United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR MARTYN WEST (Representative) Peninsula Business Services Ltd Riverside New Bailey Street Manchester M3 5PB
For the Respondent	MR VINEY (Of Counsel) As instructed by: Messrs John Halson Solicitors 26 Hope Street Liverpool L1 9BX

SUMMARY

Practice and Procedure

The Tribunal erred in striking out this Notice of Appearance by taking into account when doing so the failure of the Respondent to serve unilaterally its witness statements in circumstances where the Claimant was declining to exchange statements (the Tribunal having directed exchange). On review the Tribunal did not apply correct principles.


 


HIS HONOUR JUDGE RICHARDSON

1. I have before me two appeals by Peter Edwards Law Solicitors; ("PEL"). The first is against an order dated 2 July 2004 striking out PEL's Notice of Appearance for failure to comply with the directions of the Tribunal. The second is against a judgment dated 11 October 2004 given on review determining that the order of the Tribunal dated 2 July 2004 should stand. Generally speaking, appeals of this kind are dealt with by the Appeal Tribunal very speedily. On this occasion, however, there was delay for reasons which the Registrar explained in her letter dated 5 August 2005 in which she ruled the appeals to be in time. Following that ruling HHJ Serota considered the appeals on paper. He ruled out one ground of appeal pursuant to Rule 3(7) of the Appeal Tribunal's Rules and directed that the balance of the appeal be dealt with at full hearing by a judge alone.

The Background

2. Miss Simpson is a solicitor. PEL is a solicitor's practice. It describes itself as a small, primarily legal aid practice, representing clients who are mentally ill or have learning disabilities. Miss Simpson was employed by PEL as a solicitor from 5 June 2002 until 12 September 2003. On 12 September 2003 she was dismissed. She says she was dismissed unfairly; PEL says she was dismissed fairly for reasons relating to her capability or conduct. Miss Simpson presented an originating application alleging unfair dismissal on 21 October 2003. At all material times she has been represented by solicitors. Her application set out detailed grounds, telling a lengthy story of what she alleged was harassment and bullying by PEL. On 20 November 2003 PEL put in a Notice of Appearance. They were at this stage represented by solicitors. The Notice of Appearance also set out detailed grounds running to 48 paragraphs answering Miss Simpson's grounds. It is clear from these documents that the issues in the case are of important to both sides. If Miss Simpson is correct PEL fell far below the standards to be expected of a good employer, particularly a solicitor. If PEL are correct, Miss Simpson fell far below the standards to be expected of a solicitor in employment.
3. On 1 December 2003 a Tribunal Chairman considered the papers and gave directions. He directed that lists of documents be exchanged by 9 January 2004 and witness statements by 30 January 2004. He directed that the matter be listed for two days including remedies if appropriate. Lists of documents were exchanged in January 2004. On 22 January 2004 PEL's then solicitors asked Miss Simpson's solicitors for a postponement of exchange of witness statements. They said they expected to be able to exchange witness statements by 13 February 2004. Miss Simpson's solicitors replied that they had no objection to exchanging statements by 13 February.
4. On 30 January however, PEL ceased to be represented by solicitors. They became represented by a company known as Peninsula Business Services Ltd; ("Peninsula"), who hold themselves out as providing litigation and advocacy services in connection with employment law. At this stage problems began. On 10 February Miss Simpson's solicitors wrote to Peninsula asking them to confirm whether they would be in a position to exchange statements on 13 February. Peninsula did not reply. On 17 March Miss Simpson's solicitors wrote a follow-up letter threatening an application to the Tribunal. Peninsula did not reply. However on 18 March Peninsula wrote to the Tribunal asking for a fresh timetable with witness statements exchanged about a month before the hearing. Peninsula also suggested that a third day would be required for the hearing. By this time the hearing had been fixed for 26 and 27 July 2004. Miss Simpson's solicitors protested and applied for the Notice of Appearance to be struck out. They too said a third day would probably be required if the Notice of Appearance was not struck out. The Tribunal declined to strike out the Notice of Appearance but left the existing order in place saying that the longer PEL were in non-compliance, the more likely it would be that in the end, the Notice of Appearance would be struck out. The hearing date remained in place.
5. On 9 June 2004 Peninsula finally wrote suggesting exchange of statements on 14 June 2004. This was nearly five months after the date in the Tribunal's directions. It was, however, still six weeks prior to the hearing. This time it was Miss Simpson's solicitors who did not reply. Rather, they wrote to the Tribunal asking again for the Notice of Appearance to be struck out for breach of the direction. The Tribunal gave notice to Peninsula. Peninsula wrote to the Tribunal. Peninsula took a point as to whether any firm date for exchange had been agreed between the parties. There was nothing in that point; there was a plain direction of the Tribunal which had never been varied and remained in force. Peninsula also submitted that there was no prejudice to Miss Simpson; there was plenty of time to prepare. Since Miss Simpson had not exchanged her statements both parties were on equal terms.
6. In a subsequent exchange of correspondence Peninsula again made it clear to the Chairman that Miss Simpson had not exchanged her witness statements. They said:

"The Applicant's representative has nowhere pointed to any prejudice or injustice to his client. Indeed, his continuing refusal to exchange suggests that getting the statements earlier is of no consequence to him at all. On the other hand, to strike out the Respondent would cause them a massive injustice as being unable to defend themselves in a public forum against serious accusations, not just against the company, but against individual employees."

The Tribunal was therefore aware or should have been aware that Peninsula were saying that Miss Simpson's solicitors were refusing to exchange statements.

The Tribunal's Decisions

7. On 2 July 2004 the Tribunal Chairman ordered that the Notice of Appearance be struck out. There are no contemporaneous reasons for this decision, but her reasons appeared clearly from the reasons subsequently given for not reviewing this decision. Even on 1 July she would not have stuck out the Notice of Appearance if the witness statements had been sent (see paragraph 9). She said:

"I accept the point made by Mr Rees for the Respondent that the Respondent's representative wrote suggesting 14 June, but then the Respondent did not even meet the 14 June date which he himself had set. I ensured that my clerk telephoned Mr Warren Jones before I sent out the order to strike out the Notice of Appearance. The information given by my clerk was that the witness statements had not been received. Even then I was prepared not to strike out if the witness statements had been sent; they had not."

What the Chairman, in my judgment, overlooked at this point was what Peninsula had said in their letters namely that Miss Simpson's solicitors were refusing to exchange statements. The direction of the Tribunal had been for exchange of witness statements.

8. Following the Chairman's order there was an application for a review. Peninsula sent PEL's statements unilaterally on 13 July 2004 at the same time as applying for a review. Miss Simpson's solicitors sent her statements by return. The application was heard on 11 October. Both sides were represented. In her reasons refusing a review the Chairman pointed out that PEL had been in breach of the order for exchange of witness statements for some months. She pointed out that letters from the Tribunal had, in effect, warned what the consequences might be. She said:

"By the time this case was struck out the Respondent's representative had gone past the date suggested by the representative himself and had still never supplied the witness statements."

She then dealt with the question whether there could be a fair trial as follows:

"I agree that the authorities on this subject say the major consideration is whether a fair trial can still be had. Employment Tribunals now have an obligation to see that cases are managed properly and there is therefore a question of what the Tribunal is to do when a Claimant or a Respondent is properly represented and their representative takes no notice of what the Tribunal says.

I could take the easy way out and say 'Yes, I will revoke my decision and order costs for today's hearing instead' however I am concerned that if the only consideration is whether at the end of the day there can be a fair trial, then case management becomes pointless because parties can ignore the directions of the Tribunal, substitute dates which are convenient to them alone and then argue that a fair trial is still possible."

She went on in her reasons to say (in the passage that I have already quoted) that she had been prepared not to strike out if the witness statements had been sent.

Submissions

9. On behalf of PEL Mr West submits that the Tribunal erred in law by failing to have proper regard to the question whether a fair trial was still possible and whether any remedies short of striking out might meet the justice of the case. Mr West in particular submits that the Tribunal took into account a consideration which it was irrelevant and unfair to take into account, namely that Peninsula had not exchanged statements on 14 June when it said it was in a position to do so. Miss Simpson's solicitors did not take up the offer to exchange on 14 June. They did not reply to his letter; they applied instead to strike out the application. The Chairman overlooked or placed too much weight on the fact that the order had been for exchange but Miss Simpson's solicitors were declining to exchange.
10. On behalf of Miss Simpson Mr Viney accepts that in this case a fair trial was still possible. He says that the key question in the case is whether a strike-out can take place, and if so in what circumstances, when a fair trial is still possible. He submits that if an 'unless order' had been made by the Tribunal in March or April with a short date for compliance, PEL would have had nothing to complain about had they failed to comply and the Notice of Appearance been struck out. He says that what the Tribunal did in March and April by refusing to extend time for compliance with exchange of witness statements was, in effect, to impose an 'unless order'. He accepts that there was no date given for compliance but he says that at all material times PEL through its representative Peninsula, was aware of the risk of striking out and took that risk. There would be, he says, no sanction for breach of a court order such as this if it were not possible to strike out the claim. He submits that the Tribunal had a wide discretion under Rule 4(8) to strike out a Notice of Appearance if directions were not complied with. He accepts that the Tribunal's approach must be informed by authorities such as Bolch v Chipman [2004] IRLR 140 and Kaiser v Wilson [2001] IRLR 324 but he said ultimately that failure to comply with a direction is also a matter of importance with the Tribunal is fully entitled to take into account. He submits that no error of law was made by the Tribunal either in July or upon review where it reached a reasoned decision. The Tribunal, he submits, plainly had in mind the interests of justice when it declined to alter its decision on review.

The Law

11. This case was decided under the 2001 Rules:

4. "Case Management

(1) A tribunal at any time, on the application of a party or of its own motion give such directions on any matter arising in connection with the proceedings as appear to the tribunal to be appropriate.

(…)

(3) Directions under paragraph (1) may include any requirement relating to evidence (including the provision and exchange of witness statements), to provision of further particulars, and the provision of written answers to questions put to a party by the tribunal.

(…)

(8) If a requirement under paragraph (1) or (5) is not complied with, the tribunal-

(a) may make an order in respect of costs under rule 14(1)(a), or

(b) before or at the hearing, may strikeout the whole or part of the originating application, or, as the case may be, the notice of appearance, and, where appropriate, direct that a respondent be debarred from defending altogether…."

12. The law concerning the Tribunal's approach to striking out under these rules is now well established. It was summarised by the Appeal Tribunal in Weir Valves UK Ltd v Armitage [2004] ICR 371 at 374-375:

"13. What are the principles on which the employment tribunal should act in deciding whether to strike out in a case such as this, where there has been a breach of a direction?

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 issues is still possible: De Keyser Ltd v Wilson [2001] IRLR 324,328-329, paras 24 and 25, applying Logicrose Ltd v Southend United Football Club Ltd The Times, 5 March 1988 and Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167. De Keyser Ltd v Wilson was recently followed and applied in Bolch v Chipman, para 55(unreported) 19 May 2003 [see [2003] ICR Part 12, Recent Points.]

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, para 55(3) and (4). 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.

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 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 Ltd v Wilson [2001] IRLR 324, 329, para 25 and Bolch v Chipman, para 55(2).

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 caused 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.

18. In the Civil Procedure Rules 1998 (SI 1998/3132) there is, at Part 3, rule 9, a checklist to be considered upon an application for relief from a sanction. The Employment Tribunals Rules of Procedure 2001 contain no similar checklist; but the overriding objective in regulation 10 requires a broadly similar approach. As Millet J said, in another context in Logicrose Ltd v Southend United Football Club Ltd: "The court must always guard itself against the temptation of allowing its indignation to lead to a miscarriage of justice."

13. In the context of an application to review a decision to strike out, the Appeal Tribunal has similarly said that the criteria set out in Rule 3(9) of the Civil Procedure Rules are relevant (see Maresca v Motor Insurance Repair Centre [2005] ICR 197 at 209-210.

Conclusions

14. When the Tribunal Chairman decided to strike out the Notice of Appearance she clearly had in mind both that PEL's Notice of Appearance was liable to be struck out by reason of the breach of the order and also that such a result was not inevitable. She was aware that she had a discretion to exercise. Thus far she was, in my judgement correct. Given that there was a breach of an order a gateway was open by virtue of which the Tribunal was entitled to strike out the Notice of Appearance. However, such a result was by no means obvious. PEL had been ready to exchange witness statements six weeks before the hearing. PEL were saying, with some force, that it was still possible to have a fair hearing. The Chairman was plainly prepared in principle to refuse the application to strike out. In my judgment she was right to contemplate refusing the application. Miss Simpson's solicitors had not pointed to any prejudice except that if the statements were exchanged the hearing might not finish in two days. While it might be undesirable for a case to go part-heard it would not be an error of law for a Chairman to consider that this was a preferable course if it proved necessary to striking out the application altogether.
15. However, before doing so she checked to see if PEL had in fact exchanged statements. Finding that PEL had not done so she struck the Notices of Appearance out. Here, in my judgment, she fell into error. If she had enquired she would have found that PEL had been perfectly willing to exchange and on this occasion it had been Miss Simpson's solicitors that had failed to respond to its letter, preferring to write to the Tribunal to make the application. It was an error to strike out the application because the statements had not been delivered without taking into account why they had not been delivered. PEL had said in correspondence that Miss Simpson's solicitors were refusing to exchange. In my judgment either the Chairman overlooked this, or the Chairman placed weight on PEL's failure to send the statements unilaterally which that failure could not bear. I think the probable explanation is that the Chairman overlooked the matter otherwise her clerk would have been directed to enquire not only whether the statements had been exchanged but whether it was true that Miss Simpson's solicitors were refusing to exchange.
16. I turn to the review hearing. In my judgment the Chairman approached the review hearing erroneously. Firstly, she did not put right the error she had made in the first instance, although the point was very clearly made in the application for review dated 13 July 2004 that Miss Simpson's representatives were refusing to exchange witness statements. If the Chairman thought that notwithstanding the earlier direction PEL should have sent its witness statements unilaterally and that was the decisive feature in her reasoning, then in my judgment she should have dealt with that and set out why.
17. Secondly, in any event, there is in my judgment no sufficient balancing of the factors relevant to review of a striking out decision where there has been breach of an order (see Weir Valve UK Ltd v Armitage [2004] ICR 371 and Maresca v Motor Insurance Repair Centre [2005] ICR 197 which I have quoted above). The Chairman is right to say that it is a relevant and important factor in determining whether to strike out that there has been breach of a direction. But it is then important to carry out a careful review as to where the interests of justice lie on the question whether to allow relief from the sanction of striking out.
18. It follows that this appeal will be allowed and the order striking out the Notice of Appearance set aside. The question then arises as to whether this is a case where the Chairman ought again to consider the question of striking out the Notice of Appearance or where this Appeal Tribunal can effectively impose its own view as to the correct result. This Appeal Tribunal can only substitute its own decision for that of the Tribunal if it is plain what the result ought to have been. Otherwise the matter has to be returned to the Tribunal for it to exercise its own discretion in accordance with proper principles.
19. In my judgement it is plain that the application to strike out the Notice of Appearance ought to have been refused. This is what the Chairman would have done if she had not placed so much weight on the fact that the statements had not been sent. PEL's representatives, though tardy in the extreme, were ready to exchange witness statements six weeks before the hearing. The statements have been exchanged. It is common ground that there was nothing in the late delivery of those statements which rendered a fair hearing impossible. It is true that the hearing time might have increased from two days, although I must say for myself that looking at the originating application and Notice of Appearance, I doubt whether a two-day time estimate was ever a realistic one. In my judgment the Chairman was right when she was prepared not to strike out the Notice of Appearance and wrong then to base her decision on the failure unilaterally of PEL to send its statements.
20. Therefore, the appeal will be allowed; the order striking out the Notice of Appearance will be set aside; and the case will be remitted to the Tribunal to continue with the proceedings. That will certainly involve the setting of a new hearing date. It may involve further directions.