United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant

Mr A Straw (Counsel) Ripon Citizens Advice Bureau 5 Duck Hill Ripon HG4 1BL

For the Respondent

Mr N Brockley (Counsel) Messrs Kirbys Solicitors 32 Victoria Avenue Harrogate North Yorkshire HG1 5PR

SUMMARY

Practice and Procedure

The Employment Tribunal was faced with a delay in serving witness statements and a mistaken assumption that the hearing would be adjourned by consent. It considered that the Respondent's conduct had been unreasonable and in breach of orders of the Tribunal so it struck out the Notice of Appearance and refused to permit the Respondent to cross examine the Claimants or to make submissions. The Employment Tribunal failed to consider whether a fair trial was possible or whether it was proportionate to apply a lesser sanction. The Appeal was allowed and the sanction against the Respondent was limited to debarring the Respondent from calling witnesses.


 


HIS HONOUR JUDGE D SEROTA QC

Introduction

1. This is an appeal by the Respondent employer Laing O'Rourke Group Services Ltd against the order of the Employment Tribunal at Reading chaired by Mrs J Hill entered onto the Register on 2 November 2004. On that occasion the Respondent's Notice of Appearance was struck out under Rules 18 (7C) and (E) of the 2004 Employment Tribunal Rules of Procedure to which we shall refer in due course.
2. The Respondent was ordered to pay various sums to the Claimants including unpaid lodging allowance and holiday pay in the sum of roughly £5000 each. His Honour Judge Pugsley referred the matter to a preliminary hearing on 4 January, and Bean J referred the issue before us today, although not the issue in relation to holiday pay, to a full hearing on 1 March.

The Issue

3. Let us say something now about the background to these proceedings. The Claimants are both joiners or carpenters. Mr Woolf joined a sister company of the Respondent in August 2002 and Mr Jones some time in September 2003. In February 2004 the employment of Mr Woolf and Mr Jones was transferred to the Respondent, which as we have said is the sister company of Laing Construction Services and an issue arose between them and the Respondent as to their entitlement to a weekly lodging allowance of some £175. The Claimants maintained that after February 2004 they remained entitled to this sum, the Respondents denied that this was the case. The Claimants were throughout represented by their union – UCATT and the ET(1) that was filed on 11 May was in fact filed through UCATT. On 7 June the Respondent served its notice of appearance and on 14 June the Employment Tribunal fixed a hearing for 30 July. I should have said that the originating application had only been issued in respect of the first rather than the second claimant. The second claimant's originating application was presented on 17 June, also through UCATT, and on 5 July another Notice of Appearance was entered by the Respondent.
4. As a result of there now being two similar Originating Applications, on 14 July UCATT sought an adjournment. On 15 July the Employment Tribunal Chairman adjourned Mr Woolf's hearing to 3 September and listed that of Mr Jones for 20 August. It was then appreciated that the two cases should conveniently be heard together and on 9 August the Chairman ordered the two cases to be consolidated and heard together on 3 September. On 27 August the respondent applied to amend its Notice of Appearance and the application was granted on 31 August 2004.
5. Now it is right to say that the Notice of Appearance makes clear the factual dispute between the parties. The factual dispute between the parties included an issue as to the terms of a conversation between a Mr Kiff of the Respondent and the Claimants. We draw attention to paragraph 15 of the amended Notice of Appearance.

"In or around early February 2004 the applicant met with Laing's Tony Kiff, the Project Manager for the Maple Cross project on site to discuss the applicant's possible transfer to working for O'Rourke on the John Radcliffe project. Mr Kiff informed the applicant that he would be paid on a different basis as O'Rourke paid an all inclusive shift rate, he would not receive an additional payment for travel or subsistence. Mr Kiff provided the applicant with a name and telephone number of one of the construction manager's of the John Radcliffe project and advised the applicant to contact the construction manager to find out the shift rate that he would be paid."

And then paragraph 18

"At the outset of his first day the Applicant met with O'Rourke's Damian Finn, a construction manager for the project, Mr Finn confirmed to the applicant his daily shift rate would be £110 with a bonus of £30. This was an all inclusive rate and he would not be paid any additional monies for subsistence or travel. The applicant did not expressly reply that he objected to this in any way and he commenced work."

6. On 1 September the claimants sought an adjournment of the hearing because the Notice of Appearance had been amended but the Chairman took the view that no adjournment would be granted because no new point was raised. At this point in time we do not believe that any directions for the conduct of the hearing had been given. On 3 September the parties and their witnesses attended but the claimants through the UCATT representative, Mr Dooley, renewed the application to adjourn. On this occasion the Employment Tribunal granted the adjournment on the basis that the Notice of Appearance had been amended late and raised what were said to be complicated issues.
7. The case was re-listed for 26 October 2004 and directions were given for service of further amendments, disclosure, service of schedules of loss, preparations of bundles and in particular, exchange of witness statements, which were to be exchanged by 12 October 2004. Thereafter the various amendments were made both to the Originating Applications, and the Notices of Appearance. The Claimant's Schedule of Loss was served and the Respondent's prepared a bundle of documents, nearly all, if not all of which, had been supplied to the Claimant at the hearing of 3 September.
8. A bundle of documents was sent by the Claimants' on 13 October and they asked the Respondent to prepare a hearing bundle. On 22 October, which was a Friday, there was a flurry of activity. We may be wrong about this but as at 22 October, Mr Jones had not served a witness statement. A Witness Statement had certainly been served at some point in time in respect of Mr Woolf but it may be that that witness statement was subsequently amended. Certainly no Witness Statement was served after 13 October. In addition the Respondents had not served any Witness Statements at all. At some point in time during the day, they sent by post, a bundle and copies of two witness statements, which they also faxed to Mr Dooley at approximately 5.50pm. No explanation for the delay in serving the witness statements was given to the Employment Tribunal. There was some conversation on that day between Mr Gold, the in-house solicitor for the Respondents, and Mr Dooley. Mr Dooley said, that in effect, the Claimants would have to seek an adjournment. He would not be in the office on Monday 25^th and so would only see the bundle and witness statements for the first time on 26 October. Mr Gold said he did not consider the Claimants would be disadvantaged by late service and initially said he would oppose an adjournment, although in a subsequent conversation he appears to have agreed with Mr Dooley that he would consent to an adjournment. Mr Dooley faxed the Employment Tribunal on 25 October, sending certain correspondence he had had with Mr Gold, and asked for an adjournment. The Chairman refused an adjournment and said the matter would be dealt with at the hearing. Mr Gold then faxed a letter to the Tribunal in the following terms:

"Case Number 2701130/2004

We understand that the Tribunal's response to our earlier letter to you of today and UCATT's Michael Dooley's letter to us of 22 October 2004 is that any application for adjournment will be dealt with at the hearing tomorrow.

This is quite unsatisfactory as we will be travelling from Dartford and one of our witnesses will be travelling from Manchester. If the hearing is adjourned tomorrow morning this will be the second time that we will have attended with our witnesses, only for the hearing to be adjourned. We would therefore be grateful if a decision could be taken on this matter today.

In order to prevent a second wasted attendance we would be willing to agree to any application to adjourn that the Applicants have made, or, if they have not done so, we hereby make an application to adjourn on the basis that the Applicants are not ready."

After speaking to Mr Dooley, Mr Gold sent a fax in these terms:

"Further to our earlier letters of today and our conversations with your Ms Landon, we have spoken this evening with the Applicants' representative, UCATT's Michael Dooley. He has confirmed that he intends at the outset of tomorrow's hearing to make an application for an adjournment on the grounds that he has not had sufficient time to consider the Respondent's witness statements and the consolidated bundle of documents, which were only issued to him at the end of last week.

Although we were minded to object to the Applicant's application, as we detailed in our first letter of today, we have concluded that because it is probable the adjournment will be granted, the most sensible course of action, to avoid wasting time and money, is to consent to the adjournment in writing and not to attend the hearing tomorrow.

We discussed the matter further with Mr Dooley, and agreed that he will attend the Tribunal in person tomorrow to make the application for an adjournment, and we would write confirming our consent to this, which we hereby do. Mr Dooley also said that he would inform the Applicants not to attend tomorrow.

In coming to our decision we were influenced by what occurred at the previous hearing, where the Applicants also made an application for an adjournment at the outset of the hearing which was granted, and that one of the Respondent's witnesses has to travel down from Manchester. We were very reluctant to insist that this witness should attend tomorrow, when it was likely that the hearing will be adjourned again and he would have had a second wasted journey.

We are proposing not to attend tomorrow ourselves simply to save the Respondent's costs, which is obviously an overriding principle of the Employment Tribunal Procedure. However, we could attend by telephone, if this is possible, or we could travel to Reading at short notice. We estimate that it would take us approximately two hours to travel to Reading. We would be grateful if as soon as possible you could pass a copy of this letter to the Chairman that has been allocated tomorrow's hearing and obtain his views on whether he would like us to attend the hearing, and if so, in what form.

We accept some responsibility for this situation as the Applicant is seeking an adjournment as a result of our failure to comply with the directions made by Mr Hardwick on 3 September 2004, for which we apologise. We refer you to our first letter of today for details of what steps we have taken to comply with the directions."

9. Between the first and second letter, Mr Gold had spoken to Mr Dooley, and had agreed over the telephone, so he said, with Mr Dooley, that there should be an adjournment. Now let me say straight away that Mr Gold is an in-house solicitor with a construction company and as he frankly told us his speciality is in construction law. He has appeared on six or seven occasions in Employment Tribunals but it is apparent that his knowledge of Employment Law and procedure in Employment Tribunals is not very great. There is no doubt whatever that Mr Gold's unilateralist approach to an adjournment without the reference to, or consent to the Employment Tribunal, rather upset the Employment Tribunal. These days adjournments in Employment Tribunals are not granted as of right. They are only granted for good reason when it is necessary. The days when parties could agree adjournments between themselves have long gone and Employment Tribunals are jealous of their time and resources and quite rightly are reluctant to adjourn cases when time has been set aside for them.
10. We note that in the letter at page 75 there is a suggestion that no Witness Statement had been received by the Respondents from Mr Woolf although they had, as we have said, probably received one rather earlier although perhaps not in an amended form, but certainly none had been received from Mr Jones. It is necessary to consider the two Witness Statements that were served, albeit very late. They are both extremely short. Mr Finn's statement is ten paragraphs and the substance of it is in little more than a page. The substance of Mr Kiff's which is twelve paragraphs long is contained in little more than two pages. There is very little of substance in those Witness Statements that is not in the amended Notices of Appearance and trying to be realistic there is nothing in these Witness Statements that at the end of the day could have taken very long for Mr Dooley and his clients to absorb. Be that as it may this matter seems to have proceeded at the Employment Tribunal without any consideration by either the claimants or the Employment Tribunal of these Witness Statements.
11. On 26 October the Respondents, through Mr Gold, did not attend the Employment Tribunal. Mr Gold naively and unwisely assumed that the case was going to be adjourned. He had also stood down his two witnesses, Mr Finn and Mr Kiff. Understandably, the Chairman was irritated to say the least and directed that Mr Gold be told to attend at once and warned that the Employment Tribunal was considering striking out the Notices of Appearance on the grounds of unreasonable conduct and failure to comply with directions. That is more or less what happened. We shall come to the decision of the Employment Tribunal shortly. The Respondents sought a review of the decision, which was refused by the Chairman.
12. The Employment Tribunal, whose decision we now turn to, recognized at once that an order striking out proceedings in toto was to be regarded as a draconian order. The Tribunal aid this:

"14 Where the unreasonable conduct which the Employment Tribunal is considering involves no breach of a court order, the crucial and decisive question will generally be whether a fair trial of the issue is still possible: De Keyser Ltd v Wilson [2001] IRLR 324, at paragraphs 24 to 25 applying Logicrose Ltd v Southend United Football Club Ltd (Times, 5 March 1998) and Arrow Nominees Inc v Blackledge [2000] 2 Butterworths Company Law Cases, 167. De Keyser Ltd v Wilson was recently followed and applied in Bolch v Chipman [2003] EAT 19 May, a decision which has been starred and is likely to be reported: see pages 21-22.

15 Even if a fair trial as a whole is not possible, the question of remedy must still be considered so as to ensure that the effect of a debarral order does not exceed what is proportionate: see Bolch v Chipman at pages 23-25. For example, it may still be entirely just to allow a defaulting party to take some part in a question of compensation which he is liable to pay: see page 25.

16 Those principles apply where there is no disobedience to an order. What if there is a court order and there has been disobedience to it? This is an additional consideration. The principles which we have set out above do not apply in the same way. The Tribunal must be able to impose a sanction where there has been wilful disobedience to an order: see De Keyser v Wilson at paragraph 25, Bolch v Chipman at page 22

17 But it does not follow that a striking out order or other sanction should always be the result of disobedience to an order. The guiding consideration is the overriding objective. This requires justice to be done between the parties. The court should consider all the circumstances. It should consider the magnitude of the default , whether the default is the responsibility of the solicitor or the party, what disruption, unfairness or prejudice has been cause and, still, whether a fair hearing is still possible. It should consider whether striking out or some lesser remedy would be an appropriate response to the disobedience."

The Employment Tribunal then went on to consider the merits but the Respondents were not permitted to participate. They were not able to make submissions nor were they entitled or permitted to cross examine. Unsurprisingly, in those circumstances, the Employment Tribunal found in favour of the Claimants.

13. The thrust of the submissions made on behalf of the Respondents, is that the Employment Tribunal failed adequately to consider, before imposing so drastic a sanction, whether a fair trial was possible despite the default. Further, and we perhaps condense the grounds, the Employment Tribunal having regard to the overriding objective was bound to consider the proportionality of the sanction to be imposed, but failed to do so.
14. We shall turn to the authorities shortly but before so doing, it is helpful we think to refer to the relevant regulations. Firstly, we remind ourselves that the Employment Tribunal was bound to have regard to the overriding objective which was to ensure that cases were dealt with justly, that included dealing with the case in ways proportionate to the complexity or importance of the issues (rules 32(B) and 32(C)) ensuring it is dealt with expeditiously and fairly and (rule 32(D)) saving expense. The Rules of Procedure provide in Rule 8, that where the relevant time limit for presenting a response has passed, the Chairman might issue a default judgement. In circumstances where no response was presented, or a response had been presented, but a decision had been made not to accept the response, has been made either by the Secretary or by a Chairman, rule 9 makes clear that the Respondent is not entitled to take part in the proceedings except to a limited extent. Rule 9 provides, and is appears below.

"Taking no further part in the proceedings

9. A respondent who has not presented a response to a claim or whose response has not been accepted shall not be entitled to take part in the proceedings except to -

1. (a) make an application under rule 33 (review of default judgments);

(b) make an application under rule 35 (preliminary consideration of application for review) in respect of rule 34(3)(a) and (b);

(c) be called as a witness by another person; or

(d) be sent a copy of a document or corrected entry in accordance with rule 8(4), 29(2) or 37…."

15. We now turn to Rule 18 which provides (and is headed 'Conduct of Pre-hearing Reviews') and it provides that the Chairman or the Tribunal in certain circumstances has power under Rule 18 (7C) to strike out any claim or response, or part of one, on the grounds that the manner in which the proceedings have been conducted by or on behalf of the Claimant or the Respondent as the case may be, has been scandalous, unreasonable or vexatious. Now it is right to say that the Employment Tribunal was satisfied, that the proceedings had been conducted in a manner that was unreasonable. There is also under Rule 18 (7E) power to strike out a claim or response or part of one, for non-compliance with an order or practice direction. The Employment Tribunal in the passages we have read, relied upon Rule 18(7E) as well.
16. There is a substantial body of authority which we need not refer to in detail. We refer to the decisions in De Keyser v Wilson, R Bolch v J Chipman, Weir Valves & Controls (UK) Ltd v JB Armitage, as well as three other cases, National Grid Company Plc v Virdee, Profile Analysis Ltd v S Cassidy, and SM Grady v Home Office; these cases make clear that save in cases where there has been a breach of an order or rule, and where the default can be regarded in the language used by Mr Justice Burton in Bolch v Chipman as being wilful, deliberate or contumelious disobedience of the order of the Court, a Court or a Tribunal should not strike out a case by way of punishment but should always ask whether a fair trial could be achieved. In our opinion when the Employment Tribunal in the present case said that a fair trial could not be achieved "today", all that the Employment Tribunal was saying was that it would not be possible for the Respondents witnesses and the Claimant's witnesses to be heard on that day in view of the relatively limited time available – 2 hours at least having already been lost – together with the time spent on considering whether or not there should be a strike out. It is also right to note that albeit the conduct of the Respondent and Mr Gold, might be categorized as unreasonable, the Employment Tribunal did not categorize his conduct as being wilful, deliberate or contumelious, either generally or in respect of the failure to serve Witness Statements on time.
17. Had this been a case in which the Employment Tribunal had concluded that there was a deliberate ploy on the part of Mr Gold to embarrass the Claimants and Mr Dooley by deliberately serving Witness Statements late on a Friday evening, knowing that Mr Dooley would be embarrassed because he could not see them until the day of the hearing on Tuesday, this case would have a different complexion but that is not the finding that was in fact made by the Employment Tribunal. We are satisfied that the Employment Tribunal should have had regard to the principle referred to earlier insofar as the Employment Tribunal struck out the proceedings for conduct apart from the failure to serve witness statements. Although it is possible to strike out a Notice of Appearance for breach of an order, such as the order as here to serve witness statements, without reference to the possibility that a fair trial may still be had, nonetheless that is always a relevant consideration to be considered in the exercise of the discretion of the Employment Tribunal. That as it seems to us appears from the decision of the Employment Tribunal in Weir Valves and Controls (UK) Ltd v JB Armitage.
18. In any event it seems to us that that is a matter that would be required to be considered by reason of the overriding objective. There are a number of authorities in particular, the judgment of Mr Justice Millet in Logicrose Ltd v Southend United Football Club Ltd as well as Bolch v Chipman, in which it has been made clear that Employment Tribunals and Courts should not be so outraged by what they see as unreasonable conduct as to punish the party in default in circumstances where other sanctions can be deployed and where a fair trial is still possible.
19. It is clear in this case that the Employment Tribunal was also required, on whatever basis it made its order, to consider issues of proportionality. It does not appear to have done so. The Employment Tribunal, had it, in our opinion, considered the issue of proportionality, as well as the issue of a fair trial, would have concluded that in this case, the prejudice to the Claimants was minimal, having regard to the fact that the Witness Statements added little to what was already in the Notices of Appearance.
20. However, the Employment Tribunal was certainly entitled to have regard to the fact, firstly that there had been breach of an Order in relation to service of Witness Statements, and that the other conduct to which it referred, merited a sanction, and there was no good reason why it should not effectively, by default, so as to speak, permit the Respondents to have the benefit of an adjournment when they had chosen not to bring their witnesses to the Tribunal. In addition, to that, there was of course the fact that the Respondents had been responsible for wasting a good proportion of the time allotted for the hearing. Bearing in mind, that the Directions Order itself made clear that the Tribunal was most unlikely to hear evidence from any witness whose statement has not been exchanged pursuant to its Order, the Employment Tribunal, in our opinion, applying the principle of proportionality should have simply said to the Respondents, "Very well then, the case will go on but without your witnesses."
21. The case of Bolch v Chipman is authority for the proposition that where a Notice of Appearance is struck out, it is as though none was served, or none accepted, so the Respondent would not be entitled to participate in the proceedings at all. However, the Employment Tribunal, in our opinion, should have recognized that that was a wholly disproportionate sanction and that matters could have been dealt with, as we have suggested, by simply denying the Respondents the right to call any evidence. It would have left the Respondents entitled to cross examine the Claimants, to put documents to them, and make appropriate submissions. The Employment Tribunal in our opinion did not properly direct itself and we are therefore able to review its decision and conclude that that is the decision it should have come to, had it properly directed itself. It seems to us that to debar the Respondents from participating at all was quite disproportionate and amounted to a punishment of the Respondents' which was inappropriate when there was no reason why the case could not be heard, albeit without the Respondents' witnesses.
22. We therefore are minded to allow the appeal but we do so on the basis that there must be a re-hearing but the Respondents are debarred from calling evidence at that hearing. We would express the hope that the parties might think it sensible to seek to come to a negotiated compromise, having regard to the relatively modest sums involved and the significant expense of returning to the Employment Tribunal. We also make clear, in our opinion, that whatever use on the shop floor so as to speak, or on building sites, may be made of the decision of the Employment Tribunal in favour of the Claimants, that decision is of no real authoritative value as a precedent because the issues between the parties have never been fully argued and evidence has never been heard on both sides. We assume that our views will be communicated to UCATT and borne in mind.