United Kingdom Employment Appeal Tribunal

Appeal No. UKEAT/0215/12/DM

 

 

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

 

 

  At the Tribunal

  On 25 October 2012

 

 

 

Before

HIS HONOUR JUDGE McMULLEN QC

(SITTING ALONE)

 

 

 

 

MR R BAL APPELLANT

 

 

 

 

 

 

PARALLEL REALISATIONS 1 LTD (IN ADMINISTRATION) RESPONDENT

 

 

Transcript of Proceedings

 

JUDGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

APPEARANCES

 

 

 

 

 

For the Appellant	MR JAMES WILLIAMS (of Counsel) Instructed by: Thakrar & Co Solicitors 38A & 38B The Broadway Southall Middlesex UB1 1PT
For the Respondent	Debarred

 

 

SUMMARY

PRACTICE AND PROCEDURE – Review

After a default judgment new material came to light of a TUPE transfer. The Employment Judge refused to review the judgment. This was an error as it plainly affected the forward losses she had awarded to the Claimant, which had been capped at the date of what was said to be an administration. Once the administrators transferred the business, logically his contract would not have terminated but been transferred. This new evidence was admitted at the EAT, the review conducted and the case remitted to the same Employment Judge for fresh assessment of compensation.
HIS HONOUR JUDGE McMULLEN QC

 

1.              This case is about compensation for forward losses following an unfair dismissal.  I will refer to the parties as the Claimant and the Respondent.  It is an appeal by the Claimant in those proceedings against a refusal by Regional Employment Judge Gay to review a Judgment she had given at a hearing in Watford, sent on 19 December 2011.  The refusal to review was done on the papers on 4 January 2012.

 

Background

2.              The circumstances in which both of those Judgments were made are unusual.  The Claimant had been employed by the Respondent for some four years when dismissed on 15 November 2010.  The Respondent went into administration.  The joint administrators were alerted to the Claimant’s case.  They entered a response. On the true construction of the response the administrators decided not to contest the claim, for they said the following:

 

“I would advise that consent has been given for Mr Bal to pursue a claim via the Employment Tribunal.  I would advise that it is not the intention of the joint administrators to resist the claim by Mr Bal.”

 

3.              The administrators said they were appointed on 31 January 2011 and the assets of the company were acquired on that day by AA.  There is no suggestion that there was a transfer of an undertaking under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).  It is asserted by the administrators that any compensatory award made to Mr Bal would be an unsecured claim, on the financial information available the amount for disposal to him would be minimal, and there was no benefit to the administrators in being involved in the proceedings.

 

4.              Thus the matter came before Judge Gay.  The Claimant was represented by Mr James Williams of counsel; the Respondent was not present or represented.  I am told that some evidence was given by Mr Bal that goes towards his injury to feelings in respect of the race discrimination that he alleged. An award of £5,000 was made under Chief Constable of West Yorkshire Police v Vento (No.2) [2002] IRLR 177 principles.  The rest of the Judgment is for satisfaction of money claims and includes wrongful dismissal, a basic award of unfair dismissal, loss of earnings up to 31 January 2011, and various other figures within a compensation package amounting to £13,717.54.  The cut‑off for loss of earnings is 31 January 2011, because that was the date of the administration.  One infers that Judge Gay took the view that the employment would have ended anyway, and that is how she put it in her refusal to review.

 

5.              A problem emerged, and it was apparent to Mr Williams when he attended at the Employment Tribunal, as to the proper constitution, for here a Judge has made a finding of unfair dismissal at a time when she could not do that sitting alone (prior to April 2012) and a declaration and an award in respect of race discrimination that she could not make even today.  This presents a jurisdictional problem, but Mr Williams has invited me to treat the Judgment as a default Judgment. It is necessary to look at the way it was put by his solicitors, because they made an application for a review.  It is accepted that this was for a review under rule 34(3(d), which is that new evidence became available.  Judge Gay proceeded on the basis that there was a preliminary consideration under rule 35(3), and she refused the application.

 

6.              I have been most careful to consider Mr Williams’ submissions knowing that the administrators are not here, but he submits that the original Judgment was indeed a default Judgment.  This is correct.  The making of a default Judgment is regulated by rule 8. One of the circumstances in which a default Judgment can be issued without a hearing is where a response has been accepted but the Respondent has stated that it does not intend to resist the claim (see rule 8(2)(c)).  As a matter of construction, that is what happened here, and so it was open to the Judge to consider this for default without a hearing.  In rule 8(3) there is this:

 

“A default judgment may determine liability only or it may determine liability and remedy.  If a default judgment determines remedy it shall be such remedy as it appears to the employment judge that the claimant is entitled to on the basis of the information before him.”

 

7.              The Judge at a default Judgment can consider any information, and the matter can be considered without a hearing. From “on the basis of the information” it appears to me that it is open to a Judge at a default Judgment where a party attends to consider evidence, as happened in this case.  Mr Williams is alert to the fact that evidence in respect of injury to feelings has to be called, but it seems to me from considering the papers that there was sufficient information as to the Claimant’s injury from the papers but if not then certainly by the evidence that he gave to the Judge for her to form a view as to a Vento award.

 

8.              Thus this was a default Judgment; in which case, Regional Employment Judge Gay had jurisdiction to hear the case without members.  There has been no attack on the substance of the Judgment. 

 

9.              At the time, however, of the reporting to the administrators of this award it became apparent to the Claimant’s solicitors that the administrators had some money to dispose of, and the solicitors wrote as follows:

 

“In summary, this review is brought on the basis that new evidence has become available since the hearing that a TUPE transfer of this business of the Respondent took place soon after it went into administration (and about 10 weeks after the Claimant was dismissed).  The existence of this transfer means that the original award of compensation by REJ Gay, made on the assumption that the Claimant would have lost his job when the Respondent went into administration, was lower than it should have been.  The Claimant therefore seeks to increase it to take into account his subsequent losses.”

 

10.          There is very substantial background attached to the application.  The reasons for this review are set out in great detail, and the Respondent was copied into it.  This led to the Judgment on the papers on a review application under rule 35(3).  If my diagnosis is correct that this was a default Judgment, the application for a review should have been dealt with under rule 33.  Rule 33 is much broader than rule 34, but at least in respect of new information becoming available the two are the same.  The two routes to a review are different, and a more liberal approach is taken to the review of a default Judgment, usually at the behest of the paying party but not necessarily, and it is open to the successful party, as here, to apply.

 

11.          The substance of the review is that the Claimant’s solicitors understood that there was a TUPE transfer.  In the light of the comprehensive application Judge Gay ruled as follows:

 

“4. It must always have been apparent to the claimant’s solicitors that the issue as to what would have happened had the claimant not been dismissed was crucial to the extent of the period for which he could recover loss of earnings.  He was asked specific questions about this when giving evidence and answered that he did not know what had happened to the original BSM business or its management employees at the end of the administration.  The information now put before me appears to have come from a telephone call and a confirmatory email exchange between the claimant’s solicitor and the former employer’s administrators on 21 December 2011.  I do not accept, as further submitted, that the administrators were elusive or evasive during the course of the proceedings.  It simply appears that the claimant’s solicitors had failed to make the relevant enquiry.  There is no reason why it was not done earlier.  This is evidence which was always available.  There must be finality in litigation and it is not appropriate to reopen a concluded case simply because a representative has decided after the event to do that which should have been done earlier.  The interests of justice, including proportionality and the use of judicial resources, do not further avail the claimant here.

5. In the circumstances the application for a review of the judgment is rejected on the basis that there is no ground under rule 34(3) and/or no reasonable prospect of the judgment being revoked or varied.”

 

The arguments and discussion

12.          Mr Williams has a number of staged ambitions in this appeal.  He seeks to uphold the monetary Judgment but to open up the question of forward losses from 31 January 2011 as demonstrated by a Schedule of Loss from 1 February 2011. Although the Claimant has mitigated there is a very substantial additional loss, said to be £33,000, from the date of the last assessment; that is, 31 January 2011.  So, the practical impact of this case is vivid.

 

13.          In my judgement, whether this arose under rule 33 or 34, this material ought to have been allowed in.  Mr Williams puts before me several arguments, one of which is that this case on appeal was sent by Wilkie J to a full hearing and as a matter of practice it has reasonable prospects of success; that is, on the learned Judge considering it, he must have had regard to the substance of the evidence going before Judge Gay and that she was arguably wrong.  I accept some of that; there is more material available at a full hearing than there was to Wilkie J, but in principle Mr Williams is right that the case had reasonable prospects. 

 

14.          Engagingly, Mr Williams puts before me the test I set out in Secretary of State for Health v Rance [2007] IRLR 665 at paragraph 33:

 

“It is often useful, where a party seeks to introduce new evidence, for this matter to be put first to the employment tribunal.  The questions which arise on appeal are questions of law.  Those which arise on a review are much broader.  They are the five grounds set out in rule 34(3).  They may or may not lead to a question of law.  The interest of justice is a very wide category.  The grounds for adducing new evidence are less circumscribed than those for new evidence to be adduced in the EAT.  This is regulated by para. 8 of the Practice Direction which additionally requires the evidence to be apparently credible and likely to have had an important influence on the hearing.  Consideration of reasons given on a review becomes more important when the original judgment is a default judgment or one given without a hearing.”

 

15.          He also rightly points out the change in practice in the EAT following my Judgment in Korashi v Abertawe Bro Morgannwg University Local Health Board [2012] IRLR 4, which is that the matter of new evidence should first be dealt with by the Employment Tribunal, for the reasons I gave and have inured into the practice statement issued by Langstaff P. 

 

16.          It seems to me that the critical issue here is the impact of TUPE.  In simple terms, had the Claimant not been unfairly dismissed on 15 November 2010, he would have been in the employ on 31 January 2011.  Contrary to this being a transfer of assets as asserted by the administrators in their response, there was a relevant transfer within the meaning of TUPE. There is no material to suggest that he would not have been the beneficiary of Regulation 4. His contract of employment would have transferred on 1 February 2011 to AA and he would continue to be in the employ of AA until some later date – perhaps the date of assessment - subject to whatever exigencies there are in assessing future losses.

 

17.          In my judgment, the learned Judge erred in refusing to consider that this material was indeed new material and that it could have had an effect on the Judgment she gave.  It plainly does have that legal consequence by reason of TUPE and it was not available to the Judge or to the Claimant before the award.  I do not consider any criticism is due to the Claimant’s solicitors; they acted perfectly properly, and they put forward reasons for this new material. 

 

18.          The proper place for this to be decided is the Employment Tribunal, but there is a power, as I set out in both Rance and Korashi, for the EAT to accept new evidence. Instead of this matter now going before a Judge at the Employment Tribunal, having detected the error that I have set out above, Mr Williams invites me to decide the matter.  I now hold that on appeal this new evidence is admissible.  Under the normal principles in Ladd v Marshall [1954] 1 WLR 1489 it would have had an impact on the Judge’s assessment of compensation and that the matter should now be examined.

 

 

 

Disposal

19.          On this new material I allow the appeal and grant the application for a review. I hold that there was a transfer of an undertaking, and that the Claimant would have been in the employ of the Respondent as at the date of transfer and his contract of employment would have transferred.  On that footing, capping his losses as at 31 January 2011 was wrong, and a view should be taken as to for how long he would have continued with AA.  Mr Williams invited me to make that decision myself, but that is a bridge too far.

 

20.          This matter will now be sent back.  There is no objection in principle to it being dealt with by Regional Employment Judge Gay; indeed, there is every reason why it should go back to her.  She, after all, made very important findings in favour of the Claimant; he can have no lack of confidence in her.  She has made an error, but now, as I have directed, she can consider the question of the Claimant’s losses starting on 1 February 2011 at a hearing or on paper according to how she directs, which I would have thought would begin with the Claimant providing evidence and a Schedule of Loss.