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Appeal No. UKEAT/0527/09/JOJ

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 8 July 2010

Before

HIS HONOUR JUDGE McMULLEN QC

(SITTING ALONE)

KLT CONSTRUCTION LTD (APPELLANT)

MR J SWAIN (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant MS CHRISTINA LYONS (of Counsel)
Instructed by:
Messrs Crane Staples Solicitors
Longcroft House
Fretherne Road
Welwyn Garden City
AL8 6TU

For the Respondent MR SAMSON SPANIER (of Counsel)
Free Representation Unit

PRACTICE AND PROCEDURE – Appearance/response

At a review of a default judgment, made because of the late response, the Employment Judge did not consider the prospect of its success. Given that error, the EAT set aside the review judgment and the default judgment and then directed the response be accepted out of time.

1. This case is about the exercise of discretion in refusing to allow a late response to an Employment Tribunal claim. I will refer to the parties as the Claimant and the Respondent.

1. It is an appeal by the Respondent in those proceedings against a judgment of Employment Judge Thomas sitting alone at Watford, registered with reasons on 21 July 2009. This was a review conducted under rule 33 of a default judgment which had been made against the Respondent on liability on the grounds there had been no response within 28 days of the sending of the claim.

1. It is common ground that by the time of the hearing an ET3 response had been submitted and was considered by the Judge. The Claimant has been represented throughout by Mr Samson Spanier giving his services under FRU; the Respondent by Mr Mike Beagle, its Operations Manager. It had been put to me, without contest, that, for this purpose, he was a litigant in person although the business is engaged in the replacement of gas mains and services, employs 70 people and is a limited company.

1. The Claimant made claims for unfair dismissal, wrongful dismissal and unlawful deductions from pay. It is conceded by Mr Spanier that there are reasonable prospects of success in the response. That is a realistic concession to make and I accept it.

1. The issue in the case is whether the Judge exercised her discretion wrongly, or paid attention to irrelevant factors, or failed to consider relevant factors, or was wrong in principle in the exercise of her discretion. She refused to set aside the judgment in default ordered against the Respondent. The Respondent appeals. Under rule 3, HHJ Ansell decided that the appeal had no prospect of success but at a rule 3(10) hearing, Wilkie J held that it was arguable that the Judge had failed to have any regard to the merits of the response submitted as an attachment to an email sent on 22 January 2009 which was itself outside the 28 days vouchsafed for response.

1. The legislation is not in dispute. Employment Tribunals rule 33 provides for a review for a review of a default judgment. I pointed out in Chowles t/a Granary Pine v West [2009] UKEAT0473/08 that the review under rule 33 is radically different from that under rule 34, which is invoked where there has been a full hearing. Rule 33 is available to set aside a default judgment. It provides in relevant part as follows:

"(1) A party may apply to have a default judgment against or in favour of him reviewed. An application must be made in writing and presented to the Employment Tribunal Office within 14 days of the date on which the default judgment was sent to the parties. The 14-day time limit may be extended by [an Employment Judge] if he considers that it is just and equitable to do so.

(2) - (3) …

(4) The Employment Judge may -

(a) refuse the application for a review;

(b) vary the default judgment;

(c) revoke all or part of the default judgment;

(d) confirm the default judgment;

and all parties to the proceedings shall be informed by the Secretary in writing of the chairman's judgment on the application.

(5) … An Employment Judge may revoke or vary all or part of a default judgment if the Respondent has a reasonable prospect of successfully responding to the claim or part of it.

(6) In considering the application for a review of a default judgment the Employment Judge must have regard to whether there was good reason for the response not having been presented within the applicable time limit.

(7) …"

1. The facts continue to be in dispute but the Judge found that the ET3 had not been received by the Employment Tribunal by the time 28 days had expired. The question was the explanation for the failure and whether the Respondent should be relieved of the sanction, which was a judgment in default against it. The explanation given by Mr Beagle in evidence upon which he was cross-examined was that he had made an error in transmitting on 15 January 2009 at 16.03 what he considered to be the ET3.

1. The account given by Mr Beagle was that he had wrongly addressed the email, it being sent to [email protected]. He said this bounced back. Then he sent at 16.31 an email to [email protected]. This is the correct address and it got through, but what was attached was not the ET3; it was a completely irrelevant document.

1. On 22 January 2009 there was a conversation between Mr Beagle and an officer of the Tribunal which had followed the default judgment on 21 January 2009 and its receipt by Mr Beagle on 22 January 2009. During the course of that conversation Mr Beagle transmitted the ET3. It was also transmitted again on 25 January 2009. So, it is common ground that the ET3 which forms the vehicle for the Respondent's defence to this claim was submitted by email on 22 and 25 January 2009. It was out of time.

1. The Judge was critical of Mr Beagle who said that he had not brought all his computer records with him which would show clearly that his account was correct. The Judge refused the application to set aside the default judgment, primarily on the basis that he did not bring to the Tribunal the documents, including print-outs from his computer outbox, which would have clinched the matter. As the Judge said, "Matters did not come about in the way in which Mr Beagle described". The default judgment was upheld.

1. The Respondent contends that the Judge erred in failing to consider, as she was bound to do, the merits of the case. A stark issue as to jurisdiction is revealed by the ET3 and Ms Lyons needed to go no further than to acknowledge the concession made by the Claimant that the response had reasonable prospects of success in respect of all three claims made by the Claimant.

1. Secondly, she contended that the Judge should have paid attention to the circumstances as set out by Mr Beagle in the correspondence and in the account which he gave of the documents. Irrespective of the unsatisfactory nature of the evidence of Mr Beagle, as found by the Judge, Mr Beagle had indeed made an error and he should be relieved of that sanction.

1. Ms Lyons contended that the prejudice was all one way in that the Respondent had been shut out of its opportunity to defend this case when it had reasonable prospects of so doing and was exposed to a claim of £20,000, whereas there was no prejudice to the Claimant save for the fact that he would now have to fight the case.

1. On behalf of the Claimant it is contended that rule 33 operates as a gateway and the first requirement to passage is that there should be acceptance of a frank explanation as for the reason for delay. There was none in this case for the Judge did not accept Mr Beagle's account. Further, attention was given by the Judge to the explanations and, in some cases, the explanation or lack of it may be a decisive factor: see Kwik Save Stores Ltd v Swain & Ors [1997] ICR 49.

1. It was contended by Mr Spanier that no new material should be adduced before me than was before the Employment Judge and that the Judge plainly considered the merits, for she had, contrary to the Notice of Appeal, the ET3 before her.

1. The legal principles to be applied in this case emerge from Kwik Save and from the application of Kwik Save by Burton P in Pendragon v Copus [2005] ICR 1671 and Moroak t/a Blake Envelopes v Cromie [2005] IRLR 535. The starting point is Kwik Save when the EAT allowed an appeal by employers against a refusal by a Judge to extend time. Mummery P said that in some cases the explanation or a lack of it may be a decisive factor in the exercise of discretion, but it is important to note that it is not the only and relevant factors must also be considered (see page 55).

1. Burton P in Pendragon, applying Kwik Save, concluded (see paragraph III) the following:

"In any event, as I commented above, I note the caveat that the chairman himself put forward – "in almost all cases" – which makes any such argument difficult to accept. It is quite plain that the wording of rule 33(6) is not, as the chairman concluded it was, one which renders the absence of a good reason determinative of an application. It simply makes it a matter which the tribunal considering an extension must have regard to. But, it does not in my judgment rule out consideration of all the other matters, which inevitably must be considered on a discretionary decision by the tribunal, including, but not limited to, the reasonable prospect of success."

1. Prejudice must also be considered and, for the purposes of the application of rule 33, the merits are a relevant factor and are to be considered. The power to set aside is given if the response has merit, so in order to exercise the discretion, the judge must first consider the merits. This is what I decided in Chowles (above) , at paragraph 17:

"The review conducted by the Judge could only be under Rule 33 and it was defective because there was no review of the merits."

That proposition has not been disputed by Mr Spanier.

1. The first issue, therefore, is the merits. I have decided that the Judge did consider the ET3. It does reveal a reasonable prospect of success. She did not mention it in her judgment. This, in my opinion, is an error. This is not only a relevant consideration but a necessary consideration for, under rule 33(5), a Judge is directed to revoke a default judgment and may do so if there is a reasonable prospect of it being successfully defended. I need go no further than the concession. There is in this case merit in the response. It is to be noted that, at least in respect of one of the claims, unfair dismissal, there is a jurisdiction issue as the Claimant had not been employed for a year on the Respondent's account.

1. That is sufficient to set aside the review judgment and to dispose of the case since the matter must be considered again. Both counsel now invite me to make the decision myself. In order to do this I have looked at the correspondence.

1. The present state of play is unsatisfactory. There is a sequence of emails which has emanated from the Watford Tribunal, since it is printed out by its officer, Christopher Farmer. These, to some extent, correspond to the documents produced today by Mr Beagle, printed out by him. The common features include the name of the printer, Christopher Farmer at Watford, Mike Beagle at the Respondent.

1. Some of the text is the same but significantly, where Mr Beagle prints out an email as showing an attachment, the corresponding email at Watford simply shows the word received. Yet, it is clear that attachments were being received at Watford without the word attachment being printed on the email, for the wrongly attached irrelevant document is produced by Watford without it being expressly stated on its face as having been attached and received.

1. Within the documents received at Watford is Mr Beagle's account of the bouncing back of the document. That is the position formally before me but I have to say that that looks odd in the light of the print-out of Watford of the document on 15 January 2009 sent to the wrong address. It appears that the first email, while it may have been recorded as bounced back to Mr Beagle, is in the inbox at Watford.

1. If that is the case, the alternative approach of Ms Lyons is to say that this document should have been considered by the Secretary and the Secretary should have written back, under rule 5 of the rules, indicating that she was not going to accept the response. A defective response is treated as not being received. Had that been done, Ms Lyons contends, Mr Beagle would have then sent the ET3. It seems to me that he is a person who operates quickly, albeit inefficiently - inefficient because he first got the wrong address of Watford and, secondly, sent the wrong irrelevant documentation to Watford.

1. In my judgment these are venial human errors and I accept Mr Beagle's account as demonstrated by the Watford file alone, even though I consider that it is right to introduce some of Mr Beagle's print-outs, since they correspond to the Watford account too. I would accept his account of the mistakes he made and, bearing in mind that there is a reasonable prospect of success, I allow the appeal, set aside the review judgment and the default judgment and direct that the ET3 be accepted as validly presented.