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||BAILII case number:  UKEAT 0139_08_0407
||Appeal No.UKEAT/0139/08/DM, UKEAT/0138/08/DM
EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
||At the Tribunal
||On 21 May 2008
||Judgment delivered on 4 July 2008
THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)
Transcript of Proceedings
© Copyright 2008
|For the Appellant
||MR RICHARD LEIPER
Messrs Slaughter & May
One Bunhill Row
|For the Respondent
||MR CHRISTOPHER JEANS
(One of Her Majesty's Counsel)
Messrs Baker & McKenzie LLP
100 New Bridge Street
PRACTICE AND PROCEDURE
The Employment Tribunal made an unless order against the claimant requiring her to take positive steps by a particular date. The Tribunal concluded that she had failed to take those steps and her case was automatically struck out. She sought a review to have the case reinstated. The employment Judge granted the review but refused any relief. She appealed both decisions.
The EAT held that there was no error of law by the Tribunal. Appeals dismissed.
THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)
- This is an appeal against two related decisions. In the first, the employment judge held that the claimant's claim was struck out in its entirety (the strike out decision). In the second, she reviewed the decision but confirmed that the strike out should stand (the review decision).
- The appeal is the latest battle in a litigation war that has been conducted for over seven years. The claimant was employed as an associate, and latterly a principal, by the respondents who operate a worldwide business as management consultants. She worked in the financial services group. She was born a male, but in April 2000 she underwent a transition and began to live fulltime in a female role. In November 2000 she underwent gender re-assignment surgery. She was subsequently dismissed on 31 August 2001.
- The claimant made an application to an Employment Tribunal on 26 November 2001 in which she alleged that her dismissal was unfair, that she had been dismissed by reason of redundancy for a discriminatory reason, namely that she had undergone gender re-assignment contrary to sections 2A and 6 of the Sex Discrimination Act 1975, as amended.
- The Employment Tribunal gave judgment on 8 January 2004 following a hearing taking some 13 days. They found that she had been unfairly dismissed but they rejected the discrimination claim. She appealed to the Employment Appeal Tribunal against that conclusion but the appeal was dismissed.
- The claimant then appealed further to the Court of Appeal and that appeal was successful: see EB v BA  IRLR 471. The Court of Appeal ruled that the Employment Tribunal had erred in law and they remitted the case back to a fresh tribunal to consider the claim of discrimination, and also to analyse the reason for the claimant's dismissal.
- The essential nature of the discrimination claim was that following her gender re-assignment, and in particular between January and mid-June 2001, the claimant was not assigned any billable work by the respondent. Although hundreds of projects had been allocated to other staff, the claimant had been assigned only three projects. The Court of Appeal appears to have been under the impression that there were some 200 FSG projects and proposals in the relevant period. In fact, it was substantially more than that and is apparently now in excess of 900.
- The basis of the successful appeal to the Court of Appeal was that the Employment Tribunal had failed properly to apply the burden of proof provisions. The Tribunal said that the burden pursuant to section 63A of the Sex Discrimination Act ran from November 2000 whereas it should have been from May 2000 running through to the dismissal.
- More relevantly with respect to these appeals, the Court held that the employers had not made adequate disclosure and that this had prejudiced the ability of the claimant to establish her case. The employers had taken the view that unless the claimant raised the issue whether she should have been given a particular project they were not obliged to provide information about it. The Court of Appeal said that this was not the right approach. Lord Justice Hooper (with
whose judgment Ward and Moses LJJ agreed) summarised what had to be done as follows
"An examination of the detailed conclusions of the EAT about the projects which the appellant had identified reveals the difficulties which she and her counsel faced. Her failure to get evidence about a project was noted. If a Scott Schedule had been prepared by the respondent summarising all or a substantial number of the projects during the period May 2000 to July 2001 with the reasons why the appellant was not chosen, then the appellant and her counsel could then have concentrated on those which supported her case. As it was, she had to make from memory a shot in the dark about which of the projects might support her case. It is plain that the court envisaged that there would be projects for which she would not be suited, but she would be in a position to know which were realistic possibilities for her and which were not."
- The effect of the Court of Appeal's judgment was significantly to lengthen the case. Initially it was due to last four weeks but following the decision it was listed for 16 weeks later extended to 22. It is difficult to believe that had the Court of Appeal appreciated the full significance of their decision, they would have contemplated making an order with such draconian consequences.
- It is one of the ironies of this case that, following their decision in the claimant's favour, she has alleged that the burden of dealing with so many proposals and projects, and the very significant extension of the time needed to conduct the trial, has infringed her Article 6 rights to a fair trial. One can appreciate her concerns, although of course it was not the employers who were responsible for this increase in the timescale. They were simply acting in accordance with the ruling from the Appeal Court.
- In fairness to the Court of Appeal, the passage reproduced above suggests that they had envisaged that if the employers were to identify the range of projects which had been awarded in the relevant period, then the claimant would be in a position to identify those for which she thought she might properly have been considered. This would be the effective check on the case running out of control.
- Following that decision of the Court of Appeal there were a whole series of case management conferences. It is not necessary to recount them all. On 31 August 2006 the employment judge was told by the respondents that there were 885 projects and proposals which would have to be considered unless the claimant agreed to reduce the list. At that time the respondents estimated that it was necessary for them to call 121 live witnesses, of whom only 44 still worked for the respondents. The following order was made:
"The claimant is ordered to indicate which projects or proposals or groups of projects or proposals she does not wish to pursue by 28 March 2007."
- The claimant appealed against that order to the Employment Appeal Tribunal. Her appeal was rejected on the sift by His Honour Judge McMullen QC, and she did not pursue that appeal any further.
- The claimant did not give any indication of the projects or proposals she did not wish to pursue by the due date. Instead she wrote a letter to the Tribunal setting out what she claimed to be her understanding of two alternative effects of the direction. This followed much correspondence on the matter. The two alternatives were as follows:
"Case 1 The claimant by having indicated that she "does not wish to pursue" a particular project proposal is deemed to have conceded the respondent's explanation and the respondent succeeds, or:
Case 2 The claimant is deemed to have not conceded in relation to that particular project proposal
. and therefore the respondent, having produced no evidence to support her asserted explanation, the respondent is deemed not to have met the burden of proof and the claimant succeeds."
The claimant said that under Case 1 she put all of the projects and proposals in issue, and if Case 2 was the proper analysis, then she put none of them in issue.
- There was a case management discussion on 4 April 2007, when submissions by both parties were directed to that failure. By this time the total number of projects and proposals had risen to 915. The claimant herself submitted, as indeed she had on earlier occasions, that the whole process would be unmanageable unless the number of projects and proposals were reduced. She said that some of them were quite irrelevant. She also made it clear, according to the employment judge, that she was in a position to specify which were irrelevant but that this would take her some further time. She therefore asked for an extension until 27 April in which to undertake that task. In view of that request, the employment judge made an order in the following terms which I will call the "unless order":
"Unless the claimant indicates which projects or proposals, or groups of projects or proposals she does not wish to pursue by 27 April 2007, her claim will be struck out on the date of non-compliance without further consideration of the proceedings or the need to give notice under rule 19 or hold a pre-hearing review or hearing in accordance with rule 13(2) of the Employment Tribunal Rules of Procedure 2004."
- Notwithstanding that she had indicated that she could comply with that order, the claimant appealed it to the Employment Appeal Tribunal. The appeal was set down initially for a preliminary hearing, and the matter was heard before His Honour Judge Burke QC on 28 June 2007. By the agreement of the parties the preliminary hearing was treated as a full hearing of the appeal. His Honour Judge Burke QC gave judgment on 5 July 2007, and he dismissed the claimant's appeal and refused leave to appeal. An application for leave to appeal has been lodged against that decision with the Court of Appeal, but it has not as yet been determined, having been stayed pending this appeal. I have to determine this appeal on the basis that the unless order was properly made.
- Meanwhile on the 27 April the claimant responded to the decision of the Tribunal in the
in compliance with the Tribunal's order of 4 April 2007 that the claimant "indicates which project or proposal or groups of projects or proposals she does not wish to pursue...", I hereby inform you that there are no projects or proposals or groups of projects or proposals that I do not wish to pursue."
The Strike Out hearing.
- A hearing was conducted on the 10 July for the employment judge to determine whether this response constituted compliance with the unless order or not. It is common ground that if the claimant was indeed in breach of the unless order then there was no discretion whether or not to strike out the claim. The strike out operated automatically upon breach of the order. This is made plain in the decision of Moore-Bick LJ, giving the judgment of the Court of Appeal in Marcan Shipping v Kefalas & Candida Corporation  1 WLR 1864 in relation to the Civil Procedure Rules, where he said this (para 34):
"In my view it should now be clearly recognised that the sanction embodied in an 'unless' order in traditional form takes effect without the need for any further order if the party to whom it is addressed fails to comply with it, in any material respect. This has a number of consequences, to three of which I think it is worth drawing particular attention. The first is that it is unnecessary, and indeed inappropriate, for a party who seeks to rely on non-compliance with an order of that kind to make an application to the court for a sanction to be imposed or, as the Judge put it, 'activated'. The sanction prescribed by the order takes effect automatically as a result of the failure to comply with its terms. If an application to enter judgment is made under Rule 3. 5(5), the court's function is limited to deciding what order should properly be made to reflect the sanction which has already taken effect. Unless the party in default has applied for relief, or the court itself decides for some exceptional reason that it should act of its own initiative, the question whether the sanction ought to apply does not arise. It must be assumed that at the time of making the order the court considered all the relevant factors and reached the decision that the sanction should take effect in the event of default. If it is thought that the court should not have made the order in those terms in the first place, the right course is to challenge on appeal, but it may often be better to make all reasonable steps to comply and seek relief in the event of default."
- The same position has been adopted with respect to non-compliance with unless orders before the EAT. In Uyanwa-Odu and Adenram v Schools Offices Service and Caxton Islington Ltd UKEAT/0294/05, His Honour Judge Peter Clark, giving the judgment of the EAT said this (para 28):
Following expiry of the time for compliance, the strike-out sanction takes effect. Thereafter it is open to the party in default to apply for a review of the strike out judgment, coupled with an application to extend time for compliance with the underlying order requiring him to do or not to do something; here serve a list of documents and witness statements."
- The only question, therefore, was whether there had been a breach of the order or not. The issue fell within a very small compass. The claimant submitted before the employment judge that all the order requires is that she should indicate which projects she does not wish to pursue, and the short answer is that she wishes to pursue them all. Hence there was no failure to comply with the order. It was entirely up to her which projects she wished to keep in play.
- The employment judge categorically rejected this submission. She noted that the order was made against the background that the claimant herself had recognised - and continued to recognise - that the case was unmanageable, and furthermore it was in accordance with the guidance given by Lord Justice Hooper, to which I have made reference. The time for compliance had been identified to reflect the claimant's own choice of date. The employment judge summarised her conclusion as follows (para 19):
"The Claimant has argued in her submission of 25 June that the terms of the Unless order did not state that a 'nil return' was not acceptable. That is a narrow analysis of the Unless order. The Chairman was careful to adopt in the Unless order the language of the Case Management Order of 31 August 2006 and told the parties that that was her intention. The Order of 31 August 2006 was made in an attempt to comply with the guidance of Hooper LJ in the Court of Appeal. The intention was that by the Claimant selecting those projects and proposals which she wished to pursue, the case would be made more manageable. The so-called 'nil return' made by the Claimant, does not achieve this end and goes against the essential intention of the Tribunal Orders of 31 August 2006 and the Unless order. The Claimant was in no doubt that it was incumbent upon her to eliminate those projects which, at the very least, she considered irrelevant, as she argued on 4 April. It is disingenuous for the Claimant to now suggest that a 'nil return' complies with the Unless order. Her notice of appeal to the Employment Appeal Tribunal argues against the requirement to limit the scope of her claim and had she thought that a reply declining to restrict the scope of the projects and proposals was consistent with the Unless order, she would not be appealing against the requirement to limit that scope."
The review hearing.
- There was a further hearing on 25 October 2007, in which the claimant sought to have the strike out order reviewed. The employment judge considered that the case should be reviewed, and there is no appeal against that decision. Thereafter, the Tribunal had two issues to determine. The first was whether the review application should be heard in two stages. The claimant submitted that it should. Her counsel, Mr Leiper, submitted that the Tribunal should first consider whether it remained a proportionate sanction for the case to be struck out. If that application were unsuccessful, then it was proposed that there should be a second stage at which the Tribunal would consider whether it should grant her an opportunity to take steps to comply with the order. However, this stage should not take place until the appellate courts had determined the outstanding appeals directed at whether the unless order had been properly made and whether it had been breached.
- It was submitted by Mr Jeans QC, on behalf of the employers, that there was no power for the employment judge to order a split hearing. She rejected that contention, but nonetheless concluded that a two-stage review was inappropriate, given the facts of the case. In reaching that conclusion she took into account the continued failure of the claimant to comply with the order, or even to make any proposals as to how she might comply at any future date. The only object of this application was so that the claimant could seek to preserve the position so that if unsuccessful in her various appeals, she could have the unless order varied so that she could comply with it. She noted that the appeals in the Court of Appeal and the EAT had been stayed pending the outcome of the review, and she considered in those circumstances that she ought to resolve all review issues before the appeals could proceed.
- The final issue for the employment judge to decide was whether the review should be granted. Mr Leiper argued that the claimant had not in any sensible use of the term wilfully disobeyed the order. She would have appreciated that this would lead to a strike out. It was perfectly logical for the claimant to contend that projects were relevant to the case, even in circumstances where they would not have been appropriate for the claimant herself. The employers were seeking to rely upon these projects. He also submitted that there was something faintly absurd about the order because the claimant could just as easily have made the case unmanageable by identifying a small number, such as 10 or so, projects which she did not wish to pursue, and yet that would have been compliance.
- The employment judge recounted the history, and in particular the continued failure to supply any information about which projects and which proposals were not relevant. She then considered the factors identified in rule 3(9) of the Civil Procedure Rules, which concerns relief from sanctions. It was common ground that this is a CPR rule which is equivalent to the Tribunal rule relied upon in this case. To put the analysis in very summary terms, the employment judge held that the interests of the administration of justice were not served in granting relief because the claimant had failed to assist the Tribunal in furthering the overriding objective.
- The employment judge also considered that the failure was intentional, in that the claimant deliberately ignored the context in which the order was made, and acted in defiance of it. There was no good explanation for the delay; the claimant was an intelligent woman who understood what was required of her, and had indeed conducted her own case throughout.
- The employment judge also noted that there had been other examples of unco-operative conduct. She referred to a paragraph from the decision of His Honour Judge Burke QC, who noted that the claimant had said that there were additional projects not identified by the employers but when asked what they were, she said that she would not disclose them. Moreover, the employment judge considered that she had been generally unco-operative since the decision of the Court of Appeal.
- Finally, an important feature here was that the trial date had been lost as a result of these delays. The judge was not persuaded that the trial date would necessarily have been lost in any event by the appeal against the unless order. Moreover, she considered that the attitude of the claimant had had a profound effect on the employers, since it directly affected the manageability of the case, and would inevitably have a huge impact on their preparation.
- Bearing in mind all these factors, the employment judge concluded as follows (para 63):
The Chairman is not satisfied that there has been an unintentional failure to comply, a good explanation for the failure, general compliance with all other orders or prejudice to the trial date. Taking the matter overall and considering all the circumstances, the Chairman is not satisfied that there should be relief from the sanctions."...sic).
(It is clear from the judgment, and I believe common ground, that the "or" should read "and". The judge found that there had been prejudice to the trial date.)
The grounds of appeal.
- The appeal is against both the finding that she had breached the unless order, and the decision not to give relief from the strike out. I shall consider them separately.
- The argument advanced before me substantially mirrors that put before the Employment Tribunal. Reference is made to the original order dated 31 August 2006, which required the appellant to indicate "which projects
. she does not wish to pursue", and also to a letter from the Tribunal dated 16 November when the appellant was asked to "take a view as to whether there were any cases or groups which you did not want to pursue". This was consistent with a "nil return". Mr Leiper submitted that an unless order is in the nature of a conditional judgment and should be very strictly construed. Also, it would be contrary to section 63A of the Sex Discrimination Act relating to the burden of proof, since it would require the appellant to accept some explanation offered by the respondent as to why they did not think certain projects were relevant prior to the service of any witness statements.
- Mr Jeans supports the Tribunal's decision. The appellant's own case was that the claims had become unmanageable; she openly acknowledged that she could identify some projects and proposals which were irrelevant to the proceedings; it was, as the Tribunal said, disingenuous for her to believe that a 'nil return' was proper compliance; and her decision to act in that way was deliberate and wilful and in plain defiance of the Tribunal's order.
- I agree with that submission. I accept that on a strictly literal construction of the Tribunal's order the response of the claimant could be said to fall within its terms, but in my judgment, given the history of this litigation and in particular the fact that the claimant herself recognised that the proceedings were unmanageable and that she could identify irrelevant projects, she fully understood the intention behind the order, and was deliberately flouting it. In any event, the Tribunal was fully entitled to take that view.
- It is, in my judgment, pertinent to note that the claimant had sought to appeal against the unless order precisely on the basis that it required her to limit her case. I also consider it relevant that part of the overriding objective as described in rule 3 of the Employment Tribunals (Constitution Rules and Procedure) Regulations 2004 requires the parties to assist the Tribunal in furthering the overriding objective. That was manifestly not done here.
- The submission that it was unclear how many projects may have to be identified, in my judgment, has no weight. The plain intention of the order was that the claimant would identify those projects which she accepted were irrelevant. The expectation was that she would do that in good faith. If there were any real doubt about a project then, of course, she would have been entitled to keep it in issue. She would not have satisfied the order by identifying just a few projects if that was not genuinely all that she thought were irrelevant to her.
- I also reject what I consider to be the wholly misconceived notion that this was in some way impacting upon the burden of proof provisions in section 63A of the Sex Discrimination Act. The claimant was not conceding the case in any sense at all. She was merely identifying those issues which were irrelevant to the case. This was plainly what the Court of Appeal envisaged would happen; it was what the claimant asserted she wanted; it was conducive to the proper management of the case; and the position struck was a deliberate one, setting those objectives at nought.
- I do not accept, and more importantly, in my judgment, the Tribunal simply did not accept that there was any genuine argument based on the burden of proof in any event. Her complaint to the Court of Appeal had been that she had had to try and rack her memory about those projects that might have been appropriate for her. It was to assist her in identifying those projects that the employers were put to the not inconsiderable time and expense of having to identify each and every one of over 900 projects.
- It was plainly not the intention of the Court of Appeal that each one of those should have to be explored and exhaustively analysed, nor could they have intended that the employers should be required to produce witness statements explaining the reason why each and every one of these projects was assigned to whoever it had been assigned to, before she could decide whether or not she wished to rely upon it.
- I further note that the similar argument about burden of proof was advanced before His Honour Judge Burke QC as a reason why the unless order should not have been made at all. In that case also it was submitted that she should not be made to identify the projects which she considered to be irrelevant until she had seen all relevant witness statements from the employers. The judge concluded that the order was entirely in line with what the Court of Appeal had plainly envisaged. The order did not negate the burden of proof, and it did not require the claimant to prove anything (see para 34). I agree.
- On any view, some of these projects would never be the subject of challenge. For example, there were some where a particular language was required which the claimant did not have. Indeed, the claimant accepted in terms before His Honour Judge Burke QC that some of the projects were irrelevant, but she was not willing to identify what they were because she considered that she should not be required to make concessions.
The review application.
- The claimant contends that the employment judge erred in law in refusing in her discretion to permit the review application to proceed in two stages. Mr Leiper observes that it is standard practice that a claimant should be entitled to persuade a tribunal after a strike out order has been made that because of compliance (albeit late) it is in the interests of justice for the strike out order to be reviewed and revoked.
- He submits that it is not reasonable to subject the claimant to the burden of having to identify the relevant projects in circumstances where this may never prove to be necessary at all. That would be the position if she were to succeed in either of her appeals against the unless order and the strike out order. She has been compelled to comply with the unless order which she strongly disputes is valid. Mr Leiper recognises that the order is final until and unless it is set aside on appeal, but the fact that it is under appeal is a material factor which the Tribunal ought to take into consideration.
- Mr Jeans QC reminds me of the well-established principle that where challenges are made to interlocutory discretions exercised by the Employment Tribunal, there is a "generous ambit" which is conceded to those tribunals where reasonable disagreement is possible: see Noorani v Merseyside TEC  IRLR 184, applying G v G  1 WLR 647. He submits that it was plainly justified to have the review conducted in the usual way. The claimant was seeking to have a second bite of the cherry, in the event that her appeal on proportionality might fail.
- Moreover, the EAT and the Court of Appeal had both been asked to stay the appeals until the review hearing had been determined. In those circumstances it was plainly open to the Tribunal to take the view that they should determine all the issues relating to the review at one time. The decision of the Tribunal in this case fell nowhere near the level of perversity required to challenge a decision of this nature.
- I agree with that submission. The Tribunal has to do what is just, and there is no one right answer to how the discretion should have been exercised in this case, but given the history of this litigation, it seems to me that it was a perfectly proper exercise of discretion to require the whole of the review application to be considered at one go. A two-stage hearing might well have led to delay. Indeed, it would be bound to do so if the claimant were to fail in her appeals.
- I think there is some force in Mr Jeans' observation that the claimant is seeking to manage the Tribunal and is reluctant to be managed by the Tribunal. In my judgment, until the order was set aside the Tribunal was entitled to treat it as binding and to act accordingly. That is the conventional approach, and I see no reason why this Tribunal should have been compelled to depart from it.
- I turn to the final issue which is whether the Tribunal ought to have allowed the review and reinstated the case. The principal criticism here is that the Tribunal has effectively determined that no-one in good faith could have taken a different view of the order from that identified by the Tribunal. It is submitted that had the Tribunal appreciated that the claimant's understanding of the order was a legitimate one and genuinely held, then they ought to have found that it was not proportionate in the circumstances to allow the strike out order to stand. It is submitted that the context in which the order was made was not material; the whole issue depended on what was the proper construction of the order, and whether the construction put upon it by the claimant was genuinely held.
- In any event, Mr Leiper submits that if one looks at the context and in particular has regard to the letter in November 2006 (referred to at para 31 above) then it is plain that this envisaged that the claimant would be entitled to take a view as to whether there were projects she did not wish to pursue. That plainly justified her adopting the position which she did.
- Moreover, he submitted that there was no proper basis for the Tribunal's finding that the claimant had not co-operated with the Tribunal's directions and had generally adopted an unco-operative approach.
- Mr Jeans submits that this is all specious. There was no genuine misunderstanding of what was required. The Tribunal was fully entitled to conclude, as it did, that her approach was disingenuous. It was not a genuine attempt to comply with the order. Moreover, the lack of co-operation was demonstrated by her earlier failure to comply with the order which had been made on 31 August 2006, and by the observation which was made by His Honour Judge Burke QC, to which we have made reference in this judgment.
- In this case the employment judge identified the factors set out in rule 3(9) of the CPR. She went through each of them and reached a conclusion which, in my judgment, she was wholly entitled to reach, having balanced the competing considerations. She was entitled to conclude that there was no good explanation for the delay, that it was not a genuine misunderstanding of the nature of what was required, that it was a singular failure to co-operate with the Tribunal, and that there was a manifest prejudice to the employers.
- I recognise that striking out is a draconian power, as did the employment judge, but once it was recognised that the unless order had been properly made, as His Honour Judge Burke QC had held that it was, then in my judgment, the decisions made by the employment judge flowing from that are unimpeachable.
- It follows that both appeals fail.
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