Striking out and dismissal of claims - Case Round-Up: March 2018

In this month's round-up, Mark Shulman, consultant solicitor with Keystone Law, looks at a round-up of recent cases on striking out and dismissal.

Mark Shulman*, Consultant Solicitor at Keystone Law * STRIKING OUT Rule 37(1) of The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 ("the ET Rules") gives an ET power to strike out all or part of a claim on various grounds, including where it has no reasonable prospect of success. Under Rule 38(1) an order may specify that if it is not complied with by the date specified (an "Unless Order"), the claim will be dismissed. This article examines three recent cases where the relevant legal principles were considered.

Strike out principles In [Javed v Blackpool Teaching Hospitals NHS Foundation Trust]() UKEAT/0135/17/DA the Claimant was employed as the Directorate Manager of General Surgery by Blackpool Teaching Hospitals NHS Foundation Trust ("the Trust"). He brought various claims of race discrimination. The Trust's case was that there was "a world of difference between allegations of bullying and harassment and allegations of discrimination. This is not a situation where the claimant alleged discrimination until much later". The ET, adopting the Trust's analysis, struck out 33 of the claims and ordered that a deposit be paid in relation to a further 12 claims.

Had the ET erred in law in its approach to the strike-out application?  The EAT thought it had.

The EAT referred to the relevant case authorities which gave ETs a strong steer not to strike out claims where there are central disputes of fact which could only be decided after hearing and evaluating evidence. It is only in an exceptional case that an ET should do so, for example, where "the facts sought to be established by the claimant were totally and inexplicably inconsistent with the undisputed contemporaneous documentation" (per Maurice Kay LJ in North Glamorgan NHS Trust v Ezsias . That strong steer, the EAT indicated, applies with greater force in discrimination claims because it is a matter of "high public interest" that discrimination claims are decided on their merits.

The Trust had relied heavily on the fact that its internal investigations had concluded that there was no substance in the Claimant's various allegations. But on the facts, the EAT thought that some instances of the Trust's investigatory conclusions would still have allowed an inference of discrimination to have been drawn by an ET. More significantly, if the Trust was right that such conclusions should be determinative, there would be many claims of race discrimination which would not survive a strike-out application where an employer had investigated and had not upheld the Claimant's allegations.

The fact that the Claimant did not complain at the time that his treatment was based on his race could not disprove a discrimination allegation or show that it has no reasonable prospect of success. There could be many reasons (e.g. embarrassment or fear of victimisation) as to why at the time an employee may have been reluctant to make a discrimination complaint.

The Trust submitted that there was a burden on the Claimant to provide evidence to the ET at the strike-out stage (i.e. before trial and before there had been any Order for exchange of witness statements), to show that his treatment was on the grounds of race, and if the Claimant did not come up with that evidence, the ET was entitled to decide the strike-out on the basis of the Trust's documents. The EAT disagreed with the Trust's submissions. The EJ had impermissibly conducted a mini-trial on inadequate material; his judgment was based merely on reading documents and after listening to submissions.

The key dispute was whether the Trust had done what it did because of the Claimant's race. The ET could not resolve that dispute without hearing evidence, unless the Claimant's allegations were clearly frivolous or vexatious or they had no reasonable prospects of success. The ET could not properly conclude that the Claimant's complaints had no reasonable prospect of success simply because he did not complain when he first raised his various grievances. At best, that could only potentially be relevant to weight, if and when the ET considered all the evidence in the round. Nor was the EJ in a position to conclude on the basis of the papers alone that there was no merit in the Claimant's complaints of discrimination because the Respondent's paper explanations appeared plausible; those explanations had not been tested in any way.

Further, the EJ had not clearly explained by what criterion he had decided that some claims had no reasonable prospect of success, but others did. The EAT deduced that the distinction between them was that the Claimant raised the issue of race at the time and possibly also that there were no contemporaneous documents giving the Respondent's explanation. That reinforced the view that the EJ had treated the absence of contemporaneous references to race and/or the presence of explanations from the Respondent in the documents as decisive when considering whether to strike out claims.

Although the EJ had directed himself correctly in law about the test for striking out a claim, he had not correctly applied the law to the facts. Apart from one instance (where the EJ had been right to strike out a claim as having no reasonable prospect of success), the ET had been wrong to strike out the remaining claims and so the appeal as to the striking out of the other claims was allowed.

**Costs: onus of proof *In [Haydar v Pennine Acute NHS Trust]()* UKEAT/0141/17/BA, the EAT considered who has the onus of proof in relation to the costs of a strike out application.

*Background *The Claimant was a medical doctor and fellow of the Royal College of Surgeons, employed by the Respondent in a sexual health clinic at the Royal Oldham Hospital. He was dismissed for serious misconduct and he pursued proceedings in the ET, raising wide-ranging claims, all of which were dismissed except in relation to his claim of unfair dismissal.

Before the full merits hearing, both parties had made applications to strike out the other side's grounds on the basis that the manner in which the proceedings had been conducted by the opposing party was unreasonable, vexatious or scandalous. Neither application succeeded.

The Respondent subsequently sought a costs order against the Claimant in respect of their unsuccessful strike out application against the Claimant. The EJ found that the Claimant had sent correspondence which was held to be a misuse of the legal process designed to vilify and threaten the solicitor for the Respondent and/or upset and harass potential witnesses of the Respondent, to bring pressure to bear on them so that the litigation might be settled.

The ET said that "The claimant has not satisfied us that this is a case where there should not be an order for costs if the respondent is able to satisfy us as to the matters set out in Rule 76". Although the ET recognised that the Respondent's strike out application failed (and therefore it was inappropriate to order the Claimant to pay the whole of the costs of the strike out application), the ET considered that he had acted vexatiously and unreasonably and it was appropriate for the Claimant to pay "something following his behaviour which resulted in the application being made. We conclude that he should pay 80% of the costs incurred by the respondent…".

Three-stage approach At the Claimant's appeal against the costs order, the EAT confirmed that under Rule 76 of the ET rules, there was a three-stage approach required:

* Stage one - whether the trigger for making a costs order has been established (because a party or his representative has behaved unreasonably, abusively, disruptively or vexatiously in bringing or conducting the proceedings or because the claim has no reasonable prospects of success). * Stage two - the ET must consider whether to exercise its discretion to make an award of costs. The discretion is broad and unfettered. * Stage three – this only arises if the ET decides to exercise its discretion to make an award of costs. This involves assessing the amount of costs to be ordered. Ability to pay may be considered, both at stage two and at stage three.

The Claimant contended that once the ET had concluded that his conduct had triggered the costs jurisdiction it had then wrongly moved straight to stage three to consider the percentage of costs that should be paid, without any reference to the discretion available at stage two. He also argued that the ET's approach was compounded by an error in relation to the burden of proof (wrongly putting the onus on the Claimant to show why costs should not be awarded).

*Error of approach *The EAT agreed. On the face of its reasons, the ET had wrongly concluded that if the relevant threshold in Rule 76 was made out, it was for the Claimant to satisfy it that there should not be an order for costs.

The EAT stated that the burden of proof ought not to play a significant part in the decision whether or not to order costs. On any view it was not for the Claimant to satisfy the ET that no costs should be ordered. Rather, once the Respondent had satisfied the ET that there was jurisdiction to award costs, it was for the ET to satisfy itself whether a costs order was appropriate in all the circumstances having regard to any factors relevant to the exercise of that discretion.

Relevant factors When determining whether costs should be awarded, it may be relevant for the ET to consider:

* whether or not there have been any costs warnings (but a costs warning is not a precondition to the award of costs); * the nature of the particular claim, bearing in mind the very real difficulties which face a Claimant in discrimination or whistleblowing claims. It might be difficult in these types of cases for a Claimant (especially where unrepresented), to make a realistic assessment of the real prospects of success until the explanation for the employer's conduct has been proffered and tested in evidence; * that unrepresented litigants may lack the objectivity and experience of a professional adviser.

In relation to the strike out application, the only factor considered at stage two was whether the Respondent was itself justified in making the application to strike out the claim. Various broader factors were not considered.

Further, although it was strictly speaking unnecessary to decide in the light of the EAT's earlier conclusion, there was no explanation by the ET as to why it had decided on ordering a figure of 80% of the Respondent's costs of the strike out application.

The costs issue was remitted to the same ET for it to re-consider the question of costs in accordance with the three-stage approach. Stage one had already been dealt with and did not need to be re-addressed. Therefore, the question on remission would be whether at stage two, the wide discretion ought to be exercised in favour of an award of costs and if so in what amount. There was no burden on the Claimant to satisfy the ET either way.

**DISMISSSAL OF CLAIMS Relief** In [Amey Services Ltd v Bate & Ors ]()UKEAT/0082/17/JOJ there were multiple claims for holiday pay by 25 Claimants. There was an "Unless Order" under Rule 38 requiring the Claimants to serve further information in relation to their claims. However, the Order was not complied with and the claims were all dismissed.

The Claimants then made an application under Rule 38(2) of the ET Rules 2013 seeking relief from the dismissal of their claims. On the day before the hearing to consider that application, the Claimants' solicitors served "a substantial document" purporting to deal with one of the information requests that had been ordered (regarding the contractual terms said to support the claims). This was done "without any explanation as to the delay before it was served and indeed with no apology for the lateness of its service".

However, by the time the Rule 38(2) application was heard, six of the Claimants were no longer represented by the original solicitors and were unrepresented at the hearing re-considering the dismissal of their claims. In addition to those six Claimants, the document served the day before the hearing provided no information in relation to a further four Claimants. However, the ET revoked all of the dismissed claims in relation to all Claimants. The Respondent appealed.

Had the ET been right to revoke the dismissal order? No said the EAT. Whilst the EJ had correctly considered the relevant case authorities, he had (i) failed to carry out the appropriate assessment as to the magnitude or seriousness of the Claimants' default (see [Opara v Partnerships in Care ]()(unreported UKEAT/0368/09/LA) and [Thind v Salvesen Logistics Ltd ]()(unreported UKEAT/0487/09/DA)), and (ii) not taken into account the principle established by Neary v Governing Body of St Albans Girls' School [2010] ICR 473 that a person guilty of deliberate and persistent failure to comply with a Court Order should expect no mercy.

In his reasons, the EJ had stated with regard to the late provision of information from the Claimants that "…whether or not there was compliance with the order, it is impossible to tell …". Therefore, in the absence of a finding that there had been material compliance with the Unless Order (in all respects) it was not open to the EJ to find that relief from sanction was justified. Alternatively, it was a perverse of the ET to find that without provision of the ordered information, a fair trial was possible.

Further, it was wrong in law and also perverse of the EJ to have granted relief from sanction to all of the 25 Claimants, notwithstanding that 10 Claimants had not even purported to comply with the terms of the Unless Order. In relation to those 10, the EAT stated there was only one possible finding open to the EJ (i.e. to dismiss the application for relief against striking out of their claims).

For the remaining Claimants, the EAT concluded that there had to be a remission back to the ET to reconsider the application afresh. The ET would have to consider the question of compliance with the terms of the Unless Order in full, including all of the requests set out in the Respondent's Request for Information which had been the subject of the Order.

*Comment *Although not addressed in this article, readers should be aware that the EAT upheld a costs Order for £26,000 made by the ET against the solicitors acting for some of Claimant's. The case is a salutary warning about the potential consequences to representatives in their handling of ET orders.

Laying the failure to comply with the Unless Order at the door of the solicitors, the EJ did so on the basis that "to answer the request for further information, when faced by the unless order, in the way in which they did amounted to improper, unreasonable and negligent conduct. It amounted to a breach of their duty to the tribunal; it did not permit of a reasonable explanation". The EJ also said that "In relation to the claimants who had presented information, that information was not being presented to the tribunal. Where they could not supply the information, there was a failure on the part of the claimants' solicitors to ask for the tribunal's indulgence and a variation to the order to facilitate the provision of that information later. There was no hint at any time that the solicitors would have difficulty in complying with the terms of the order…".

Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator. His blog on new employment legislation can be found here.

Published: 12/03/2018 10:42