England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
MR JUSTICE NELSON PRESIDING
UKEAT/0326/03/ILB

		Royal Courts of Justice Strand, London, WC2A 2LL
		04/04/2006

Lord Justice Mummery:

Introduction

1. This is the judgment of the court.
2. On 22 February 2006 the court adjourned the hearing of this appeal and made certain directions. As the circumstances of the adjournment were very unusual, we decided to give written reasons for the adjournment and the directions.

The appeal

3. The appeal is brought by Ms Andrea Madarassy (with permission granted by this court on 14 September 2005) against the decision of the Employment Appeal Tribunal and its order dated 18 April 2005. The respondent is Ms Madarassy's former employer, Nomura International plc (Nomura).
4. Ms Madarassy's employment commenced on 17 January 2000 and terminated on 22 November 2001. Ms Madarassy presented an application to the employment tribunal on 14 December 2001 claiming sex discrimination, victimisation and unfair dismissal. Nomura's case was that she was fairly dismissed for redundancy. Nomura denied all the allegations of discrimination and victimisation.
5. In view of the turn that this appeal has now taken it is necessary to chart the changes in the legal representation of the parties at the various stages of the proceedings. In the employment tribunal Ms Madarassy was represented by junior counsel, Ms Suzanne McKie. She was instructed by Messrs Lawrence Graham. Nomura was represented by Mr Paul Goulding QC and Ms Claire Weir. They were instructed by Howard & Howard, a firm carried on by Mr Barry Howard as a sole practitioner. His wife, Mrs Gillian Howard, is a consultant with the firm. She acted as legal adviser to Nomura both before the termination of Ms Madarassy's employment and in relation to the employment tribunal proceedings.
6. After a hearing in the tribunal lasting for 21 days between 11 November and 12 December 2002, with a total of 38 witnesses, 32 out of 33 allegations of discrimination and the remaining claims for unfair dismissal and victimisation were dismissed. The reasons were set out in the extended reasons sent to the parties on 18 February 2003.
7. One claim was upheld: the tribunal held that Nomura's failure to carry out a health and safety risk assessment amounted to sex discrimination.
8. On Ms Madarassy's appeal to the Employment Appeal Tribunal there were some changes in the legal representation. Ms Madarassy was represented as before, save that Mr Andrew Clarke QC was brought in to lead Ms McKie. Nomura was represented by the same leading and junior counsel as before, but they were now instructed by different solicitors, Messrs Osborne Clarke. Howard & Howard's retainer had been terminated by 1 month's notice with effect from the end of June 2003.
9. At a preliminary hearing in the Employment Appeal Tribunal Ms Madarassy's grounds of appeal were limited to sex discrimination issues. After a full hearing the Employment Appeal Tribunal (Nelson J presiding) allowed the appeal only to the extent of remitting to the same tribunal for further consideration two of the 33 allegations of sex discrimination. It allowed Nomura's cross appeal against the health and safety risk assessment finding. Nomura does not appeal from that part of the order. It is content for the employment tribunal to give further consideration to the two remitted allegations of discrimination.

Outline employment history

10. The employment relationship need only be outlined in order to explain the background to the recent developments.
11. On 17 January 2000 Ms Madarassy was appointed an Associate Director and member of the Equity Capital Markets team (ECM). Her role was to originate and execute ECM transactions in emerging markets with particular focus on Hungary, which is her native country, and Turkey. Mr Michael Boardman was the head of ECM and Ms Madarassy's line manager.
12. At the end of her probationary period in September 2000 her employment was confirmed. In February 2001 Mr Boardman's appraisal concluded that her performance was not up to the Nomura standard. Ms Madarassy was then away on maternity leave between 2 March 2001 and 9 July 2001.
13. After her return from leave a meeting was held on 16 August 2001 at which it was decided that her role was redundant. The market was poor. ECM revenues were down from the previous year. Three employees in the ECM team were assessed against redundancy criteria. Ms Madarassy scored the worst (the other two employees concerned being men, Mr Adams and Mr Salam). On 7 September 2001 she was informed that she was at risk of redundancy. On 3 October 2001 she commenced the grievance procedure. Despite an extended period of consultation no suitable alternative employment was found for her. On 22 November 2001 she was dismissed for redundancy with pay in lieu of notice.

Decision of the employment tribunal

14. As for the unfair dismissal claim, the employment tribunal held that the reason for her dismissal was not, as she alleged, a reason connected with her pregnancy or taking maternity leave. The reason was redundancy, there having been a diminution in work. The selection procedure was fair. The dismissal was fair.
15. The tribunal held that Ms Madarassy had, in commencing the grievance procedure, committed a protected act, but she was not victimised. As for sex discrimination, the only claim established was Nomura's failure to carry out a health and safety risk assessment.

Issues on the appeal

16. There are no less than 7 principal grounds of appeal: errors as to the burden of proof in the light of section 63A of the Sex Discrimination Act 1975, as interpreted by this court in the decision given since the employment tribunal hearing, Igen Ltd v. Wong [2005] ICR 931, and which it is contended undermines all the conclusions of the tribunal; an erroneous approach to the evidence in wrongly requiring corroborative evidence and in wrongly holding that there was no evidence on matters on which Ms Madarassy in fact gave evidence; an erroneous approach to pregnancy and maternity leave by requiring a male comparator; misapplication of the limitation provisions in the 1975 Act in relation to "continuing acts" and the power to extend time where it is just and equitable to do so before reaching conclusions on the facts; an erroneous approach to the complaint of risk assessment and the obligation to carry out such an assessment in respect of new or expectant mothers; inappropriateness of a remit of the 2 of the 33 allegations to the same tribunal; and that a re-hearing of the matters remitted should have been directed rather than a review by the same tribunal.
17. There have been further changes in the legal representation of Ms Madarassy on this appeal. In January 2005 the Equal Opportunities Commission began to advise Ms Madarassy. Ms Karon Monaghan was instructed as her counsel. She appeared on the oral hearing for permission to appeal and prepared the skeleton argument for the appeal.
18. Shortly before the appeal was due to be heard the Equal Opportunities Commission applied for an adjournment, as Ms Monaghan had had to withdraw from the case (17 February 2006). The application was refused, as the counsel instructed in her place was Ms Madarassy's former junior counsel and she was available for the two days set aside for the hearing of the appeal on 22 and 23 February 2006. She is still instructed on the appeal, but Ms Monaghan is instructed to resist an application issued by Nomura on 20 February 2006 to strike out Ms Madarassy's notice of appeal and her claim as an abuse of process.

Nomura's application to strike out

19. The arrangements for the hearing of the appeal were dramatically overtaken by disclosures potentially affecting the future conduct of all the proceedings by Ms Madarassy against Nomura, including this appeal. Unforeseen developments over the last week or so resulted in an application by Nomura to strike out the notice of appeal and the claims against it as an abuse of process, alternatively for an order restraining the Equal Opportunities Commission from representing or assisting Ms Madarassy in relation to the proceedings. The application is supported by a witness statement from a partner in Osborne Clark, Nomura's solicitors in the proceedings since May 2003. Further developments have occurred since Nomura's application was launched.
20. The strike out application is based on a document brought to Nomura's attention for the first time on 10 February 2006. The Equal Opportunities Commission, with the authorisation of Ms Madarassy, disclosed to Osborne Clarke what Ms Madarassy claims are the minutes or notes that she made of a meeting on 30 June 2003. She had disclosed the document to the Commission on 1 February 2006. The meeting took place, it is alleged, between her and Mrs Howard after Howard & Howard was replaced by Osborne Clarke as Nomura's solicitors. By the time of the alleged meeting the employment tribunal had sent its decision to the parties, Ms Madarassy had lodged her appeal with the Employment Appeal Tribunal and Nomura had lodged a cross appeal.
21. A letter dated 3 June 2003 has also been disclosed by Ms Madarassy. It was written by Mrs Howard to Ms Madarassy after Nomura's notice of the termination of her firm's retainer and the strongly contested and protracted proceedings for sex discrimination and victimisation in the employment tribunal. In the letter Mrs Howard indicated that she would be delighted to meet Ms Madarassy for a cup of tea when she could talk "a little more freely."
22. Mrs Howard, who was sent copies of Nomura's application and the evidence in support, including the notes of the alleged meeting with Ms Madarassy, made a witness statement dated 20 February 2006 dealing with Ms Madarassy's allegations. In it she denies that a meeting with Ms Madarassy ever took place. Her response is that Ms Madarassy fabricated the minutes of a meeting. She says that she was on holiday with her husband in Majorca at the time of the alleged meeting on 30 June 2003. She also says that she has not met or seen Ms Madarassy since she was pursuing her claim in the employment tribunal. She accuses Ms Madarassy of misleading the court and the Equal Opportunities Commission about the alleged meeting and conversations. She says in a covering letter to the court that she is willing to attend court to give evidence on oath. She was not in fact asked to attend by either side. She did not attend and, so far as we are aware, she had no representative at the hearing on 22 February 2006.
23. It was submitted by Nomura, on the strength of Ms Madarassy's evidence about the alleged meeting with Mrs Howard, that she was in unauthorised possession of confidential and privileged information belonging to Nomura. The information related to legal advice given to Nomura as to the merits of Ms Madarassy's claim, the prospects of success of the appeal, the attitude of Nomura to the appeal and any re-hearing or potential settlement.
24. It was contended by Mr Paul Goulding QC appearing for Nomura that the fairness of the proceedings, including both the claim and the appeal, has been fundamentally and irretrievably compromised. The court has jurisdiction to strike out proceedings on the ground that a fair hearing is no longer possible, such as where there has been contumelious conduct on the part of a claimant: see Arbuthnot Latham Bank Ltd v. Trafalgar Holdings Ltd [1998] 1 WLR 1426. The court also had jurisdiction to deal with a case in which one party to litigation has innocently received privileged information of the other side, such as restraining by injunction the use of confidential information by legal advisers: see Ablitt v. Mills & Reeve ...Blackburne J, Transcript 24 October 1995 at pages 16A-17A).
25. Mr Goulding submitted that the position here is that, unknown to Nomura, Ms Madarassy has acted since the end of June 2003 with the benefit of Nomura's confidential and privileged information. She has only very recently passed this information to her current legal advisers. This disclosure caused Ms Monaghan to withdraw from the appeal. Having initially declined Nomura's request to withdraw from representing Ms Madarassy, the Equal Opportunities Commission has instructed new solicitors to act for her, although it has represented Ms Madarassy and instructed Counsel on the strike out application.
26. Mr Goulding's initial position was that this court should hear and determine his application immediately. His attention was drawn to difficulties in following that course. They arise from the stark conflict of evidence between Ms Madarassy and Mrs Howard.
27. The general point is that the Civil Division of the Court of Appeal does not normally hear oral evidence and decide facts. It hears appeals from trials at which evidence is heard and the facts are decided. The Court of Appeal does not itself conduct trials of actions or applications. If it did, the losing party would be deprived of the opportunity to appeal to the Court of Appeal.
28. It was also pointed out that one member of this court (Mummery LJ) would be personally embarrassed if he was required to make findings of fact on conflicting evidence given by Ms Madarassy and Mrs Howard, whom he had met on several occasions. There was, however, no objection raised by either side to his continuing to sit on the appeal for the limited purpose of deciding how to proceed with the strike out application.

Future conduct of proceedings

29. As to the future conduct of the proceedings we make a number of preliminary points -

(1) It is not sensible for this Court to hear the substantive appeal pending the determination of Nomura's application to strike out Ms Madarassy's appeal and claim. If Nomura's application succeeds there will be no appeal to hear.

(2) The problem raised by the alleged disclosure of confidential information cannot be resolved by simply requiring the Equal Opportunities Commission and counsel instructed by them to cease acting for Ms Madarassy or by restraining disclosure of information by them to new legal advisers. The real problem is not, as in cases where the parties' advisers have innocently received confidential information by inadvertence of the other side, what the Commission and the legal advisers know: it is what Ms Madarassy herself has learned as a result of the alleged disclosure, and what she cannot "unlearn." The problem exists whoever represents her or whether she represents herself.

(3) The application cannot be decided by this court for the reasons indicated. In brief this is not a court of first instance and, if it acted as such, it would deprive the unsuccessful party of the opportunity to appeal to the Court of Appeal.

30. There are further complications. At the start of the hearing Ms Monaghan informed the court that Ms Madarassy had now discovered a tape recording that she had made of the alleged meeting with Mrs Howard. She says that she used a tape recorder in her handbag. Ms Monaghan apologised for the late disclosure. She said that she had tried to play the tape, but it is of such poor quality that it was inaudible and unintelligible to her. It may, however, be possible for an expert to decipher it. The contents of the tape are obviously relevant to the resolution of the conflict of recollection between Ms Madarassy and Mrs Howard. Ms Monaghan also produced a witness statement by Ms Madarassy dated 22 February 2006 about the alleged meeting. In it she stated that Mrs Howard had left a voice mail message at her home telephone on 1 June 2003, which Ms Madarassy returned the following day. She received the letter of 3 June 2003 by fax, following which she telephoned Mrs Howard, who invited her out to lunch. They met for lunch on 30 June 2003. There was a discussion over lunch. She drafted minutes of the meeting that evening or the following day and stored on her home computer. She sent a copy to the Commission early in February 2006 to give Ms Monaghan background information on the history of her case. She had not disclosed the minutes to her previous solicitor or counsel.
31. There was some discussion between counsel and the court as to whether the application to strike out could proceed without the need to resolve the conflict of evidence. At first Mr Goulding was understandably in favour of proceeding with his application immediately in this court without the need to resolve the conflict of evidence between Ms Madarassy and Mrs Howard. Neither of them would be required to give oral evidence. Instead the application would proceed on the assumption that the facts alleged by Ms Madarassy were true, in which case there would be no need to cross examine her or to hear evidence from Mrs Howard.
32. It soon became clear that there were difficulties in pursuing this course, as Ms Monaghan explained that she would be asking the court to disbelieve Mrs Howard and to treat Ms Madarassy as innocent recipient of information, who should not be prejudiced in the pursuit of her claim and her appeal by what Mrs Howard has chosen to tell her about Nomura. Ms Madarassy was unrepresented at the time and did not know that there was anything improper in such a meeting taking place. She was not culpable. Nomura's real complaint was against Mrs Howard, not against Ms Madarassy. In our view, the conduct of Ms Madarassy in relation to the circumstances of the alleged disclosure might be relevant to a decision whether or not it was an abuse of the process of the court for her to pursue the appeal and the claim. It would be necessary to establish the facts. The alleged tape recording could be relevant in determining the facts. In those circumstances Mr Goulding asked for the application to be remitted for a hearing at first instance. He explained that the disclosures had given rise to a collateral issue which was not of Nomura's making. Nomura could not be blamed for the circumstances that had given rise to the strike out application and to an adjournment of the appeal pending the hearing of the application .
33. Ms Monaghan was opposed to an adjournment of the appeal. She submitted that these were old proceedings. There should not be further delays as the result of an application which was not a proportionate response to the alleged disclosures. The matters raised in the application could be dealt with in the employment tribunal under its powers to strike out proceedings. That could be done after the hearing of the substantive appeal, which should proceed without further delay.

Directions

34. We decided that the only realistic way forward in the interests of all parties was to adjourn the hearing of this appeal to be re-fixed after the strike application has been heard. As this court cannot decide that application, it is necessary to remit it for determination by a court of first instance. We directed that it be remitted to the Queen' s Bench Division for an expeditious hearing by a High Court Judge, preferably one with experience of sitting in the Employment Appeal Tribunal.
35. We directed disclosure of documents by close of business on 27 February 2006. Any further witness statements should be served within 14 days, with 7 days for reply evidence. A joint expert is to be instructed as soon as possible to make a transcript of the tape recording made and produced by Ms Madarassy of the alleged meeting with Mrs Howard. The estimated length of hearing of the application is 2 days. There is to be liberty to apply to the Queen's Bench Division for further directions in relation to the hearing of the strike out application.
36. As to the costs of the strike out application, we reserved them to the judge who hears it. As to the costs of the appeal, we reserved them to the hearing of the appeal. As to the costs of today thrown away by the adjournment, we considered that they had arisen from the late disclosures by Ms Madarassy. We made an order that they should be paid by Ms Madarassy, to be the subject of a detailed assessment, if not agreed. An interim payment of £2,500 costs is to be made by her within 14 days.