Banking on practice and procedure - Case Round-Up: March 2013

In this month’s round-up, Mark Shulman consultant solicitor with Keystone Law looks at Tribunal cases on deposits and withdrawals.

Mark Shulman, Consultant Solicitor at [Keystone Law*

](*PRACTICE AND PROCDURE Deposit Orders **Rule 20 of the ET Rules provides (insofar as relevant) that:

"(1) At a pre-hearing review if an Employment Judge considers that the contentions put forward by any party in relation to a matter required to be determined by a tribunal have little reasonable prospect of success, the Employment Judge may make an order against that party requiring the party to pay a deposit of an amount not exceeding £1,000…"

But what is the threshold for imposing a deposit order and how far does the ET have to go in explaining the reasons for making such an order? Two recent cases deal with these questions.

Little reasonable prospect of success In [Crossland v OCS Group & Anor]() UKEAT/0340/12/SM the Claimant worked as a security guard and was a diabetic. It was accepted that his condition constituted a disability within the meaning of the Equality Act 2010. The Claimant refused to undertake outside patrols and was disciplined.

The Claimant claimed at a PHR that the employer had breached the duty under section 20(3) of the Equality Act 2010. His case was that he may suffer unpredictable hypoglycaemic episodes that could lead to serious injury or death and that the employer should have taken steps to reduce the risk of injury occurring as a result of his suffering such an episode. At the PHR, the EJ imposed a deposit order of £250 on the Claimant and the Claimant appealed.

The EAT decided that the ET was entitled to decide that the Claimant had little prospect of establishing that it would be a reasonable adjustment for the employer to relieve him of his obligation to patrol the exterior of the premises. Whilst the Claimant was at special risk of suffering injury following a hypoglycaemic episode, it was the EJ's view that that risk was no higher outdoors than indoors.

In the EAT's view, the question was whether the EJ should have found that there was more than "little" chance of that being established. The EAT did not think that the reason advanced by the Claimant amounted to a particularly convincing case that the consequences of a hypoglycaemic episode occurring outside would be substantially worse than if the episode occurred in the office. If, for example, the episode was of such severity as to leave him unable to phone, or unable to let a rescuer onto the site, that would be equally so if he were in the office.

With regard to the remaining point that the Claimant would be more likely to injure himself if he fell outside, for example onto concrete or a metal container, it was well recognised that an unfortunate fall indoors could also lead to serious injury. Therefore it was hard to see the difference in risk as being substantial in those two scenarios.

Accordingly, the EJ was entitled to reach the conclusion that the Claimant's claim had little reasonable prospect of success and thus was right to make a deposit order.

*Giving reasons for making deposit Orders How far does an ET need to go to explain its reasons for imposing a deposit order? In [Russell v Fox Print Services LLP & Anor]()* UKEAT/0544/12/KN the Claimant went off sick with depression in November 2011 as a consequence of her father's illness. In December she was off sick again, and again in January 2012. She failed to attend a meeting to discuss the future with her employer and was subsequently dismissed.

At a PHR the Claimant alleged disability discrimination, and that her dismissal was automatically unfair for having taken time off to make provision for her terminally ill father, for which statutory leave (under section 57A of the Employment Rights Act 1996) had been approved.

The EJ struck out her claim of disability discrimination. The EJ also made a deposit order in the sum of £200 because he thought the unfair dismissal claim had little reasonable prospect of success.

The EJ's grounds were that he considered it unlikely that the Claimant would be able to persuade a Tribunal at a full merits hearing that her absence from 4 January to 12 January 2012 was a reasonable amount of time under section 57A of the Employment Rights Act 1996 so as to bring her absence for emergency leave for dependants within the scope of that section. Even if she did, he thought it unlikely that a Tribunal would find that the reason, or principal reason, of the dismissal was related to the Claimant having sought or taken time off. The Claimant appealed.

The EAT decided that the reasons given by the Employment Judge for making a deposit order of £200 were simply not compliant with the guidance in Meek v City of Birmingham City Council [1987] IRLR 250 when the Court of Appeal decided that, while an ET's reasons do not need to be elaborate or formalistic, they must contain:

* an outline of the facts of the case; * a summary of the ET's principal factual conclusions; * a statement of the reasons why, on the facts as found, the ET reached its conclusions.

At the PHR there was no live evidence. Although the EJ had a witness statement from the Claimant, she did not give evidence, she was not cross-examined and the EJ had little documentation in relation to the dismissal other than the dismissal letter. No witness for the Respondents gave evidence or was cross-examined. The EAT suspected that the reasons given for dismissal would be challenged. These were all issues which could only be resolved at a full hearing. The EAT was completely unable to understand how the EJ had reached his conclusions and so the deposit order was quashed.

Withdrawal of proceedings – no abuse of process Rule 25 of the ET Rules (insofar as relevant) states that:

"… (4) Where a claim is being withdrawn a Respondent may make an application to have the proceedings against him dismissed. Such an application must be made by the Respondent in writing to the Employment Tribunal office within 28 days of the notice of the withdrawal being sent to the Respondent…"

The EAT's judgement in [Thomas Cook Airline Services Ltd v Wolstenholme]() UKEAT/0353/12/KN provides a recent example of a case where there was no dismissal following withdrawal.

The Claimant was the deceased's representative. The deceased was employed as a pilot until July 2009 when he was caught drink driving by the police and then he disappeared. He fell off a bridge the following month and died from his injuries in May 2010. Meanwhile, Thomas Cook had written to him, informing him that he had resigned from his employment or if not, he was being dismissed with immediate effect, which was July 2009.

The deceased's union instructed solicitors to lodge an ET1 in October 2010 saying that the employment had terminated in July 2009 and claiming both unfair dismissal and wrongful dismissal. In November 2011, the Claimant withdrew the ET proceedings and informed Thomas Cook that she was taking the case to the High Court to claim contractual sick pay between July 2009 and the deceased's death, together with a claim for a death in service payment under the company pension scheme. The total claim was for over £420,000. Thomas Cook applied for the ET proceedings to be dismissed under Rule 25(4) but the application was resisted by the Claimant. In deciding the application, the EJ formulated answers to two questions (derived from Verdin v Harrods Ltd:

* was the withdrawing party intending to abandon the claim? * if the withdrawing party was intending to resurrect the claim in fresh proceedings, would it be an abuse of the process to allow that to occur?

The EJ answered both questions in the negative, following the case of Verdin (which both parties in the Thomas Cook case agreed contained the relevant principles to be applied). The ET therefore dismissed the application for dismissal of the claims. Thomas Cook appealed.

The EAT dismissed the appeal. By coincidence, when considering the appeal in the Thomas Cook case, the EAT handed down their judgment in [Fox & Ors v Bassetlaw District Council]() UKEAT0274/12/SN - also a case on withdrawals under Rule 25(4). Counsel for both parties in Thomas Cook agreed with the EAT's analysis of the law relating to Rule 25(4) as set out in Fox. Accordingly, the principles to be applied were to be found in Verdin (as approved by the Court of Appeal in Fraser v Hlmad Ltd.

Taking the present case on its facts, whilst it could be said that the Claimant did intend to abandon the ET claim on withdrawal, the critical question was whether the fresh proceedings, insofar as they sought to resurrect a claim of breach of contract, would amount to an abuse of process. Applying the approach in Fox, the EAT was satisfied that in answering that question in the negative, the EJ reached a permissible conclusion.

The Claimant could not pursue her substantial claims for sick pay and a death in service payment in the ET given the £25,000 jurisdictional limit on breach of contract awards and so it was not an abuse to discontinue the first proceedings in order to bring the second set of proceedings. Although the factual matrix was common to both sets of proceedings, the need to bring the breach of contract claim in the High Court was because:

* of developments following institution of the original ET proceedings, particularly the death of the deceased, and; * the High Court claim proceeded on a wholly different basis (the ET1 contended that the deceased was dismissed on 22 July 2009, whereas in the High Court proceedings it was alleged that his employment continued until his death on 28 May 2010).

On that basis, even if the first question was answered in the affirmative (i.e. that the Claimant intended to abandon the ET claim), since the answer to the second abuse of process question was in the negative, the EJ was right to dismiss Thomas Cook's application. Otherwise an issue estoppel would operate against the Claimant in the High Court proceedings.

Accordingly the Judge's decision not to dismiss the ET proceedings was "plainly and unarguably" correct.

Was withdrawal voluntary? The case of [Drysdale v Department of Transport (The Maritime & Coastguard Agency)]() UKEAT/0171/12/LA considered whether the withdrawal of proceedings was truly voluntary. The Claimant was represented at the ET by his wife. The hearing was listed for 2 days, but towards the end of the second day it was clear that there would not be enough time to conclude the case. The Claimant's representative became upset when the EJ reminded her that they could only sit until 4.45pm and that the earliest the case could resume would be some 4 months later. The representative then stated that she wished to withdraw the claim which she confirmed when asked by the EJ and the Claimant did not demur. The Respondent then made an oral application to have the case dismissed under Rule 25, which was granted. The Claimant appealed against the dismissal of the claims.

At the EAT the Claimant contended that his wife had left the ET hearing as she was starting to feel "very ill and was wobbly". It was argued that the Claimant's representative did not have "capacity" to withdraw his claim when she did and the ET should have enquired into her state of health and her authority to withdraw the proceedings.

The EAT rejected the Claimant's submissions. Neither the representative nor the Claimant had suggested to the ET that the withdrawal was in any way caused by the effect of any medical condition and stress. So there was no basis upon which it could be said that the ET acted unfairly or was under any duty to intervene to enquire whether the withdrawal was caused by her medical condition or by stress.

Next the EAT dealt with a submission that the ET ought to have intervened because it should have appreciated that the representative was acting without authority. In the EAT's judgment the Claimant's wife was not acting without authority. The Claimant had appointed her as his representative. Accordingly, she acted for him both prior to and during the hearing and her authority had not been limited in representing him.

An ET is entitled to make such enquiries as appear fit to it to check whether the representative means what they say, but the extent of such enquiries is very much a matter for the ET. In the present case, the EJ had checked whether the Claimant's wife meant to withdraw the claim; she said she did. The Claimant had not demurred. Having withdrawn the claim, there was no legal duty upon the ET in the circumstances of the case to go any further.

One further procedural point arose. This was as to whether the ET should have entertained the application to dismiss when it had not been made "in writing to the Employment Tribunal office within 28 days…". The EAT's view was that whilst the drafting of Rule 25 "problematic" in places, it was plain that the second sentence of Rule 25(4) was intended to impose a time limit on an application to dismiss, not to prevent an application to dismiss being made orally at the hearing where the claim has been withdrawn.

The EAT saw no valid purpose in requiring a written application to the ET office when the parties are present at a hearing and the matter can be addressed there and then. To require otherwise would be inimical to the overriding objective, which includes dealing with cases expeditiously and saving expense

Abuse of process In [Mills v London Borough of Brent]() UKEAT/0545/11/BA it was decided that to allow the Claimant to bring further proceedings following withdrawal, would amount to an abuse of process. The case illustrates the sorts of factors to be taken into account when making a decision on whether to dismiss claims under Rule 25(4).

The Claimant was a teacher who presented two claims of race discrimination against the school where she worked. On the third day of a four day hearing, she withdrew her claims on the advice of her lay representative. The Claimant then issued a third claim against the London Borough of Brent rather than the school, reclaiming race discrimination on the same facts and adding in a claim for public interest disclosure, again on the same facts.

At a PHR to decide whether the claim ought to be struck out as an abuse of process, the EJ struck out the third claim on the basis that there had been no duress at the first hearing which had persuaded the Claimant to withdraw her claims and the interests of justice were best served by striking out her further claim. The EJ's reasons were that:

* the Claimant's representative advised her to withdraw and she agreed to do so; there was no evidence of any 'duress'. * the interests of justice were also best served by striking out the claim. There was no evidence that the Claimant had not been allowed to put her case at the full hearing; indeed, she had done so. * the issues that would have to be determined were very stale and memories would inevitably have faded in the course of the six years from the first act complained of by the Claimant. * it would be against public policy for the Claimant to be allowed to re-run her original claim, otherwise a party could withdraw and start afresh hoping for a different outcome from a different tribunal. This would not only lead to a waste of public time and money but would incur disproportionate costs for both parties.

The Claimant appealed unsuccessfully.

The EAT considered that the EJ was entitled to take the view that there had been no duress and that the withdrawal of the first two claims was voluntary. She was also entitled to take into account the fact that the third claim was almost identical to the first two claims, save that the identity of the Respondent was different. There was a privity of interest between the school and the local education authority and the reality was that if there had been a judgment against the school, the local education authority would have paid any compensation.

The Claimant also contended that the EJ had erred in law by striking out the third claim because it was not an abuse of process to re-litigate a withdrawn but not dismissed claim. The EAT disagreed. There was no reason why in law the EJ was prevented from considering the nature of the first two claims against the governors of the school and take notice of the fact that those two claims were factually indistinguishable from the third claim, brought against the London Borough of Brent. The school was the only correct Respondent in the first two proceedings. The withdrawal was effective as against the school and it was therefore proper for the EJ to consider what had happened in the first two claims when considering whether to strike out the third claim.

The EJ had given "more than adequate reasons" as to why she was going to strike out the third claim and so the appeal was dismissed.

Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator.

Published: 10/03/2013 09:05

Sign up for free email alerts

Email address
First name
Last name
Receive daily
Receive weekly
I agree to this site's terms and conditions