Finlay v Cyron & Ors UKEAT/0121/11/RN

Appeal against decision not to strike out an application for joinder by respondents who claimed that the appellant (en ex-employee) had been partially responsible for discrimination claims. Appeal dismissed.

The litigation arose from claims by an English employee against the US owned company she worked for. The appellant was the claimant's line manager based in the US and made redundant a month before the claimant. The claimant bought discrimination claims against the respondents, partly on the grounds that they had not properly considered whether she was willing to relocate. The respondents stance was that the appellant had discussed the matter with the claimant and so was partly liable for any claims. The respondents applied for the joinder and the judge in the ET dismissed an application to strike out tha application.

By the time that this appeal went ahead the claims had been settled but counsel for the appellant submitted that the appeal should proceed as a) the appellant may seek costs and b) there was ongoing litigation the US that could be mislead by the original ET decision.  Underhill J dismissed the second submission but heard the appeal though (and with regret as it is clearly a point that 'needs to be decided sooner rather than later') not on the issue of jurisdiction.  He then reviews the judge's decision, and while sympathetic to the appellant's predicament, upholds it 'on the basis that there was insufficient evidence for him [the ET judge] to reach a safe conclusion to that effect at the interlocutory stage.'


Appeal No. UKEAT/0121/11/RN



At the Tribunal

On 14 October 2011





Transcript of Proceedings



For the Appellant

CM Murray LLP
Level 37
One Canada Square
Canary Wharf
E14 5AA

For the second Respondents

Sherrards Employment Law Solicitors
Grosvenor Hall – Bolnore Road
Haywards Heath
West Sussex
RH16 4BX




Respondents to a discrimination claim sought joinder, in reliance on rule 10 (2) (h) and/or 10 (2) (r) of the Employment Tribunal Rules of Procedure, of the Appellant, an ex-employee based in the U.S., who they said was jointly liable for any discrimination found against them – Application to strike out claim as against him on the basis (a) that service had not been effected in accordance with rule 61 (4) (h) (ii) and/or (b) that the application was made for an ulterior motive and/or (c) that the claim of joint liability had no reasonable prospect of success – Application dismissed.

By the time of the appeal the Respondents and the Claimant had settled, and neither had any wish to pursue the Appellant further; but he sought to pursue the appeal in order to be able to make an application for costs on the basis that he should not have been joined in the first place. Appeal allowed to proceed, but only as regards issues that could have justified an application for costs.

**Held** (dismissing appeal):

(1) Rule 61 (4) (h) had no application to the service of documents by which a party was sought to be joined.

(2) The application had not been demonstrated to have been made for an ulterior motive.

(3) The claim of joint liability could not be said to have no reasonable prospect of success.

(The question whether one respondent can seek contribution against another was parked, because, whatever the answer, it was not a point on which the Respondents' stance could have attracted an award of costs.)

  1. This is an appeal against the decision of Employment Judge Pettigrew, sitting at Watford, refusing to strike out a claim against the Ninth Respondent, who is the Appellant before me. The decision was sent to the parties on 30 December 2010, following a Pre-Hearing Review on 29 November.
  1. The Claimant in these proceedings was employed by a company called Beam Global International Limited as their Chief Marketing Officer. That company is part of a group based in the United States, to which I will refer without differentiation as "Beam", and although the Claimant is English and was primarily based in this country, her line manager, Mr Finlay, who is the Appellant, was based in Deerfield, Illinois.
  1. There was a reorganisation in the Beam group in late 2009, which led to redundancies. The employments of both the Appellant and the Claimant were terminated. The Appellant's last day at work was 21 September 2009. His employment formally terminated on 31 October. It was in early October that the Claimant was told that she was at risk of redundancy. There was a consultation process which included a meeting between her and her managers at Beam on 29 October. Her employment was terminated with effect from 13 November.
  1. On 12 February 2010 the Claimant commenced proceedings in the Employment Tribunal alleging discrimination on the grounds of race, sex and age. She named as the Respondents three companies in the Beam Group and five individual colleagues or managers. I will refer to these collectively as the "Beam Respondents". The essence of the Claimant's case was that the Beam Respondents had made an assumption that she was not prepared to relocate to the United States, and that that assumption was based on discriminatory assumptions about her gender and/or her age and/or her nationality. It was her case, as pleaded, that there had never been any discussion with her about whether she was willing to relocate and that in fact she was willing and able to do so. Although the Tribunal proceedings were commenced in February, the claim had been adumbrated earlier in correspondence, and in particular by the service of a questionnaire under the Sex Discrimination Act 1975.
  1. The solicitors for the Beam Respondents, Messrs Sherrards, served a response on 17 March 2010. It was their case that, although Beam indeed proceeded on the basis that the Claimant was unwilling to relocate, that belief was not based on any discriminatory assumption but on things that the Claimant herself had said in the past and, in particular, things that she had said to the Appellant. The conversations in question had occurred both in the previous year and earlier in the same year, as recently as August 2009, as part of a "talent review" which was the start of the reorganisation process. The Appellant was said to have communicated the Claimant's views to his colleagues, including the individual Beam Defendants.
  1. The responsible managers within Beam wanted the Appellant to give a statement confirming, as they said he had told them, that the Claimant had told him on numerous occasions that she was unwilling to relocate and that he had passed that information on; and in December 2009 he was asked to make a witness statement to that effect. However, he was not prepared to sign a statement in the terms provided. Beam tried to encourage him to do so, but without success; and when he persisted in his refusal they withheld the outstanding part of the sums due to him under the termination agreement and started proceedings in the United States to recover the part that they had already paid, on the basis that he was in breach of an obligation in the agreement to co-operate in any ongoing litigation.
  1. On 9 April 2010 Messrs Sherrards wrote to the Tribunal, with a copy to the Appellant at his home address in Illinois, applying to join him as a further Respondent, on the basis that if the Beam Respondents were found to have committed the acts of discrimination alleged he had knowingly aided that discrimination and was accordingly jointly liable with them. The Appellant's lawyers wrote to the Tribunal opposing that application. They relied on rule 10 (2) (h) of the Employment Tribunal Rules of Procedure. Employment Judge Bedeau made an order that the Appellant should be joined as the Ninth Respondent, and he subsequently refused an application for a review. On 19 July the Appellant's lawyers applied for the claim against him to be struck out. That is the application which came before Employment Judge Pettigrew, and which gives rise to the decision appealed against.
  1. Before the Judge the Appellant, who was represented by Mr Benjimin Burger of counsel, advanced three grounds in support of his application that the claim should be struck out, namely (1) that he had not been properly served with the proceedings; (2) that the claim was out of time; and (3) that the claim against him was, in the words of rule 18 (7) (b), scandalous and/or vexatious and/or had no reasonable prospect of success. That last ground had essentially two elements, which are at least to some extent distinct: first, that the Beam Respondents' case against him was hopeless on the facts – that is to say that there was no chance of them establishing that he had knowingly aided them in any act of discrimination that might be found – and, secondly, that the application to join him had been made for an ulterior and improper motive, namely to punish him for his refusal to co-operate in the provision of what he believed was a false witness statement, and/or to encourage him belatedly to do so. All those grounds were dismissed by the Judge.
  1. The Appellant has appealed against the refusal to strike the claim out. At a preliminary hearing, attended by the Appellant only, I allowed the appeal to proceed to a full hearing as regards the question of whether the Appellant had been properly served with proceedings, and on the rule 18 (7) point (or points). I also allowed it to proceed on a point which it was not clear had been taken below, and to which the Respondents might accordingly be entitled to object, namely that the Tribunal had no jurisdiction to entertain what could only be, though this does not appear to have been fully spelled out, a claim for contribution by the Beam Respondents against the Appellant under the Civil Liability (Contribution) Act 1978.
  1. I was informed in the skeleton argument of Mr McDermott QC, who appears for the Appellant on this hearing (as he did at the preliminary hearing), that the Claimant and Beam have now in fact settled the proceedings between them. That was confirmed before me by Mr Hignett, who represents the Beam Respondents, but who did not appear before Judge Pettigrew. Mr Hignett further confirmed that, whether or not the Tribunal had any jurisdiction to entertain a contribution claim by the Respondents against the Appellant, they had no intention now of pursuing such a claim and that accordingly, so far as they were concerned, the Employment Tribunal proceedings were at an end. I asked Mr McDermott what in those circumstances was the point of proceeding with the appeal, which appeared to be wholly academic. He advanced two reasons – first, that if the claim should indeed have been struck out he would be entitled to pursue an application for costs against the Respondents under rule 40; and secondly that in the litigation proceeding in the United States between the Appellant and Beam, Beam have sought to rely on Judge Pettigrew's decision as reinforcing their stance, and that there was a risk of the US court being misinformed as to the significance of that decision.
  1. As to the second point, I was not persuaded that that would be a sufficient reason for my entertaining an appeal which was otherwise wholly academic. I could not in any event see how the correctness or otherwise of Judge Pettigrew's decision could be material to any issue arising in the US litigation. However, I think the point about costs is right in principle. I ought to entertain this appeal to the extent that a decision in the Appellant's favour would potentially put him in a position where he would be entitled to apply for costs.
  1. On that basis, I made it clear that I would hear argument on the service and rule 18 (7) points, but that I saw no point in my now hearing argument on the question whether the Tribunal had jurisdiction to entertain a contribution claim. That was because, quite apart from any objection on the basis that the point was not taken below, I took the view that, even if I were to decide that issue in the Appellant's favour, there was no prospect that a decision on that basis could ground any award of costs. The question whether an employment tribunal has power to entertain contribution proceedings between respondents is one on which, perhaps surprisingly, there is no authority, and it is certainly within my knowledge that at least some practitioners and tribunals have assumed in the past that such a jurisdiction existed. It is not, I think, until the recent decision of this Tribunal, myself presiding, in [London Borough of Hackney v Sivanandan]() [2011] IRLR 740, that the point was explicitly put in question (though not answered). That being so, a mistaken belief by the Beam Respondents that the Tribunal had such jurisdiction could not in my view even arguably give rise to a liability in costs. It is with some regret that I have decided not to enter on deciding this point, since it is clearly one that needs to be decided sooner rather than later, but my regret is tempered by the fact that an appeal raising the issue is listed before me next month.
  1. I turn therefore to the points which remain for decision.
  1. I take first the point about service. Mr Burger's argument before the Tribunal was that the Beam Respondents' original application to join the Appellant – more precisely, the letter to him giving him notice of that application – was a "notice or document directed to a party" falling within the terms of rule 61 (4) (h) (ii) of the Employment Tribunal Rules of Procedure – being the rule which applies where the party in question has not specified an address for service or where a document sent to such an address has been returned. In such a case the rule provides that service may be made at any known address or place of business for the party in question in the United Kingdom, or its registered or principal office in the United Kingdom "or in any case such address or place outside the United Kingdom as the President, Vice-President or a Regional Chairman may allow". Mr McDermott in his submissions before me suggested that that rule fulfilled the same function as what used to be Order 11 of the Rules of the Supreme Court and is now rule 6.37 of the Civil Procedure Rules. No application to the Regional Employment Judge, or indeed the President or Vice-President of the Employment Tribunals, had been made for a direction that the Appellant could be served at his home address in Illinois.
  1. I am, with respect to both Mr McDermott and Mr Burger, sure that this is wrong. Rule 61 (4) (h) applies to cases of the service of notice on a "party" and is directed at cases where the party, having had an opportunity to do so, has given no address for service or one which has proved to be ineffective. It is not concerned with the situation of the initiation of proceedings against a person who is not so far a party, as may occur under rule 10 (2) (k) (or rule 10 (2) (r)). There appears to be no explicit rule governing service in such a case. But, as a matter both of principle and common sense, one would expect the situation to be the same as it is with the initiation of a claim. In that case, the claimant identifies in the claim form the address at which he says the respondent can be served. The Tribunal duly serves the claim form at that address, which may be outside the jurisdiction, and if decisions are taken in the absence of the respondent and it subsequently transpires that the notice of proceedings has not come to his attention he will be entitled to have them set aside. That is a sensible regime. I am sure that it is the regime which applies in cases of the kind under rule 10 (2) that I have referred to. On that basis, it is clear that the notice of the application did indeed come to the Appellant's attention, and he acted appropriately by seeking to resist joinder.
  1. I turn to the point under rule 18 (7) (b). As I have already indicated, there are in essence two points in this connection.
  1. I take first the point that the application to join the Respondent was made with an improper purpose. I was taken by Mr McDermott, as the Judge had been by Mr Burger, to the correspondence between Beam and the Appellant in which they were seeking to persuade him to sign a witness statement supporting their case, and specifically to the language used in the communications from Beam. It was pointed out to me that it was shortly after the Appellant had reaffirmed his position that the decision was taken to seek to join him in the proceedings. I can see why the Appellant might well take the view that the application to join him was taken out of spite, to punish him for his failure to co-operate, or alternatively to put pressure on him to support Beam's case. But that is not the only possible interpretation. If Beam genuinely believed, on the basis of what colleagues had been told by the Appellant at the time, that the draft witness statements which they put before him were true, and that it was in fact his refusal to sign them which had an ulterior motive, there would be nothing necessarily improper in their wishing to obtain the benefit of his evidence by another route, namely by joining him in the proceedings. The Judge had no live evidence before him. The Appellant's case that the Beam Respondents were acting improperly was based on the inference to be drawn from their correspondence. He took the view that such an inference could not safely be drawn from that evidence. I think his conclusion on that is unimpeachable. The allegation against Beam – though, as I have already accepted, far from implausible – is nevertheless a serious one and a finding that it was well-founded was not to be lightly made. It is also a relevant consideration that the Beam Respondents had put before the Judge at the PHR witness statements from four Beam employees, one of whom had been principally responsible for the correspondence in which they sought to obtain the witness statements; but no application was made to cross-examine any of those witnesses.
  1. I turn to the second element under the rule 18 (7) application – namely whether, irrespective of the motive, any contribution claim by the Beam Respondents against the Appellant (assuming the Tribunal to have had jurisdiction to entertain such a claim) had any reasonable prospect of success. The Beam Respondents' case was, as I have said, that their information about the Claimant's unwillingness to relocate came, at least primarily, from the Appellant; that if the Claimant's denial that she had said anything to that effect were accepted the information would have had to be an assumption on his part, and a potentially discriminatory assumption; and, in those circumstances, that if it were held that by acting on that information they had indeed discriminated against her, the Appellant had knowingly aided that discrimination by imparting the information on the basis of which they had acted. The case would accordingly fall within the terms of the relevant statutory provisions imposing liability on an "aider" (which are section 42 of the 1975 Act, section 33 of the Race Relations Act 1976 and rule 26 of the Employment Equality (Age) Regulations 2006, all of which are in substantially the same terms).
  1. The Appellant's case, as advanced by Mr Burger before the Judge, was that even if the information on which the Beam Respondents, at least partly, relied in coming to the decision which was said by the Claimant to be unlawful had derived from him, he could not be said to have knowingly aided that discriminatory act because he had no involvement in the making of the decision to make the Claimant redundant. He had himself stopped work before the redundancy consultation even began and his employment had terminated before the final decision to dismiss the Claimant was made. He relied in this regard on the decision of the House of Lords in Hallam v Avery [2001] ICR 408. He also pointed out that, on the Beam Respondents' pleaded case, at the consultation meeting in October to which I have already referred, it had been put to the Claimant that they understood that she was unwilling to relocate and that she had indicated her assent; and that it was that, and only that, which was the basis of the decision which they reached.
  1. The Judge dealt with that submission at paragraph 35 of the Reasons, where he said this:

"The relevant paragraph of the respondent's response states that the respondent's representative at that meeting indicated to the claimant that they understood that she was not prepared to relocate. This seems to suggest that they had that information from somewhere and there are many references in the draft witness statements of the respondents' witnesses to suggest that these witnesses will testify that Mr Finlay passed on information to the intent that the claimant was unwilling or unable to relocate. Plainly therefore, on Mr Finlay's admission, he formed the impression that the claimant would not relocate. There appears to be a not insignificant body of evidence that he communicated this view to colleagues and management. This is not a case, therefore, where there is likely to be a total lack of evidence that Mr Finlay had communicated the impression that the claimant was unwilling to relocate. Whether Mr Finlay knowingly aided any unlawful act, this is a matter which is better resolved upon hearing all the factual evidence in the case and on the findings of fact."

The crucial part of that paragraph is the last sentence.

  1. In my view, the Judge was right to say that the question whether Mr Finlay's communication of the Appellant's unwillingness to relocate (assuming that to be proved) constituted knowing aid to the eventual act of discrimination was a question which it would be dangerous to decide before the full facts had been established. I am prepared to accept – as indeed, realistically, was Mr Hignett – that even taking the Beam Respondents' case at its highest the description of the Appellant's conduct as knowingly aiding the eventual ex hypothesi discriminatory decision to dismiss is debatable; but I cannot say that it is clear beyond argument that it could not constitute knowing aid. In marginal situations of this kind, it is generally unwise to decide the case on a strike out application without the full facts. The point that the issue is, essentially, one of fact was clearly made by the House of Lords in Hallam v Avery.
  1. I therefore think that the Judge was right on both aspects of the rule 18 (7) (b) application before him, and I must dismiss the appeal.
  1. I should make it clear that I am, nevertheless, to some extent sympathetic with the Appellant's predicament. It is not an enviable situation to be made a party to litigation in a foreign jurisdiction, without the support of a corporate employer; and he had the additional misfortune that two of the planks in the case against him were thin – namely, first, the assumption that the Tribunal had jurisdiction to entertain a contribution claim at all and, secondly, the point about knowing assistance. But thin is not the same as unarguable. The first point indeed was not taken; and the second was not in my judgment, or that of the Judge, so thin that it would not bear the weight of the case being taken to a full hearing. Of course, I would be even more sympathetic with the Appellant if it is indeed the case that he was brought into the proceedings in circumstances where he was not in breach of his duty to co-operate, and where the application to join him was made with the motive either of punishing him for his perceived intransigence or putting pressure on him to change his position. But I am clearly not in a position to decide whether that is in fact what happened here. If it was, I have no doubt that the US court will see that justice is done.
  1. Finally, I am happy to make clear – though, as I have already said, I cannot as at present advised see the relevance of Judge Pettigrew's decision or indeed mine to the US proceedings – that the decision not to strike out the Beam Respondents' contribution claim against the Appellant was not in any way equivalent to a decision that it was well-founded. A claim is only struck out if it has no reasonable prospect of success – or, as it is sometimes more straightforwardly put, if it is hopeless. To say that the point on knowing assistance was not hopeless is not the same as to say that it was good. Likewise, Judge Pettigrew's decision not to strike out on the basis that Beam were bringing the Appellant into the proceedings for an ulterior motive cannot be equated to a definitive decision that that was not the case. He made his decision, and I have upheld it, on the basis that there was insufficient evidence for him to reach a safe conclusion to that effect at the interlocutory stage.

Published: 25/11/2011 16:01

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