United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	THE APPELLANT IN PERSON
For the First Respondents For the Second, Third and Fourth Respondents	MS A RUSSELL (of Counsel) Messrs Stonehams Solicitors Stoneham House 17 Scarbrook Road Croydon CR0 1SQ THESE RESPONDENTS NEITHER BEING PRESENT NOR REPRESENTED


 


JUDGE PETER CLARK: We begin with the relevant chronology.

On 23rd June 1997 the appellant, Mr Kuttapan presented an Originating Application to the London (South) Employment Tribunal complaining of racial discrimination and wrongful dismissal (breach of contract) against the London Borough of Croydon and others. The claims were resisted.

On 29th August 1997 a Chairman, Mr D Booth, sitting alone, directed that a pre-hearing review ['PHR'] should be held.

The PHR was held before a full tribunal chaired by Mr Booth on 7th November 1997. No decision was announced orally at the end of that hearing.

Following the PHR a written decision with extended reasons was entered in the Register on 19th November 1997. It is also recorded at the end of that decision that a copy was sent to the parties on the same date. That rubric is apparently signed by a member of the tribunal staff on behalf of the secretary, whose name appears to be M A Cottrell-Tomlin. The signature is not easy to make out, but is clearer on the Certificate of Correction in a later decision in this case dated 23rd March 1998.

By that decision the tribunal ordered the appellant to pay a deposit of £150 as a condition of allowing him to proceed with his race discrimination claim.

On 3rd December 1997 the appellant wrote to the tribunal in these terms:

"I very much regret to write to you that I have not yet received any communications about my afore-mentioned case since 7th November 1997.

On 7th November 1997, a Pre-Hearing Review was held before a Chairman, Mr Booth, and two other members of the Tribunal. After the hearing the Chairman told [sic] the Tribunal's decision would be informed later.

I would indeed be most grateful if you could kindly let me know the decision of the Tribunal as soon as possible."

It is the appellant's case that a copy of the PHR decision was then sent to him by post on 4th December and received by him on 6th December.

On 19th December the same Chairman made a striking out order ['the strike out order']. A copy of that order with extended reasons was purportedly sent to the parties on 2nd January 1998. The appellant contends that it was contained, together with his returned cheque (see below), in a letter dated 5th January, received by him on 8th January 1998.

The order purported to strike out the whole of the Originating Application on the grounds that the appellant had failed to remit the amount of £150 within the period of 21 days beginning with the 19th November 1997, the date on which the decision recording the PHR order was sent to the appellant. The strike out order was incorrect, since the deposit had been ordered in respect of the race discrimination claim only in the PHR order and not the breach of contract claim.

The extended reasons also record that the appellant was ordered to pay the deposit at the hearing held on 7th November 1997. In fact, no decision was announced at that hearing.

On 23rd December 1997 the appellant personally tendered a cheque for the £150 deposit at the tribunal offices.

Following receipt of the strike out order on 8th January 1998 the appellant wrote a letter to the tribunal dated 9th January 1998 headed "Application for review of the Order". He set out his arguments in numbered paragraphs. The following extracts are material:

"2. The Tribunal sent me a copy of the decision dated 19 November 1997 only on 4 December, that too, only after I had specifically made a written request for it on 3 December. And I received a copy of the Decision, for the first time, only on 6 December. The Tribunal made an error, because it failed to send me a copy of the Decision until 4 December.

3. It was not stated anywhere in the Decision of 19th November 1997 that the payment must have to be paid on or before 10 December 1997 or within three weeks from the date of that decision. The 21 days (three weeks) time limit for payment commenced effectively only on 6 December, that is the date I received the copy of the Decision for the first time.

4. I did pay the deposit of £150/- at the tribunals on 23 December 1997, that is, within the 21 days time limit set by the rules of the Industrial Tribunals.

...

10. Was it fair and justice to penalise me for the error of the Tribunal officer who failed to send me a copy of the Decision of the Tribunal dated 19 November 1997 until after I made a written request for it on 3 December 1997.

...

13. In the interests of justice the Decisions of the Tribunal dated 19 December 1997 (Striking Out Order) and 5 January 1998 (Refusing to accept my payment to continue the claims against all the Respondent) must be declared null and void.

14. If I need to come before a Chairman and to give more details or information, I am only pleased to do so."

By a decision with extended reasons promulgated on 29th January 1998 and corrected on 23rd March 1998 the same Chairman refused to review the strike out order without a hearing, apparently under Rule 11(5) of the Tribunal Rules of Procedure, whilst directing that the breach of contract claim should proceed ['the review decision'].

Against both the strike out order (EAT/268/98) and the review decision (EAT/392/98) the appellant now appeals.

The PHR Procedure

In 1993 the former Pre-hearing assessment procedure was replaced by the PHR procedure. By Rule 7 of the Employment Tribunal Rules of Procedure 1993 ['the Rules'], contained in Schedule 1 to the Employment Tribunals (Constitution etc.) Regulations 1993 ['the Regulations'] the tribunal was given power to order a party to pay a deposit of up to £150 where the tribunal considers that the contentions put forward by that party have no reasonable prospect of success (r.7(4)), subject to an enquiry as to that party's means (r.7(5)).

A decision with summary reasons must be sent to the parties, accompanied by a note explaining that if the party against whom the order is made persists with his case an order for costs may be made against him and he could lose his deposit (r.7(6)).

By rule 7(7):

"If a party against whom an order has been made does not [remit] pay the amount specified in the order to the Secretary either-

(a) within the period of 21 days beginning with the day on which the document recording the making of the order is sent to him, or

(b) within such further period, not exceeding 14 days, as the tribunal may allow in the light of representations made by that party within the said period of 21 days,

the tribunal shall strike out the originating application ... of that party or, as the case may be, the part of it to which the order relates."

The original word 'remit' was replaced by the word 'pay' in Rule 7(7) by an amendment to the rule effected by Regulation 9 of the Industrial Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 1996 (SI 1996/1757).

Arising out of Rule 7 the following preliminary questions of construction arise for determination in this appeal:

(1) when does time begin to run for the purposes of Rule 7(7)(a) and (b)?

(2) what is the meaning of the word 'pay' in Rule 7(7) as amended?

(3) is a strike out order made under Rule 7(7) a "decision" within the meaning of Regulation 2(2) of the Regulations and thus reviewable under Rule 11?

(4) if not, does the tribunal have power to revoke the strike-out order?

(5) does the tribunal have power to extend time for complying with the order to pay a deposit other than under Rule 7(7)(b)?

We shall deal with each question in turn.

First question

In Immigration Advisory Service v Oommen [1997] ICR 683, the Employment Appeal Tribunal (Keene J. presiding) held that Rule 7(7) fell to be construed in accordance with s. 7 of the Interpretation Act 1978, and that the use of the word 'sent' meant that time begins to run on the date of receipt of the tribunal's order by the party ordered to pay a deposit. That date will be determined in accordance with the postal rules, that is the date of deemed service will be the second working day after posting in the case of a letter sent first class, unless the contrary is proved.

Applying that decision it follows that the Chairman was wrong to treat the date on which the order was purportedly sent out, 19th November 1997, as the relevant start date for the 21 day period, as appears from paragraph 2 of the strike out order reasons and paragraph 3 of the review decision reasons.

Second question

Again, it appears from paragraph 3 of the review decision that the Chairman considered that in order to comply with Rule 7(7)(a) it was necessary for the appellant to ensure that cleared funds should have been with the tribunal office within 21 days of the order being sent out.

We believe that it is the understanding of the Employment Tribunal's administration that a deposit is not paid until cleared funds are available. Ms Russell submits that that is the meaning of 'pay' in Rule 7(7). We disagree.

It is a long-established, on high authority, that a cheque or bill, if duly honoured, is payment as from the time of its being given. Belshaw v Bush 11 CB 191, per Cockburn CJ; Currie v Misa LR 10 Ex 153, per Lord Blackburn. As Lord Denning MR said, in the context of Order 14 proceedings on a dishonoured cheque:

"We have repeatedly said in this court that a bill of exchange or promissory note is to be treated as cash."

Fielding & Platt Ltd v Selim Najjar [1969] 1WLR 357, 361.

Of course, if a cheque is dishonoured, no payment will have been made and the claim will be struck out under Rule 7(7).

Ms Russell submitted that the amendment to Rule 7(7), substituting the word 'pay' for 'remit' had the effect of changing the requirement from handing in a cheque (remit) to paying the money, that is cleared funds (pay). We cannot accept that submission as a matter of construction, or indeed common-sense.

Take an everyday analogy. I go into the Post Office to buy a road fund licence for my car. I hand over a cheque and receive the tax disc. If the cheque is dishonoured, the licence become invalid; if in due course it is honoured, I display a valid licence straightaway. The same principle applies where a cheque for the deposit is tendered. To construe the word 'pay' as meaning cleared funds would be to introduce an element of uncertainty into whether or not payment had been made within time. The appellant's cheque in this case would not have been cleared until after the Christmas holiday. There may be a delay in presentation of the cheque by the tribunal staff. Would such a delay have the effect of putting a party out of time and thus liable to have his claim struck out under the mandatory provisions of Rule 7(7)? That cannot be right and happily is not the law.

The distinction between 'pay' and 'remit' is this, in our judgment. To 'remit' money means to send off the money. Once posted, the money has been remitted. Comber v Leyland (1898) AC 524, per Lord Herschell. To pay the deposit means that the cheque, in this case, is put into the hands of the tribunal, subject to its being honoured in due course.

Third question

Prior to the 1993 rule changes an order striking out an application as frivolous or vexatious (currently under r.13(2)(e)) was not a decision capable of review. Only 'decisions' may be reviewed under Rule 11. Casella London Ltd v Banai [1990] ICR 215.

Regulation 2(2) of the Regulations now provides:

"'decision' in relation to a tribunal includes-

a declaration,

an order, including an order striking out any originating application or notice of appearance made under rule 4(7) or 13(2),

a recommendation or an award of the tribunal, and

a determination under rule 6, but does not include any other interlocutory order or any other decision on an interlocutory matter;"

Under the High Court rules any judgment in default is an interlocutory order. RSC Order 59 r.1A(6)(f).

We are driven to conclude that, as Ms Russell submits, a strike out order under Rule 7(7), not being a strike out order under Rule 4(7) or 13(2), is an interlocutory order which is not a decision within the meaning of Regulation 2(2) and therefore not reviewable under Rule 11.

The explanation may be that the order under Rule 7(7) is mandatory, whereas those under Rule 4(7) and 13(2) are discretionary, as suggested by the EAT in Oommen (692E-F).

Consequently, it appears to us that the Chairman had no power to entertain an application for review of the strike out order in this case.

Fourth question

It would, in these circumstances, be absurd if the tribunal had no power to revoke a strike out order wrongly made under Rule 7(7). However, that is not the position. By Rule 16(1) the tribunal has power at any time, on the application of a party or of its own motion, to give directions on any matter arising in connection with the proceedings. We are satisfied that such power includes the power to set aside or revoke a strike out order wrongly made under Rule 7(7). See, by analogy, Nikitas v Solihull Council [1986] ICR 291, 295C-D.

Fifth question

Following Oommen (691H) the tribunal has power under Rule 15 to extend the time for paying a deposit provided for in Rule 7(7), if necessary after time under that rule has expired.

The Appeals

On its face, the order of 19th November 1997 was sent out on that date. Even allowing for deemed service under the postal rules the 21 day period provided for in Rule 7(7)(a) had expired, without application for an extension of time under Rule 7(7)(b), when the Chairman made the mandatory strike out order of 19th December 1997, promulgated on 2nd January 1998. Accordingly we shall dismiss the first appeal.

The real question is how the Chairman ought to have dealt with the appellant's letter dated 9th January 1998. Although headed "Application for Review of the Order" it is clear, from paragraphs 13 and 14 of that letter set out above, that the appellant sought a hearing in order to apply to have the strike out order set aside in circumstances where he contended that he had not received the PHR order until 6th December and had tendered a cheque at the tribunal offices on 23rd December, that is within 21 days of actual receipt of the relevant order for the purposes of Rule 7(7)(a). Alternatively, he sought an extension of time if necessary.

In our judgment the correct course procedurally was for the Chairman to order a directions hearing before a full tribunal to determine the factual question as when the appellant first received the PHR order and whether that was less than 21 days before he tendered his cheque, and if not whether time should be extended under Rule 15. Since the cheque was returned to the appellant uncashed there was no evidence as to whether there were funds to meet it. No doubt that point could be satisfied by the appellant producing his relevant bank statement.

Instead, the Chairman:

(1) misconstrued the start date for the purposes of Rule 7(7)(a), by taking the date of promulgation of the strike out order as the beginning of the period, instead of the date on which the decision was received by the appellant.

(2) wrongly concluded that he had power to consider the application as an application for review.

(3) dismissed the review application under Rule 11(5), whilst effectively allowing a review of that part of the strike out order which related to the breach of contract claim.

(4) mistakenly believed that the tribunal had no power under Rule 15 to extended time beyond that provided for in Rule 7(7)(b).

(5) failed to consider ordering a directions hearing under Rule 16(1) in order to resolve the issues arising before him.

In these circumstances we have concluded that the Chairman fell into error. We shall accordingly allow the second appeal and order that a directions hearing be held before a full Employment Tribunal consisting of a Chairman and members who have not previously sat on Mr Kuttapan's present case for the purposes of considering whether the strike out order should be set aside, having determined the factual issues to which we have referred.