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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Red Ninja Ltd v Succu (PRACTICE AND PROCEDURE –- Appearance/response) [2019] UKEAT 0035_19_2805 (28 May 2019) URL: https://www.bailii.org/uk/cases/UKEAT/2019/0035_19_2805.html Cite as: [2019] UKEAT 35_19_2805, [2019] UKEAT 0035_19_2805 |
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At the Tribunal | |
Before
HIS HONOUR JUDGE AUERBACH
(SITTING ALONE)
APPELLANT | |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
For the Appellant | MR LEE OMAR (The Appellant in Person) |
For the Respondent | MR RICCARDO SUCCU (The Respondent in Person) |
SUMMARY
PRACTICE AND PROCEDURE – Appearance/response
Following the termination of his employment, the Claimant in the Employment Tribunal claimed in respect of unpaid wages for the final month of employment and three days' accrued but unused holiday pay.
A proposed response form was submitted late. The Respondent also applied for a postponement of the date fixed for the Full Merits Hearing. The Respondent was only notified the working day before the hearing that that application would be considered at that hearing itself. At the hearing (which the Respondent, whose two employees were both in the USA, did not attend) the Judge rejected the out of time response, and refused the postponement application. The Judge made awards in respect of the wages and holiday pay claims, but also, on his own initiative, made a further award of four weeks' net pay in respect of notice.
The Respondent's appeal against the rejection of the late response failed. No application for an extension of time had been made and the Judge was obliged to reject it. Even had he had a discretion, he would have been entitled to reject it on the basis that no explanation for the response being late was advanced, and that there was no arguable defence to the wages and holiday pay claims.
The Respondent's appeal against the decision not to postpone the Tribunal hearing succeeded in part. In all the particular circumstances of this case, it was potentially unfair to have refused the application only at the hearing. However, the Tribunal was entitled, given the rejection of the late response, to make awards in the absence of the Respondent in respect of the wages and holiday pay claims, the amounts of which were a matter of straightforward calculation. Office Equipment Systems Limited v Hughes [2019] ICR 201 applied.
However, the Tribunal erred in making a further award in respect of breach of contract damages notice monies to the Claimant, over and above the wages and holiday pay awards when (a) on examination no such additional claim appeared in the original claim form; (b) the Respondent was not on notice that such an award might be contemplated; and (c) the basis for it was in any case unclear, having regard to the contents of the Claimant's claim and witness statement. As the EAT could not be sure, however, that only one outcome on this aspect was possible, and the parties did not agree to the EAT finally determining the matter, this award would be quashed and this aspect, only, remitted to the Employment Tribunal.
HIS HONOUR JUDGE AUERBACH
"We have had to close our office in Liverpool while I am based in the US until December. We are currently working with ACAS as we have issued a counterclaim to the Claimant for breach of contract. I would like to attend the ET in person in Liverpool. I will not be able to be in Liverpool for the proposed date in October and request we postpone the ET for a date that I can attend. Is it possible to arrange a date that is suitable so that I can attend, please?"
"1. The response submitted to the tribunal on 11 September 2018 is rejected.
2. The application by the respondent for a postponement of the hearing is refused.
3. The claimant's complaints of unauthorised deductions from wages, unpaid holiday pay and breach of contract are well-founded.
4. The respondent is ordered to pay the claimant compensation in respect of those complaints collated as follows:
Unauthorised deduction from wages
Salary for the month of March 2018 (gross) £2,500.00
Unpaid holiday pay
Three days' gross pay (based on weekly pay of £576.92) £346.15
Unpaid contractual notice pay
Four weeks' net pay (based on weekly pay of £455.40) £1,821.40
5. The respondent is ordered to pay the resulting sum of £4,667.55 to the claimant on or before 16 October 2018."
"1. By a claim presented to the tribunal on 20 July 2018 the claimant alleged that the respondent had made unauthorised deductions from his wages by failing to pay salary for the month of March 2018, notice pay or accrued but outstanding holiday pay.
2. The claim was served upon the respondent which was required to submit a response by 24 August 2018. It failed to do so. A response was submitted on 11 September 2018. The response disputed the claims but did not set out any basis upon which it was entitled to do so maintaining only that it had a counterclaim for breach of contract. No explanation was given for the late service of the response nor•was any application for an extension of time to serve a response made.
3. The respondent by an email of the same date applied for a postponement of the hearing on the ground that it was trading in the United States of America until December. Again, no factual basis was given to establish why the proceedings could not be conducted by someone acting on behalf of the respondent.
4. Accordingly, I considered whether the response should be accepted having regard to the provisions of rule 18 of the Employment Tribunal Rules of Procedure 2013. In the absence of an explanation for the delay in serving the response nor any application for an extension of time to do so, I rejected the response. In doing so I had regard to the overriding objective, the failure to plead any basis to contest the claims on their merits and the fact that the respondent has the right to request a reconsideration of the rejection of the response and indeed this judgment.
5. The attention of the respondent is drawn to rules 19, 20 and 21 which set out the procedure for a respondent whose responses been rejected to apply for reconsideration, an extension of time and the effect of rejection of a response on the proceedings.
6. Substantially, for the same reasons I rejected the application to postpone the hearing. In addition, I did so for the matters set out in paragraph 3 above.
7. In reaching those conclusions I had regard to the fact that a claimant is entitled to establish a claim and the respondent a counterclaim if they can do so but the tribunal will enter judgment for both parties leaving any matters of set-off to be resolved between them.
8. Although the claimant provided me with an argument for maintaining that the counterclaim was manifestly ill founded I did not make the decisions to reject the response (and the counterclaim which is included within it) or to refuse the application to postpone for that reason. Because the response has been rejected and the counterclaim is therefore treated as not having been made it would be open to the respondent, for example, to pursue its counterclaim as a freestanding claim for breach of contract in the civil courts. I therefore consider that its rights were fully protected in respect of the counterclaim.
9. Furthermore, proceeding in this way protected the claimant's rights to have a remedy for the elements of his claim since they had not been separately disputed upon their merits.
10. The claimant produced before me a witness statement and a small bundle of documents. His account was that he had not been paid for his final month's salary. Mr Omar for the respondent had not suggested this was because of any breach of contract but the lack of the means to pay.
11. I accepted the claimant's account that he had worked for that month. His annual salary was £30,000. He was entitled to £2500 per month which I awarded gross and which may be taxable in his hands.
12. I also accepted the claimant's account that he was not given contractual notice. The contract provided for four weeks' notice. I derived the claimant's net weekly pay using the payslip for February 2018 which the claimant produced before me. The sum set out above reflects four weeks' net pay.
13. The claimant accepted that he had taken all of his contractual holiday entitlement in the holiday year 1 April 2017 to 31 March 2018 except for, so far as he recalled, three days. He was unable to access his records showing the amount of holiday he had taken since his access to his email account had been deleted upon termination. I thought it probable that the claimant's account of three days holiday owing to him was truthful and likely to be accurate and therefore awarded him three days' gross pay on that basis."
Overriding objective
2.--The overriding objective of these Rules is to enable Employment Tribunals to deal with cases fairly and justly. Dealing with a case fairly and justly includes, so far as practicable—
(a) ensuring that the parties are on an equal footing;
(b) dealing with cases in ways which are proportionate to the complexity and importance of the issues;
(c) avoiding unnecessary formality and seeking flexibility in the proceedings;
(d) avoiding delay, so far as compatible with proper consideration of the issues; and
(e) saving expense.
A Tribunal shall seek to give effect to the overriding objective in interpreting, or exercising any power given to it by, these Rules. The parties and their representatives shall assist the Tribunal to further the overriding objective and in particular shall co-operate generally with each other and with the Tribunal.
…..
Response
16.— (1) The response shall be on a prescribed form and presented to the tribunal office within 28 days of the date that the copy of the claim form was sent by the Tribunal.
(2) A response form may include the response of more than one respondent if they are responding to a single claim and either they all resist the claim on the same grounds or they do not resist the claim.
(3) A response form may include the response to more than one claim if the claims are based on the same set of facts and either the respondent resists all of the claims on the same grounds or the respondent does not resist the claims.
…..
Rejection: form presented late
18.— (1) A response shall be rejected by the Tribunal if it is received outside the time limit in rule 16 (or any extension of that limit granted within the original limit) unless an application for extension has already been made under rule 20 or the response includes or is accompanied by such an application (in which case the response shall not be rejected pending the outcome of the application).
(2) The response shall be returned to the respondent together with a notice of rejection explaining that the response has been presented late. The notice shall explain how the respondent can apply for an extension of time and how to apply for a reconsideration.
Reconsideration of rejection
19.— (1) A respondent whose response has been rejected under rule 17 or 18 may apply for a reconsideration on the basis that the decision to reject was wrong or, in the case of a rejection under rule 17, on the basis that the notified defect can be rectified.
(2) The application shall be in writing and presented to the Tribunal within 14 days of the date that the notice of rejection was sent. It shall explain why the decision is said to have been wrong or rectify the defect and it shall state whether the respondent requests a hearing.
(3) If the respondent does not request a hearing, or the Employment Judge decides, on considering the application, that the response shall be accepted in full, the Judge shall determine the application without a hearing. Otherwise the application shall be considered at a hearing attended only by the respondent.
(4) If the Judge decides that the original rejection was correct but that the defect has been rectified, the response shall be treated as presented on the date that the defect was rectified (but the Judge may extend time under rule 5).
Applications for extension of time for presenting response
20.— (1) An application for an extension of time for presenting a response shall be presented in writing and copied to the claimant. It shall set out the reason why the extension is sought and shall, except where the time limit has not yet expired, be accompanied by a draft of the response which the respondent wishes to present or an explanation of why that is not possible and if the respondent wishes to request a hearing this shall be requested in the application.
(2) The claimant may within 7 days of receipt of the application give reasons in writing explaining why the application is opposed.
(3) An Employment Judge may determine the application without a hearing.
(4) If the decision is to refuse an extension, any prior rejection of the response shall stand. If the decision is to allow an extension, any judgment issued under rule 21 shall be set aside.
Effect of non-presentation or rejection of response, or case not contested
21.— (1) Where on the expiry of the time limit in rule 16 no response has been presented, or any response received has been rejected and no application for a reconsideration is outstanding, or where the respondent has stated that no part of the claim is contested, paragraphs (2) and (3) shall apply.
(2) An Employment Judge shall decide whether on the available material (which may include further information which the parties are required by a Judge to provide), a determination can properly be made of the claim, or part of it. To the extent that a determination can be made, the Judge shall issue a judgment accordingly. Otherwise, a hearing shall be fixed before a Judge alone.
(3) The respondent shall be entitled to notice of any hearings and decisions of the Tribunal but, unless and until an extension of time is granted, shall only be entitled to participate in any hearing to the extent permitted by the Judge.
…..
Correspondence with the Tribunal: copying to other parties
92. Where a party sends a communication to the Tribunal (except an application under rule 32) it shall send a copy to all other parties, and state that it has done so (by use of "cc" or otherwise). The Tribunal may order a departure from this rule where it considers it in the interests of justice to do so.
22. It was common ground before the ET that the principles to be applied when considering an application for an extension of time for presenting a response are those set out by Mummery J (as he then was) in Kwik Save. Those principles require that all relevant documents and other factual material must be put before the ET to explain both the non-compliance and the basis upon which it is sought to defend the case on its merits, and an Employment Judge, exercising their discretion, must take account of all relevant factors, including the explanation, or lack of explanation, for the delay, the merits of the defence and must reach a conclusion that is objectively justified on the grounds of reason and justice, taking into account the possible prejudice to each party. Specifically, Mummery J provided the following guidance:
"The discretionary factors
The explanation for the delay which has necessitated the application for an extension is always an important factor in the exercise of the discretion. An applicant for an extension of time should explain why he has not complied with the time limits. The tribunal is entitled to take into account the nature of the explanation and to form a view about it. The tribunal may form the view that it is a case of procedural abuse, questionable tactics, even, in some cases, intentional default. In other cases it may form the view that the delay is the result of a genuine misunderstanding or an accidental or understandable oversight. In each case it is for the tribunal to decide what weight to give to this factor in the exercise of the discretion. In general, the more serious the delay, the more important it is for an applicant for an extension of time to provide a satisfactory explanation which is full, as well as honest.
In some cases, the explanation, or lack of it, may be a decisive factor in the exercise of the discretion, but it is important to note that it is not the only factor to be considered. The process of exercising a discretion involves taking into account all relevant factors, weighing and balancing them one against the other and reaching a conclusion which is objectively justified on the grounds of reason and justice. An important part of exercising this discretion is to ask these questions: what prejudice will the applicant for an extension of time suffer if the extension is refused? What prejudice will the other party suffer if the extension is granted? If the likely prejudice to the applicant for an extension outweighs the likely prejudice to the other party, then that is a factor in favour in granting the extension of time, but it is not always decisive. There may be countervailing factors. It is this process of judgment that often renders the exercise of a discretion more difficult than the process of finding facts in dispute and applying to them a rule of law not tempered by discretion.
It is well established that another factor to be taken into account in deciding whether to grant an extension of time is what may be called the merits factor identified by Sir Thomas Bingham MR in Costellow v Somerset County Council [1993] 1 WLR 256, 263:
"a plaintiff should not in the ordinary way be denied an adjudication of his claim on its merits because of procedural default, unless the default causes prejudice to his opponent for which an award of costs cannot compensate."
Thus, if a defence is shown to have some merit in it, justice will often favour the granting of an extension of time, since otherwise there will never be a full hearing of the claim on the merits. If no extension of time is granted for entering a notice of appearance, the industrial tribunal will only hear one side of the case. It will decide it without hearing the other side. The result may be that an applicant wins a case and obtains remedies to which he would not be entitled if the other side had been heard. The respondent may be held liable for a wrong which he has not committed. This does not mean that a party has a right to an extension of time on the basis that, if he is not granted one, he will be unjustly denied a hearing. The applicant for an extension has only a reasonable expectation that the discretion relating to extensions of time will be exercised in a fair, reasonable and principled manner. That will involve some consideration of the merits of his case."
23. Before me, for the Claimant it has been urged that following the stricter approach to breach of Court rules and directions now taken in the Civil Courts (see, for example, Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537) it would be legitimate for the ET and the EAT to determine an application for an extension of time solely on the basis of the Respondent's default. Allowing that the Civil Procedure Rules do not directly apply in ET proceedings, there is certainly authority for stating that ETs are entitled to take a stricter line than previously (see Harris v Academies Enterprise Trust and Ors [2015] ICR 617 EAT per Langstaff J, in particular at paragraphs 39 and 40; and, in relation to Tribunals more generally, see BPP Holdings v Commissioners for Her Majesty's Revenue & Customs [2016] EWCA Civ 121, per Ryder LJ (Senior President of Tribunals), in particular at paragraphs 37 and 38).
24. Where a Respondent seeks to appeal to the EAT in respect of an extension of time, paragraph 19 of the EAT Practice Direction 2013 applies. The Notice of Appeal must then include particulars showing that there is a good excuse for the Respondent's failure to present its response and that there is a reasonably arguable defence to the claim. In order to satisfy the EAT on these matters, the Respondent needs to lodge, together with the Notice of Appeal, a witness statement explaining in detail the circumstances of the failure, the reason for it and the facts and matters relied on for contesting the claim on the merits. There is also to be exhibited to the witness statement all relevant documents and a completed draft response.
"16. As I have noted, the liability judgment is now conclusive between the parties as to the issues it decides. But, subject to the effect of the debarring order to which I shall come in a moment, "the underlying principle is that on an assessment of damages all issues are open to a defendant save to the extent that they are inconsistent with the earlier determination of the issue of liability, whether such determination takes the form of a judgment following s full hearing on the facts or a default judgment" (per Jonathan Parker J in Lunnun v Singh, 1 July 1999, CA, unrep. but cited in Workman v Forrester [2017] EWCA Civ 73 at paragraph 34). That is the position in the civil courts, and I see no reason why it should not be the same in the employment tribunals.
17. In D & H Travel Ltd v Foster [2006] ICR 1537 the respondents to a sex discrimination claim failed to enter a response within the time limit prescribed by the rules and judgment in default with regard to liability was entered. The claim had been made against the employers and their senior manager, a Mr Henderson. The manager attended the subsequent remedies hearing and sought to take part in it but was not allowed to do so. The EAT, Elias J presiding, held that the chairman had been correct to decide that there had been no valid application to review the default judgment on liability but had been wrong to assume that unless the default judgment was set aside the respondents could play no further part in the proceedings. Given that the respondent manager was present at the hearing and could have cross-examined the claimant and made submissions it would have been proportionate and in accordance with the over-riding objective of dealing with cases justly, to have allowed him to participate in the remedies hearing. That would have involved no prejudice to the claimant whereas there was obvious prejudice to the respondents in denying them the right to participate. The EAT said at paragraph 61:
"We bear in mind the observations of Burton J in NSM Music Ltd v Leefe [2006] ICR 450 that it will sometimes be proportional to allow a party to participate in a remedies hearing albeit that liability has been determined against him. All of us consider that this is plainly such a case. Mr Henderson was present; he could have cross-examined the claimant and made submissions. Whereas the chairman understandably did not think it right to re-open liability, with all the delays thereby involved, that very fundamental concern did not apply to the more limited participation in the remedies hearing. Had Mr Henderson sought an adjournment to produce witnesses or further documents there would have been every good reason to refuse it. But that was not suggested. He wanted to be able to make observations and submissions with respect to remedies, even if he could not put his side of the story with respect to liability. To exclude him in the circumstances seems to us simply a punishment for failing to comply with the Rules."
18. I agree entirely with the approach taken by the EAT in the D&H Travel case, and although the 2013 Rules differ in some respects from the 2004 Rules which were then applicable I do not consider that this should lead to a different result.
19. There is no absolute rule that a respondent who has been debarred from defending an employment tribunal claim on liability is always entitled to participate in the determination of remedy. At the lower end of the scale of cases employment tribunals routinely deal with claims for small liquidated sums, such as under Part 2 of the Employment Rights Act 1996 (still commonly called the "Wages Act" jurisdiction) where liability and remedy are dealt with in a single hearing. In such a case, a respondent who has been debarred from defending under Rule 21 could have no legitimate complaint if the employment tribunal proceeds to hear the case on the scheduled date, determines liability and makes an award. Even in that type of case it would generally be wrong for the tribunal to refuse to read any written representations or submissions as regards remedy sent to it by the defaulting respondent in good time, but proportionality and the overriding objective do not entitle the respondent to a further hearing.
20. But in a case which is sufficiently substantial or complex to require the separate assessment of remedy after judgment has been given on liability, only an exceptional case would justify excluding the respondent from participating in any oral hearing; and it should be rarer still for a tribunal to refuse to allow the respondent to make written representations on remedy.
21. This was not an exceptional case, and the draft award of compensation was of just under £75,000 (indeed Ms Hughes' solicitors argued that it should be increased to a figure in the region of £100,000 after grossing-up for tax). There was no reason why the company should have been precluded from making submissions on the quantum of Ms Hughes' claim following the judgment on liability. An appropriate course would have been to invite the company to make such submissions by a specified date and for an employment judge then to consider whether an oral hearing was required. It is unfortunate that this was not done: with the result that, through no fault of Ms Hughes or her solicitors, the resolution of her case has now been held up for two years."