Harada Ltd. (t/a Chequepoint) v Turner

Under Article 18 of the Brussels Convention, a defendant preserves a jurisdictional objection by raising it no later than its first defence on the merits. It may then defend the merits, including at a full hearing required by the court, without thereby submitting to jurisdiction.

A party which chooses not to attend such a hearing cannot obtain a review merely by alleging that it was denied the opportunity to defend the claim. Where the review appeal had no realistic prospect of success, the Employment Appeal Tribunal could treat it as unnecessary or vexatious and order costs under rule 34 of the Employment Appeal Tribunal Rules 1993.

The employee resigned from his post as Harada's in-house solicitor and brought claims for unfair and wrongful dismissal. Harada disputed the tribunal's jurisdiction and, after a preliminary jurisdiction decision, declined to participate in the merits hearing because it feared that doing so would amount to a submission under Article 18 of the Brussels Convention.

The Ryan Employment Tribunal heard the employee's evidence in Harada's absence and upheld both claims. A later tribunal again held that it had jurisdiction. Harada then sought a review of the merits decision, but the Regional Chairman refused it. The Ansell Employment Appeal Tribunal dismissed Harada's appeal on 17 March 2003 and, on 30 May 2003, ordered it to pay costs.

The central issue was whether Harada had a good reason for absenting itself from the merits hearing and so was entitled to a review.

1. Disposition. The court unanimously dismissed both applications for permission to appeal. Simon Brown LJ gave the leading judgment. Mummery LJ agreed, and Mance LJ agreed while adding supplementary observations.
2. Article 18. Article 18 of the Brussels Convention permits a defendant both to contest jurisdiction and to make submissions on the merits, provided that the jurisdiction challenge is made before or with the first merits defence. The court applied [1981] ECR 1671. A defendant who has made that timely challenge does not abandon it by continuing to defend the claim.
3. Harada had objected to jurisdiction in its first appearance and was still pursuing that objection. The merits hearing had been directed to proceed despite Harada's applications to postpone it. Its participation, under continuing protest, could not possibly have constituted a submission to jurisdiction. The common-law dictum in [1951] 2 All ER 69 did not govern the Convention position. [1992] 1 Lloyds’ Rep 624 was materially different because the later pleading there was an unequivocal submission without a reservation of the jurisdiction objection.
4. Review. Harada had every opportunity and incentive to defend the merits. It deliberately chose to withdraw. It therefore had no good reason for its absence and no basis for reviewing the merits decision. The Regional Chairman and the Ansell EAT made no error of law in refusing the review.
5. Costs. Under rule 34 of the Employment Appeal Tribunal Rules 1993, the Ansell EAT was entitled to order costs. The review appeal was unnecessary and/or vexatious because there had never been a realistic prospect that it would succeed. Earlier permission for the appeal to proceed was relevant but did not preclude a costs order after the full hearing.

• Court of Appeal (Civil Division) — In [2003] EWCA Civ 1695, dismissed Harada's two applications for permission to appeal from the Ansell Employment Appeal Tribunal.
• Employment Appeal Tribunal (Ansell) — On 17 March 2003, dismissed Harada's appeal against refusal of a review of the Ryan Employment Tribunal's merits decision. On 30 May 2003, ordered Harada to pay the employee's assessed costs of £3,158.50.
• Employment Tribunal (Regional Chairman) — On 29 April 2002, refused Harada's application to review the Ryan tribunal's merits decision.
• Employment Tribunal (Pritchard-Witts) — On 16 August 2001, held that it had jurisdiction over both dismissal claims; Harada did not appeal that decision.
• Employment Tribunal (Ryan) — In May 1999, refused an adjournment and, after Harada withdrew, upheld the employee's unfair and wrongful dismissal claims.