Appeal No. UKEAT/0500/12/GE
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX
At
the Tribunal
On
28 June 2013
Before
THE
HONOURABLE MRS JUSTICE SLADE DBE
MRS C BAELZ
MR D NORMAN
MR
R VORALIA T/A RTS TEXTILES RECYCLERS APPELLANT
MR J OSOWSKI RESPONDENT
Transcript of Proceedings
JUDGMENT
SUMMARY
PRACTICE AND PROCEDURE – Striking-out/dismissal
The Employment Tribunal did not err in exercising their
discretion to strike out an ET3 in circumstances in which on the evidence
before them they could conclude that the failure to comply with an order to
disclose documents was deliberate and persistent. The sanction of striking out
the ET3 Response was within the discretion of the ET it was not
disproportionate. Blockbuster Entertainment Ltd v James [2006] IRLR 630 considered.
THE HONOURABLE MRS
JUSTICE SLADE DBE
Introduction
1.
Mr Voralia, trading as RTS Textiles Recyclers, the Respondent,
appeals from the order and Judgment of an Employment Tribunal sent to the
parties striking out the Respondent’s response and debarring him from the
proceedings. The Claimant, who was employed by the Respondent as a driver,
brought proceedings for unfair dismissal and money claims. He contended that
he was dismissed because he reported the Respondent to Her Majesty’s Customs
and Excise. In his Particulars of Claim relating to unfair dismissal for
making a protected disclosure he says:
“The Respondent dismissed the Claimant because the Claimant
reported the Respondent to HMRC for:
(a) providing the Claimant with payslips which were completely
false in content;
(b) failing to deduct income tax and National Insurance from the
Claimant’s wages and account for the same to the HMRC;
(c) contrary to the National Minimum Wage Regulations
the Claimant was paid below the NMW stipulated rate of £5.93/hour; and
(d) contrary to the Working Time Regulations he was made to
work for more than 10 hours a day (50 hours per week), without any rest breaks;
(e) unlawful deductions of wages made by the Respondent.”
2.
The Claimant stated that his wages were paid each week by two cheques and
that tax and National Insurance contributions were only paid on one. The
Respondent in his ET3 denied that the Claimant was dismissed. He alleged that
tax and National Insurance Payments were made to HMRC and that this was shown
on itemised pay statements. He denied that the Claimant made any disclosures
to HMRC regarding payment of tax and National Insurance.
Background
3.
The claims came before an Employment Tribunal for a full hearing on
4 April 2012. The hearing was adjourned to 22 June 2012, and in
the Reasons sent to the parties after that hearing on 18 April 2012
the Employment Tribunal recorded this at paragraph 3:
“On reading this material, it appeared to us that there was a
serious possibility that the relationship between the parties was tainted by
illegality. Witnesses on behalf of the Claimant gave evidence that employees
of the Respondent received two simultaneous payslips in respect of the same
periods of employment. This was verified from copies of the payslips in the
Respondent’s bundle. Mr Voralia did not dispute that that system was
operated.”
4.
The Tribunal at the hearing on 4 April 2012 made a number of
orders. The material orders for the purpose of this appeal are as follows:
“No later than 27 April 2012 the parties will give the following
disclosure by list and copy to each other:–
4.1 The Respondent will send to the Claimant records of payment
of tax and national insurance for all its warehouse and driver staff in the tax
years 2010/2011 and 2011/2012. National insurance numbers may be redacted.
4.2 The Respondent will send to the Claimant copies of Form P11D
and verification from its accountants of payments made to HMRC in respect of
tax and national insurance.”
Submissions
5.
It is not said by Mr Rees, on behalf of the Respondent, that these
requirements were complied with; they were not complied with by the
Respondent. When matters came back for hearing on 22 June 2012, the case
proceeded on the basis of the agreed facts set out in paragraph 3 of the
earlier Reasons given by the Tribunal following the hearing on 4 April.
At the hearing on 22 June the parties, were asked whether there was any
respect in which each party considered that the other had failed to comply with
the order made on 4 April 2012. It is agreed by Mr Rees that the
Respondent had not complied with paragraphs 4.1 and 4.2 of the
order. The Employment Tribunal asked the Respondent’s representative to show
cause why the Response, the ET3, should not be struck out. At paragraph 14
the Employment Tribunal record:
“Mr Joshi [the Respondent’s representative] pointed out
that strike out is a discretionary remedy which if granted could leave the
Claimant with a windfall to which he was not entitled. He pointed out that the
Claimant himself had not given full disclosure and stated (on a point on which
he had our near complete sympathy) that he had been distracted from the task of
compliance by repeated and near abusive letters from Mr Lukomski [the
Claimant’s representative].”
6.
Mr Rees acknowledged that the repeated and near‑abusive
letters referred to were the only explanation offered to the Tribunal for the
default of the Respondent in compliance with the order made on 4 April.
Further, it is acknowledged by Mr Rees that the letters referred to in paragraph 14
of the record of Mr Joshi’s, the Respondent’s representative’s, comments were
letters sent from the Claimant’s representative to the Respondent’s
representative, not to the Respondent himself. That is the reason why
Mr Joshi said there had been distraction from the task of compliance with
the orders.
7.
At the hearing on 22 June there was no application by the Respondent
for an adjournment to enable them to obtain the documents, nor was there any
suggestion that they would be produced. It is not suggested by Mr Rees
that the documents provided by the Respondent at the hearing and referred to in
the Judgment were documents that complied with the orders previously made. The
Employment Tribunal held:
“16.3 The Respondent’s failure to comply with the April order
was made without good excuse or cause;
16.4 To adjourn this hearing would have been disproportionate to
the resources of the Tribunal and the potential value of the claim (which was
inherently a claim of modest value, the Claimant having suffered only nine
weeks unemployment). […]
16.6 Proceeding today on the basis of non compliance would allow
the Respondent to take part in proceedings on the footing of non compliance
with an earlier case management order, and would expose the Claimant to the
very prejudice which our April Order had sought to avoid.”
8.
The Employment Tribunal then struck out the ET3 response and debarred
the Respondent from further participation in the proceedings.
9.
Mr Rees, for the Respondent, contends that the Employment Tribunal
erred in that they failed to apply the case of Blockbuster Entertainment v James
[2006] IRLR 630, in which Sedley LJ at paragraph 5 made certain
observations and gave guidance on the approach to the power to strike‑out.
Mr Rees comments that the Employment Tribunal did not find that the
Respondent was “in deliberate and persistent disregard of the orders”. “Deliberate
and persistent disregard of required procedural steps” was referred to by
Sedley LJ as one of the two cardinal conditions preceding a strike‑out.
Further, it was said by Mr Rees that the Employment Tribunal failed, as
they should have applying James, to consider whether if there had
been a deliberate and persistent disregard for orders, that striking‑out
was a proportionate response. Sedley LJ in James had said
that if one of the two preconditions he referred to had been satisfied, it is
also necessary to consider whether striking‑out is a proportionate
response. Mr Rees contended that striking‑out was not a
proportionate response and that a costs or preparation order would have been
the appropriate sanction for the non‑compliance.
10.
Mr Elesinnla, counsel for the Claimant, submits that the Employment
Tribunal did not err in law or in their exercise of their discretion to strike
out the Respondent’s response. Rule 18(7)(c) of the Employment Tribunals
(Constitution and Rules of Procedure) Regulations 2004 was to be applied. James
gives guidance. In this case, there was non‑compliance with orders made
by the Employment Tribunal and no reason advanced by the Respondent for that
non‑compliance. Mr Elesinnla recognised that the sanction of
striking‑out may be viewed as harsh, but it was within the bounds of the
reasonable exercise of discretion of the Employment Tribunal to apply.
Discussion and conclusion
11.
The Respondent has admitted that it was in breach of orders made by the
Employment Tribunal on 4 April 2012. The disclosure ordered in
paragraphs 4.1 and 4.2 went to the heart of the issue of
illegality that was to be considered by the Employment Tribunal. Further,
since the claim made by the Claimant was for unfair dismissal because of a
protected disclosure, consideration of Employment Rights Act 1996 section 43B(1)(b)
requires that under section 43C(1) disclosure must be made in good faith
in order for it to be a protected disclosure. It is therefore material that
the Claimant shows grounds for disclosure that are in good faith. Clearly
documentation which supports the contention that the Respondent had committed misdeeds
that were reported to the HMRC would be relevant to show good faith.
12.
As for whether the Tribunal found or were entitled to proceed on the
basis that the breach of the order was deliberate and persistent, the
Respondent gave no indication to the Employment Tribunal that they would comply
with the order. There was no request for an adjournment or statement that in a
few days or within a short while the documents would be produced. More than
two months had passed since the order was made, and many weeks since the deadline
for compliance had passed. No reason was advanced for non‑compliance.
Letters to the Respondent’s representative that were advanced by Mr Joshi
as a reason why there was interference with preparation of the documents is not
an excuse; it was the Respondent who was to comply with the order, and no doubt
it, and not their representative, had those documents.
13.
In our judgment, the Employment Tribunal inevitably came to the
conclusion that rule 18(7)(c) was satisfied. The fact that the Employment
Tribunal did not use the words “deliberate and persistent”, in our judgment, is
not material. The only inference from the Judgment of the Employment Tribunal
and the facts and events set out therein is that the Tribunal considered the
situation before them to be evidence of a deliberate and persistent breach by
the Respondent of the order of 4 April 2012.
14.
As to whether the sanction of striking out the response was
proportionate, in our judgment that sanction was within the discretion of the
Employment Tribunal. The Tribunal was faced with a deliberate disobedience of
an order of the court; it was an important, not an insignificant, order, and
there was no indication that compliance would be forthcoming. No costs order
could be made under rule 40(2) of the Employment Tribunal Rules, as the
Claimant was not represented. In our judgment there is no reason to consider
that the Employment Tribunal imposed a sanction that was disproportionate by
not making a preparation time order, which we are told would be £33 per hour,
instead of striking out the ET3.
15.
The order made by this Employment Tribunal was well within their
discretion and powers to make. There is no error of law or wrong exercise of
discretion, and the appeal is dismissed.
