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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Benyon & Ors v Scadden & Ors [1999] UKEAT 1269_98_1406 (14 June 1999) URL: http://www.bailii.org/uk/cases/UKEAT/1999/1269_98_1406.html Cite as: [1999] IRLR 700, [1999] UKEAT 1269_98_1406

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APPEARANCES

 

For the Appellants	MR J N GALBRAITH-MARTEN (of Counsel) Instructed By: Mr J Clinch Legal Officer UNISON 1 Mabledon Place London WC1H 9AJ
For the Respondents	MR N BOOTH (of Counsel) Instructed By: Miss D Reeves Solicitor Legal Department Urbane Rubicon Alco House 435 Green Lanes Haringey London N1 1HQ


 


MR JUSTICE LINDSAY: On the 7th September 1998 the Employment Tribunal at London (South), by the Chairman alone, Mr G.W. Davis, made an order for costs against the unsuccessful Applicants, Mrs M.J. Beynon and 12 others. The Chairman had, by an earlier decision promulgated on the 10th February 1998, dismissed those Applicants' claims made under Regulations 10 and 11 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE"). There is no appeal as to that earlier substantive decision; the appeal before us exclusively as to the order for costs. A citation of the full order as to costs may hint at some of the arguments which it gives rise to; it reads as follows:-

"The Applicants are ordered to pay the Respondents' costs of and in connection with these claims covering the period from 4th July 1997 to 31st July 1998. Such costs to be taxed, if not agreed, on an indemnity basis on the Higher County Court scale. This award has been made having taken into account, both the involvement of and the means of, the Applicants' Union, UNISON".

No point is taken as to that period; 4th July 1997 was when the IT1s were received and 31st July 1998 was the day after the hearing of the costs application.

Jurisdiction as to costs in the Employment Tribunal is conferred, by way of Section 13 of the Industrial Tribunals Act 1996, by Rule 12 of the Industrial Tribunals (Constitution etc.) Regulations 1993 Rule 12 which, so far as material, provides:-

"(1) Where, in the opinion of the tribunal, a party has in bringing or conducting the proceedings acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably, the tribunal may make -

(a) an order containing an award against that party in respect of the costs incurred by another party;

(b) ...................

(2) ................

(3) An order containing an award against a party ("the first party") in respect of the costs incurred by another party ("the second party") shall be -

(a) where the tribunal thinks fit, an order that the first party pay to the second party a specified sum not exceeding £500;

(b) .....................

(c) in any other case, an order that the first party pay to the second party the whole or a specified part of the costs incurred by the second party as taxed (if not otherwise agreed).

(6) Any costs required by an order under this rule to be taxed may be taxed in the county court according to such of the scales prescribed by the county court rules for proceedings in the county court as shall be directed by the order."

Mr Galbraith-Marten for Mrs Beynon and the other 12 appellants has 5 chief complaints. He argues (i) that no case for an order for costs under Rule 12 was made out and that it was perverse of the Tribunal to have held otherwise, that (ii) the order for costs wrongly failed to take into the Appellants' lack of means; instead the Tribunal (iii) wrongly took into account the means and involvement of UNISON, the Appellants' Union, and even if, contrary to his submissions, any order for costs was appropriate, then (iv) the Tribunal exceeded its jurisdiction in specifying an indemnity basis of taxation, especially since (v) there was not even a good ground for the indemnity scale to be ordered.

At both the hearing as to costs and the earlier substantive hearing Mrs Beynon and her fellow complainants had been represented by Miss Venner of UNISON (not a person said to have any legal qualification) and their cases had from the outset had the support of one or more officers of that Union. As will appear, one of the considerations which led the Chairman to make the order for costs as he did was his view that the Union had pursued the claims vexatiously. The claims, in the Chairman's view, not only had had no reasonable prospect of success but (as we shall explain) had been pursued with a collateral purpose in mind. Moreover, the Union had been aware (or, as the Chairman held, should have been aware) that the proceedings had no reasonable prospect of success. This latter factor requires us to examine the nature of the substantive claims made by Mrs Beynon and her fellows and the way in which those claims had been advanced.

Mrs Beynon's IT1 described the type of complaint she was making as "Transfer of Undertakings". The representative acting for her was described in her IT1 as Mr Jon Rogers of UNISON. The named respondents were Mr David Scadden and Mrs Charalambous. In Box 11 of her IT1, which has the title "Please give details of your complaint", Mrs Beynon specified as follows:-

"Until about 7/5/97 I was an employee of Urbane Rubicon (of which Mr Scadden, the first Respondent, was Managing Director). Thereafter I believe that I have been employed by Hillside Houses (Care Homes) Ltd (of which Mrs Charalambous, the second Respondent, is Managing Director). The Respondents in this case are therefore Mr Scadden and Urbane Rubicon and Mrs Charalambous and Hillside Houses (Care Homes) Ltd. The transfer of ownership and management of my place of work from Urbane Rubicon to Hillside Houses was a relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981. This complaint is submitted in accordance with Regulation 11 (1) (c) and is a complaint of a complete and comprehensive breach of Regulation 10 on the part of both Respondents. In particular, the first Respondent failed to provide the information specified in Regulation 10 (2). Both Respondents have failed to comply with Regulation 10 (5). The Applicant seeks a declaration and an award of appropriate compensation in accordance with Regulation 11 (4)".

That IT1 was met with a Notice of Appearance - an IT3 - on behalf of Mr Scadden and Mrs Charalambous. It said, inter alia,:-

"3. By a Share Acquisition Agreement dated 7th May 1997 ("the Agreement") the first Respondent and Joy Yvonne Scadden (the other shareholder in URHL) [Urbane Rubicon Holdings Ltd, the parent company of URL] agreed to sell all shares in URHL to Hickory Holdings Ltd, ("HHL"). HHL in turn wholly controls Hillside Houses (Care Homes) Ltd ("HHCHL"). Completion of the Agreement has not yet taken place but is expected to do so shortly. The second Respondent is Managing Director of HHCHL.

4. No assets have been transferred into or out of URHL or URL [Urbane Rubicon (Payroll & H.Q.) Ltd - the employer] under the Agreement. URL remains the Applicant's employer after the Agreement as before. Neither the first nor second Respondent has ever been or become the Applicant's employer.

5. Accordingly the undertaking carried out by URL has not been transferred from one person to another, and no relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981 has taken place.

6. The Applicant is therefore not entitled to a declaration or an award as pleaded or at all".

By the time the substantive hearing took place the Respondents had formally become 4 in number. Mr Scadden and Mrs Charalambous remained the first and second but there had been added as a third respondent Hillside Houses (Care Homes) Ltd and, as the fourth, "Urbane Rubicon" (meaning, presumably URL, the employer). The decision on the substantive application was:-

"There was no transfer of an undertaking on or about the 7th May 1997. The Applicants' claims made under Regulation of the Transfer of Undertakings (Protection of Employment) Regulation 1981 are dismissed".

The Chairman in his extended Reasons set the scene as follows:-

"1. In this case, all the Applicants bring claims under Regulation 11 of [TUPE]. The claims are made with the support of UNISON and the claims are of an alleged failure to inform or consult the Union on a transfer of undertakings subject to the Regulations".

The Chairman held that there was no transfer at all of any assets or goodwill in any sense material to TUPE. The employer of the applicant-employees remained in that position. There had been a sale of shares but it was well established, he held, that a sale and purchase of shares was not of itself a relevant transfer for the purposes of TUPE. The Chairman continued, by reference to Miss Venner as the UNISON representative who had acted on behalf of the Claimants, as follows:-

"21. Miss Venner has attempted to construct an interesting argument, but it is without foundation, and, if accepted, would extend the present scope of the law far beyond the intention of the legislators.

22. There was no relevant transfer of an undertaking on or about the 7th May 1997 and the claims of all the Applicants that there was a failure to inform or consult are dismissed".

The argument below on behalf of the employees at the substantive hearing seems to have been divisible into two main parts. Firstly, Miss Venner on their behalf had argued (to use the words of the Chairman) "That the share sale was only part of the picture" and, secondly, that "It is necessary to look at the reality and the effective control" of the employer as having passed from one group of persons - Mr Scadden and Christine Bond - to another - Mrs Charalambous - who, said Miss Venner, had managed the employing company in a different style.

As to whether there was something going on other than a share sale, Miss Venner was advancing to the Employment Tribunal an argument earlier used by UNISON in correspondence. Thus, when UNISON had been advised, rightly, by the Respondents' solicitors that a take-over by way of a share transfer was not caught by the TUPE Regulations and that paragraph 10 and 11 of the TUPE Regulations therefore did not apply, UNISON had answered, on the 18th June 1997:-

"I am indebted to you for stating the obvious. However it is clear that what is happening at Urbane Rubicon is in fact a take-over by Hillside Houses (Care Homes) Ltd and that a transfer from one legal person to another is taking place".

It was not in contention that it did not suffice, for the TUPE Regulations to apply, for the Respondents merely to show a transfer of shares. Although this is an area of the law close to that described by Harvey at its paragraph F55 as "Something of a judicial rollercoaster", that proposition, at least, seems never to have been doubted; it does not suffice to represent a relevant transfer of an undertaking for the purposes of the TUPE Regulations if there is merely a sale of shares. Nor is there any authority which suggests that the board and management changes which so frequently accompany a sale of the total share capital of a company can represent a relevant transfer of an undertaking. It is equally plain that if there had been no relevant transfer then Regulations 10 and 11, upon which the employees were relying, would have had no application. However, nothing material other than a share sale was held to have taken place nor, so far as we can tell, was there any evidence adduced from which anything other than a share sale could possibly have been held to have taken place. If UNISON, on behalf of the employees, had felt that something was being hidden from it, it could have required particulars of the employer's case under Rule 4 (1) (a) or discovery of all documents relating to whatever transfer was taking place under Rule 4 (1) (b) or the furnishing of written answers to UNISON's questions under Rule 4 (3) of the Industrial Tribunal (Constitution etc.) Regulations 1993. No such steps were taken. UNISON had raised questions in a letter of the 21st May 1997 but it never pursued them to an answer after being told by the employer that the TUPE Regulations did not apply to a transfer of shares, a point later reiterated to UNISON by the employer's solicitors. A party who, despite having had an apparently conclusive opposition to his case made plain to him, persists with the case down to the hearing in the "Micawberish" hope that something might turn up and yet who does not even take such steps open to him to see whether anything is likely to turn up, runs a risk, when nothing does turn up, that he will be regarded as having been at least unreasonable in the conduct of his litigation.

The other argument advanced by Miss Venner of UNISON involved reference to Spijkers -v- Gebroeders Benedik Abattoir CV [1986] 2 CMLR 296. That case was apparently relied upon in support of a proposition that "The absence of a transfer of "assets" does not preclude the existence of a transfer and that it is necessary to look at the reality and the effective control". Spijkers supra says nothing to suggest that a share sale of itself can represent a relevant transfer of an undertaking nor can it be authority even for the proposition for which it was apparently used; rather it shows that a sale of assets does not of itself indicate there has been a material transfer - see e.g. page 303, paragraph 12. The Employment Tribunal was thus well justified in concluding that the employees' argument had been "without foundation".

Given, then, that the employees (by way of UNISON) persisted in an argument despite its inescapable flaw being pointed out more than once in correspondence well before the hearing and given also that the argument that was presented, presumably in the hope of escaping that flaw, was held to be "without foundation" and was manifestly so and given further that the employees (by way of UNISON) had not even pressed an inquiry into the facts in any way consistent with their believing that something other than a mere share sale was going on, we can readily see a situation in which a tribunal might well have considered the employees' conduct of the proceedings (by way of UNISON) as having been at least unreasonable within Rule 12 (1) supra.

However, as we have noted, the Chairman's view as to costs was formed not merely on a view of the absence of merits in the employees' case but because in his view UNISON had had a collateral object in mind.

As for that, in its letter of the 21st May 1997 the Union, writing on behalf of the employees-applicants, wrote, inter alia:-

"I would also like to request an opportunity to meet with yourself or another appropriate person in order to discuss the benefits of Trade Union recognition to staff and to the organisation".

That letter to the Managing Director of Urbane Rubicon concluded:-

"I look forward to hearing from you and hope that you will wish to respond positively to my suggestion that a meeting takes place at which there can be discussion of Trade Union recognition. For the time being, I have advised UNISON members that an employer should not seek unilaterally to vary contracts and that they should seek advice before consenting to any changes which may be proposed".

Urbane Rubicon answered that there was no relevant transfer and that there was no proposal to change the terms and conditions of Urbane Rubicon's employees. It also said it did not propose to recognise UNISON.

On the 7th June 1997 UNISON challenged Urbane Rubicon's view of the law, cited Foreningen af Arbejdsledere I Danmark -v- Daddy's Dance Hall A/S [1988] IRLR 315 E.C.J. and concluded:-

"This could of course be tested in a tribunal. However, I would request that, as an alternative to litigation, you reconsider your refusal to recognise UNISON so that a channel for consultation with staff could be opened up."

Then Urbane Rubicon's solicitors entered the matter, saying:-

"There are no cases supporting your proposition that share transfers are caught within the regulations. Indeed the law is clear in this area."

On the 18th June 1997 UNISON answered the solicitors by saying, inter alia:-

"In view of the provisions of TUPE Regulation 10, I wonder if your client (whether it wishes to call itself Hillside or Urbane Rubicon for this purpose) would consider recognising UNISON for collective bargaining purposes in order to facilitate the meaningful consultation".

The letter concluded by saying that Hillside was under an obligation to consult and:-

"Recognition of UNISON is the easiest means available to Hillside to achieve this".

Given the tone of the correspondence and the request by the Union that recognition of UNISON should be reconsidered "As an alternative to litigation", it cannot be said that the Chairman had no grounds for an inference that the proceedings were being pursued on behalf of the employees, despite the indication given to their advisers that they were without real prospects of success, not just for their own sake but with a view to a purpose collateral to the proceedings, namely UNISON's recognition. By saying that union recognition was here a collateral purpose we are not to be taken as meaning that for a Union to press for recognition is wrong. It is not, but in hinting that recognition could be an alternative to the continuation of the proceedings UNISON laid itself open to the charge that it was pursuing the proceedings or procuring or supporting their pursuit with a collateral object in mind, something not in itself offensive but something other than success in obtaining the relief, a declaration and compensation, claimed in those proceedings. For a supporter to have a collateral purpose is not necessarily bad, but it may prove to be a luxury which has to be paid for. The Chairman, when ruling on costs, said, as to that:-

"I am satisfied that the Union were either aware, or by making proper inquiries could have been aware, that a transfer by way of sale of shares, would not be a transfer under the Regulations. I am also satisfied that the Union saw the threat of Tribunal litigation as a way of putting pressure on the Respondent to agree to Union recognition. In my judgment, the Union have pursued these claims vexatiously, because they were aware, or should have been aware, that there was no reasonable prospect of success, and because they were attempting to force the Respondent to recognise the Union. This is both vexatious and unreasonable conduct and an abuse of the Tribunal process. In these circumstances I am prepared to make an order for costs in favour of the Respondent".

As for the law, in approaching an appeal as to the exercise of a discretion it is right for the appellate body to remind itself of the correct approach of a Tribunal of first instance to such a task. In Gardner -v- Jay (1885) Ch D 50 C.A. at 58 Bowen L.J. said (of the Court's discretion as to the mode of trial):-

"That discretion, like other judicial discretions, must be exercised according to common sense and according to justice and if there is a miscarriage in the exercise of it, it will be reviewed, but still it is a discretion, and for my own part I think that when a Tribunal is invested by Act of Parliament or by rules with a discretion, without any indication in the Act or rules of the grounds upon which the direction is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the direction should run, for if the Act or the rules did not fetter the discretion of the judge why should the Court do so?"

Then, after referring to a particular authority and the Judge who had decided it, he continued:-

"....... Though it is very convenient that a judge of first instance, who is going to exercise the discretion in these cases from day-to-day, should indicate to those who are practising before him the kind of way in which his mind operates on such questions, still when he does so he is not laying down a rule of law nor fettering his own discretion, and, a fortiori, although it is of great value to hear anything that such a master of practice as Mr Justice Pearson says on such a subject, he cannot fetter the discretion of another judge where the rule has left the discretion open."

Gardner -v- Jay was referred to in Re Southard & Co Ltd [1979] 3 All Eng L.R. 556 C.A. where, at p. 562, Buckley L.J. referred to it as a case:-

"Where Bowen L.J. expresses the view that where a judicial discretion is concerned it is mistaken to attempt to lay down rules for its exercise. That, if I may say so with humility about an observation of so clear minded a judge as Bowen L.J., is obviously right. Any other approach contradicts the existence of the discretion. Where a discretion is conferred on the Court, no judge can fetter any other judge in a later case in the exercise of it; so no judge, or Court, can lay down rules binding others in the exercise of the discretion".

A more recent example of the same notion is to be found in Globe Equities Ltd -v- Globe Legal Services Ltd and Others C.A. 5th March 1999 which was mentioned, but not by name, in the course of the hearing. It had recently been reported in The Times. There Morritt L.J., with whom Butler-Sloss and Sedley L.J.J. agreed, pointed out, in relation to orders for costs made in the discretion of the Court against a non-party under Section 51 of the Supreme Court Act 1981, that the statute said nothing about that being appropriate only in "exceptional" circumstances. At page 17 of the transcript Morritt L.J. notes:-

"I would also comment that there appears to me to be a danger of treating the requirement that the circumstances are "exceptional" as being part of the statute to be applied. It is not".

Then, after reference to Symphony Group Plc -v- Hodgson [1994] Q.B. 179 C.A., which had used that word "exceptional", Morritt L.J. continued:-

"In none of the cases to which I have referred have "exceptional circumstances" been elevated into a pre-condition of the exercise of the power; nor should they be. Ultimately the test is whether in all the circumstances it is just to exercise the power conferred by sub-sections (1) and (3) of Section 51 Supreme Court Act ......."

So in our case, whilst we shall examine the cases to which we have been referred, we must be at pains to remember, firstly, that those cases cannot fetter the jurisdiction as to costs conferred upon the Employment Tribunal by the rules and, secondly, we must avoid the common error of construing the cases rather than the statute. The proper test for the Employment Tribunal was not whether its order accorded with this authority or that but, ultimately, to borrow the phrase from Morritt L.J., whether it was just to have exercised as it did the power conferred upon it by the rule. We must remember, too, that the test for us is different to that which was appropriate to the Employment Tribunal. We must not consider whether we would have ordered as the Chairman did but instead ask ourselves whether the Employment Tribunal took into account matter which it should not have done, or failed to take into account that which it should have done or whether in some other way it came to a conclusion to which no Employment Tribunal, properly directing itself, could have arrived - see e.g. Carter -v- Credit Change Ltd [1979] ICR 908 at 918.

Turning to the authorities, the first in time to which we were referred was Carr -v- Allen-Bradley Electronics Ltd [1980] ICR 603 EAT. The employee there had been represented before the Industrial Tribunal by the regional organiser of the General and Municipal Workers Union and had named him in her IT1 as her representative. Her case was found to be without merit; the applicant was held to be a person who would say anything to suit her case - p. 605. Because she had been assisted by the Union the Industrial Tribunal had ordered her to pay the employers' full taxed costs. She appealed the costs order to the Employment Appeal Tribunal. The employers supported the order below as having been an adaptation of the practice common in personal injury cases in the High Court when an unsuccessful plaintiff was Union-assisted. The Employment Appeal Tribunal thought it unhelpful to try to adopt High Court principles to the quite different circumstances that arose in litigation in Industrial Tribunals - p. 608H. At p. 609C Waterhouse J., delivering the judgment of the Employment Appeal Tribunal, said (including a reference to the then-applicable Rule 10):-

"The normal rule is that there is no order for costs. In the comparatively infrequent case in which the claimant has acted frivolously or vexatiously, we think that the Tribunal should consider the means of the claimant himself rather than of his Union, in deciding, first of all, whether or not to make an order in respect of the costs, and, secondly, the form of the order to be made. There may be cases where the role of the Union in pursuing the litigation, and the Union's knowledge or means of knowledge of the lack of merit of the claim, may make it appropriate to take account of the Union's position in deciding the order for costs. In such circumstances it may be that the Trade Union itself will be willing to indicate that it will indemnify the claimant in respect of the costs, even though the order itself will be against the claimant because that is the limitation imposed by rule 10. We do not wish to say anything that may fetter the exercise by tribunals of their discretion in future hypothetical cases. It is right, in our judgment, however, to say that it is not appropriate to adopt that kind of approach in the ordinary case, such as this, where the claimant is merely represented by a lay official of the Trade Union at the hearing in order to assist her in the presentation of her case. To do so would affect adversely the established and convenient practice before Industrial Tribunals where so many claimants are now represented by lay officials of the Union, who give very considerable assistance to the tribunals in the trial of cases before them".

Four points of particular relevance emerge from that passage. The Employment Appeal Tribunal was not saying that never could the Unions' position be taken into account in deciding the order for costs; on the contrary, it recognised there might be cases where it was appropriate to do so. The case is not authority for a proposition that the means or involvement of a supporting union can never be taken into account, nor, as will have been seen, does Rule 12 include any such a provision. Nor can it be said that it is axiomatic that if means are to be looked at (which, in any event, Rule 12 does not specify) it can only be the party's own means to which regard is had. Secondly, the case did not limit such cases to cases where the Union had accepted that it would indemnify the individuals involved; the Employment Appeal Tribunal said only that "It may be" that the Union in such circumstances would be willing so to indicate. Thirdly, the Employment Appeal Tribunal made clear that the Union's involvement there involved nothing more than assistance to the applicant at the hearing in the presentation of her case. Fourthly, the Employment Appeal Tribunal was careful not to say anything which might fetter the discretion of tribunals in future cases.

It cannot be said that anything in Carr -v- Allen-Bradley supra vitiates the exercise of the discretion as to costs by the Chairman in the case before us and it is notable that in our case the involvement of the Union went far beyond mere assistance given to the lay applicants at the hearing itself. Moreover, in Carr the Union could fairly claim that it could not have foreseen the weakness in the case it was supporting, namely that its member was untruthful. By contrast, in our case the weakness in the case supported was made plain well before the hearing. In Carr -v- Allen-Bradley the Employment Appeal Tribunal set aside the order as to full taxed costs and, on the information only that the employee was an unemployed person without any significant means - p. 609H - ordered her to pay only £50. There was no error of law such that no order for costs at all could be made.

In Wiggin Alloys Ltd -v- Jenkins [1981] IRLR 275 EAT the employee, Mr Jenkins, had been dismissed on grounds of suspected theft. He was prosecuted for that theft and sentenced to 6 years imprisonment. Mr Jenkins lost his claim for unfair dismissal at the Industrial Tribunal but the Tribunal turned down the employer's request for costs. The Tribunal had taken the view that as Mr Jenkins had been for some time and was to remain in prison it was unlikely that he would be in a position to pay costs. Before the Employment Appeal Tribunal the employer argued that it did not suffice to refuse an order for costs to show merely that the prospective payor was not in a position to pay them. Browne-Wilkinson J. said at p. 276 paragraph 5:-

"We do not feel able to accept that submission although we, too, feel sympathy for the employers. The matter was within the discretion of the Industrial Tribunal. The regulation says that the Tribunal may make an order. In our view, the inability of the applicant to meet any order for costs is a matter which is properly to be taken into consideration and therefore we cannot see that they have erred in any way in law in exercising their discretion. We should emphasise that it is no consequence of our decision that the mere fact that for the time being an applicant is penniless is in every case a sufficient ground for refusing an order for costs. Each case depends upon its own circumstances and lies within the discretion of the Tribunal".

The present Rule 12 is not precisely as was the Rule 10 that applied then but, consistently with Wiggin Alloys Ltd, even had it been shown (as it was not) that the appellant employees in our case were unable to pay the costs they were ordered to pay, that of itself would not have vitiated the exercise of the Chairman's discretion. Each case, as Wiggin Alloys says, depends upon its own circumstances and lies within the discretion of the Tribunal. It is perhaps notable, so far as concerns parties' means, that the present Rule 12 neither requires, nor provides any machinery for, an inquiry into a party's means. If in every case, as a pre-condition of any order as to costs, there had to be an inquiry into the prospective payor's means one might reasonably expect the Employment Tribunal to have been empowered so to enquire. It is not as if the draftsman of the rules had no such empowerment in mind; only a little earlier in the Rules, Rule 7 (5) makes the taking of reasonable steps to ascertain ability to pay a pre-condition of an order. Whilst it will, no doubt, usually be desirable to look into means, when that is possible, before an order for costs is made, it cannot be said that a failure to do so necessarily makes the order an improper exercise of the discretion.

In Dorney -v- Chippenham College (unreported) EAT 28th May 1997 a deposit had been ordered under Rule 7 (4), which is a course possible only where the Tribunal considers a case has no reasonable prospect of success. The applicant-employees in that case, supported by their Union, nevertheless proceeded to a full hearing. The applicants' cases were all dismissed and the applicants were ordered to pay the College's taxed costs. The deposit was forfeited. The case, unlike ours, was argued under Rule 12 (7), which deals with cases where a Rule 7 (4) deposit has been made. However, three points were made that may illuminate our case. Firstly, at p. 4 of the transcript, His Honour Judge Clark said:-

"Next, it is said that the full Tribunal fell into error when considering the costs application by basing its decision on the fact that the applicants had access to skilled legal advice. That is not how we understand paragraph 10 of the Costs Order reasons. The Tribunal was at pains to make clear that it was not saying that the decision to go ahead following the PHR Order was automatically unreasonable; however, it took into account in finding that it was unreasonable so to do that the applicants had the advantage of being able to explore with their legal advisers the ramifications if they were to proceed with the matter".

We underline the common sense of that observation; one does not necessarily judge a party who has had the benefit of advice as one would a lay person left only to his own perhaps inadequate devices.

Secondly, in response to the argument that the Industrial Tribunal had there taken into account that the appellants had been given an indemnity by the Union, the EAT, after citing the passage we have cited above from Carr -v- Allen-Bradley supra and describing the Industrial Tribunal as having applied that guidance, continued in Dorney:-

"It heard that the Union had provided an indemnity as to costs to these applicants, and found that the Union took a prominent role in this case, which raised an important point of principle for its membership. In these circumstances we can see no grounds for criticising the Tribunal for taking the costs indemnity into account when considering the means of these applicants to pay costs".

The Employment Appeal Tribunal dismissed the appeal as to costs. On this second point the case illustrates that when a Tribunal turns to costs there is nothing inherently offensive in its having in mind, where a Union has given support and assistance to a case, that the Union may have been looking to objectives beyond mere success in the particular case, nor does Dorney limit the materiality of such a consideration to cases where the Union has given an express indemnity to its litigant-members. Thirdly, as to Dorney, there appears to have been no finding that the lay-applicants were individually at fault.

In Omar -v- Worldwide News Inc. [1998] IRLR 291 EAT the Industrial Tribunal, in response to Mr Omar's claim for unfair dismissal, concluded that he had fabricated his evidence. Indeed, he had not even been dismissed. The Tribunal awarded costs to the employer. Mr Omar had been assisted by his Union both in bringing and in conducting his claims but he had been represented at the hearing by Junior Counsel. The appeal to the Employment Appeal Tribunal was argued (in the absence of the employer) on the basis that the Industrial Tribunal had wrongly taken into account the conduct of Mr Omar's Trade Union representative in ordering costs as it had and in taking the means of the Union - the National Union of Journalists - into account but not those of Mr Omar when making the order. The Industrial Tribunal had found as a fact - p. 293 paragraph 11 - that Mr Omar and his representative had acted frivolously, vexatiously or otherwise unreasonably. The Employment Appeal Tribunal appears to have accepted the appellant's argument that:-

"It is only in exceptional cases that in making an order for costs against a party an Industrial Tribunal should consider not only the individual means of that party, but also the means of his Trade Union representative".

With respect, that is to introduce a pre-condition as to "exceptional cases" which is not to be found in the Rule; it would introduce a fetter which is not proper - Gardner -v- Jay supra - and, by way of the introduction of the words "exceptional cases", does precisely what Globe Equities supra says is not to be done. However, the EAT there recognises as an exceptional case a case where the union persists with a case which to its knowledge or within its means of knowledge is without any merit, basing that view on Carr supra. Then, in Omar, it was held by the Employment Appeal Tribunal that it followed from the absence in Industrial Tribunals of any "wasted costs" jurisdiction analogous to Section 51 of the Supreme Court Act and from its view of Carr supra that it was not permissible to take into account the means of the Union unless the Union knew or ought to have known that the case it was supporting had no merit. That may be thought illogical; after all, it was a commonplace in unsuccessful personal injury cases supported by Unions for the means of the Union to be taken into account long before the "wasted costs" jurisdiction was conferred by the amendment to Section 51 of the 1981 Act in 1990 and long before Lord Goff's speech in Aiden Shipping Co Ltd -v- Interbulk [1986] A.C. 965 which provided the fountainhead of orders for costs against non-parties. Even leaving that point aside, the Employment Appeal Tribunal's conclusion in Omar would represent yet another unjustified fetter on the discretion which the unrestricted terms in which it is conferred do not permit.

Lastly in Omar it was held as established that an Industrial Tribunal must look at an applicant's personal means to pay before making an order for costs against him. The Rule contains no such requirement, in contrast with Rule 7 (4), as we have pointed out above. Dorney supra and Wiggin -v- Alloys supra were cited in support of that proposition. We cannot read Dorney as authority for such a view; means were considered by the Industrial Tribunal in that case but the case does not suggest that that was a necessary pre-condition of a proper award. In Wiggin Alloys the total inability of the employee to pay costs was borne in mind by the Industrial Tribunal but that is far from saying that it would necessarily have been wrong not to have had that in mind and the Employment Appeal Tribunal had emphasised that the fact that a party was penniless did not of itself invariably provide a sufficient ground for not making an order for costs against him. We have no quarrel at all with the result in Omar (the question of costs was remitted to the Industrial Tribunal). In particular we have no quarrel as the Employment Appeal Tribunal there held that the Union had no means of knowing that the claim by their members was fabricated and, moreover, was not held to have had any collateral or other more general purpose behind its support of its member. However, for the reasons given, the case cannot be taken as introducing any fetters on the broad jurisdiction which Rule 12 confers. It is to be remembered that the Employment Appeal Tribunal had the benefit of argument from only one side, nor, of course, was the more recent case of Globe Equities cited to the Employment Appeal Tribunal.

We shall deal below with particular arguments raised but that general review of the authorities provides, in our view, no reason for disturbing the Chairman's exercise of the unfettered discretion conferred upon him. He took into account UNISON's means and involvement but it was not necessarily wrong to have done so. He did not overlook the applicants' means; he specifically refers to no evidence on the subject being produced to him. Even if he had not had their means in mind it would not necessarily have been wrong not to have considered them. Although we start with some sympathy for a robust view that such were the complications of the TUPE Regulations that almost any case involving them was hard to predict and could not be said to have had no merits, by June 1997, when the IT1s were launched here, there was no doubt but that a share sale of itself could not be a relevant transfer of an undertaking and, moreover, the employees' advisers were not only told of that more than once but they had acknowledged that to be no more than a statement of the obvious. The Chairman found as a fact that the Union was aware or should have been aware that the cases presented had no reasonable prospect of success. The Union, as the applicants' representative, continued with the cases nonetheless hoping, one can only think, that something would turn up but, as we have pointed out, without its even taking the steps open to it to see if anything would. Further, and very materially, the Chairman had grounds for a fair inference that the Union was pursuing not merely hopeless cases but was doing so with the collateral purpose of achieving the Union's recognition, even perhaps as an alternative to the litigation. There was, we add, no evidence given to the Employment Tribunal or that the applicant-employees could not severally or jointly afford the costs. Mr Booth, appearing before us on behalf of the Respondents, says that the employees produced no evidence of means but it was said that all were still in employment. That is confirmed in the Chairman's Extended Reasons. No adjournment, it seems, was sought in order that any such evidence could be adduced. Nor was it said that the Union would not pay the individual applicant's costs if the applicants were ordered to pay costs but only that no indemnity had been given. The Chairman's expectation that UNISON would pick up the tab has not been said to be groundless; Mr Galbraith-Marten, on instructions, was not able to tell us whether or not the Union would pick it up (although his argument, that we shall come to below, that the order was tantamount to a wasted costs order, was surely premissed upon a view that it would). True it is that the Chairman took into account both the actions and motives of the Union and the fact that it is a very large Union with substantial means but nothing in Rule 12 outlaws such considerations and the authorities, properly regarded, not only do not, but could not, fetter the discretion conferred by the legislature. We have in mind the many descriptions of the test for perversity collected by Mummery J. as President in Stewart -v- Cleveland Guest (Engineering) Ltd [1994] IRLR 440 EAT at p. 443, including that the conclusion came to can be said to be "outrageous", "irrational" or as flying "in the face of properly informed logic". So far as concerns the general arguments we have so far dealt with, none of such expressions can in our view be fairly applied to the decision before us. Thus, as we mentioned, before we turn to the particular arguments and bearing in mind the stern test required to be satisfied before a discretion can be interfered with, we see no ground for upsetting the Chairman's conclusion.

Turning to the particular arguments, first Mr Galbraith-Marten argues that there is no wasted costs jurisdiction applicable to Employment Tribunals. Given that many of the advocates and advisers at the Employment Tribunal are beyond the discipline of, and have no standards set by, any professional body it might have been thought that a wasted costs jurisdiction would be especially appropriate but it is common ground that there is none. Mr Galbraith-Marten then urges that the order made by the Tribunal here is, as he puts it, a wasted costs order by the backdoor. It is no such thing; under a wasted costs order a non-party is either disallowed costs or is ordered to pay them, neither of which results obtains here.

Next, Mr Galbraith-Marten argued that there can be no order for costs in an Employment Tribunal made against an individual applicant without fault being found in that applicant as opposed to fault in his or her advisers or representatives. Under Rule 12 (1) it is "a party" that has to have acted as there described. There are three answers to that. Firstly, there is nothing inherently unjust in identifying parties with their advisers for the purposes of costs and in not necessarily separating the conduct of one from that of the other. Whilst it is not invariably done, it is common for Courts not to separate parties from advisers but to leave one with the possibility of exploring its remedies against the other. Secondly, there are sound practical reasons for that; were the separate conduct of the parties and their advisers to be investigated hearings would inevitably be prolonged, conflicts between the parties and their advisers would be likely to appear, their own separate representation would then become necessary and legal professional privilege would often need to be waived if a fair conclusion was to be arrived at. Thirdly, Rule 12 does not in terms require such separation between a party and his, her or its representatives. As the identification of principal with agent and of party with representative is common both generally and in relation to costs and litigation, the words "a party" in the opening words of Rule 12 (1) must, at least in relation to an evaluation of conduct in the bringing and conducting of proceedings, include the conduct of representatives. It would be absurd if a party's representative could, for example, conduct proceedings abusively or disruptively or could require costly adjournments to suit his or her convenience and yet leave "the party" immune to an order for costs on the ground that it was not "the party" himself who had so behaved. There would be oddities, too, in the case of corporate parties which, not being natural persons, can only act through agents or representatives. The Rule not having outlawed identification of party and representative in relation to conduct, it is not for Tribunals to introduce a requirement that the legislature has not itself made. We recognise that this construction could have led to an argument that an order for costs directly against a representative not himself a party could be made under Rule 12 (1) but, as we have mentioned, it was common ground that that was not the case.

Even if, contrary to that view, applicants had to be found personally at fault before any order for costs could be made against them, this was not a case in which it was proved or accepted that they were not at fault. No evidence would seem to have been given that they knew nothing as to the lack of any prospect of success, nor as to the instructions they gave nor as to their knowledge or ignorance of the Union's suggestion that Union recognition might be an alternative to the proceedings. It is true that the Chairman said:-

"I am very well aware of the complications surrounding the transfer of undertakings regulations, and if these cases had been brought by the individuals themselves, then I cannot imagine that I could have said that they were acting frivolously, vexatiously or unreasonably, in seeking a tribunal determination."

However, that does not represent a finding the individual applicants were without fault. As Dorney supra illustrated, it can be proper for an Employment Tribunal to take a different view than otherwise it would have done of applicants where they have had the advantage of being able to explore their cases with advisers. Here the Union advisers, even if not legally qualified, showed themselves in the correspondence as purporting to be at home with the TUPE Regulations, with cases in the European Court of Justice and with the Acquired Rights Directive. This first argument fails.

Next it was argued, defending the Union's conduct, that, on behalf of concerned members, it had attempted to find out what was going on but had been met only with a bald statement that there was nothing but a share sale and an unwillingness on the employer's part to consult. It was, in such circumstances, argued the Appellants, incumbent on the Union to press on. It was not improper for Miss Venner to have:-

"Attempted to construct an interesting argument".

This argument overlooks that the Chairman held the argument to have been without foundation, that there was no appeal against that finding, that we, too, see it to have been without foundation and that the Chairman at the later costs hearing, when euphemisms had to be discarded, showed his view to be that the claims had had no reasonable prospects of success. Of course, it will very often be right for a Union to press for information on behalf of its members. Had UNISON asked for particulars or discovery or had it required answers to be given particular questions under Rule 4, as we pointed out above, its later claim that it was attempting to find out merely what was going on would, no doubt, have been more credible. Moreover, unusually, on the facts here an inference could fairly have been drawn and was drawn that the Union was using the proceedings not just to gain relief for its members but to obtain Union recognition. As we have said, there was nothing wrong as such, in UNISON seeking recognition but if it chose to use hopeless proceedings as a vehicle to that end then it could not expect to do so with total impunity so far as costs were concerned.

Then, as to quantification of costs, Mr Galbraith-Marten referred to Rule 12 (6) supra as enabling costs to be taxed on "Such of the scales prescribed by the County Court Rules for proceedings in the County Court as shall be directed by the order". That Rule, he points out, makes no provision as to the basis of such taxation. There is therefore no jurisdiction, he argues, to order a taxation on the indemnity basis and in any event, even if there had been, in point of discretion there was no sufficient reason to order taxation to be on that basis. He does not quarrel (in this part of his case) with the requirement that the scale of costs should be "The higher County Court scale" - namely scale 2.

The appellants' argument that there is no jurisdiction to order an indemnity basis of taxation transpired to depend on Order 62 Rule 12 of the Rules of the Supreme Court which provides at (3):-

"(3) Where the Court makes an order for costs without indicating the basis of taxation or an order that costs be taxed on [a] basis other than the standard basis or the indemnity basis, the costs shall be taxed on the standard basis".

Mr Galbraith-Marten argues that consequently, as Rule 12 (6) is silent as to the basis of taxation, the costs must be taxed on the standard basis. However, as Mr Booth for the Respondents points out, Order 62 Rule 12 (3), even if otherwise applicable (which he accepts it is) deals, so far as relevant, only with the position where the Court makes an order for costs "Without indicating the basis of taxation". Here the Tribunal specifically did indicate a basis - the indemnity basis. Order 62 Rule 12 (3) thus has no application to exclude the indemnity basis. The fact that Rule 12 (6) of the Industrial Tribunal Rules does not in terms provide for a basis of taxation to be specified is without significance, says Mr Booth, as every order for costs has to be on one of two bases - the standard or the indemnity - and that that is as much the case under the County Court Rules (to which IT Rule 12 (6) refers) as it is in the High Court - see e.g. the County Court Practice 1998 pages 1656-1657. We accept Mr Booth's argument; nothing in Rule 12 (6) prohibits an order, in an appropriate case, for the taxation to be on the indemnity basis.

The Appellants then argue that this was not such an appropriate case. The indemnity basis, they argue, is used to reflect unreasonable behaviour by a party. Any award of costs by the Employment Tribunal can be made under Rule 12 (1) only if there has been some category of unreasonable behaviour. Thus to order costs to be on the indemnity basis amounts, said Mr Galbraith-Marten, to a double penalty. However, it is not correct to regard an order for costs as penal; it is, rather, compensatory, compensating the successful respondent for the expense to which it has unreasonably been put. Further, it is not, in any event, the case that the indemnity basis can be ordered only when there is, for example, some deception or underhand conduct. In rejecting that view in Munkenbeck & Marshall -v- McAlpine (1995) 44 Con L.R. 30 at 33 it was said in the Court of Appeal that:-

"In my view it is a pity that various Courts have attempted to define in exactly what circumstances indemnity costs may be ordered. It is a matter in each case of the Judge exercising his discretion to order costs on an indemnity basis when appropriate to the facts before him".

We have no material laid before us that would enable us to interfere with the Chairman's ruling as to the appropriate basis of taxation.

We have now dealt, at one point or another, with all of the chief points made in Mr Galbraith-Marten's attractive argument. He has throughout been afflicted by the difficulties put in an appellant's way by the discretion appealed against being totally unfettered (and hence being one which must remain unfettered and which reported cases therefore cannot circumscribe) and by the stern nature of the test for perversity. We do not hold that test to be satisfied nor are we satisfied that the Chairman either took into account matters he was required not to have done or failed to pay regard to the matters to which he should have done. The weight to be given to the various factors was very much a matter within the province of the Chairman. It may comfort UNISON for us to reflect, admittedly irrelevantly, that had we come to the matter afresh we might well have described its conduct as "unreasonable" rather than "vexatious" but we cannot say the Chairman was wrong to have used that word. Moreover, not only is that reflection irrelevant but, as Rule 12 (1) by its reference to "or otherwise unreasonably" provides, the costs order could still have been made as it was, and so the outcome could still have been the same. We cannot interfere with the Chairman's conclusion and accordingly must dismiss the appeal.