United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr Andrew Hochhauser (one of Her Majesty's Counsel) Mr Sean Jones (of Counsel) Messrs Burges Salmon Solicitors Narrow Quay House Narrow Quay Bristol BS1 4AH
For the Respondent	Mr Paul Downes (of Counsel) Messrs Allen & Overy LLP Solicitors One New Change London EC4M 9QQ


 


Summary

Practice and Procedure – Case Management

Case Management – restrictions in ambit of expert evidence – no error of law in Tribunal Chairman's decision.


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal by Miss M Makar against a Case Management Order dated 20 September 2006, made by a Tribunal Chairman Miss Lewzey sitting alone at London (Central). The order related to the scope of expert evidence in proceedings between Miss Makar and her former employers Triad Group Plc, ("Triad"). Before turning to the order it is necessary to summarise as simply as I can, the issues between the parties and the course of the proceedings to date.

The Background Facts

2. Triad is a company listed on the London Stock Exchange. It ran essentially two businesses, one in consulting the other in IT contracting. Miss Makar was its chief executive. She had been an employee since April 2001, although her involvement with Triad predated that time by some years; she had been a director since 1994. In 2004 Miss Makar began to express concerns about financial impropriatory in part of Triad's business. She expressed those concerns to the board, to Triad's audit committee in a series of 3 reports during January 2005, to Triad's solicitors in late January and early February 2005 and to Triad's stock brokers in early February 2005. On 8 February 2005 Triad suspended her. Triad also instructed accountants to undertake an audit. Miss Makar instructed solicitors. Her solicitors continued to express her concerns to Triad's solicitors; she herself expressed concerns to the auditors.
3. In July 2005 Triad announced preliminary results which Miss Makar regarded as highly misleading by reason of the auditors being given misleading information. She expressed her concerns to the FSA principally in a document entitled "The Problems of Triad". She commenced legal proceedings in her capacity as director seeking information which she said had been withheld from her. She raised her concerns at Triad's AGM. On 8 December 2005 she was dismissed and removed as director; allegations leading to her dismissal are set out in a letter dated 16 November 2005.

The parties' case in outline

4. Miss Makar says that the concerns which she expressed to the board, to the audit committee, to the solicitors, to the auditors, to the court and to the AGM were protected disclosures within the meaning of part IVA of the Employment Rights Act 1996. She says that contrary to section 47(B), Triad subjected her to detriment for making these disclosures by sidelining her, suspending her, undermining her and campaigning against her. She says she was dismissed from making these disclosures, so her dismissal was automatically unfair by virtue of section 103(A). She says in any event that the dismissal was unfair though substantially and procedurally (see section 98 and 98(A) Employment Rights Act 1996). She says, bluntly, that following her suspension there was a cover up in the financial affairs of Triad so that the auditors produced a clean report.
5. Triad says that Miss Makar was engaged to a campaign to increase her power in the company, so she was seeking ways to undermine attack and replace certain other senior managers in the company. Triad accepts that Miss Makar raised concerns, in particular to the audit committee, some of which were well founded. The Triad says that when the board did not react by removing the senior managers concerned, allegations became increasingly extreme and hostile. Triad says she was suspended because her allegations suggested she had lost all judgment or was acting for ulterior motives. Triad says that during her period of suspension she mounted a campaign against the company which involved making unfounded allegations to the board, auditors, stock broker, FSA, the press and on her personal website. Triad says the reason for her dismissal was a fundamental breakdown in trust and confidence caused by her misconduct.

Qualifying Disclosures

6. Before I come to the course of proceedings it is convenient to say a word about the law relating to protected disclosures. The question whether Miss Makar made these to various bodies is central to the proceedings. Before any disclosure can be protected for the purposes of the 1996 Act it must qualify for disclosure within the meaning of section 43(B). To qualify under section 43(B) the disclosure must be a disclosure of information, the information must, in the reasonable belief of the worker, tend to show one or more states of affairs which are set out in section 43(B)(1)(a)-(b) and which constitute certain kinds of wrong doing.
7. At this stage it will be noted, it is not a prerequisite that the worker should have reasonable grounds for believing the information to be true. It is sufficient that he reasonably believes the information tends to show a state of affairs of the kind parliament has prescribed. At this stage the focus is on the worker's reasonable belief that the information is of a particular type, not on the workers belief, reasonable or otherwise in the truth of the information. If the disclosure qualifies under section 43(B) it will be protected if it falls within one of the categories set out in sections 43(C) to 43(G).
8. Section 43(C) applies where the qualifying disclosure is to an employer; the disclosure is protected if it is made in good faith. In the ordinary case therefore, where an employee makes a qualifying disclosure to his employer, the question whether the information disclosed is true or whether there were reasonable grounds for believing it to be true is not in itself central. Of course that does not mean that it is irrelevant to whether the information is true or believed on reasonable grounds. Depending on the circumstances either of these states may make it easier for the worker to establish he made the disclosure in good faith. But that need not necessarily be the case. If a worker overhears in a pub that another worker was stealing from his employer, he may be quite unable to say whether what he overhears is true or not but he will generally act in good faith, if he passes the information onto his employer's security department.
9. Section 43(D) applies where a qualifying disclosure is made in the course of obtaining legal advice; here it is not necessary for anything further at all to be established before the disclosure is a protected disclosure.
10. Section 43(F) applies where a qualifying disclosure is made to a person prescribed in an order by the Secretary of State; the FSA is in certain respects such a person. Under this section, the tests for disclosure are stricter; the worker must reasonably believe that he is disclosing a failure which falls within the remit of the body concerned and that the information disclosed and any allegation in it was substantially true. Section 43(G) requires qualifying disclosure in other cases; here the circumstances are yet more closely confined by the legislation.

Case Management

11. At present the Tribunal hearing is listed to begin on Monday 6 November and to run until 21 December. The hearing was fixed for six weeks allowing for some days when the Tribunal will not sit. There have been a number of case management discussions. The Tribunal has had to deal with a wide variety of issues particularly concerning disclosure. I am principally concerned that with two of those case discussions.
12. The first took place at the beginning of August 2006. The result was an order dated 22 August 2006. It is important to note that at this discussion an order was made for a list of issues with an attached schedule of disclosures to stand as the issues before the Tribunal.
13. On the question of expert evidence, the order effectively stipulated that the parties follow one of two procedures. Either by paragraph 2.1 they were to agree the identity of a joint expert and terms of reference and then to produce a report by 13 October with questions to follow; or by paragraph 2.2 and succeeding paragraphs, if they could not agree a joint expert the parties were ordered to notify the Tribunal and each other of the identity of the expert by 1 September and to serve the report of their individual expert with certain attachments by 13 October 2006.
14. Two features of the order should be noted. First, it does not identify the area of expert evidence; there was debate about this before the Tribunal Chairman. Second the order does not in turn grant permission to call experts live at the hearing but it was plainly envisaged that experts were to be heard because their dates were to be brought in September for timetabling.
15. The Chairman's reasons for this order are understandably succinct. She said she was "satisfied at the need of an expert". She recorded a debate as to whether the evidence might go beyond that of a forensic accountant because a financial expert with accountancy and market compliance experience might be needed. She would have preferred the parties to agree, but if not she made provision for individual experts.
16. There followed some correspondence between the parties. At one time it seemed possible that there might be some agreement as to the use of a joint expert, but this possibility was short lived, in particular, Triad having promised certain concessions as to the disclosures alleged by Miss Makar said that no expert evidence of an accountancy nature was required.

The Order Dated 20 September

17. On 19 September the parties came to the Tribunal for a fourth case management discussion. The unresolved issues of expert evidence were before the Tribunal on that occasion. I note in passing, that the Tribunal varied the dates for expert evidence; reports were to be served by the 31 October, experts were to meet by the 7 November and to be served by the 14 November, when the hearing was already a fortnight old.
18. On the question of financial expert evidence it was Triad's submission that none was necessary. Mr Downes, making submissions on behalf of Triad, analysed the issues in respect of three time periods as indeed he did before me today. As regards to the first time period for December 2004 he submitted, as recorded by the Chairman, that the ten matters set out in paragraph 34 of the claim form were all conceded as qualifying disclosures in respect of which the Claimant had a reasonable belief. He argued that the only outstanding matter was motive. The Chairman recorded his submission as being, that since Triad conceded that these were qualifying disclosures and the Claimant had reasonable grounds, expert evidence was unnecessary for this first period. In relation to the second and third periods, Mr Downes argued that an expert was unnecessary because a clean audit was issued on 29 September 2005 and the audit partner of PWC would be called to give evidence. Mr Hochhauser, on behalf of Miss Makar, did not accept that there should be any restriction on expert evidence for any party.
19. The Chairman's order, which is under appeal, was:-

"It is ordered that the expert evidence of each party is not required where Respondent has conceded both a qualifying disclosure and reasonable belief. This does not affect the order for expert evidence in relation to market practice".

20. The Chairman's reasoning is set out in paragraph 1.8 to 1.11 of her reasons. She referred to the overriding objection set out in regulation 3 of the Employment Tribunal Constitution and Rules of Procedure Regulations 2004. She noted the complexity of the case and said that expert evidence should be restricted to issues where it is necessary for the fair disposal of the case. She noted Mr Downes concession on behalf of Triad, She referred to Darnton v University of Surrey [2003] ICR 615 where HHJ Serota said that the determination of the factual accuracy of the disclosure by the Tribunal, will in many cases be an important clue in determining whether a worker held the reasonable belief that this disclosure tended to show a relevant failure. She said that "qualifying disclosure and reasonable belief" were conceded in respect of those items set out in Triad's concession schedule.
21. The Chairman then quoted a skeleton argument of Mr Hochhauser where he said that expert evidence on financial matters would assist the Tribunal to determine, four particular, interlinking issues. Was the financial position of the company as Miss Makar believed it to be? Did she in fact believe the financial position of the company to be as it was? If that were indeed the financial position what should the consequences of that have been, in terms of onwards disclosure of information by the company or actions by the company? Was Miss Makar's belief, reasonable given the information in her possession at the time of holding the belief?
22. The Chairman then said:-

"The Chairman took the view that these went to reasonable belief which has been conceded for the disclosures in question."

She concluded:-

"In these circumstances the decision of the Chairman is to limit the experts report to those disclosures which have not been conceded as qualifying disclosures where reasonable belief has also not been conceded. The experts report will therefore cover all non-conceded qualifying disclosures. It is made clear that this order does not restrict the need for an expert on market compliance."

23. Before I turn to the submissions and my conclusions on them, it is important, in my judgment, to make two points about the effect of the order.
24. The first is this. It will limit the scope of expert evidence where the disclosure is admitted to be a qualifying disclosure as set out in section 43(B), and in addition it is admitted that Miss Makar reasonably believed the information in the disclosure to be true. It is important to appreciate this point because the concession does not exactly match the structure of the legislation. Section 43(B) does not require a reasonable belief that the information was true as such; as I have already said it is sometimes a requirement if the disclosure is to be protected but not for example where the disclosure is for the employer. But it is plain that the limitation on expert evidence was intended to bite, if in addition to the admission of a qualifying disclosure there was also an admission that Miss Makar reasonably believed the information in the disclosure to be true. This accords with the Tribunal Chairman's reasoning, it fits in with subsequent amendments to the response which makes this admission in respect of a number of disclosures, prior to suspension and it was Mr Downes stand point before me today.
25. The second point is this; the order leaves very considerable scope for expert evidence. I have been taken to the list of disclosures and to the amended response. It is plain that in respect to disclosures after January the relevant admissions are not made sure, just possibly in relation to a disclosure to Triad's solicitors in early February. It is clear from the Tribunal's reasoning that Mr Downes submissions to the Tribunal in respect of the second and third periods that he identified were not accepted. It follows that unless both admissions are made, and they are not in respect of the second and third periods, there is still very substantial scope for the calling of expert evidence on issues central to the case.

The Test on Appeal

26. The Appeal Tribunal has jurisdiction only in respect of a matter of law. Case management decisions, including decisions on the scope of expert evidence are matter of discretion; points of law will seldom arise in them. In Noorani v Merseyside TEC Ltd [1999] IRLR 184, the Court of Appeal said of such decisions:-

"Such decisions are essentially challengeable only on what loosely may be called Wednesbury grounds, when the court at first instance exercised the discretion under a mistake of law, or disregard of principle, or under a misapprehension as to the facts, where they took into account irrelevant matters or failed to take into account relevant matters, or where the conclusion reached was "outside the generous ambit within which a reasonable disagreement is possible", see G v G [1985] 1 WLR at 647."

27. Mr Downes submitted that due deference should be given to a decision on case management matter by a Chairman steeped in the case, especially one who might subsequently hear the matter. It is inherent in the Noorani test that a substantial margin of appreciation is given to the decision maker. It does not seem to me however, logically to matter at all whether the decision maker will subsequently hear the case.

The Appeal

28. Although this is an appeal in respect of a case management order, I have had very lengthy skeleton submissions totalling nearly seventy pages. I have listened to submissions which have occupied fully the half day for which the case is listed. I will have to be forgiven if I give only the briefest summary of the submissions and along with that summary give my conclusions in respect of the principal points. This is not a case where I can sensibly reserve judgment, given an impending case discussion and an impending full hearing.

The State of the Concessions

29. On behalf of Miss Makar, Mr Hochhauser submits that the Tribunal Chairman limited the effect of her earlier case management order, dated 1 August, when there was no proper basis for doing so. The concessions made by Triad, he submitted, were insufficient, unclear and often ambiguous, given other references remaining in the response. The concessions were incomplete and did not address all the disclosures which had been listed in the schedule to the list of issues ordered on 1 August. He took me to references in the amended response which were arguably inconsistent with the admissions made and to further particulars of the response which were inconsistent with the admissions made. He says that the Chairman made an order which was inappropriate given the uncertain effect of concessions before her and the state of admissions and pleadings.
30. On behalf of Triad, Mr Downes says that the problems with pleadings are exaggerated; he says that oral explanations had been given on occasions as to the true ambit of the case; he says there is no real problem in practical terms with pleadings.
31. My conclusions on this point are as follows. There are, to my mind, passages remaining in the amended response and in particulars, which sit uneasily with the admissions which have now been made, for example at paragraphs 19 and 20 and in some particulars. It is also apparently right to say that not all the disclosures which are in the Schedule relating to the first period are covered by admissions. Although the Schedule of disclosures has been ordered to stand along with the list of issues, the precise answer of Triad to some of them is not clear because Triad has not answered the schedule as such and the amended response does not recognise the allegations in the claim form as being protected disclosures.
32. Two steps are, in my judgment, required. First, I think it would be very helpful for Triad to answer, disclosure by disclosure, the schedule of disclosures which is appended to the list of issues. That will afford to the Tribunal Chairman in a single location an overview of what is and is not in issue between the parties. In this case where the pleadings are lengthy, some such tool is indispensable.
33. Secondly Mr Downes needs to consider his amended response again. The admissions that are made in his amended response are in my judgment clear admissions, but there are passages in his amended response which do not appear to sit easily with the admissions he made. Listening to him today, I have no doubt that he does intend to make substantial admissions as to the period leading up to the end of January. It is however, possible to read some paragraphs of the pleadings as though those admissions are not being made.
34. It does not to my mind follow from these criticisms that there was any error of law in the Tribunal Chairman proceeding as she did. There is sometimes a need in case management, to make progress even though the procedural picture is untidy in other respects. The Tribunal Chairman was entitled to expect that the amended response would reflect the concessions that she was told were being made and that allegations inconsistent with those concessions would be deleted. To my mind the amended response does reflect the concessions she was told were being made, although there may be some inconsistent allegations remaining. If contrary to my expectation, Triad were to insist on keeping in inconsistent allegations, no doubt the matter will be raised at the next case management hearing.
35. I do not think she was wrong to make the order merely because the scope of certain concessions was unclear. So while on analysis I agree with some of Mr Hochhauser's criticisms of the present state of the response, I do not think there was an error of law in the Tribunal Chairman's decision to limit expert evidence by reason of that matter.

The Range of Issues

36. It is then said by Mr Hochhauser that the Tribunal Chairman misunderstood or simply forgot the range of issues to which expert evidence might be relevant. His submissions took me in considerable length through potential issues. Causation will be an issue. Whether Miss Makar acted bona fide will be an issue. The reason for dismissal will be an issue. Whether she acted appropriately will be an issue even if she did have a reasonable belief in the information. The well foundedness of Miss Makar's beliefs in the disclosure will be an issue by reason of allegations in the response and the reason for dismissal. Mr Hochhauser having made those submissions as to the issues, submits that it is inconsistent and inappropriate to limit expert evidence merely because there is a concession as to the existence of a qualifying disclosure and reasonable ground for believing the truth of it. It is, he submits, not a rational basis for limiting expert evidence. He points in particular to the Tribunal Chairman's statement that the issues in paragraph 12 of his skeleton argument "went to reasonable belief", that he said is a misunderstanding of the true position.
37. Mr Downes submits that this last sentence leads to be seen in the context of the skeleton argument to the Tribunal below; he took me to Triad's skeleton argument, to which I will return in a moment. He submitted that expert evidence was limited relevant to the case. He too took me through potential issues in great detail. He submitted forcibly, that this was a case which was likely to be decided on the evidence of those directly involved who would be witnesses on either side. He took me to cases on the proper ambit of the expert evidence including Midland Bank v Hett, Stubbs & Kemp [1979] Ch 384 at 402, Barings v Coopers & Lybrand [2001] LLR Banking 85 and also to De Keyser v Wilson [2001] IRLR 324.
38. On this point my conclusions are as follows.
39. The ambit of expert evidence is of course a matter which depends critically on the issues in the case. Where the issues in respect of a particular part of the case are limited, a Tribunal Chairman is entitled to take the view that expert evidence in that area is the less necessary because of it. In Barings v Coopers & Lybrand Mr Justice Evans-Lombe said:-

"Evidence meeting this test, [this is to say for the admission of expert evidence] can still be excluded by the court if the court takes the view that calling it will not be helpful to the court in resolving any issues in the case justly. Such evidence will not be helpful were the issue to be decided as one of law or is otherwise one on which the court is able to come to a fully informed decision without hearing such evidence."

40. It is worth recording the submission made to the Tribunal in July about the need for financial expert evidence in Triad's skeleton argument.
41. It was submitted that the evidence went principally to the third of four criteria relating to protected disclosures, namely the existence of reasonable grounds for believing that the information disclosed tended to show that a breach of relevant obligations had been committed or was likely to be committed. The skeleton went on to say that this criterion and the criterion of good faith are subject to some degree of correlation in reaching a view on whether Miss Makar made disclosures in good faith, for the Tribunal may reasonably be influenced by the fact that there was or was not a reasonable ground for believing that a breach of an obligation or obligations had taken place or was likely to take place.
42. In my judgment that skeleton argument correctly said that financial expert evidence was principally necessary on the question whether there were reasonable grounds for believing the information disclosed tended to show a breach of relevant obligations had been committed or was likely to be committed. That does not mean of course that it is the only issue to which expert evidence could be relevant, plainly it can be relevant in this case to other issues which Mr Hochhauser addressed me on. But once there is a concession, in certain respects, as to the reasonableness of Miss Makar's belief in the truth of certain facts, it was plainly right for the Tribunal Chairman to reconsider the ambit of expert evidence. She took the view that it could, to a certain extent, be circumscribed. In my judgment she did not err in law in taking that view, I emphasise that as so far as the second and third time periods are concerned that were identified by Mr Downes, the limiting order she made appears to me to place a very little limitation on the expert evidence that can be called. I do not believe that the Tribunal Chairman misunderstood the issues or believed that the reasonableness of Miss Makar's belief was the only issue. I do not think that the last sentence of paragraph 1.11 betrays any such error. She had been addressed at length about the range of issues that might be involved in the case, but it must be born in mind that she was considering expert evidence on financial matters. That was the focus of the argument before her.
43. Two points should be born carefully in mind. Firstly, the order only limits the ambit of expert evidence; it leaves open the adducing of evidence of fact including documentary evidence. Miss Makar is herself a qualified accountant with many years experience of the company. Nothing in the order limits her right to give evidence about all the qualifying disclosures and their truth. Nothing limits her right to adduce documentary evidence about them. Secondly, the order as I have said, does not apply to matters which are not admitted to the disqualifying disclosures or where substantial belief in the truth of the matters is not admitted.
44. At different times in the argument there were references by Mr Hochhauser to insufficiency of reasons and to perversity. As to perversity I am satisfied that no separate challenge is sustainable. As to sufficiency of reasons; it must be born in mind that this was a case discussion hearing, one of a number in which a Tribunal Chairman was attempting to take sensible case management decisions to bring a matter on for hearing. In that context, in my judgment, the reasons which she gave for her decision about the scope of expert evidence are not open to criticism.
45. I do not pretend to have dealt with every byway in the submissions which I have heard today; I hope that I have dealt with the essential ones. For the reasons that I have given, the appeal will be dismissed.