Harada Limited (t/a Chequepoint) v Turner

The Court of Appeal dismissed two applications for permission to appeal against Employment Appeal Tribunal decisions which had refused a review of an Employment Tribunal merits decision and had ordered Harada to pay the respondent’s costs. The central legal principle concerned the effect of Article 18 of the Brussels Convention on whether a defendant who contests jurisdiction can nonetheless take part in merits proceedings without being treated as having submitted to the court’s jurisdiction. The court held that under Article 18, read with the European Court of Justice authorities (notably Elefanten Schuh), a defendant who raises a jurisdictional objection at or before its first defence may defend the merits without necessarily submitting to jurisdiction.

Applying that principle, the Court concluded that Harada had no good reason to absent itself from the merits hearing of 24 May 1999 and therefore had lost the opportunity to seek a review; the review application was unnecessary or vexatious in the history of the litigation and the costs order against Harada was justified under rule 34 of the Employment Appeal Tribunal Rules 1993. The court also considered and rejected common-law authorities and other English cases relied upon by Harada as inconsistent with Article 18.

Background and procedural history:

• From February 1990 until February 1998 Mr Turner was employed by Harada as in-house solicitor. He resigned on 26 February 1998 and in March 1998 brought unfair and, later amended, wrongful dismissal claims to the Employment Tribunal.
• Harada raised jurisdictional objections, including that the claimant ordinarily worked outside Great Britain (s.196(2) Employment Rights Act 1996) and later argued the Article 18 point under the Brussels Convention; a preliminary jurisdiction hearing was held before the Roose tribunal which found in Turner’s favour.
• Harada sought to challenge jurisdiction and bias; the Morison EAT on 23 March 1999 directed that the merits hearing proceed and refused leave to appeal such a direction; a subsequent single-judge refusal of permission to appeal to the Court of Appeal was recorded (Mummery LJ, 21 May 1999).
• The Ryan Employment Tribunal proceeded in Harada’s absence on 24 May 1999 and found for Turner on both wrongful and unfair dismissal, awarding damages. Harada later succeeded on a bias ground in an appeal to this Court of Appeal on 6 April 2001 as to an intermediate EAT decision; the Pritchard-Witts tribunal subsequently again held it had jurisdiction (30 October 2001).

Nature of the applications and issues before this court:

• (i) Harada applied for permission to appeal against the Employment Appeal Tribunal (Ansell EAT) decision of 17 March 2003 which dismissed Harada’s appeal against the Regional Chairman’s refusal to order a review of the Ryan tribunal’s merits decision.
• (ii) Harada also sought permission to appeal against the Ansell EAT’s costs order of 30 May 2003 requiring Harada to pay the respondent’s costs, assessed at £3,158.50.
• The central issues were whether Harada would have risked being treated as having submitted to the tribunal’s jurisdiction if it had participated in the merits hearing (thereby prejudicing its Article 18 objection and outstanding appeals), and whether the review appeal was unnecessary or vexatious thus justifying a costs order under rule 34 EAT Rules 1993.

Court’s reasoning and decision:

• The court analysed Article 18 of the Brussels Convention and the ECJ authorities beginning with Elefanten Schuh which permit a defendant to raise a jurisdictional objection and at the same time submit a defence on the merits, provided the jurisdictional plea is raised at or before the time of the defendant’s first defence and not delayed until after the first national procedural defence to the merits.
• English authorities relied on by Harada (notably Denning LJ in Re Dulles’ Settlement Trusts and Marc Rich) were considered but the court held that those authorities were either inconsistent with Article 18 or distinguishable on the facts. Subsequent ECJ decisions (including Rohr/Ossberger and others) reaffirmed Elefanten and made the rule clearer.
• On the facts the Court of Appeal found Harada had continuously and promptly raised its jurisdictional objection, had opportunities to contest the unfair dismissal claim alone, and in any event could not realistically have thought that participation in the Ryan hearing would amount to submission to jurisdiction. The Ansell EAT was therefore correct to dismiss the review appeal and to treat the review proceedings as unnecessary or vexatious, justifying the costs order.

Subsidiary findings:

• The court rejected Harada’s contention that reliance on counsel’s advice excused non-attendance where no such advice had been produced and where Harada had opportunities to pursue other procedural options.

The applications for permission to appeal were dismissed. The court held that Article 18 of the Brussels Convention, as interpreted by the ECJ in Elefanten Schuh and subsequent cases, allows a defendant who raises a jurisdictional objection at or before its first defence to participate in merits proceedings without necessarily submitting to jurisdiction; on the facts Harada had no good reason to absent itself from the merits hearing, the review application was unnecessary or vexatious, and the costs order under rule 34 EAT Rules 1993 was justified.

This was an appeal to the Court of Appeal from two decisions of the Employment Appeal Tribunal (Ansell EAT) dated 17 March 2003 (refusal to order a review of the Employment Tribunal’s merits decision) and 30 May 2003 (costs order). The litigation originated in the Employment Tribunal (Roose tribunal decision on jurisdiction 10 September 1998), proceeded through the EAT (Morison EAT direction 23 March 1999) and a single-judge refusal of leave to appeal (Mummery LJ 21 May 1999), the Ryan tribunal merits hearing 24 May 1999, subsequent EAT proceedings (Levy EAT refusal 15 July 1999; Burke EAT preliminary hearing 8 October 2002), a later Court of Appeal ruling allowing an appeal on bias grounds (6 April 2001), and the Pritchard-Witts tribunal decision on jurisdiction (30 October 2001) before the Regional Chairman’s refusal to order a review (29 April 2002) and the Ansell EAT decisions in 2003. The present Court of Appeal judgment is reported as [2003] EWCA Civ 1695.