the exposition is brief; but these were only summary reasons. The parties, having agreed that this appeal should proceed on the basis of summary reasons, cannot expect a more elaborate statement of the manner in which the Tribunal directed themselves.[33]The Tribunal, having in summary form appropriately set out the principles derived from Arrow ,did not, we conclude, then fail to apply these principles in reaching their decision, so far as Mr. Karam's lies were concerned. We do not accept the argument that the lies were such that there must have been a substantial risk that a fair trial could not be held. The lies were obviously serious, as the Tribunal expressly recognised; but they were not inevitably such as to put at risk a fair trial of the very large number of different factual issues arising from the Re-Amended Originating Application and the Notice of Appearance; this is not a case, as was Arrow , in which documents of direct relevance to the issues to be decided at trial had been irretrievably lost or altered so that their original contents could not be discovered. Furthermore Mr. Hochhauser's submission that by demonstrating himself as prepared to lie and lie again on important matters Mr. Karam had put at risk a fair trial of his claims because the mendacious conduct could or would be repeated at trial appears to us, and would, no doubt, have appeared to the Tribunal, to be unpersuasive; the issues raised by the "pleadings" are such that Mr. Karam's credibility is inevitably going to be a central focus of attention at the merits hearing; CSFB's case must be that, in many areas, Mr. Karam's claims are based on untruthfulness. Mr. Karam's credit will doubtless be explored at length during the 20 days fixed for the hearing and CSFB will not be handicapped in exploring it by the lies which he has already told. It could fairly be said that, by exposing himself as a liar in the strike-out proceedings, Mr. Karam has made the task of CSFB in terms of his credibility at the merits hearing easier rather than more difficult. Examination at that hearing of the effect of the lies which he has been found to have told will not add substantially to its length or cost.[34]These are all facts on which the Tribunal would have had in mind and which go to support their views that the misconduct was not of great significance in the overall content of the case. In relation to the lies we conclude that the Tribunal did not make any error of law in the way in which they exercised their discretion nor did they reach a conclusion which is, in our judgment, one which no reasonable Tribunal could reach or as to which we can or should say "that must be wrong". The Without Prejudice Meeting[35]It was submitted on behalf of CSFB that, in concluding, in para. 5 of its decision, that the conduct of Mr. Prismall at the without prejudice meeting on 24 th November 2000 was "outside the legitimate bounds of negotiation about litigation" but was not "misconduct for which the Applicant should be held responsible". The Tribunal erred in two respects, namely :(1) on the facts Mr. Karam had : (a) authorized Mr. Prismall previously to enter into without prejudice discussions and had not objected to such discussions. (b) adopted or ratified Mr. Prismall's involvement in and conduct at the meeting of 24 th November 2000 and thus Mr. Karam consented to Mr. Prismall's conduct at the meeting.(2) in any event Mr. Karam was bound by the conduct of his solicitor, Mr. Prismall.[36]It is agreed between the parties that, on the evidence before the Tribunal, Mr. Karam had authorized his solicitors to carry out without prejudice negotiations earlier in the course of the proceedings or had not objected to their being involved in such negotiations. However as to the events of 23 rd November 2000, when Mr. Prismall informed Mr. Farr, the principal in Herbert Smith responsible for this case, that it was imperative that an urgent meeting should be convened, that he recommended a without prejudice meeting the next day and that it would be very helpful if the Managing Director of CSFB were to be present on 24th November at the without prejudice meeting and of 24 th November when, at the meeting, Mr. Prismall was found to have conducted himself as summarized in para. 3 of the Tribunal's decision, the position was very different. Mr. Karam denied that he had authorized any such meeting in negotiations; the evidence was, in summary, that by this stage he did not want to settle at all, that he was determined to have a trial and that he knew nothing in advance about the meeting. The Tribunal found as a fact, at paragraph 4, that Mr. Prismall's attendance at the meeting was without instructions from and without the consent of Mr. Karam and that he was acting outside his authority; Mr. Karam, the Tribunal found, did not wish to accept any offer which CSFB might conceivably make in order to settle the claim.[37]Mr. Hochhauser, as we have said earlier, eschewed any suggestion that he was seeking to go behind these facts. It was plainly open to the Tribunal on the evidence not to infer that Mr. Karam had authorized Mr. Prismall's involvement in the without prejudice meeting on 24 th November from the fact that he had authorized such negotiations at an earlier stage.[38]Should the Tribunal have concluded that Mr. Karam had, in effect, ratified Mr. Prismall's unauthorized misconduct by his, Mr. Karam's subsequent misconduct? The conduct relied upon was Mr. Karam's failure to disassociate himself from what Mr. Prismall had done, his subsequent disclosure to the press of the contents of the re-amended pleading including the sensational and irrelevant allegations, as the Tribunal described them in para. 3 of their decision and his disclosure to the press of documents obtained through the discovery process. These acts, as separate items of alleged misconduct, are dealt with by the Tribunal in paras. 9 and 16 of their decision but, it was argued that they indicated Mr. Karam's approval of his solicitor's conduct on 23 rd and 24 th November and his intent to use those allegations, which were in the re-amended pleading of which he had a copy, for his own purposes and outside the proper conduct of his claim.[39]The Tribunal, in what we must again remind ourselves were only summary reasons, did not analyse expressly the extent to which the evidence supported the "ratification" argument. We were therefore taken by both parties to relevant passages in the notes of evidence, almost entirely agreed as accurate. Mr. Karam denied in evidence any knowledge of the meeting of 24 th November; he did not give any evidence to contrary effect; and, on his evidence, his subsequent actions did not arise from such knowledge. Mr. Prismall was recorded in Herbert Smith's contemporaneous note of the 24 th November meeting as saying that he was present at the meeting without instructions; he repeated this in his evidence to the Tribunal; he said that on 27 th November he told Mr. Karam that there had been a meeting and that CSFB wanted to know if Mr. Karam "had a figure" (i.e. a settlement figure) but Mr. Karam was not interested in settling. In answer to the Chairman Mr. Prismall said that he had not informed Mr. Karam of the meeting in advance because, while he believed it to be in Mr. Karam's interests to settle, he thought that Mr. Karam would tell him not to go to such a meeting. He went on to say that he had told Mr. Karam what had happened at the meeting; whether that included letting Mr. Karam know how he had used the objectionable allegations in the Re-Amended Originating Application which was to be served by the following Monday is not spelt out; as to that, Mr. Prismall's evidence appears to us to have been equivocal.[40]It was clearly open to the Tribunal to interpret Mr. Prismall's evidence as amounting to evidence that Mr. Karam was told in full of the content of the 24 th November meeting; it was also open to them to interpret Mr. Prismall's equivocal evidence differently; and it was open to the Tribunal, insofar as there was conflict between Mr. Karam and Mr. Prismall, to prefer the evidence of Mr. Karam (despite his lies). Because the Tribunal has given only summary reasons, we cannot say what analysis of the evidence led them to the conclusion that Mr. Prismall was acting without instructions and without consent and that Mr. Karam was not responsible for Mr. Prismall's misconduct - which conclusions excluded post-meeting ratification, but it was open to the Tribunal so to decide and it is not for an appellate court to intervene unless we regard this factual decision as perverse. We do not so regard it.[41]We draw attention, in this context, to the Tribunal's express findings at para. 19 that Mr. Karam has become convinced of the justice of his cause and accordingly has decided that he wishes to publicize it as widely as possible. This finding explains why Mr. Karam acted as he did after the meeting in terms which do not render in anyway compelling CSFB's argument that he so acted because of or having knowledge of what had been said at the 24 th November meeting.[42]Mr. Hochhauser's next submission was that set out at para.35(2) above. Mr. Prismall was, he submitted conducting the litigation on behalf of Mr. Karam, it is a familiar principle that in interlocutory proceedings, for example where a time limit has not been met or there has been want of prosecution, a litigant is responsible for inadequacies on the part of his solicitor. He relied in support of his submissions upon Bennett v. London Borough of Southwark (EAT/1273/97 and EAT/828/99) decided by the Employment Appeal Tribunal on 11 th January 2001 ("Bennett").[43]In Bennett the employee in a claim against her employers before an Employment Tribunal (chaired coincidentally by the same Chairman as in the present case) was ill when, after 10 days of hearing and a 6 month break, the hearing was resumed. She was represented by a black trade union official, Mr. Harry. On the day of the resumption Mr. Harry made an application for an adjournment until the employee recovered her health; the application failed. He renewed the application after consulting the employee, over the lunchtime break; but the Tribunal adjourned only to the following morning when Mr. Harry made a third application for an adjournment and said :
"If I were a white barrister I would not be treated in this way" and "
If I were an Oxford educated white barrister with a plummy voice I would not be put in this position" The Tribunal were genuinely outraged by these remarks; they decided that they could not continue and left open to a different Tribunal any possible application under Rule 13(2)(e) for a strike out order. A subsequent Tribunal subsequently struck out the employee's claims on the grounds that Mr. Harry's conduct had been scandalous. On appeal the Employment Appeal Tribunal, chaired by HHJ Clark, concluded that Mr. Harry's conduct was both scandalous and vexatious; it then asked itself whether the employee should herself be fixed with Mr. Harry's conduct in her absence and decided that she should be so fixed for two reasons : firstly she had expressly instructed Mr. Harry to conduct the case on her behalf and to persist in his vexatious applications for an adjournment; secondly she had sworn an affidavit in which she wholeheartedly endorsed and ratified the remarks made by Mr. Harry to the Tribunal; see para. 37 of the decision.[44]We understand Mr. Hochhauser's substantial reliance on Bennett ; but in our judgment there are important distinctions between Bennett and the present case. Firstly, in Bennett the relevant conduct occurred during the course of the hearing itself; Mr. Harry was instructed to be present and to represent the employee who clearly authorized the specific application, held to be vexatious, in the course of which Mr. Harry addressed the Tribunal as he did. In this case, in contrast, the offending behaviour occurred not in the course of the proceedings proper but in the course of a without prejudice meeting which took place, as the Tribunal found, without the instructions or consent of Mr. Karam and which Mr. Prismall attended without informing Mr. Karam because he knew that if he informed him he would be instructed not to attend at all. Furthermore in Bennett the employee was found to have endorsed and ratified the offending behaviour; but there is no such finding in the present case.[45]In our judgment in an application for a strike-out order under Rule 13(2)(e) a Tribunal is not bound to regard the misconduct of the solicitor or representative of the party against whom the order is sought as automatically and in every case the misconduct of that party. The words "by or on behalf of" in Rule 13(2)(e) indicate that a Tribunal may regard the conduct of a party's representative as, in effect, the conduct of the party; but whether the Tribunal does so in an individual case must depend upon the individual circumstances. If that misconduct occurs not only without instruction or consent but also on an occasion when the solicitor or representative has no general or specific authority to be present at all and knows that he does not have any such authority, it is open to a Tribunal to conclude that the misconduct is misconduct for which the party should not be held responsible; and it is, a fortiori, so open to a Tribunal when the misconduct takes place in the course of without prejudice negotiations. If we are wrong in principle in this view, it would in our judgment nevertheless be open to a Tribunal which is being asked to exercise its discretion to strike out to take into account, in so doing, the circumstances in which the misconduct occurred, as we and the Tribunal in this case have described them and to decide not to hold the conduct of the solicitor against his client, as the Tribunal decided in paragraph 5. Either approach leads broadly to the same conclusion on the facts of this case.[46]For these reasons we are not persuaded that the Tribunal erred in declining to treat Mr. Prismall's conduct as conduct for which Mr. Karam should be held responsible when they made their decision whether or not to strike out Mr. Karam's claim. The Service of the proposed Re-Amended Originating Application[47]CSFB contended that the Tribunal had erred in concluding, at para. 7 of the decision, that the service of the proposed Re-Amended Originating Application was not scandalous because it was at the relevant time an essentially private document which would be subject to the jurisdiction of the Tribunal to strike out irrelevant allegations. Our attention was drawn to the fact that Mr. Prismall, as shown by his letters to Herbert Smith of 29 th November 2000 and 20 th January 2001, believed that the Tribunal had earlier, by one of the directions made on 18 th September 2000, given leave for service of the re-amended pleading and that the contents of that pleading could be disclosed to the press. However, as was accepted, it was CSFB who, at the hearing on 12 th January 2001 successfully submitted that the earlier direction did not give or could not validly have given leave to amend, as opposed to giving a date by which any proposed amendments had to be put forward, in the absence of any clear idea as to what the proposed amendments would be; and it followed from that submission that, when the re-amendments were faxed to Herbert Smith very late on the night of 27 th November or early in the morning of 28 th November, the document faxed contained what had to be treated as a draft in a private document rather than a formal pleading.[48]We have referred above to the case of Keskar v. Governors of All Saints Church of England School (1991 ICR 493) from which is to be taken the perhaps unsurprising proposition that the test of whether conduct is unreasonable, frivolous or vexatious is objective. The same principle applies, no doubt, to alleged scandalous behaviour. Strictly, therefore, whether Mr. Prismall or Mr. Karam thought that the document being served was a public document was irrelevant to an assessment as to whether the service of the document was scandalous, although of course if scandalous behaviour was found, the motive and knowledge of those involved would have been relevant to the exercise of discretion. Recognizing this difficulty, Mr. Hochhauser submitted that the document served - and given press publicity - should have been marked so to have shown that it was a draft. We do not know whether this argument was put to the Tribunal but cannot believe that whether the provision of a draft pleading either to the opposite party or to the press is or is not scandalous can turn on whether or not the document is labelled as a draft.[49]In our judgment the Tribunal were entitled to find in the circumstances that the document was at the material time a private document.[50]We should add, because Mr. Hochhauser invited us to consider the service of the document including the irrelevant and scandalous allegations together with the disclosure of that document to the press, that there was evidence on which the Tribunal were entitled to find that Mr. Karam may have believed that he could publicise the document as he did (which finding is not attacked in the Notice of Appeal). The Refusals[51]The Tribunal, at paras. 6 and 8 of their decision, held that in refusing to provide a draft of the proposed re-amendment pleading in advance of service and in refusing to give undertakings not to reveal the contents of that pleading Mr. Prismall had not been guilty of misconduct because he was under no obligation to do so in either case.[52]These conclusions were criticised on the grounds set out in detail in para. 6(5) of the Notice of Appeal. We do not believe that these criticisms are made out. We do not read the summary reasons as indicating that the Tribunal, in paras. 6 and 8 of their decision, had failed to take into account their own findings of fact as to the overall course of conduct on the part of Mr. Karam and Mr. Prismall. The Tribunal heard the application over 3 full days and reached their conclusions and sent out its summary reasons on the day after the 3 rd day of the hearing; the whole of the course of conduct, which could hardly be said not to have been unusual and striking, would have been inevitably in their minds; and we see nothing in the summary reasons to suggest that it was not. The Effects of the Misconduct[53]Finally, CSFB submitted that the Tribunal in finding in paragraph 14 of the decision that there was no evidence that the recipient of the anonymous documents were upset, inconvenienced or prejudiced failed to consider the effects of the other acts of misconduct which had been established. It was accepted that this finding was an accurate reflection of the evidence; but Mr. Hochhauser pointed out that the evidence of Judith Read, the principal in house lawyer at CSFB dealing with Mr. Karam's claim, that the publicity had caused substantial distress to CSFB and certain of its employees who were the subject of the new allegations was not challenged; yet that evidence was not mentioned in the Tribunal's decision, indicating, he suggested, that the Tribunal had focussed solely on the effects of the sending of the anonymous packages and had ignored the effects of other misconduct.[54]In our judgment the finding in para. 14 of the decision was confined to the effects of the sending of the anonymous packages and could not be taken as an indication that the effects of other misconduct or of the misconduct as a whole had not been considered. The primary issue for the Tribunal was whether there was a substantial risk that a fair trial of the hearing could not be achieved as a result of that misconduct; there was nothing in Judith Read's evidence to suggest that CSFB had been deterred from resisting Mr. Karam's claims, that any witness had been deterred from giving evidence at a merits hearing or that otherwise a fair trial could not be achieved. The Tribunal expressly considered at para. 21 of their decision whether there was a risk of prejudice to a fair trial and concluded that there was not. In the Tribunal's summary reasons nothing suggests that Miss Read's evidence had been ignored by the Tribunal in reaching that conclusion; the reference to the absence of evidence as to any specific effects of the particularly nasty act of sending the anonymous packages does not establish that the Tribunal had omitted to have in mind the other effects set out by Judith Read. Discretion[55]At the end of our consideration of this appeal we have undertaken two tasks. Firstly, we have stood back from the individual allegations of misconduct and individual criticism of the Tribunal's decision and asked ourselves whether, having regard to the misconduct found by the Tribunal as a whole, the Tribunal's decision in the exercise of its discretion not to strike out Mr. Karam's claims is one about which we can or should say "that must be wrong". CSFB's case is that the ultimate decision was perverse on the basis of the lies alone; but the submissions made to us on CSFB's behalf plainly included the general submission that the ultimate decision was wrong on the basis of the wider misconduct. In the light of the Tribunal's findings as a whole and in particular their findings at paragraphs 20 and 21 that the misconduct was not of great significance in the overall conduct of the case, that Mr. Karam had not been endeavouring to put improper pressure on CSFB in order to achieve a settlement and that there was not a risk of prejudice to a fair trial, which were findings which the Tribunal was entitled to make, we do not regard the Tribunal's overall decision as coming within the category of perversity.[56]The second task which we have undertaken is to assume that we are ourselves mistaken in our conclusion upon the various grounds of appeal (save for the second limb of the appeal as to the lies told by Mr. Karam, which went to the ultimate exercise of discretion rather than the material upon which the discretion fell to be exercised) which we have considered in this judgment and that the Tribunal erred as CSFB submit. On that assumption it would be for us to exercise the Tribunal's discretion afresh, on the basis of the findings which CSFB submit that the Tribunal ought to have reached. Mr. Hochhauser invited us, if we were to carry out that exercise, to consider the guidance given by E.T. Marler v. Robertson (1974 ICR 72), a decision of the N.I.R.C., Ashmore v. British Coal Corporation (1990 ICR 485), a decision of the EAT, Keskar (see above), Medallion Holidays Ltd. v. Bird (1985 IRLR 406), a decision of the EAT and Jones v. Wallop (unreported 4 th August 1988), a decision of an Industrial Tribunal. We have done so; and we have reminded ourselves of the relevant passages in Arrow , including paragraph 74 in the judgment of Ward LJ at p.202(d).[57]Our unanimous conclusion is that, even accepting CSFB's criticism of the Tribunal's decision as correct, and therefore including in particular within the misconduct available to be weighed as part of the discretionary exercise the misconduct of Mr. Prismall on 24 th November we would if called upon to exercise our discretion not have taken the Draconian step of striking out Mr. Karam's claims. While we do not suggest for a moment that the misconduct itself was not, taken as a whole, serious our view, on the basis of all the evidence, would be that, applying the Tribunal's findings that Mr. Karam did not intend to put unfair pressure on CSFB to produce a settlement and that he did not intend Mr. Prismall to act as he did at the 24 th November meeting and bearing in mind that Mr. Karam's claim is a substantial claim involving a large number of serious complaints of discrimination which prima facie ought to be tried, unless the effect of the misconduct were such that there was a substantial risk of prejudice to a fair hearing or that the overriding objective of the CPR (which should be applied by analogy to the present proceedings) were defeated, neither of which is made out, striking out would not be appropriate. Nor do we regard this as a case in which there has been such a flagrant and continuing affront to the Tribunal that striking out would be an appropriate remedy. We would regard striking out, even in the hypothetical circumstances which we are considering at this stage of our judgment, as disproportionate and not a proper exercise of our discretion. Conclusion as to the Appeal[58]For these reasons we decided that the appeal should be dismissed.