Mark Shulman, Consultant Solicitor at Keystone Law

STRIKING OUT
**Rule 37 of the ET Rules
**Under Rule 37(1) of The ET Rules of Procedure 2013, an ET may strike out a claim at any stage of the proceedings if:-

* it is scandalous or vexatious or has no reasonable prospect of success; * the manner in which the proceedings have been conducted by or on behalf of the claimant or the respondent (as the case may be) has been scandalous, unreasonable or vexatious; * there is non-compliance with any of the Rules or with an order of the ET; * it has not been actively pursued; or * the Tribunal considers that it is no longer possible to have a fair hearing in respect of the claim or response (or the part to be struck out).

This month's round-up looks at recent decisions on the principles to be applied when Rule 37(1) comes into play.

"Scandalous" and "unreasonable"
In [Waiyego v First Great Western Ltd ]()UKEAT/0298/15/JOJ, the EAT had to consider whether an EJ had been right to refuse the strike out of a defence on the basis that the Respondent's conduct of the proceedings had been scandalous and unreasonable.

Background
The Claimant made claims of harassment on the grounds of sex and victimisation. The case was listed for a full hearing due in December 2014. A few days before the hearing the Claimant's then solicitors emailed the Respondent's solicitor suggesting that there had been "slippage" by both sides in relation to case management orders and inviting the Respondent to agree a revised timetable. Shortly afterwards, new solicitors acting for the Claimant wrote to the ET to explain they were then instructed and applying for a postponement of the December hearing on the grounds that they needed time to review the file and as the parties had not exchanged witness statements, this would save time and expense for both parties. The EJ granted the postponement.

A second claim was presented in January 2015. The Claimant subsequently made various applications including asking the ET to strike out the Respondent's entire defence on the basis that the manner in which the proceedings had been conducted on behalf of the Respondent by its solicitors was unreasonable and scandalous and also because there had been deliberate non-compliance with an Order made at a CMD in September 2014 requiring the Respondent to "present an amended response…on or before 24 September 2014".

The ET refused the application. The EJ decided that although the Respondent's solicitor had failed to deal with all of the issues by the dates in the directions Order, there had also been failings on behalf of the Claimant. She had been represented by solicitors who had acknowledged that there had been slippage by both sides in complying with the provisions of the Case Management Order. The EJ said that it was "very regrettable" that both sides had not complied with the directions, but there was nothing to show that there had been significantly greater default by one side than the other.

The Claimant also argued that but for the Respondent's delays, there could have been a Full Hearing in December 2014. However, the EJ did not accept that as the Claimant had instructed new solicitors towards the end of November 2014. Those new solicitors had told the ET that an adjournment was appropriate because they needed time to get on top of the case and they would not have been ready for the December hearing. In that situation, the EJ said, it was quite wrong to apportion blame to one side or to the other or to say that the Respondent's solicitors had behaved unreasonably. Also, there was bound to be a further delay in any event because after the Claimant had issued the new claim in January 2015, the two claims had been consolidated and further directions had to be complied with before there could be a full hearing. That further delay was not the Respondent's fault at all.

The Claimant appealed.

Power to strike out
The EAT referred to Blockbuster Entertainment Ltd v James [2006] EWCA Civ 684, [2006] IRLR 630. In that case the Court of Appeal said that striking out a claim on the grounds that the proceedings had been conducted in a way that was scandalous, unreasonable or vexatious:

"…is a draconic power, not to be readily exercised…The two cardinal conditions for its exercise are either that the unreasonable conduct has taken the form of deliberate and persistent disregard of required procedural steps, or that it has made a fair trial impossible. If these conditions are fulfilled, it becomes necessary to consider whether, even so, striking out is a proportionate response. …"

Had the EJ been right in deciding that the Respondent's conduct had not met these conditions? Yes, said the EAT. Whilst the EJ's reasoning was "not as carefully worded as it might be", the decision as a whole had given sufficient reasons for not striking out the defence. The overarching point was that even if the threshold for striking out the claim had been met, on the facts it was not proportionate to strike out the defence. Both sides were at fault to some extent for the delays that had happened and it was the Claimant's solicitors who were the moving force behind the application for an adjournment of the full hearing. Secondly, the issue of the new claim in January 2015 meant that a whole new set of directions and timetable would in any event have been necessary. In the circumstances the EJ had correctly dealt with the matter.

Protected disclosures
In [Roberts v Wilson's Solicitors LLP & Ors ]()UKEAT/0339/15/RN, the EAT decided that an EJ had been wrong to strike out a claim by a solicitor who had brought proceedings claiming compensation for detriments suffered by him as a result of whistleblowing.

Background
The Claimant was a member of the Respondent LLP and a Managing Partner. He brought ET proceedings claiming that the LLP and its members had acted in repudiatory breach of the terms of the LLP's Members Agreement and the Deed of Adherence and that his membership of the LLP ceased when he accepted those repudiatory breaches.

He claimed compensation for "detriment suffered whilst a worker; ongoing detriment suffered after I ceased to be a worker; detriment and loss arising from the Respondents' breaches of the Members Agreement; …".

Following the judgment in Flanagan v Liontrust Investment Partners LLP and others [2015] EWHC 71 (Ch) (in which Henderson J had concluded that there was no place for the operation of the doctrine of automatic termination following acceptance of a repudiatory breach in a case involving a LLP with more than two members), a preliminary hearing was listed before the ET to determine "whether the Claimant's claim that there was a constructive termination of his membership of the respondent LLP should be struck out as having no reasonable prospect in light of the judgment in ..Flanagan…".

The EJ concluded that Flanagan presented an insurmountable hurdle for the Claimant's case and struck out that claim as having no reasonable prospect of success. The EJ also decided that "the losses that flow from that termination should be struck out." No reasons or explanation were given for that part of the decision.

Mr Roberts appealed to the EAT on the basis that in striking out the claim for compensation for post-termination financial losses, the EJ had erred in law by treating Flanagan as dispositive of that claim, when the question whether he could claim financial losses in these circumstances was a question of fact and judgment.

Compensation to be assessed
Had the EJ been correct to strike out the compensation aspect of the claim? No, said the EAT.

Under section 49(2)(b) of ERA 1996, any compensation for detriment is to be assessed having regard to "any loss which is attributable to the act, or failure to act, which infringed the complainant's right".

In the EAT's view, Parliament had chosen to use the word "attributable" instead of "cause" or "caused". "Attributable" was a word capable of being applied flexibly by ETs on a broad common-sense basis and did not require that the infringement or unlawful act must be the proximate cause of loss. Proximity by itself is not the determining factor, though it was obviously relevant and the further away in time a loss is from the infringement to which it is said to be attributable, the harder in practice it was likely to be to prove. It was a question of fact and judgment in every case for the ET as to whether a particular consequence or loss was "attributable" to a particular unlawful act or infringement.

Just and equitable
The statutory test imposed by section 49(2) of the ERA 1996 provides that in deciding what compensation should be awarded, ETs have discretion to determine what is "just and equitable" in all the circumstances. But in exercising that discretion, there are two mandatory considerations:

* first they must have regard to the infringement itself, in other words the nature and gravity of that infringement; and * secondly, they must have regard to the loss attributable to the act or failure to act which infringed the individual's rights.

So, the connection that has to be established between infringement and loss is in wider language than that of pure causation and it was not a "but for" test.

Post termination losses
Mr Roberts was not precluded from claiming damages for loss caused by the LLP's alleged repudiatory breaches of contract. Although Mr Roberts had not challenged his expulsion as a detriment in itself, that did not mean that his argument was doomed to fail in relation to losses allegedly suffered after his expulsion, which he asserted were attributable to earlier unlawful treatment prior to expulsion. The EAT's view was that if Mr Roberts could demonstrate that the detriments were so serious as to make his position as a member untenable and to prevent him from attending work, he should not be barred from making such a claim. The question was ultimately one of fact and judgment for the ET and involved no necessary conclusion one way or the other.

Accordingly the appeal was allowed and Mr Roberts could pursue his claim for post-termination losses said to be attributable to the alleged unlawful conduct of the LLP prior to his expulsion. If he established liability, it would be a question of fact for the ET to determine whether his claim for compensation satisfied the requirements of s.49(2) ERA, and if so, what compensation was just and equitable.

**Claims that cannot sensibly be responded to
*Was it right to say that the Claimant's allegations in his ET1 could not sensibly be responded to? No, said the EAT in the case of [Kedziora v Servest Group Ltd ]()*UKEAT/0099/16/RN.

The Claimant made various claims of discrimination, including sexual orientation discrimination. His ET1 referred to the fact that "I don't wanna to tell [sic] anybody that I am gay". The Claimant also referred to an incident when his supervisor asked him to "…polish mirrors like I polish [men's] genitalia". The ET1 also stated that "… I think that it is a racial and sexual orientation discrimination. After that I heard from the staff of H&M that I am fagg (this heard a manager from H&M Jack - he told James that he can't call me like this) and queen…".

At the ET all of the claims were allowed to proceed apart from the claim relating to sexual orientation. According to the EJ, there were "No details for your claim of sexual orientation therefore, it cannot sensibly be responded to". That part of the claim was struck out and the Claimant appealed.

*Sufficient detail
*The EAT allowed the appeal. Sufficient details of the sexual orientation claim had been disclosed. It was clear that the Claimant was saying he is gay; his then supervisor made a derogatory comment to him which was capable of being understood as being a derogatory comment based on the Claimant's sexual orientation and that his manager to whom he complained did not investigate properly, which failure amounted to sexual orientation discrimination.  Therefore the EJ had erred in law in excluding the sexual orientation claim from the allegations in his Claim Form and any defect in detail could be remedied by a request by the Respondent for further information.

No reasonable prospect of success
Under Rule 37(1)(a) an ET can strike out a claim that has "no reasonable prospect of success". Was an ET right to strike out a claim on that basis in [Zeb v Xerox (UK) Ltd & Ors ]()UKEAT/0091/15/DM? No, said the EAT.

*Background
*The Claimant made claims of discrimination and victimisation. The ET identified three principal acts of less favourable treatment relied on for the unlawful discrimination claims, namely:

*  the removal from his post; * that he was not given any suitable alternative work following removal from his post; and * that he was placed at risk of redundancy.

The Claimant contended that each act was an act of unlawful race, sex or religion and belief discrimination. His case was that these acts were all part of a plan to treat him badly and ultimately to force him out of his job. These claims were all struck out on the basis that there was no reasonable prospect of success. The EJ's reasoning was that the Claimant's assertions amounted to:

"… nothing more than a belief, arrived at with hindsight, that [the Claimant's] race, religion or sex may have contributed, to what has been, (from his point of view), not just an unfortunate but an eventually disastrous chain of events, culminating in dismissal, and unemployment for the first time in his working life. But none of that establishes any sort of reasonable case that the subsequent events were planned, or had any connection in any way to each other; let alone, the crucial factor for me, had any causal connection to his race, religion or sex."

The Claimant appealed.

*Striking out in discrimination cases
*The EAT referred to Anyanwu v South Bank Students' Union [2001] IRLR 305, in which it was stated that in discrimination cases (which are generally fact sensitive), a strike out before the full facts have been found are rare and will arise only in "in the most obvious and plainest cases".

Not only had the Claimant alleged that the various alleged discriminatory acts were because of his protected characteristic (and the fact that he was the only person with that particular protected characteristic who was treated in the manner about which he complained), but various additional factors were also alleged in support of his claims. For example, he relied on:-

* the relationship with his manager who had  been less than frank in explaining the reasons for his change of job; * the fact that there had been a history of errors in the accounts department, for which it was agreed by both sides that the Claimant was not to blame; and * the subsequent justification for replacing the Claimant with someone who had an accounting qualification, which was not an explanation that was given until after the discrimination complaints had been raised.

There may have been good non-discriminatory reasons for the behaviour of the Xerox managers and the treatment of the Claimant, but these had not been explored in the evidence at the preliminary hearing and no findings were or could have been made. If the behaviour was unexplained by the Claimant's managers or suggested that protected characteristics played a part in the process and in the decisions taken to change the Claimant's job, or about what work he was offered and about placing him at risk of redundancy, inferences of unlawful discrimination could be drawn. Whilst unreasonable treatment on its own was not a basis for drawing inferences of unlawful discrimination, unexplained unreasonable treatment might well afford such a basis. The question of what inferences to draw would form part of the critical core of disputed facts.

In the absence of a non-discriminatory explanation for the allegedly unreasonable treatment of the Claimant, there were facts pleaded in the ET1 from which an ET could infer unlawful discrimination and it was not possible for the EAT to conclude that the claims had no reasonable prospect of success. Where there is a critical core of disputed issues including those relating to the reasons for impugned treatment, it was inappropriate and wrong to strike out a claim in discrimination cases.

Whistleblowing
Was an EJ wrong to strike out a claim on the basis that the Claimant had no reasonable belief that her claim was "in the public interest"? Yes, said the EAT in [Morgan v Royal Mencap Society]() UKEAT/0272/15/LA.

Background
The Claimant brought a claim unfair dismissal, contending that her dismissal was automatically unfair on the basis of public interest disclosures and qualifying complaints about health and safety matters. The disclosures were in effect complaints about the allegedly cramped conditions in which she was being required to work. She asserted a belief that these conditions represented a danger to her health and safety and gave further particulars stating that "I think it would shock the public to know the working conditions I was subjected to after I had broken my knee while at work. The attached picture confirms these appalling conditions. The public would be equally appalled to know that I was victimised for expressing my concerns over my health and safety… The public ought to know about Charities who behave in this manner and operate under a culture of bullying".

At a Preliminary Hearing an EJ struck out the claims, concluding that the Claimant's allegations were not matters of public interest and could not be so even in the Claimant's reasonable belief.

The EAT allowed the Claimant's appeal. Whistleblowing cases have much in common with discrimination cases, involving as they do an investigation into why an employer took a particular action or decision and so "… It would only be in an exceptional case that an application to an Employment Tribunal will be struck out as having no reasonable prospect of success when the central facts are in dispute..." (North Glamorgan NHS Trust v Ezsias . Where there is a dispute of fact, unless there are very strong reasons for concluding that the Claimant's view of the facts is simply unsustainable, a resolution of that conflict of fact is likely to be required before the case can be dismissed without a hearing.

Claimant's belief
It was common ground that for there to be a protected disclosure there must be (i) a belief by the whistleblower that the disclosure is made in the public interest, and (ii) a belief that the disclosure tends to show one or more of the relevant situations in section 43B(1)(a)-(f) of the ERA 1996. The question is not whether the disclosure is actually in the public interest but whether the worker making it has the belief and whether the belief is reasonable. Both subjective beliefs must be reasonably held by the worker, but may in fact be wrong.

It is not therefore necessary for an ET to determine the public interest, but to determine whether the Claimant's subjectively held belief (that the disclosures were in the public interest) was reasonable. That is a fact sensitive question.

The Claimant had asserted that others could be affected by the same or similar working conditions and she had identified a number of ways in which the public interest was in her belief engaged. Those factual matters might not be established ultimately, but whether they would depended on the evidence about how other workstations were organised, how other employees might or might not be affected by cramped conditions and what the Claimant's belief was about all of that. Those were questions of fact and degree that would be affected by the evidence. It was reasonably arguable that an employee may consider health and safety complaints - even where they are the principal person affected - to be made in the wider interests of employees generally.

On that basis the EJ had erred in law in striking out the case on the basis of legal argument only and without resolving the potential factual disputes.
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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.