Employment Cases Update

Rojas v Brent Association of Disabled People UKEAT/0109/13/GE

Date published: 18/10/2013

Appeal against a decision to review and then revoke an earlier default judgment made in favour of the claimant. Appeal allowed and remitted for reconsideration.

The claimant brought a claim against the respondent on the grounds of unfair dismissal and disability discrimination. The respondent failed to put in an ET3 response form. A default judgment was entered on issues of liability. A remedy hearing was set for 19 March 2012.  On that date, however, a director of the respondent attended and expressed a wish to apply to set aside the default judgment. The claimant's case was that she had transferred to the respondent after her original employer became insolvent. The respondent refused to accept her. It denied TUPE transfer and disability discrimination. It is likely that this case was explained to the Employment Judge at the remedy hearing. In these circumstances, the Employment Judge was naturally concerned as to whether (in view of a possible official insolvency) there was a TUPE transfer. The EJ gave leave for the respondent to apply to review the default judgment, subject to various orders, and the review judgment was subsequently revoked. It was the claimant's case that the respondent had not complied with the orders of the judge in respect of the time limits specified in the order.

The EAT allowed the appeal. The Employment Judge entertained an application to revoke a default judgment which was made substantially out of time.  He reviewed and revoked the default judgment; but he did so on a false factual basis, and in so far as he considered at all whether it was just and equitable to extend time for the making of the application he also decided that question on a false factual basis.

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Appeal No. UKEAT/0109/13/GE

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

At the Tribunal

On 17 September 2013

Before

HIS HONOUR JUDGE DAVID RICHARDSON

(SITTING ALONE)

MS ROJAS (APPELLANT)

BRENT ASSOCIATION OF DISABLED PEOPLE LTD (DEBARRED) (RESPONDENT)

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellant
MR MICHAEL REED (of Counsel)
Free Representation Unit

For the Respondent
DEBARRED

SUMMARY

PRACTICE AND PROCEDURE - Review

Default judgment - review - time limit - extension. The Employment Judge entertained an application to revoke a default judgment which was made substantially out of time. He reviewed and revoked the default judgment; but he did so on a false factual basis, and in so far as he considered at all whether it was just and equitable to extend time for the making of the application he also decided that question on a false factual basis.

HIS HONOUR JUDGE DAVID RICHARDSON

1. This is an appeal by Ms Rojas ("the Claimant") against a judgment of Employment Judge Mahoney dated 18 May 2012. By his judgment the Employment Tribunal reviewed and revoked an earlier default judgment dated 14 December 2011. The Claimant, represented today by Mr Michael Reed of the Free Representation Unit, says that the default judgment should stand.

2. The Brent Association of Disabled People Limited ("the Respondent") has taken no part in this appeal. It has not put in an answer or replied to correspondence from the EAT. By order dated 17 April 2013 it was debarred from taking part in the appeal.

3. The Claimant brought a claim against the Respondent on the grounds of unfair dismissal and disability discrimination. The Respondent failed to put in an ET3 response form. A default judgment was entered on 14 December 2011 on issues of liability. A remedy hearing was set for 19 March 2011. On that date, however, a director of the Respondent attended and expressed a wish to apply to set aside the default judgment.

4. The Claimant's case, as it appears from the ET1, is that she had been employed by an organisation known as Brent Association for Voluntary Action Limited from January 2009 onwards. In January 2011 this organisation became insolvent. By this time she was suffering from serious depression. She worked on a particular project known as "BASIS". This project was transferred to the Respondent. The Respondent refused to accept her although it accepted all the other workers on the BASIS project. She says she had transferred under TUPE and was unfairly dismissed by the Respondent and, in any event, was the victim of disability discrimination.

5. The Respondent's case, as it was subsequently to appear from its draft ET3, is that it did not employ the Claimant and knew very little about her. It took over the BASIS project after a meeting at which "BrAVA was officially declared insolvent". It denied TUPE transfer and disability discrimination. It is likely that this case was explained to the Employment Judge at the remedy hearing. In these circumstances, the Employment Judge was naturally concerned as to whether (in view of a possible official insolvency) there was a TUPE transfer (see rule 8(7) of the Transfer of Undertaking (Protection of Employment) Regulations 2006). This, however, depends on evidence. It should have been very straightforward for the Respondent to produce an ET3 backed by evidence in support of its case, including evidence as to whether there were insolvency proceedings to which rule 8(7) applied.

6. The Employment Judge made the following order:

"1. This remedy hearing is adjourned to 10 May 2012 at 10.00am (1 day allowed).

2. Leave is given to the respondent to apply to review the default judgment entered on 14 December 2011. It is a condition of this leave that any such application must be served on the tribunal no later than 4 April 2012.

3. In the event of an application being made under paragraph 2 above in compliance with Rule 33 Employment Tribunals Rules of Procedure 2004, the hearing listed for 10 May 2012 will consider that application and, if it is successful, a Hearing of this matter will take place on 10 May 2012.

4. By 4 April 2012 each party is to disclose to the other party all relevant documents in respect of both liability and remedy. In the event o the respondent failing to comply with this order the leave to apply to review the default judgment set out at paragraph 2 will be revoked.

5. The respondent is to serve on the claimant its witness statement(s) in respect of both liability and remedy by 18 April 2012. In the event of the respondent failing to comply with this order, the leave to apply to review the default judgment set out at paragraph 2 will be revoked.

6. Leave is granted to the claimant to serve on the respondent a further witness statement within two weeks of receipt of the respondent's witness statement (if so advised)."

7. At the time in question Employment Tribunal procedure was governed by the Employment Tribunal Rules of Procedure 2004 to be found in Schedule 1 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004. Rule 33(1) provided that a party might apply to have a default judgment reviewed. There was a 14-day time limit which an Employment Judge might extend if he considered it just and equitable to do so. The Employment Judge's order did not fit neatly into the scheme of rule 33(1), which contains no specific provision for giving leave or imposing conditions. Mr Reed submits that it was, in effect, an "unless order". There is no provision, as such, for an unless order within rule 33(1). For today's purposes it is sufficient to say that the Employment Judge made clear what he expected the Respondent to do if the judgment was to be reviewed.

8. By 10 May 2012 the Respondent had served an application for review. It is the Claimant's case that the Respondent had not complied with paragraphs 4 and 5 of the order. The Claimant's case is that the Respondent served only two emails and did not serve those until the day before the hearing, whereas there must have been other relevant documents. Even more fundamentally, the Claimant's case is that the Respondent failed to prepare witness statements at all.

9. I have an affidavit by a Mr Lee, the Claimant's Free Representation Unit representative at the hearing on 10 May. He confirms that the Respondent did not serve documents other than those two emails and did not serve witness statements at all. He says that Employment Judge Mahoney went through the previous order, and that Mr Cox, the Respondent's director, confirmed this to be the position. He says the Employment Judge asked Mr Cox for an explanation of his failure to provide a witness statement and that Mr Cox had no explanation.

10. The Employment Judge then permitted Mr Cox to give oral evidence on the basis of the Respondent's draft ET3. He, Mr Lee, asked the Employment Judge what the implications were of the Respondent's failure to obey the earlier order. The Employment Judge said the default judgment should be revoked.

11. The Employment Judge gave written reasons for his decision with his judgment dated 18 May 2012. He said that the basis of the review application was that the Claimant's employment had not transferred to the Respondent and that the Respondent committed no act of disability discrimination. He set out briefly the history, making reference to the earlier order which gave "leave to apply" providing, as he put it "certain conditions were met". He then continued:

"5. The tribunal is satisfied having heard evidence from Ms Cox, who is the respondent's manager (with the title of Director), that the respondent had complied with the tribunal's order sent to the parties on 22 March 2012.

6. The tribunal is further satisfied that the Respondent has a reasonable prospect of successfully responding to the claim. The judgment is therefore reviewed under rule 33(5) and the draft response presented on 4 April 2011 is not to stand as the response."

12. Mr Reed, on behalf of the Claimant, submits that paragraph 5 of the Employment Judge's reasons is simply wrong, perverse in the true legal sense that there was no foundation for it at all. Mr Cox, he says, did not give evidence that he had complied with the order; on the contrary, he had not complied with it.

13. If Mr Lee's evidence is correct, the Employment Judge's decision cannot stand. His reasons would disclose that the decision was made on a fundamentally erroneous basis. The Employment Judge's reasons do not, in fact, say that he considered it just and equitable to extend time for making the application. If he considered that question at all, it seems to have been at the previous hearing, and it seems to have been his view that it would only be just and equitable to do so if certain conditions were met. They were not met. It would, however, still have been necessary for him to consider and give correct reasons on this question in his May decision.

14. There is no evidence to contradict what Mr Lee says in his affidavit. The EAT's case management order in preparation for this appeal required the parties to agree what occurred at the Tribunal or apply to the EAT. The Respondent did not cooperate. The Claimant applied and was given permission by HHJ McMullen to rely on Mr Lee's affidavit.

15. My only pause for thought before allowing this appeal is that the Employment Judge has not been asked for any note of evidence, as he would have been if the Respondent had co-operated in the appeal and if the Respondent had disputed what Mr Lee says. It would be open to me today to postpone the appeal and ask the Employment Judge for his note.

16. There is, to my mind, a feature of the case which strongly supports what Mr Lee says. The Employment Judge's order on 22 Match envisaged that, documents and statements having been served, the hearing in May would deal with the review application and hear the case if it was successful (see paragraph 3). It also made provision for the Claimant to respond to the Respondent's statement (see paragraph 6).

17. In May, however, the Employment Judge did not proceed to determine the claim. He listed it for a Pre-Hearing Review to determine at some date in the future whether the Claimant's claim had reasonable prospects of success. He made a further order for disclosure and permitted the Claimant to put in further evidence. If the Respondent had complied with the Employment Judge's earlier order, I find it difficult to see why these steps would have been required.

18. In the end, therefore, I have reached the conclusion that I can and should rely on Mr Lee's evidence; that it would be disproportionate to adjourn this appeal for further evidence when the Respondent has not disputed the grounds on which it has been put forward; and that the appeal should be allowed. The Employment Judge's judgment, dated 18 May 2012, is set aside because the reasons disclose an erroneous basis for it. The Respondent had not complied with the earlier order. Insofar as the Employment Judge considered at all whether it was just and equitable to extend the 14-day time limit, he did so on a false foundation.

19. The question then arises: how should the appeal be disposed of? Mr Reed submits that since the Respondent is debarred it is sufficient to allow the appeal and say that the default judgment stands. Not doubt that is a course I could take, but the position does not appear to me to be so simple. The Respondent applied below to review the default judgment and there was implicit in that application an application to extend the 14-day time limit. Where the decision on such an application is set aside by the EAT, the general practice is to remit the matter for reconsideration on a correct basis, unless on a proper application of the law there can only be one true answer to it. Here I am not satisfied that there could only have been one true answer to the application.

20. If there was indeed a meeting at which BrAVA was formally declared insolvent, this may well have been a creditors' voluntary liquidation and the Respondent's case that TUPE would not have applied might be very strong indeed. Enquiries today suggest that there may indeed have been a creditors' voluntary liquidation. There is, therefore, every prospect that an Employment Judge might approach such an application on the basis that the Respondent's case concerning the unfair dismissal claim was very strong and there then would be interesting questions for the Employment Judge to consider as to the basis for a disability discrimination claim.

21. The merits are, of course, by no means the only factor for the Employment Judge to take into account, but they are a relevant consideration and it seems to me that I am not in a position to say that there would only be one answer to a properly considered application to review the default judgment. In the circumstances, therefore, the appeal will be allowed but the matter will be remitted for reconsideration. Whether the Respondent takes any part in that reconsideration will, of course, be a matter for it.