Mr S Williams v ABP (London) Investment Ltd and Others: 3202456/2020
EMPLOYMENT TRIBUNALS
Case No 3202456/2020
Between
Mr S WilliamsClaimantABP (London) Investment Ltd and OthersRespondent
Before
Employment Judge McLarenMr A Sendall (instructed by Counsel) for claimantMs L Robinson (instructed by Counsel) for respondentMr. A Sendall (instructed by Counsel) for claimantDate 21 December 2021
JUDGMENT
AND INTERIM RELIEF ORDER The decision of the tribunal is that The application for interim relief succeeds.[2]The respondent not being willing to re-instate or re-engage the claimant pending the determination or settlement of the complaint, an order under s130 of the Employment Rights Act 1996 is made that the contract of employment remains in force for the purposes set out in s 130(1) (a) & (b).[3]From the date of termination until the date on which the complaint is determined or settled:a. The employer shall pay the claimant £13,750 (less appropriate tax deductions) per month, to be paid on the same pay date as other employees of the respondent, usually the last Thursday of each month. Case Number: 3202456/2020 V 2b. A sum equal to 10% of the claimant’s monthly gross pay will be paid into the respondent’s pension scheme.c. The claimant shall be a member of the respondent’s private health insurance scheme on the same terms as he enjoyed prior to the date of termination of his employment.[4]On or before the 26th November 2020 the respondent will pay the claimant arrears of pay accrued from the date of termination of employment to the date of first payment under this Order. Employment Judge McLaren Date: 11 November 2020 Case Number: 3202456/2020 V 1 EMPLOYMENT TRIBUNALS Claimant: Mr S Williams Respondents:(1) ABP(London) Investment Limited(2) Ying Xu(3) Wei Ping Xu Heard at: East London Hearing Centre (by Cloud Video Platform) On: 19 February 2021 Before: Employment Judge McLaren Representation Claimant: Mr. A Sendall, Counsel Respondent: Mr. T Coghlin, QC UPON APPLICATION made by letter dated 05.01.21 to reconsider the judgment dated 27.10.2020 under rule 71 of the Employment Tribunals Rules of Procedure 2013[1]The respondents’ application for the judgment of 27.10.2020 to be reconsidered succeeds. The interim relief judgment is revoked. The application for interim relief is refused.
REASONS
[1]This has been a remote hearing on the papers which was not objected to by the parties. The form of remote hearing was CVP.A face to face hearing was not held because it was not practicable. The parties referred to a bundle of agreed documents of 268 pages, together with the original bundle of 166 pages, Case Number: 3202456/2020 V 2 a supplemental bundle of claimant’s documents of 40 pages and correspondence from the claimant’s solicitors of 29th of January 2020. I was also provided with written submissions from both Counsel.[2]There had been a preliminary hearing on this matter on the 16.2.21 at which it was agreed that the respondents would not rely on ground 1 of the written submissions, the EDT, but on grounds 2- 8 only. It was also agreed that questions as to the admission of new evidence and any application for a stay of the current judgment would be addressed today.[3]I have not set out the relevant law in relation to interim relief as that is set out in the judgement which I am asked to reconsider. Grounds for the application – interests of justice[4]The application for reconsideration is made pursuant to:(1) rules 70 and 71 of the Rules of Procedure on the ground that it is necessary in the interests of justice; and/or(2)section 131 of the Employment Rights Act 1996 (“ERA”) on the ground of a relevant change of circumstances since the making of the[5]Mr Coghlan made general submissions on the interests of justice. He referred to article 6 considerations, being entitled to a fair and public hearing within a reasonable time. It was also submitted that I needed to consider the overriding objective and that this expressly included the quantum of the claim as part of any proportionality consideration.[6]It was said that this case presented extraordinary circumstances and that both article 6 and the overriding objective required the interim relief judgement to be reconsidered in the interests of justice. The case should also be approached with flexibility to admit new evidence and entertain arguments not previously advanced.[7]It was further submitted that the obtaining of new evidence represented a relevant change of circumstances, as did the claimant’s amendment to his claim form expressly to now say that no winding up petitions had been presented.[8]Mr Sendall submitted that reliance on article 6 was, at its highest, a reason for an expedited hearing only, and not a right on which the whole basis of interim relief could be re-examined. While it is the case that the respondent may be left to pay an irrecoverable sum, that is the nature of interim relief. Article 6 is about when parties can get a hearing. It is not a sufficient ground for a decision to be reconsidered.[9]I accept Mr Sendall’s submissions on this point. Interim relief means that one party may be unjustly enriched but, provided the matter comes to a full hearing within the usual time frame (and this matter is listed for 8 days in November 2021), the fact that the respondent must keep on paying until a final determination of this issue, and the sum is not recoverable, is not in itself a ground on which to reconsider the judgment.[10]I do of course accept Mr Coghlin’s submissions that I must have regard to the overriding objective and view the application with the objective in mind. Case Number: 3202456/2020 V 3[11]The respondent made an application to admit new evidence by three witness statements and some additional documents at pages 130—203 of the application bundle. I was directed by Mr Coghlin to Ladd v Marshall [ 1954] 1 WLR 1489. The three conditions to be satisfied to admit new evidence are:a. that the evidence could not have been obtained with reasonable diligence for use at the trial.b. the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive.c. that the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.[12]Mr Coghlin’s written submissions answered these points in turn as set out below: “The first condition: that the evidence could not have been obtained with reasonable diligence for use at the trial(a) the Court of Appeal stressed in Rawding v Seager UK Ltd[2015] EWCA Civ 113at [44], “the standard required is reasonable diligence, not higher.”(b) In applying this test of reasonable diligence (as part of the broader analysis of the interests of justice), the tribunal will be mindful that the hearing in question was not a trial or even a preliminary hearing listed at several weeks’ or months’ notice. Rather, it was an interim relief hearing, listed at short notice. At an interim relief hearing a respondent is required to act with enormous haste, and it is inevitable that even with reasonable diligence, not all relevant evidence will be marshalled. There will have been no time for a proper disclosure exercise on either side, and there will rarely be time to take instructions from the client so as to identify the full shape of the defence, let alone collate all necessary documentary and witness evidence.(c) Here, the respondent did not even have time to prepare an ET3. The respondent and its representatives faced very particular difficulties which set the case rather apart from the norm. The respondent’s representatives needed to obtain instructions and documentary and witness evidence from a client based in China and who does not speak English, and who required documents to be translated……..(d) The respondent’s representatives acted as quickly as they reasonably could, and made an appropriate application for a postponement of the hearing. That application was turned down since the interim relief procedure is one which by its nature has to Case Number: 3202456/2020 V 4 be undertaken quickly. But that need for expedition should not serve as a tool of injustice.(e) Overall, the respondent and its representatives used reasonable diligence in preparing for the interim relief hearing: they did the best they reasonably could. The fact that it is only subsequently that important evidence has emerged is wholly unsurprising. The second condition: that the evidence would probably have an important influence on the outcome of the interim relief application, though it need not be decisive (a) The evidence is obviously highly relevant. The relevance of different elements is explained in the witness statements provided, and in the submissions below, but it includes among other things evidence which, if accepted as accurate, will show: ii. That the tribunal made a material error in its approach to the insolvency issues at play in the case by finding that there had been winding up petitions presented, county court judgments issued, and bailiffs demands received, when none of these things was true …. iii. That the respondent’s parent company had committed to providing funding for a further 12 months…… (b) These matters are clearly fundamental to the case, and any one of them could have had an important influence on the outcome of the interim relief application. The third condition: that the evidence in question must be apparently credible, though it need not be incontrovertible (a) Largely the evidence comprises documents, such as audited accounts and letters, which are not only apparently credible but unlikely to be seriously capable of being disputed. In summary, the three Ladd v Marshall conditions are clearly met, and it is therefore in the interests of justice that the respondent should be permitted to adduce this evidence”.[13]I was also directed to Jasinarachchi v GMC 2014 EWHC 3570 paragraphs 31 and 37 and reminded that documents may be relied upon even if they do not meet all parts of the Ladd v Marshall conditions. I accept this submission and note that the test is of reasonable diligence.[14]Mr Sendall, on behalf of the claimant, submitted that the new evidence which the respondent sought to introduce could have been reasonably known and foreseen at the time. He questioned why, when the first respondent has staff in both London and China who speak English as a first or second language, solicitors could not take instructions from them. He also submitted that the first respondent would be expected to have resources at its disposal to be able to deal with important issues quickly and effectively, even if it entails documents in English. Interim relief hearings are by their nature speedy and in this case 11 Case Number: 3202456/2020 V 5 days’ notice was provided which it is submitted was adequate time for instructions to be taken.[15]Mr Sendall referred to the fact that Mr Rudwick, who is the first respondent’s director of operations, HR and administration and who handles all London HR issues, would have been the obvious person to take instructions in relation to matters surrounding the claimant’s termination of employment.[16]He submitted that the documents relating to questions of solvency could have been dealt with by London office staff and there was no cogent evidence that the need to translate everything into Chinese led to any material delay in seeking obtain instructions from the relevant people. Further, the respondent was able to obtain sufficient instructions to make submissions on the point of the support from ABP China, and so the company accounts could and should have been identified as relevant to this issue. While the shareholder letters are not in the public domain Mr Sendall submits that the existence of the document at p 182-184 could be inferred from the financial statements. No explanation is given as to why this and the document at p185-7 could not have been relied on at the first hearing.[17]I have considered the submissions made to me. I accept that solicitors needed to obtain instructions from the chairman of the respondent organisation, particularly as he is a named respondent. While no doubt some instructions could have been taken from London, in the circumstances of this case it was appropriate to take these from the chairman. I also accept that as this required taking instructions from a non-English speaker resident in China where there is a significant time difference, and this is an individual with other calls on his time, his evidence could not have been obtained with reasonable diligence at the time of the interim relief hearing.[18]While others may have had knowledge of the exchange of emails relating to the February meeting, I accept that the need for these would become more readily apparent from speaking to the chairman. The director’s reports are public documents, but the letters from shareholders are not. While their existence could perhaps have been inferred, and some instructions were given on the position of support from the parent company, without the benefit of being able to take full instructions I accept that the documents now provided were not ones that could reasonably have been presented. Overall, I accept that the communication delays the respondent’s solicitors faced meant they were not in a position to provide the witness statements or documents they now seek to introduce applying the standard of reasonable diligence[19]I also conclude that the evidence will probably have an important influence on the result of the case. Mr Sendall disputed this in relation to the accounts and other documents at pages 142-190 as in his submission they supported the claimant’s position and so did not advance the respondent’s case. This is clearly a contested point and I conclude that the documents are relevant to the case and may have an important influence on its result one way or the other. There is no dispute that the documents are credible.[20]While I appreciate that an interim relief hearing is always dealt with at short notice, and in this case the respondent had more than the required seven days’ notice, nonetheless on the facts of this case I find that it is in the interests Case Number: 3202456/2020 V 6 of justice to reconsider my decision and further that the availability of this new evidence together with the claimant’s amended pleading amounts to a relevant change of circumstances. Other specific grounds[21]I will deal briefly with the specific grounds on which the application was made. Ground 2 is a submission that my reasons suggest I applied the wrong test for interim relief by considering each hurdle the claimant must pass for a “whistleblowing” claim and not then considering the position in the round. I agree with Mr Sendall’s submission that the claimant had to meet each hurdle to the appropriate level, as otherwise his application would fail, but then the matter must be looked at in the round and I must be satisfied that the claimant met the required standard as a whole. While the reasons could have been better expressed at paragraph 48, that was intended to express the holistic approach and I do not find this is a ground to reconsider the judgment.[22]Grounds 3 and 5 are effectively addressed in considering the new evidence which is now before me. Ground 4 is a relevant change of circumstance and I have found that this, together with the new documents, is a ground for review.[23]Grounds 6 and 7 are a criticism that insufficient analysis was carried out that the claimant could have a reasonable belief that legal obligations that amount to wrongful or fraudulent trading had been breached or were likely to be breached. Mr Sendall submits that it does not matter if a legal obligation has technically been broken or not, what matters is the reasonableness of the belief of the person making the disclosure.[24]Ground 8 is a criticism that many of the disclosures did not have the required level of specificity which is answered by Mr Sendall that there was plainly sufficient evidence in respect of the allegations of breach of contractual obligations. For grounds 6,7 and 8 Mr Sendall submits that there are no grounds to reconsider one or even a few aspects of the protected disclosures as it would not affect the outcome.[25]I would agree with Mr Sendall and would not reconsider on just these grounds. However, as part of the reconsideration I have determined to carry out on other grounds I will consider the claimant’s amended schedule of disclosures and his solicitor’s letter of 17th February 2020 as representing the claimant’s position on his state of knowledge and belief. Reconsideration Evidence as to the meeting on 28 February 2020[26]The witness statements of Ms Baird, Mr Xu and Miss Xu address the claimant’s dismissal. They referred to a meeting which took place on 28th of February 2020. The claimant’s amended claim form (page 204 – 216) now makes further detailed reference to this meeting at paragraph 24 and 26.[27]The claimant specifies in his claim form that the chairman made it clear to the claimant that he wanted him out of the business by the end of March 2020. The claimant’s amended claim further states that he reminded the chairman he Case Number: 3202456/2020 V 7 was entitled to 6 months written notice of termination and they agreed to meet again to discuss how the terms on which he is employed might end and if a consultancy agreement could be established.[28]The documents now admitted included at page 131 a calculation headed “Sam exit payments”. At page 134 was a letter from the claimant to Mr Rudwick dated 12 March 2020. The claimant accepts that this email was sent and it was a proposed basis for negotiation of the settlement agreement, but he says that no further meeting took place to seek to agree a basis of the possible termination of his employment or the creation of a consultancy agreement and no such agreement was reached subsequently. The newly admitted documents also includes at page 137 a note from the claimant of 11 June which refers to the respondent feeling they no longer needed his services and that they were still in the process of negotiating his exit from the company.[29]It had been agreed between the parties that this matter was not raised as one of jurisdiction, but it is raised by the respondent to show that any alleged protected disclosures occurring after February 2020 were unlikely to be of any causative potency. This was in fact, ground three of the reasons for reconsideration.[30]On behalf of the claimant it was submitted that the respondent has still not come up with any reason for dismissal, other than what is now said to have occurred in February 2020. It was not credible that they had determined to dismiss him in February when in submissions at the original interim hearing the respondent had relied on matters which had arisen after February as reasons to dismiss.[31]To succeed in his application for interim relief the claimant must show a number of things, but key is that he has a “pretty good chance” of persuading the tribunal that the reason for his dismissal were what he says were the protected disclosures. What exactly occurred in the February 2020 meeting is disputed, but it is clear from the claimant’s own pleadings and the contemporaneous documents that he knew that the respondent wanted him out of the organisation and that he knew that from 28 February. It is arguable that the decision to end his employment had already been taken at this point. I therefore conclude that the claimant does not have a pretty good chance of persuading a tribunal that disclosures made after this date were the reason he was dismissed, as it appears that the decision may have been taken in February and all that was left was to determine the terms of the exit. The nature of the disclosures prior to 28 February and reasonable belief[32]There were, however, 5 disclosures prior to this meeting. While this is not the claimant’s pleaded case, as he relies on all disclosures, I have considered whether these could have amounted to a reason to dismiss him. They are set out in the schedule of disclosures and all are said to show a criminal offence of fraudulent trading due to cashflow and /or balance sheet insolvency, breach of contractual obligations to pay debts, breach of contractual obligations to pay liabilities as and when they fell due, and wrongful trading due to cashflow insolvency. Case Number: 3202456/2020 V 8 New documentation relating to the respondent’s solvency and support from the Chinese shareholder[33]I have considered the issue of the claimant’s reasonable belief as to Iikely insolvency in the light of the new information and documents. I had concluded at paragraph 29 of my reasons that winding up petitions, County Court judgements and bailiff demands were variously served against the first respondent. I did so adopting an assertion made in the claimant’s skeleton argument. Ms Baird’s witness statement referred to a document at page 141 from the London Gazette which showed that there had been no winding up petitions and there were no County Court judgements served against the first respondent at any time before the application for interim relief and therefore no bailiff demands arising from any county court judgement.[34]The claimant has now corrected this in his amended pleadings to specify that threats of winding up petitions et cetera were received. In written submissions on behalf of the claimant, counsel sets out references to a number of emails at pages 55, 68 and 70 – 71. These do make reference to the fact there are outstanding creditors and that they could call for a winding up petition. The document at page 68 specifies that many creditors are now threatening to take action over overdue invoices.[35]Mr Coghlin on behalf the respondent took me to pages 142 – 160, being the directors’ report and financial statements of the year ended December 2018. At page 151 the net assets of the company were shown at nearly £11 million, and at page 153 there is a statement saying that the parent company, along with the ultimate owner, has confirmed their intention to support the company to meet its liabilities as they fall due for at least one year from the date of approval of these financial statements. It was not disputed that the claimant as finance director would see these documents.[36]I was also taken to the new document at page 161 – 181, the directors’ report and financial statements for the year ended 31 December 2019. Again, at page 171 the company has net current assets of just under £11 million but the notes to the financial statements (expanded at page 174) make it clear that the company is reliant on financial support from its parent. That parent needed to raise further funds. It was noted that there were no legally binding agreement in place in relation to any fundraising or refinancing, that the success of raising finance is outside the control of the company and there could be no certainty that the parent company would be able to raise further funds. A material uncertainty which could cast significant doubt about the company’s ability to continue as a going concern was raised.[37]The new bundle also included a letter 25th of June 2020 confirming that the parent has both the financial ability and intent to provide financial resources to the respondent, although it noted the letter was not legally binding. Page 189 – 190 confirmed that shareholder support had been received and money had been paid in May 2019, December 2019 and July 2020.[38]On behalf of the claimant it was submitted that net assets are not the crucial point, the company’s stock was dependent upon completion of the building project. Had that not occurred then there would have been no assets. It was also submitted that the 25 June 2020 letter was expressed not to be legally Case Number: 3202456/2020 V 9 binding. The claimant’s position was that although some funding had been provided, it was not enough and not being provided in time to meet contractual obligations as they fell due and therefore risked insolvency. He accepted that some funding had been provided. It was submitted on his behalf that these additional documents simply confirm the position the claimant had already acknowledged, that they were non-binding expressions of comfort. They did not deal with the concern that China might “pull the plug” on funding support and leave the business insolvent in breach its obligations to creditors.[39]In reaching the view that the claimant had met the necessary standard of “pretty good chance” in showing that he had a reasonable belief that his disclosures showed wrongful and /or fraudulent trading– both of which require insolvency, I took into account the serving of winding up petitions. There is a significant difference between creditors threatening to act and the service of winding up petitions, bailiff demands and County Court judgements.[40]In considering the reasonableness of the claimant’s belief I had also taken into account that there was no evidence produced by the respondent that the Chinese shareholder had responded to the claimant’s requests and concerns. The new documentation presents a different picture. There is in fact evidence that the respondent had the support of its parent and that money had been forthcoming. I am no longer persuaded that there is a pretty good chance that the claimant will be able to show a reasonable belief in the organisation’s potential insolvency. It follows that he would not meet the high test required for an interim relief to be granted in relation to disclosures that show wrongful or fraudulent trading. Disclosures of breach of contractual liabilities[41]I have also considered the five disclosures made prior to 28 February meeting and whether the claimant could have a reasonable belief that they disclosed a breach of an obligation to pay liabilities when they were due.[42]I was taken to a letter from the claimant solicitors of 17 February 2021 which accompanied the claimant’s list of protected disclosures. That states at paragraph 1.3 that the various legal obligation allegations were based on the claimant’s reasonable belief. It states that he could see that liabilities were not being paid as they fell due, insufficient funding was available to properly maintain the property assets, UK valuers had valued properties significantly below the carrying value in the accounts and only limited amounts of funding would be remitted by the respondent parent to pay salaries and the most urgent creditors. This all set out in the December Board report. This letter goes on to say that the UK companies were fully reliant on the survival of financial support from the Chinese parent which seemed uncertain and that it was the claimant’s suspicion that the parent company had its own financial problems. I note that it specifies that China was sending money to pay the most urgent creditors.[43]I was taken to Krause v Penna and Darnton v the University of Surrey and it was submitted that the claimant’s suspicion of financial issues in the parent which might lead to it not supporting the UK was insufficient to allow the claimant to show that he had the necessary reasonable belief that a legal obligation had been breached or was likely to be in breach. As “likely” means “more probable than not”, that requires more than suspicion. Case Number: 3202456/2020 V 10[44]The claimant’s submissions suggested it was very hard to see how there was any doubt in respect of the many breaches of contract that were pointed out in his disclosures. It was said it was common ground that the business was failing to pay all of its creditors on time and was frequently providing funding after breach of the payment obligation had taken place. This was not accepted by the respondent. In contrast it was submitted that no evidence was provided as to the payment terms that had been agreed, whether there had been any variation in these or what was the course of dealing.[45]Mr Coghlin submitted that if one takes away the wrongful and fraudulent trading allegations, one is left with the finance director pointing out things that are within his job description to flag up and that is not plausible to be dismissed for this.[46]I was asked to consider two authorities, Blitz v Vectone holdings UK EAT/0253/10 and Blackbay Ventures v Gahir [2014] ICR 747. Mr Coghlin submitted this was a finance director doing his job. Mr Sendall submitted that these cases are not authority to hold that you can not be dismissed for pointing out problems, even if that falls within your job.[47]I agree with Mr Sendall that it is possible to be dismissed for making protected disclosures that are within your job role. However, I accept Mr Coghlin’s submissions that a belief that debts will not be paid, which is based on a suspicion that the Chinese company may be unable to pay (particularly when the claimant acknowledges that money is sent to pay the most urgent creditors) mean that the claimant has not established that there is a pretty good chance of him showing a reasonable belief that there were breaches of obligations. Nor has he established to the required standard that these were the cause of his dismissal.
Conclusion
[48]Based on the new evidence that I have now had the opportunity to consider, I have reached a different conclusion. On his own case the claimant accepts that the respondent had reached a decision to end his employment on 28 February 2020. He does not have a pretty good chance of establishing that the disclosures after this meeting were a cause of his dismissal.[49]Considering the disclosures made prior to that date as a possible cause of that decision, the claimant does not have a pretty good chance of showing that he was dismissed for raising concerns relating to wrongful or fraudulent trading as I have concluded that he has not been able to establish his reasonable belief in these two possibilities to a sufficiently high standard. I have also concluded that he cannot establish to the appropriate standard required for interim relief a reasonable belief that there were breaches of obligations.[50]Considering the matter overall and in the round, I conclude that the claimant does not discharge the burden on him to show he has a pretty good chance of persuading a tribunal that he had a reasonable belief in the matters he raised so as to amount to a qualifying disclosure, or that these were the principal reason for his dismissal. Case Number: 3202456/2020 V 11[51]For these reasons I revoke my order for interim relief by finding that such an order should not be made. Employment Judge McLaren Date: 2 March 2021 Case Number: 3202456/2020 1 EMPLOYMENT TRIBUNALS Claimant: Mr S Williams Respondents:(1) APB (London) Investment Limited(2) Ying Xu(3) Wei Ping Xu Heard at: East London Hearing Centre On: 26 November 2021 Before: Employment Judge Porter (sitting alone) Representation Claimant: Mr A Sendall, counsel Respondents: Not in attendance
Conclusion
Background
[1]Each of the respondents subjected the claimant to detriment within the meaning of s47B Employment Rights Act 1996.[2]The first respondent is vicariously liable for the detrimental treatment of claimant by the second and third named respondents.[3]The claim under s47B Employment Rights Act 1996 is well-founded.[4]The claimant was automatically unfairly dismissed within the meaning of s103A Employment Rights Act 1996. His claim under that statutory provision is well-founded. Case Number: 3202456/2020 2[5]The respondents are ordered to pay to the claimant compensation of £754,380.97 (gross) for the detrimental treatment under s47B Employment Rights Act 1996. Each of the respondents is jointly and severally liable for payment to the claimant of this sum.[6]The first respondent is ordered to pay to the claimant compensation for unfair dismissal in the sum of £3,728, comprised as follows:a. Basic Award: £3,228.00b. Compensatory Award: Loss of statutory rights £ 500.00[7]The compensatory award does not include compensation for loss of earnings because this was included in the order for compensation under s47B Employment Rights Act 1996. The claimant is not entitled to double recovery.[8]The recoupment regulations do not apply. Employment Judge Porter Date: 21 December 2021 Case Number: 3202456/2020 1 EMPLOYMENT TRIBUNALS Claimant: Mr S Williams Respondents:(1) APB (London) Investment Limited(2) Ying Xu(3) Wei Ping Xu Heard at: East London Hearing Centre On: 26 November 2021 Before: Employment Judge Porter (sitting alone) Representation Claimant: Mr A Sendall, counsel Respondents: Not in attendance ORDERS having been sent to the parties on 22 December 2021 and written reasons having been ordered by the Employment Appeal Tribunal the following reasons are provided:[1]Following the announcement of the decision on the substantive merits of the claim and remedy counsel for the claimant made an application for costs. Submissions[2]Counsel for the claimant relied upon written submissions which the tribunal has considered with care but does not repeat here.
Evidence
[3]The claimant relied on the evidence and documentary evidence presented for the decision on the merits of the claim and remedy. In addition, a Case Number: 3202456/2020 2 further bundle of documents was provided together with copies of correspondence between the claimant’s solicitors and the respondents. The additional bundle of documents included copies of without prejudice correspondence between solicitors acting on behalf of the parties, which had not been disclosed to the tribunal before the application for costs was made.
Facts
[4]The tribunal relies on the findings of fact made in its decision on the substantive merits of the claim and remedy.[5]Having considered all the evidence the tribunal has made the following additional findings of fact. Where a conflict of evidence arose the tribunal has resolved the same, on the balance of probabilities, in accordance with the following findings.[6]On 24 April 2020 solicitors for the claimant sent to the second respondent, as CEO of the first respondent, a letter which was expressed to be without prejudice save as to costs. In that letter the claimant’s solicitors made a without prejudice offer of settlement of his potential claims for breach of contract, unfair dismissal and discrimination.[7]That letter referred to an open letter sent the same day, which is referred to in paragraph 57 of the reasons for the decision on the substantive merits of the claim, and includes the following: On 28 February 2020 our client had a meeting with the Chairman and his translator, Ms Zheng. The Chairman made it clear that he wanted our client out of the business by the end of March 2020 and that he wanted to replace him with a Chinese Finance Director. He also made it clear to our client that he was willing to do a ‘deal’ covering notice and bonuses. He also wanted to have our client’s services on an ad hoc consultancy basis.[8]By letter dated 28 July 2020, marked without prejudice, Beth Baird for 3CS Corporate solicitors replied to the without prejudice letter of 24 April 2020, stating as follows: Without prejudice to the ongoing grievance investigation, which is yet to be completed, our client disagrees with your client’s assertions that it has breached his contract of employment such that your client would be entitled to resign and claim that he has been constructively unfairly dismissed. Discussions about the structure of the finance team had begun some eighteen months ago, and the redirection of responsibilities back to China, and the subsequent reduction in the need for staff in London were the reason for our client’s informal approach to your client earlier this year to discuss future working arrangements. Our client denies that your client was told he would have to leave by the end of March, and it was not attempting to replace him with a Chinese FD.[9]The respondents adduced evidence for the hearing of its application for reconsideration of the Interim Relief Order including the following: Case Number: 3202456/2020 3 9.1. the witness statement of the third respondent dated 28 December 2020, which included the following: 9.1.1. I have read the witness statement of Beth Baird and insofar as it touches within my knowledge, I can confirm its accuracy. 9.1.2. I confirm that in the context of Mr. Williams' dismissal, I am the person that Mr. Williams refers to as "the Chairman" at paragraph 24 in his Details of Claim and the person that communicated to Mr Williams the First Respondent's decision to dismiss him on 28 February 2020. 9.1.3. My communication to Mr. Williams of his dismissal on 28 February was delivered in that same fashion via an interpreter. 9.1.4. I left Mr. Williams in no doubt that he was dismissed as of that day and I told him that I wanted him to leave at the end of March. 9.1.5. The First Respondent's decision to dismiss Mr. Williams was simply based on his performance and failures to carry out his duties as finance director diligently. I can confirm that the emails Mr. Williams has produced had no influence whatsoever on the decision to dismiss him. 9.1.6. Having been reminded by Mr. Williams of his notice entitlement I said OK, and accepted that he would be entitled to six months' notice. 9.1.7. There was no confusion between me and Mr. Williams as to the dismissal or the notice period. 9.2. The witness statement of the second respondent dated 28 December 2020 (see paragraph 88 of the reasons for the decision on the substantive merits) which included the following: 9.2.1. I have read the witness statement of Beth Baird and insofar as it touches within my knowledge, I can confirm its accuracy. 9.2.2. I confirm that in the context of Mr. Williams' dismissal, I was aware that Mr Wei Ping Xu would be communicating the Company's decision to dismiss Mr. Williams to him on 28 February 2020. 9.3. The witness statement of Beth Baird dated 29 December 2020 (see paragraph 87 of the reasons for the decision on the substantive merits) which explained that she had requested a postponement of the Interim Relief hearing because she needed to obtain instructions from the third respondent about the meeting on 28 February 2020. Her witness statement includes the following: Had the postponement been granted, there would have been time to adduce evidence that the notice period was given at the dismissal meeting Case Number: 3202456/2020 4 on 28"' February 2020 and this evidence would have had an important influence on the judge's decision to make the Continuation Order. It was essential to obtain instructions from the Chairman. However, this could not be obtained by the Respondent in the six working days between service of the application and the date of the hearing.[10]The respondents have been made aware of the application for costs in advance of the hearing.
The Law
[11]Under rule 76 (1) Employment Tribunals Rules of Procedure 2013 a tribunal may award a costs order or preparation time order where a party has in either bringing the proceedings or in the conduct of the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably; or the claim or response had no reasonable prospect of success.[12]Under rule 76(2) a tribunal may also make such an order where a party has been in breach of any order or practice direction or where a hearing has been postponed or adjourned on the application of a party.[13]Rule 76 imposes a two stage test. The tribunal must ask itself whether a party's conduct falls within rule 76 if so, it must then ask itself whether it is appropriate to exercise its discretion to make the award.[14]The tribunal, in deciding whether to exercise its discretionary power under rule 76 should consider all relevant factors including the following;- o costs in the employment tribunal are still the exception rather than the rule; o the extent to which a party acts under legal advice; o the nature of the claim and the evidence; o the conduct of the parties[15]The Court of Appeal in Sud v Ealing London Borough Council 2013 ICR D39, CA, held that when making a decision as to costs, an employment tribunal needed to consider whether the party’s conduct of the proceedings was unreasonable and, if so, it was necessary to identify the particular unreasonable conduct, along with its effect. This process did not entail a detailed or minute assessment. Instead the tribunal should adopt a broad brush approach, against the background of all the relevant circumstances.[16]Rule 41 provides that the tribunal may award an amount of costs not exceeding £20,000. For amounts in excess of that amount there needs to be a detailed assessment under the Civil Procedure Rules 1999 which provides at Rule 44.3 two alternative methods by which the assessment of costs may be carried out in England and Wales: the ‘standard basis’ and the ‘indemnity basis’. The default position is that costs are assessed on the standard basis This is by far the most common method of assessment in practice. Costs will only be assessed on an indemnity basis if there are aggravating factors that justify this. Case Number: 3202456/2020 5[17]In Howman v Queen Elizabeth Hospital Kings Lynn EAT 0509/12 the EAT held that an employment tribunal, when making an order for detailed assessment of costs in the county court, was also entitled to specify that costs be assessed on an indemnity basis, as opposed to the standard basis. Determination of the Application[18]This includes, where appropriate, any additional findings of fact not expressly contained within the findings above or the findings in the tribunal’s decision on the substantive merits of the claim but made in the same manner after considering all the evidence.[19]The first question is whether the respondents’ conduct fell within Rule 76.[20]The tribunal has considered all the circumstances and notes in particular the following: 20.1. Beth Baird was instructed on behalf of the respondents in July 2020 and her letter dated 28 July 2020 shows that: 20.1.1. She had instructions in relation to the meeting between the claimant and the third respondent on 28 February 2020; 20.1.2. Her instructions at that point were that: 20.1.2.1. there had been no dismissal on 28 February 2020, the claimant continued in employment and the respondents were prepared to enter into negotiations for settlement of any potential claim, the terms of which may include the termination of the claimant’s employment at a future date with appropriate notice or payment in lieu; 20.1.2.2. there had been discussions about the structure of the finance team, the redirection of responsibilities back to China, and the subsequent reduction in the need for staff in London; 20.1.2.3. that was the reason for what was described as informal approach to the claimant earlier in the year to discuss future working arrangements; 20.1.2.4. the claimant had not been dismissed, that there had been an informal approach to the claimant based on a potential restructure. Case Number: 3202456/2020 6 based on the basis that the employment is ongoing and that there is no suggestion of notice of termination having been given. 20.2. It was therefore misleading to request a postponement of the Interim Relief hearing on the grounds that Ms Baird was without instructions in relation to the meeting on 28 February 2020. 20.3. The evidence in the witness statements from the first and second respondent and Ms Baird, relied upon at the hearing for the application for reconsideration was false and appears to be deliberately misleading in the way in which they sought to explain the meeting of 28 February 2020. 20.4. The respondents made application for reconsideration of the Interim Relief Order on the basis that new or “fresh” evidence was available. That was not correct. This evidence was not new or fresh. It was false. 20.5. The respondents defended the claim on the grounds that the claimant had been dismissed in February 2020 and that the reason for his dismissal was his conduct and/or performance. There was no suggestion in July 2020 that the respondent had concerns about the suitability of the claimant for the position of Finance Director. 20.6. In providing false evidence in support of the application for reconsideration of the Interim Relief Order, in preparing the Grounds of Resistance on the false statement that the claimant was dismissed on 28 February 2020 and that the respondent had concerns about his conduct and/or performance the respondents have conducted these proceedings in an unreasonable manner and have acted in abuse of process. 20.7. Further, the respondent failed to comply with the Order for disclosure (see reasons for the decision on the substantive merits) and failed to reply to correspondence with the tribunal as a result of which the Response was struck out.[21]In all the circumstances the tribunal finds that: 21.1. Under rule 76 (1) Employment Tribunals Rules of Procedure 2013 a tribunal may award a costs order or preparation time order the respondents have, in the conduct of the proceedings, acted abusively and unreasonably; 21.2. Under rule 76(2) the respondents have been in breach of an Order of the tribunal. Case Number: 3202456/2020 7[22]The next question whether it is appropriate for the tribunal to exercise its discretion to make the award.[23]The tribunal has considered all the relevant factors including the following: 23.1. costs in the employment tribunal are still the exception rather than the rule; 23.2. the extent to which a party acts under legal advice. The respondents were represented by the same solicitor in July 2020, in relation to the application for Interim Relief, in relation to the application for reconsideration of the Interim relief Order and in preparation of the Grounds of Resistance; 23.3. the respondents have failed to comply with the Order of the tribunal, have failed to reply to correspondence from the tribunal, have failed to attend the Hearing. In essence the respondents have shown little regard to the proper conduct of the proceedings, have presented false evidence to the tribunal and deliberately made false accusations against the claimant, raising wholly unsubstantiated allegations relating to his performance, conduct and suitability for the role of Finance Director. 23.4. Of course, the respondents have not been in attendance today and have failed to provide any explanation as to why, in the first instance, they vigorously defended the claim, made false allegations against the claimant, presented Grounds of Resistance which did not accurately reflect the actual position in July 2020, and then failed to comply with the Order for Disclosure and failed to defend the proceedings. The tribunal accepts the submission of the claimant and finds that it is highly likely that the reason for non-disclosure is that the relevant documentation would not support the Grounds of Resistance and the evidence they relied on in making the application for reconsideration of the Interim relief Order.[24]In all the circumstances, it is appropriate that the tribunal exercise its discretion and that the respondents should be ordered to pay to the claimant the costs of the whole proceedings. The tribunal bears in mind that this is an unusual order but this is an unusual case. The respondents have paid little regard to the orders of the tribunal, have misled the tribunal and have committed an abuse of process in the way in which they sought to have the Interim Relief Order revoked.[25]The claimant seeks payment of his legal costs in excess of £20,000.00. Therefore the amount to be paid shall be determined by way of a detailed assessment in accordance with the Civil Procedure Rules 1999. Case Number: 3202456/2020 8[26]The claimant seeks assessment of costs on the indemnity basis. The tribunal is satisfied and finds that there are aggravating factors that justify this. As indicated above, this is an unusual case where the respondents have conducted the proceedings in an unreasonable manner. They created fresh evidence to support an application for reconsideration of the Interim Relief Order. They made false allegations of misconduct and poor performance against the claimant, who has incurred considerable legal costs in pursuing the claim and seeking to challenge the false accusations made against him. The respondents have failed to comply with an Order of the tribunal, have failed to respond to correspondence from the tribunal.[27]The liability for the costs award should be joint and several. Each of the respondents has failed to comply with the Order of the tribunal. The second and third respondents provided false evidence to the tribunal. The Grounds of Resistance was filed on behalf of each of the respondents.