PFMS LTD T/A A & A CLEANING SPECIALISTS v MR A FLEET [2004] UKEAT 0850_03_1602

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2004] UKEAT 0850_03_1602

Case No Appeal No. UKEAT/0850/03

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

PFMS LTD T/A A & A CLEANING SPECIALISTSAPPELLANT

MR A FLEETRESPONDENT

Before

His Honour Judge J R Reid

Date 16 February 2004

[1]APPEARANCES For the Appellants MR R HIGNETT (of Counsel) Instructed by: Pictons Solicitors 60 London Road St Albans Herts AL1 1NG For the Respondent No appearance or representation by or on behalf of the Respondent SUMMARY Practice and Procedure Applications to ET apparently compromised - no order made by ET - issue arises as to whether question of costs had been compromised. ET conducts hearing (uncomplicated) and indicates it will determine two preliminary points - ET in error then purports to determine the application - matter remitted to ET for further hearing. HIS HONOUR JUDGE J R REID QC This is an appeal against a Decision of an Employment Tribunal held at Watford. The Decision was promulgated on 21 August 2003 following a hearing on 21 March and discussions between the Chairman and members on 14 April and 5 August. The appeal is concerned only with the hearing as to costs.

[2]The background to the matter is that on 24 June 2002 Mr Fleet made an application to the Employment Tribunal in which he claimed that he had been unfairly dismissed by PFMS Ltd trading as A A Cleaning Specialists. On 19 July the Respondents (PFMS) put in Grounds of Resistance which concluded, after asserting that the dismissal was fair:

"7 Further, the Respondent paid to the Applicant the sum of £35,000 on 29 th April 2002 in full and final settlement of all his claims against the Respondent"

Regrettably, when making that payment they had not been through the appropriate statutory hoops, so as to prevent Mr Fleet continuing his proceedings for unfair dismissal.

[3]The hearing was scheduled for 21 October, but on 18 October there was communication between the solicitors representing Mr Fleet, Keer-Keer & Co, and Pictons, solicitors representing PFMS. The solicitors for Mr Fleet faxed Pictons:

"We have agreed the application can be withdrawn and the case dismissed and we enclose herewith Consent Order for you to sign and fax back to us. We have informed the Tribunal."

In fact the form of order there referred to was not signed by Pictons until the morning of the 21 st and it was faxed back signed, according to the fax header, at 10.06 that morning. With it went a letter:

"Further to our telephone conversations today and on Friday, we attach the signed consent order and should be most grateful if you would present this to the Tribunal by fax. Our understanding is that the question of costs is to be left open for the time being."

[4]The Order was then faxed on to the Tribunal, under cover a letter in fact bearing the date of the 18 th , but nothing turns on that. That letter is in these terms:

"Further to our telephone conversation of this afternoon …" [i.e. that would have been Friday 18 th ] "informing you that this case had been settled, we enclose herewith Consent Order in settlement signed by solicitor for Applicant and Respondent. Could the Order please be made without attendance of parties or solicitors."

In fact that Order was never signed and sealed and formally made by the Tribunal, but at the same time Mr Fleet's solicitors faxed Pictons. "Thank you for your letter. We have sent the Consent Order to the Court asking them to excuse our attendance and make an Order as requested. We understood that there was to be no order for costs and that the only orders that were needed were those set out in the Consent Order. This was the basis of the dismissal of our clients claim for compensation. Your faithfully"

[5]On 15 November, Pictons applied to the Tribunal for costs. That was on the basis that the behaviour of the Applicant had been vexatious, to put it in short form. On 27 November, on the directions of the Chairman, the Regional Secretary wrote in these terms:

"Thank you for your letter dated 15 November 2002, this was referred to a Chairman of the Tribunals (Mr Metcalf) who has directed me to write to you to say that he is not minded, in the absence of further explanation, to grant your request. You give no indication in your letter of 15 November 2002 that you expressly reserved your right to claim costs from the Applicant upon withdrawal. Did you do so or not? Please reply by 4 December 2002 Our exchange of correspondence has been copied as indicated below"

And that indicates that it was sent to Keer-Keer & Co.

[6]On the following day, the 28 th , Pictons wrote to the Employment Tribunal saying that "the Respondent did not expressly reserve its right to claim costs against the Applicant" and then setting out an argument based on Rule 14 of the Employment Tribunal Rules to the effect that the Tribunal was obliged to consider the making of an Order where a party has:

"acted vexatiously, disruptively or otherwise unreasonably in bringing or conducting proceedings."

The result of that was that the Chairman, Mr Metcalf, directed that there should be an oral hearing of the application for costs with a time allocation of two hours - see 9 December - and the hearing was fixed for Monday 13 January by a letter of 13 December.

[7]When the matter came before the Tribunal, the Chairman Mr Mahoney sitting alone, on 13 January, the matter was adjourned until Friday 21 March 2003 at 10 am before a full Tribunal, allowing half a day. The Reasons are set out as follows:

"1. It became apparent that there is a dispute between the parties as to what, if any, settlement agreement was reached. In those circumstances the Tribunal felt it appropriate for the matter to be adjourned so that the Tribunal can consider the various issues in the matter and hear any necessary evidence. Order for Directions 2. From the documentation produced to it the Tribunal considers that there are the following issues to be determined:- (1) Does the Tribunal have jurisdiction to determine the issue of the disputed terms of the settlement agreement allegedly reached between the parties' solicitors on the telephone on 18 October 2002? (2) If so, what was the agreement reached between the parties' respective representatives? (3) As a result of such agreement, is the Respondent entitled to apply to the Tribunal for an award of costs under Rule 14 of the Employment Tribunal's Rules of Procedure 2001? And, (4) If the Respondent is entitled to apply for an award of costs, should such an award be made, and if so, for what amount?" 3. The Tribunal directs that there be simultaneous exchange of written witness statements between the parties on or before 2 February 2003. 4. The parties are to provide written legal submissions which are to be presented at the Tribunal hearing. Reasons The above orders are made for the proper and just disposal of this case."

[8]The matter then came before the Tribunal on 13 March and at that hearing, it appears that the issue of jurisdiction was argued, as was the second point, " 2) If so, what was the agreement reached between the parties' respective representatives?" and, indeed, three witnesses were heard on that occasion on the issue of the terms of the agreement. Those witnesses were Mr Keer-Keer of Mr Fleet's Solicitors, Mrs Climance and Mrs Thirlway of Pictons, PFMS's solicitors. At the conclusion of that afternoon it was apparent that the whole hearing could not be concluded, and the Chairman indicated that the matter would be re-listed and that the Tribunal would in the meantime make a decision as to whether there was an agreement as to costs, and whether the Tribunal had jurisdiction to deal with the application.

[9]On 14 April the Tribunal held a discussion, and at that stage, the Tribunal discovered that the draft Consent Order signed by the two parties, had never been finalised by the Tribunal. It had not, to use the old-fashioned expression, been perfected - it had not been signed, sealed or entered on the register. As a result the Tribunal requested written submissions on the issue of jurisdiction. The solicitors on each side made written submissions, by letters dated respectively 24 April and 7 May, and on 24 June the Tribunal sent a letter to each side confirming that there would be a further discussion day, that is page 40 of our bundle, which is in these terms; "The Chairman Mr Plenderleath has directed me to inform the parties that this case will be listed during August for a discussion regarding the Application for Costs. The parties will be informed of the date in due course."

[10]Pictons wrote to the Regional Secretary on 19 June in these terms:

"Thank you for your letter of 12 June. Would you be kind enough to let us know whether the parties will be required to attend the discussion day in August? We presume that the purpose of the discussion day is to consider the further written submissions which the Tribunal requested after the last hearing. Would you be kind enough to confirm that after the discussion day, the Tribunal will be making a decision on the following points:- 1. Whether the Tribunal has jurisdiction to deal with the costs application made by our client. 2. Whether any agreement was reached between the parties' solicitors about costs, at the time when the consent order was agreed. This costs application has now been outstanding since November 2002 and our client would very much appreciate a swift resolution of the matter. We have been having very great difficulty over the last month or so in moving the matter on or even ascertaining the current position at the Tribunal. We look forward to hearing from you very soon"

[11]A response was sent on 24 June:

"Thank you for your letter dated 19 June 2003. This was referred to a Chairman of the Tribunals (Mr Plenderleath) who directs as follows: 1) Parties are not required to attend the discussion day. 2) The Tribunal will make a decision on the points set out in the numbered paragraphs of your letter. Our exchange of correspondence has been copied as indicated below."

And that indicates that a copy had been sent to Keer-Keer & Co.

[12]There then followed a formal notification on 27 June that the discussion date would be 5 August, and following that, on 21 August, the Tribunal sent out its Decision. The Decision originally did not indicate the Reasons attached to it were Extended Reasons, but by a correction dated 12 September, the word "Summary" was deleted and the word "Extended" was substituted. That Decision was in these terms:

"The unanimous decision of the Tribunal is that: 1. The Respondent's application for costs fails. 1. This is an application by the Respondents who are seeking an Order for costs against the Applicant following the withdrawal by the Applicant of his claim for unfair dismissal. 2. The Tribunal heard evidence from Margaret Thirlway of Pictons the Respondent's solicitors; Helen Climance a former employee of Pictons and from Mr P.W. Keer-Keer, the Applicant's solicitor. 3. We have considered the documents to which we have been referred in the bundle placed before us and we have considered the written and oral argument of both parties. 4. We act on the assumption that we have jurisdiction to hear an application for costs in these circumstances and on the assumption that there has been no agreement as to costs and that the issue is open for our decision. 5. Paragraph 14 of the first schedule of the Employment Tribunals (Constitution and Rules of Procedures Regulations 2001 provides: "(1) Where, in the opinion of the tribunal, a party has in bringing the proceedings, or a party or a party's representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived, the tribunal shall consider making, and if it so decides, may make - (a) an order containing an award against that party in respect of the costs incurred by another party". 6. There is no evidence before the Tribunal that the Applicant or his representative in conducting the proceedings acted vexatiously, abusively, disruptively or otherwise unreasonably. There is no evidence before us that the bringing or conduction of proceedings is misconceived. There is no evidence that the Applicant in withdrawing the proceedings acted in any of the ways set out above. By withdrawing albeit at a very late date the Applicant prevented further costs being incurred. 7. The Respondent's application for costs therefore fails."

On receipt of that the Respondent's solicitors, that is Mr Fleet's solicitors, sent an application to the Tribunal for their costs incurred in dealing with the costs proceedings.

[13]On 2 October PFMS's solicitors lodged a Notice of Appeal. On 30 October the Employment Appeal Tribunal sent its Directions Orders to the parties, and on 4 November the Respondent's solicitors sent a brief answer to the Notice of Appeal and on 17 November the Employment Tribunal wrote to the parties' solicitors stating that the Respondent's application for costs was adjourned until after the appeal was disposed of.

[14]On behalf of the Appellants, PFMS, the Counsel, Mr Hignett, says that the Tribunal erred in law in making its decision when the case was part-heard, without hearing submissions from the parties as to whether a Costs Order should be made, contrary to the case of Market Forces UK Ltd -v- Hunt , to which reference was made in the course of argument, and which does, I think, no more than state the obvious, that you cannot decide a case half way through it (so far as this is relevant to these proceedings)

[15]The problem that the Employment Appeal Tribunal faces is that it is clear that the parties were given the express statement(a) that there would be a further hearing; and

(b) that the matters that would be decided at what turned out to be the August meeting, would be limited to the two points set out in Picton's letter. In essence, the Tribunal told the parties that all it was going to do was to decide two essentially preliminary points necessary to be decided, en route to its final Decision. Mr Hignett says that there were a variety of points which could be made and that the Tribunal was wholly wrong in asserting that there was no evidence before it in relation to unreasonableness and so forth. He says that there was plenty that could be said, but the trouble was that the Tribunal never reached the point at which those matters were to be addressed.

[16]In our judgment, that criticism of the manner in which the Tribunal acted is well founded. The letter which was sent to the parties on 24 June made it perfectly clear that the only points that were to be dealt with were whether there was jurisdiction to deal with a costs application, which one would have thought clearly there was, as it had by this time appeared that the Consent Order had not been finalised, and secondly, whether any agreement was reached between the parties' solicitors about costs at the time the Consent Order was agreed. This was the matter about which the Tribunal heard oral evidence from three witnesses, and had, of course, had the advantage of the documentation created at the time, to which I have already referred.

[17]In our judgment, in those circumstances, the Tribunal could not go on and act as it did, whereby it simply made an assumption, albeit a correct assumption, that it had jurisdiction, and then make an assumption as to the very issue of fact that it had said it was going to decide, namely as to whether or not there was an agreement as to costs.

[18]Regrettably, therefore, the matter must go back for, as is requested by the Appellant, for further hearing before the same Tribunal. The Tribunal could, of course, have decided the two points that it said it was going to decide, and then had gone on to dispose of the matter without a further oral hearing by determining, as a matter of proportionality, that any further submissions should be submissions on paper. That would have been unexceptionable. It did not, however do so, it simply failed to decide the matters it said it would decide and then went on to decide matters it said it was not at that stage going to decide.

[19]When the matter goes back, the Tribunal will have to decide whether or not to endorse and approve the order for withdrawal, and in deciding that, it will have to decide whether there was any concluded agreement between the respective solicitors or not. It could decide that there was an agreement which precluded any application for costs. It could decide there was an agreement that the matter of any application for costs would be left over, or it could decide that there was no agreement at all because the parties were never ad idem .

[20]If it concluded that there was no concluded agreement, then it is difficult to see how it can approve the order of withdrawal without further ado. It may be, of course, that Mr Fleet will decide that he will press ahead with his withdrawal, even without a concluded agreement, and the Tribunal may, in those circumstances, he being aware that there was concluded agreement between the parties, be content to allow him to withdraw, but that is a matter the Tribunal will have to consider. Otherwise the parties will then have to consider what further steps have to be taken in relation to the still live application for compensation for unfair dismissal.

[21]It there was a concluded agreement, then no doubt the Employment Tribunal will endorse the Order, and it will be perfected, but then it will have to decide, if it concludes that agreement was that there should be no order for costs (either because there was an express agreement that there should be no order for costs or because on a proper construction of the documents and the oral evidence they have heard, they think that by the exclusion of any reference to costs, there was impliedly an agreement that there was no order for costs) whether Mr Fleet is to have his costs of the application for costs.

[22]If there was a concluded agreement, under which the Tribunal holds was that costs were to be left over, then the Employment Tribunal will no doubt have to decide whether it is an appropriate case, having heard such further evidence and argument as the parties wish to put before it, for there to be an award of costs to PFMS, and, if so, what the amount of those costs should be.

[23]We very much regret that we are not able to bring an end to this matter today, but there is one remaining matter, the application which PFMS has made for costs of this appeal, and we will now hear any submissions that Counsel wishes to make in relation to that. Sir, yes, you have already referred to the Respondent's answer that they gave to this appeal, and it is certainly brief. Those who instruct me have written on about two occasions asking in effect for Mr Fleet's solicitors to consent to the appeal What would the effect of their consenting be? The Employment Appeal Tribunal would still have had to consider the matter. Yes, but it would avoid the need to actually come to the Tribunal and get an order raised … No it would not. Appeals are not allowed simpliciter by consent. We have to be satisfied that if an order is to be set aside and the matter remitted, that the order below was wrong. That was point 1. Point 2 is why did you not apply to the Tribunal for a review? Sir I do not know why ….. But was it not as clear as possible a case that an application should have been made for review? It was error by the Tribunal, they had made a determination at a time when they did not have all the evidence and all the argument. Sir, I am in some difficulty ….application for review …… I think you are in some difficulty - no, no order for costs.