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

		Royal Courts of Justice Strand, London, WC2A 2LL
		7 March 2007

Lord Justice Maurice Kay:

1. Mr Ezsias is an oral and maxillofacial surgeon. He was employed by North Glamorgan NHS Trust ("the Trust") from 1 July 1998 until he was summarily dismissed on 1 February 2005. Three days later he commenced proceedings in the Employment Tribunal. He claimed that his dismissal was automatically unfair pursuant to Section 103(a) of the Employment Rights Act 1996 because the reason for it was that he had made protected disclosures; in other words, because he was in common parlance "a whistleblower". Moreover he claimed that it was unfair on conventional grounds pursuant to Section 98 of the 1996 Act. The case for the Trust is that the true reason for the dismissal was that Mr Ezsias was responsible for a breakdown of relationships in his department and within the Trust such that the employment relationship could not continue and that it had been fairly terminated.
2. From the outset the Trust contended that the proceedings in the Employment Tribunal were totally without merit and it sought the procedural protections available to a respondent employer in such circumstances. The protections available under the Employment Tribunal Rules of Procedure 2004 are:

1. In a case which a chairman at a pre-hearing review considers to have "little prospect of success", an order that the applicant pays a deposit not exceeding £500 as a condition of being permitted to continue to take part in the proceedings -- rule 20.

Or more seriously:

2. The striking out of all or any part of the claim on the grounds that it is scandalous or vexatious or has no reasonable prospect of success -- rule 18(7).

3. Although I have described these protections in terms availing a respondent's employer, in principle they may also avail an applicant if he can show that the respondent's case has little or no reasonable prospect of success. Experience shows that cases such as the one brought by Mr Ezsias in the Employment Tribunal can make substantial demands on management time and resources with only a limited prospect of recovering litigation costs from an unsuccessful applicant after trial. The limitation is that the Employment Tribunal can only award costs against an applicant or respondent who has brought or conducted the proceedings vexatiously, abusively, disruptively or otherwise unreasonably, or where the bringing or conducting of the proceedings has been misconceived -- rules 40 and 44. In these circumstances it is not surprising that employers in particular frequently seek the protections available under rules 18 and 20.
4. The present case brings into focus the difficulties and tensions which can accompany their applications for summary justice. To state the obvious, an Employment Tribunal should be alert to provide protection in the face of an application that has little or no reasonable prospect of success but it must also exercise appropriate caution before making an order that will prevent an employee from proceeding to trial in a case which on the face of the papers involves serious and sensitive issues.
5. On 7 July 2005 there was a pre-hearing review before the chair of the Employment Tribunal sitting alone. It had been sought by the Trust. The sole issue of which Mr Ezsias had been given notice related to an application for a deposit under rule 20. Before such an order can be made the Employment Tribunal must be satisfied that the person against whom it is sought has the ability to pay the sum in question -- rule 20(2). Failure to pay the ordered sum within the specified time will result in the claim being struck out -- rule 20(4). The outcome of the hearing on 7 July 2005 was the promulgation of a document dated 20 July 2005. Under the heading, "Judgment of the Employment Tribunal" it stated:

"In my opinion the contentions put forward by the claimant have no reasonable prospect of success. The case will be re-listed to consider the question of means and/or the respondent's application for a striking out order."

6. This led Mr Ezsias to lodge an appeal with the Employment Appeal Tribunal although at that time such an appeal would have been premature because the Employment Tribunal had not made a final order for a deposit and had made no order on the strike out application save that it be re-listed. On 15 August 2005 the Employment Tribunal gave notice of a hearing to take place on 9 September for consideration of Mr Ezsias's means and the Trust's strike out application. At the hearing on 9 September the chair, who knew by then of Mr Ezsias's proposed appeal to the Employment Appeal Tribunal in relation to the earlier hearing referred to the document of 20 July as containing a "clerical error" in that it should not have been described on its face as a judgment. She went on to say:

"It is clear from the opinion and reasons that there was no finding of fact, no decision on a point of law, no order and no judgment."

7. On 14 September she signed a certificate of correction under rule 37(1) deleting the word "judgment" from the document of 20 July. Also, having heard counsel for the Trust and Mr Ezsias in person on 9 September she struck out Mr Ezsias's entire application on the basis that it had no reasonable prospect of success. As a result the application for a deposit fell away. In due course Mr Ezsias brought a proper appeal before the Employment Appeal Tribunal. On 25 July 2006 the president, Elias J, sitting alone allowed Mr Ezsias's appeal and held that:

"1. The decision of the Employment Tribunal at the hearing on 9 September 2005 was vitiated by apparent but not actual bias on the part of the chair; and

2. In any event this was not an appropriate case for the use of the strike out power under rule 18(7)."

8. There is now before this court an appeal by the Trust brought with the permission of Sir Henry Brooke which seeks to challenge both parts of the judgment and order of Elias J. Before I turn to the two issues it is necessary to say a little more about the factual cases which the parties seek to advance. Mr Ezsias's case is that between 1999 and 2002 he made a number of complaints about his colleagues and about shortcomings in the way in which the department was run. He alleged fraud on the part of two colleagues and dereliction of duties affecting patient care, incompetence, and inadequacy on the part of the same and other colleagues. He claimed that the safety and treatment of patients was being jeopardised. The case for the Trust is that over a period of time relations between Mr Ezsias and certain colleagues had broken down and that it was this rather than any whistleblowing by Mr Ezsias that had resulted in his suspension in April 2003 and eventual dismissal after full inquiry in February 2005.
9. At the heart of the Trust's case is a document dated February 2003. It is in the form of a letter addressed to the chief executive of the Trust and it is in these terms:

"All the senior members of the maxillofacial department within the three district general hospitals wish to register their grave concerns in regard to the lack of progress that has been made in resolving a large number of outstanding issues concerning Mr Ezsias. There is a complete lack of confidence in and a total breakdown of the relationships between this consultant and the senior staff within the department. This has significant effects on the service provision and the quality of care provided to patients within the hospitals. We all seek urgent confirmation that immediate progress will be made to redress these issues before a complete breakdown of the services results."

10. Nine people signed the document. They included the two colleagues in respect of whom Mr Ezsias had previously made allegations of fraud, and others who were affected by his other allegations. Although the document is dated February 2003, Mr Ezsias asserts that it was not brought to his attention until after he was suspended two months later. He disputes the date of the document and challenges the good faith of some or all of the signatories.
11. I now return to the decision of the Employment Tribunal. The first document promulgated by the chair and dated 20 July 2005 requires more detailed citation. Following the initial summary which I have already set out, under the heading of "Public Interest Disclosure" the chair stated:

"I am of the opinion that the claim not merely has 'little prospect of success' but that it has no reasonable prospect of success for the following reasons."

12. She then set out a number of reasons. Some of them raise points of law which, as I shall later state, fell away as matters for consideration on this appeal. Later, addressing the merits overall, she said:

"The whistleblowing claim would have no reasonable prospect of success in my view in that the tribunal would go on to find that the principal reason for dismissal was not that the claimant had made a protected disclosure but that he was dismissed for 'some other substantial reason' within the meaning of Section 98 of the 1996 Act, namely irretrievable breakdown of the relationship of trust and confidence. In the light of the letter from all the claimant's nine colleagues asserting irretrievable breakdown of trust and confidence, together with their statements to the effect that they could no longer work with him and that members of the department would resign if he returned from suspension, any reasonable tribunal would take the view that irretrievable breakdown in relationships with the consequent prospect of disappearance of the department was the principle reason for dismissal… I am therefore of the opinion that the claim based on public interest disclosure has no reasonable prospect of success. I would go further and say I have no doubt that it is bound to fail in that any reasonable tribunal will find that public interest disclosure was not the principle reason for dismissal."

13. Then, under the sub-heading "Unfair Dismissal", the chair went on to reach a similar conclusion in relation to the alternative claim. She said:

"In my view any reasonable tribunal having found that the reason for dismissal was irretrievable breakdown of the relationship of trust and confidence would find that the procedures applied… were such as a reasonable employer would have applied in the circumstances... A reasonable tribunal would find that in the light of the entire team's inability to work with the claimant and the consequent prospect of disappearance of the department, dismissal came with the band of responses a reasonable employer would have made to the situation… For the above reasons I am of the opinion that the complaint of unfair dismissal has no reasonable prospect of success. I will go further and say that it is bound to fail."

14. So far as the later hearing of 9 September was concerned, and the resulting strike out, the reasoning of the Employment Tribunal is set out in a letter dated 29 September 2005, the relevant parts of which read as follows:

"The reasons were that the claim had no reasonable prospect of success because:

(a) in the light of the letter from all your nine colleagues and the statements they made to the respondents any reasonable tribunal would take the view that the principal reason for dismissal was not protected disclosure… but irretrievable breakdown in relationships with the consequent prospect of disappearance of the department;

(b) any reasonable tribunal would find that the respondents took reasonable procedures to try and resolve the situation through discussion without success and that in view of the entire team's inability to work with you and the prospective closing of the department, dismissal came within the band of reasonable responses to the situation and was fair within the meaning of Section 98 of the 1996 Act."

15. It is now necessary to consider whether the Employment Tribunal committed any error of law in relation to the hearings of 7 July and 9 September 2005 or whether it was the Employment Appeal Tribunal which fell into legal error when it allowed Mr Ezsias's appeal.

Issue 1: Was the decision to strike out vitiated by apparent bias?

16. I make it clear at once that Elias J did not find actual bias on the part of the Employment Tribunal. Indeed, he expressly rejected it. We are here concerned with apparent bias and in particular the question of pre-determination or pre-judgment of a case by a judicial decision maker. The test is well known and was expressed by Lord Hope of Craighead in Porter v MacGill [2002] 2 AC 357; [2001] UKHL 67 in these terms at paragraph 103:

"The question is whether the fair minded and informed observer having considered the facts would conclude that there was a real possibility that the tribunal was biased."

17. Addressing this in the particular context of alleged pre-determination by an Employment Tribunal Peter Gibson LJ made the following observation in Jimenez v London Borough of Southwark [2003] IRLR 477 at paragraph 25:

"… the premature expression of a concluded view or the manifestation of a closed mind by the tribunal may amount to the appearance of bias".

All this is common ground.

18. Even after the label "judgment" has been removed from the document of 20 July 2005, it is on its face plainly and unequivocally suffused with a concluded view as to Mr Ezsias's prospects of success. It begins with the expression of an opinion that Mr Ezsias's contentions "have no reasonable prospect of success". Although the only matter receiving immediate attention at the time was the application for a deposit which is governed by the weaker test of "little prospect of success", the chair proceeded to say of the whistleblowing claim that she was of the opinion that it had "no reasonable prospect of success". The word "no" was underlined for emphasis by the chair herself. Her final observation on this aspect of the case was as I have already set out above. As I have set out, she went on to express herself in similar terms in relation to what I would call the more conventional unfair dismissal claim. I shall say no more about that because it is common ground that for present purposes it stands or falls with the whistleblowing claim.
19. Mr Pitt-Payne on behalf of the Trust concedes that this language gives rise to cause for concern when the application for a strike out had yet to be the subject of proper notice, submissions and determination. However, his submission is that such concern is now displaced by what the chair came to say on and after 9 September 2005. He refers first to the words used by the chair when explaining her intention to expunge the word "judgment" from the earlier document in which she observed "there was no finding of fact, no decision on a point of law, no order and no judgment".
20. He then refers to the comments furnished by the chair to the Employment Appeal Tribunal in accordance with its usual practice when an allegation of actual or apparent bias is made. In a document dated 6 July 2006 the chair described her words of 20 July 2005 as:

"an interim opinion on the deposit application to the effect that the case had not merely little but no reasonable prospect of success".

21. In that document the chair went on to say that on 9 September:

"I explained to Mr Ezsias that it was merely a preliminary opinion not a judgment. That there was nothing at this stage to appeal against so there was no reason to postpone."

22. All this leads Mr Pitt-Payne to submit that, contrary to first appearances, what the chair had said in the document dated 20 July 2005 was no more than the expression of a provisional view. He then seeks to rely on Jimenez to support the proposition that a provisional view, even if expressed in trenchant terms, is not to be equated with pre-determination. That proposition is sound and is indeed illustrated by Jimenez. However, the crucial factor in that case was that the Employment Tribunal had expressly stated at the time of articulating its trenchant view of the evidence it had by then received that it was "its preliminary view". As Peter Gibson LJ said at paragraph 38:

"The council's representatives could have been in no doubt that all the views which the chairman proceeded to give… were expressed to be preliminary views… I have some difficulty in understanding why a strongly expressed view cannot be a provisional view leaving it open to the party criticised to persuade the tribunal as to why that view was wrong and why the party's conduct was justified."

23. In my judgment the present case falls clearly on the other side of the line. What the chair said in the document of 20 July 2005 was not said at the time to be a provisional or preliminary view. On the contrary, it was clearly stated in concluded terms. What she later said to the Employment Appeal Tribunal by way of explanation was, in the view of Elias J, enough to acquit her of actual pre-determination but it did not and could not displace the perception which any fair minded and informed observer would have formed, namely that there was a real possibility that she had a concluded view or a closed mind as regards Mr Ezsias's prospect of success. Elias J put it in this way:

"Any fair minded and informed observer would in my view have considered that to put it at its lowest there was very little prospect that the appellant would be able to shift her from her view. I do not think that her comments at the second hearing would sufficiently have dispelled that impression."

24. I entirely agree. The legal error is not to be found in the judgment of Elias J on this issue but in the way in which the chair expressed herself in the document of 20 July 2005. Thereafter the position was irretrievable.

Issue 2: A reasonable prospect of success.

25. It is only since 2001 that the Employment Tribunal Rules of Procedure have included "no reasonable prospect of success" as an express ground for striking out. Until then applications which had no prospect of success were struck out on the ground that they were "frivolous"; ET Malla Limited v Robertson [1974] ICR 72. In Ballamoody v Central Nursing Council [2002] ICR 646 the distinction was drawn between "no prospect of success", and "no reasonable prospect of success". Ward LJ observing at paragraph 46 that the latter prescribes a lower standard as a basis for striking out.
26. Mr Pitt-Payne seeks to draw comfort from this lowering of the threshold. I accept his submission that what is now in issue is whether an application has a realistic as opposed to a merely fanciful prospect of success. It seems to me that Elias J also proceeded on this basis -- see paragraph 56 of his judgment. Mr Pitt-Payne then submits that when Elias J observed that in the present case the facts are disputed he went on to place an unwarranted gloss on the "no reasonable prospect of success" test. He refers in particular to two passages in which Elias J said this:

"However where the facts themselves are in issue in my judgment it can only be in the most extreme case that the chairman can say that without any evidence being tested in cross-examination that the disputed facts would inevitably or almost inevitably be resolved against the claimant."

And a little later:

"Mr Pitt-Payne submits that it must in principle be possible for a tribunal in a clear case to make a finding that a claimant has no chance of establishing the facts alleged. I would not discount the possibility that very exceptionally it might be. But it seems to me that at the very least if such a step is going to be taken then the primary factual basis on which a tribunal infers that the dismissal must have been for the reason advanced by the employer and not the counter varying reason advanced by the employee must itself be undisputed."

27. I too accept that there may be cases which embrace disputed facts but which nevertheless may justify striking out on the basis of their having no reasonable prospect of success -- see ED&F Mann Liquid Products Limited v Patel [2003] EWCA Civ 472 at paragraph 10 per Potter LJ; a commercial rather than an employment case. However, what is important is the particular nature and scope of the factual dispute in question. In the present case it is stark. Mr Ezsias is contending that others turned on him because he was a whistleblower. The Trust says that he was impossible to work with and that he unreasonably jeopardised the proper functioning of the hospital. What was it that caused the chair of the Employment Tribunal to consider that that head-on conflict of fact could be resolved without a trial to the point of a conclusion that Mr Ezsias's case has no reasonable prospect of success? Although in the document of 20 July 2005 she purported to identify some legal points, these effectively fell away in the September reasoning and Mr Pitt-Payne does not seek to rely upon them. In the September reasoning she based her decision on "the letter from all your nine colleagues and the statements they made" concluding that "any reasonable tribunal" would on that basis decide that Mr Ezsias was dismissed not because he had made protective disclosures but because of an irretrievable breakdown of relationships for which he was responsible.
28. The question for this court is whether that reasoning on the part of the Employment Tribunal contains an error of law. I have no doubt that it does. Given the extent of the factual dispute, it was legally perverse to conclude as the Employment Tribunal did. In addition to the diametrically opposed cases on the reason for the dismissal, Mr Ezsias had put in issue the evidential significance of the letter of February 2003 by contending that (1) he does not accept its date because it was not shown to him until after he had been suspended in April; and perhaps more importantly (2) its signatories include the two colleagues in respect of whom he had previously made allegations of fraud and others whom he had criticised as regards their competence and professional standards.
29. It seems to me that on any basis there is a crucial core of disputed facts in this case that is not susceptible to determination otherwise than by hearing and evaluating the evidence. It was an error of law for the Employment Tribunal to decide otherwise. In essence that is was Elias J held. I do not consider that he put an unwarranted gloss on the words "no reasonable prospect of success". It would only be in an exceptional case that an application to an Employment Tribunal will be struck out as having no reasonable prospect of success when the central facts are in dispute. An example might be where the facts sought to be established by the applicant were totally and inexplicably inconsistent with the undisputed contemporaneous documentation. The present case does not approach that level.
30. There is another aspect of this type of case that calls for comment. Whistleblowing cases have much in common with discrimination cases, involving as they do an investigation into why an employer took a particular step, in this case dismissal.
31. The applicant will often run up against the same or similar difficulties to those facing a discrimination applicant. There is a similar but not the same public interest consideration. In Anyanwu v South Bank Student Union [2001] ICR 391, [2001] UKHL 14 Lord Steyn said at paragraph 24:

"For my part such vagaries in discrimination jurisprudence underline the importance of not striking out such claims as an abuse of process except in the most obvious and plainest cases. Discrimination cases are generally fact sensitive and their proper determination is always vital in our pluralistic society. In this field perhaps more than any other the bias in favour of the claim being examined on the merits or de-merits of its particular facts is a matter of high public interest."

Lord Hope of Craighead added at paragraph 37:

"I would have been reluctant to strike out these claims on the view that discrimination issues of the kind which have been raised in this case should as a general rule be decided only after hearing the evidence. The questions of law that have to be determined are often highly fact sensitive. The risk of injustice is minimised if the answers to these questions are deferred until all the facts are out. The tribunal can then base its decision on its findings of fact rather than on assumptions as to what the claimant may be able to establish if given an opportunity to leave evidence."

32. In my judgment the same or a similar approach should generally inform whistleblowing cases, subject always of course to the kind of exceptional case to which I have referred. If she had had it in mind the chair of the Employment Tribunal would surely not have concluded as she did. She ought not to have done so in any event.

Conclusions

33. It follows from what I have said that I would dismiss this appeal in relation to the two issues which it raises. The question as to whether this is a suitable case for ordering Mr Ezsias to pay a deposit under rule 20 remains open. There has been no final ruling on that application because it was overtaken by the striking out. If the Trust wishes to pursue such an application (and I am not to be taken as encouraging it), it will have to make it again in the Employment Tribunal differently constituted. Nothing I have said in that regard or anything else in this judgment should be taken as indicating any view of the ultimate merits of this case one way or the other.
34. Finally I add this observation: I regret that a second appeal from the Employment Appeal Tribunal to this court against an interlocutory order refusing to strike out or upholding a decision refusing to strike out an application is available on satisfaction of the relatively low criterion of a real prospect of success in this court. As this case shows, a great deal of time and expense can be consumed by the prolongation of what turns out to be no more than a preliminary skirmish. In my view consideration should be given to the introduction of a more demanding criterion where the order of the Employment Appeal Tribunal is an interlocutory and not a final order. I have in mind the primary test for an appeal from the decision of the High Court where that decision was itself an appellate decision and the real prospect of success test gives way to consideration of whether a second appeal "would raise an important point of principle or practice" -- see CPR 52.13(2). If that had been the test for permission to appeal to this court in the present case, I do not consider that it would have been satisfied. Nor would there have been any other compelling reason for the Court of Appeal to hear this appeal.

Lord Justice Ward:

35. I agree that this appeal should be dismissed for the reasons given by my Lord, Lord Justice Maurice Kay.

Lord Justice Moore-Bick:

36. I also agree and so the appeal is dismissed.

Order: Appeal dismissed.