Linbourne v B R Constable (Gatwick Moat House) [1993] UKEAT 338_92_0902

EAT
Linbourne v B R Constable (Gatwick Moat House)
[1993] UKEAT 338_92_0902 · 1993-02-09
MR JUSTICE MAY: This is an appeal by Mrs Linbourne, which arises in very strange circumstances. She was the Applicant before an Industrial Tribunal held at London South on 20 and 27 February 1992. She had initiated those proceedings in an application where she characterised her complaint as being for constructive dismissal. She named her employer, as Respondent to her application, as Mr B R Constable and she gave Mr Constable's address as being Gatwick Moat House, Horley, Surrey. There is no dispute at all that she had been employed at that Gatwick Moat House Hotel and her claim arose out of that employment.A Respondents' notice of appearance was entered in the name of Mr Constable, and opened with the words:
"The applicant was employed at the Gatwick Moat House Hotel as assistant Accounts Controller ..."
and then went on to deal with the substance of her complaint. In truth, Mr Constable was not her employer, he was simply the manager of the Gatwick Moat House Hotel and he employer was a company called Queens Moat House PLC.The Industrial Tribunal's reasons for its Decision, opened with these words:
"1 At the outset of the hearing of this case the Tribunal questioned the justification for the allegation by the Applicant of constructive dismissal and also whether the Applicant really wished to pursue a claim against the named Respondent, Mr Constable, or whether the Applicant wished to apply for leave to amend. After hearing certain submissions from the representatives of both parties, the Tribunal was told by Mr Stilitz, the representative for the Applicant, that he wished to amend the originating application by adding a claim of unfair dismissal instead of constructive dismissal, with termination of the contract on 9 September 1991. The Tribunal gave leave to Mr Stilitz to make that amendment and adjourned for a time to enable the Respondent's representative to consider whether to ask for further particulars and whether to continue with the hearing at that time.
2 After the adjournment, Mr Constable's representative, Mr Thorpe, indicated his willingness to continue with the case, and stressed that the application was directed against Mr Constable."In the event, therefore, an amendment was made to substitute a claim for unfair dismissal for the original complaint of constructive dismissal but no application was made to amend so as to substitute the real employer for Mr Constable.It appears that the hearing then proceeded for the best part of two days to deal with the substance of Mrs Linbourne's complaint. Witnesses were called and it does appear that there was, in truth, no issue as to who was Mrs Linbourne's employer and the hearing came to a conclusion. When the Industrial Tribunal gave its decision, its decision was simply in these terms that the unanimous decision of the Tribunal was that Mr Constable was not the employer of the Applicant. What appears to have happened is that the Tribunal heard the evidence, came the conclusion, as it is stated, that it was abundantly clear that Mrs Linbourne was employed by Queens Most Houses Plc and not be Mr Constable; came to the further conclusion that in the absence of an appropriate amendment all they could do was conclude that she had brought her proceedings against the wrong party and that that was their conclusion.It is, we think, clear from the Industrial Tribunal's Reasons that the Tribunal understood that they had invited Mr Stilitz, the Applicant's representative, whether he wished to apply to substitute the true employer for Mr Constable and he had not availed himself of that opportunity. It should be said that Mr Stilitz, who has appeared before us today, has a different recollection as to whether or not that matter was raised. For reasons which will appear, we do not consider that that particular difference of recollection is material.Having decided that they could not make an award, other than to declare that the proceedings had been brought against the wrong party, the Industrial Tribunal then, however, went on to say:
"4 Having heard the entirety of the evidence in this case (and for most if not all of the time the case proceeded as though Queens Moat Houses Plc were the Applicant's employer), we feel constrained to state in these reasons the view which we took of the evidence and the conclusions which we reached so far as the Applicant's employment with Queens Moat Houses Plc is concerned. We trust that this will be of assistance to all those who have been involved in these proceedings, not least Mr Constable."
The Industrial Tribunal then proceeded, in a careful and closely reasoned series of paragraphs, to consider the evidence; to conclude in paragraph in paragraph 13 that they were in no doubt that the dismissal of Mrs Linbourne was unfair; to proceed to conclude that she had contributed to her dismissal herself and to make the calculation of the award of compensation that they would have made had they felt able to do so. The amount of that, hypothetical as they saw it, award made the grand total of £2972.21 of which the greater part, they said, was the prescribed element.They then concluded their Reasons as follows:
"17 We understand Queens Moat Houses Plc to be a public company of the highest repute and they are certainly very well-known. We therefore entertain little doubt but that they would not wish to rely upon what is really a somewhat abstruse procedural point and will want to meet their financial obligations to Mrs Linbourne regardless of the fact that they are not specifically a party to these proceedings. It is for that reasons that we have set out our conclusions upon these aspects of Mrs Linbourne's dismissal at such great length."
In fact, however, and we make no comment on the propriety of this whatever, Queens Moat Houses Plc did not take up the suggestion made by the Industrial Tribunal in the paragraph which I have just read. They were not, so it appears to us, legally obliged at that stage to do so.What then subsequently happened was that Mr Stilitz, on behalf of Mrs Linbourne, made an application by letter to the Regional Office of Industrial Tribunals, London South, which he dated 15 March 1992, but which, in truth, must have been 15 April 1992, and therefore for its purposes was a few days out of time. The substance of his application, which he set out at some length by reference to authorities, was firstly, a request for a review by the Industrial Tribunal of their decision and secondly, a request for an amendment of the party as Respondent to the proceedings by substituting the true employer for Mr Constable.That application was considered and referred, so it appears, to the Chairman of the Industrial Tribunal and on 28 April 1992, the Regional Office wrote back conveying the Chairman's refusal of the application for a Review on the grounds that it stood no reasonable prospect of success and his rejection of the application for leave to amend the originating application (to add Queens Houses Plc). The reason that was given for that rejection was this:
"As you will be aware, insofar as a claim against that Company is concerned, time would run to the date of the amendment (Ketteman & Others v Hansel Properties Ltd, [1987] 2 WLR 312), and therefore any claim of unfair dismissal would be 4 months out of time, whilst the Applicant has had the benefit of your advice since 30th January 1992."
The Appellant, Mrs Linbourne, now appeals against the refusal of a Review and the rejection of an application for leave to amend, and very recently Mr Stilitz has also advanced a further application out of time to appeal against the decision of the Industrial Tribunal. That latter application seeks to say:
"The Tribunal erred in finding that Mr Constable was the Respondent to Mrs. Linbourne's claim."
The substance of the application is that the whole proceedings were conducted on the basis that Queens Moat Houses was the employer and ought, therefore, to have been regarded as the Respondent.It is right to say that we have been told today by Mr Wearden, who appears on behalf of Mr Constable, that he appears today, and Mr Thorpe appeared before the Industrial Tribunal, instructed solely on behalf of Mr Constable and that that arises as a result of some insurance policy, which it appears Mr Constable is or might, in appropriate circumstances, be the beneficiary. Mr Wearden has been very helpful and very frank and has told us two things. He said firstly, that Mr Thorpe was as surprised as anyone at the result to which the Industrial Tribunal came and secondly, that in all probability had an application for an amendment been made and the amendment allowed at the Industrial Tribunal, Mr Thorpe would have taken instructions quite quickly and probably proceeded to have conducted the case on behalf of Queens Moat Houses Plc.Mr Wearden also accepts that the substance of Mrs Linbourne's complaint was properly aired and dealt with evidentially, and by argument, before the Industrial Tribunal. Before referring to some authorities which bear upon this really most unusual situation, we say this, that it is quite plain that this situation has arisen because of a misunderstanding between the members of the Industrial Tribunal on the one hand and those who were conducting the proceedings on the other. It goes without saying that this Appeal Tribunal would not wish to be prevented from doing proper justice between the parties simply because of technicalities arising out of this unfortunate situation.The substance of the matter is, as it appears to us, twofold. Firstly, Mrs Linbourne's case needs to be assisted by the substitution of Queens Moat Houses Plc for Mr Constable, who at all times, as it appears to us, has been the named Respondent. Secondly, consideration has to be given to whether it is proper and possible for the appeal to be allowed if the first application succeeds, to the extent of substituting for the decision of the Industrial Tribunal the substantive decision that they have said they would have reached had they felt that they were able to do so.We have been referred to a number of cases. The first of those that I am going to refer to is Sheringham Development Co Ltd v Brown [1977] ICR 20, a Judgment of the Employment Appeal Tribunal presided over by Phillips J. It was held in that case:
"...that it was the duty of an industrial tribunal to ensure that the real issues between the parties were considered;"
- and Phillips J said this on page 21:
"The application made by the employee was for a redundancy payment only, but when the matter came before the industrial tribunal on March 3, having read the papers and the employers' answer (which suggested that, contrary to what they had originally said, what they were saying was that the employee had become disagreeable and difficult), they concluded that what the employers were really saying was that he had been properly dismissed; and so the industrial tribunal of its own volition caused the proceedings to be amended to add to it a claim for compensation for unfair dismissal. That is a course often followed by industrial tribunals and in our judgment, provided proper precautions are taken, it is a perfectly proper course. It is their duty, particularly where parties are unrepresented, to find out what the case is all about and to see that the claim represents the reality of the matter. Of course, they have to take proper precautions and decide, amongst other things, whether the claim is time barred. it was not in this case, but only just not, because, the dismissal being effective on December 12, three months expired soon after the date of hearing. Equally the industrial tribunal ought to take care to ensure that the other side is not taken by surprise, and so on. In general, the kind of precautions laid down by the National Industrial Relations Court in Cocking v Sandhurst (Stationers) Ltd. ought to be taken."
The facts of that case are not close to those of this case. We do, however, reach the conclusion that what must have happened in this case was that the Industrial Tribunal reckoned it had invited an application to amend the Respondent, by substituting Queens Moat Houses Plc, but that invitation had not been taken up. The parties, on the other hand, clearly thought that there was no issue as to who was the proper Respondent and did not address that question again.The proceedings obviously continued to deal, over two days, with the substance of the matter and, in our view, it was, in those circumstances, necessary for the Industrial Tribunal to return again to the matter which troubled them but which, apparently they must have concluded, was not troubling the parties. It was, we think, an unfortunate, perhaps an understandable, error that the Industrial Tribunal did not, at the end of the hearing, say to both parties, "well now really, we think that it must be the case that you need formally to amend and add the correct party". This was not done and we feel compelled to conclude that that was a procedural irregularity in the original proceedings. We say straight away that it is understandable that this occurred if, as is clearly recorded, the Industrial Tribunal reckoned that an opportunity had been afforded and not taken up.In the case of Cocking v Sandhurst (Stationers) Ltd [1974] ICR 650, Sir John Donaldson, President of the National Industrial Relations Court, is summarised as having held on page 951:
"...... that in deciding whether or not to exercise their discretion to allow an amendment which would substitute a new party the tribunal had to be satisfied that the mistake sought to be corrected was genuine and not misleading or such as to cause reasonable doubt as to the identity of the person intending to claim or to be claimed against and should have regard to all the circumstances of the case, in particular any injustice or hardship which might be caused to any of the parties, including those proposed to be added, if the proposed amendment were allowed or refused;"
That is a case where, on page 654 of the Judgment, Sir John Donaldson said this:
"The Tribunal found that the erroneous statement in the employee's first application that his employer was the subsidiary company misled neither the subsidiary company nor the parent company. However, they also found that the employee had no good reason to be confused and that although the mistake was a genuine one it was due to carelessness. Some of us might have taken a more charitable view, but that is a finding of fact."
The substantive decision, which I have already summarised from the headnote appears on page 656 in these words:
"In every case in which a tribunal is asked to amend a complaint by changing the basis of the claim or by adding or substituting respondents they should proceed as follows. (1) They should ask themselves whether the unamended originating application complied with rule 1 of the Schedule to the Regulations of 1972: see, in relation to home-made forms of complaint, Smith v Automobile Proprietary Ltd. [1973] ICR 306. (2) If it did not, there is no power to amend and a new originating application must be presented."
Pausing there, there is no suggestion, that we have come across, that the unamended originating application did not comply with the rules. Reading on:
"(3) If it did, the tribunal should ask themselves whether the unamended originating application was presented to the secretary of tribunals within the time limit appropriate to the type of claim being put forward in the amended application."
We ask ourselves that question and we find that it did.
"(4) If it was not, the tribunal have no power to allow the proposed amendment. (5)If it was, the tribunal have a discretion whether or not to allow the amendment."
If Cocking v Sandhurst is to be followed, we therefore have a discretion whether or not to allow the amendment.
"(6) In deciding whether or not to exercise their discretion to allow an amendment which will add or substitute a new party, the tribunal should only do so if they are satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause reasonable doubt as to the identity of the person intending to claim, or as the case may be, to be claimed against. (7)In deciding whether or not to exercise their discretion to allow an amendment, the tribunal should in every case have regard to all the circumstances of the case. In particular they should consider any injustice or hardship which may be caused to any of the parties, including those proposed to be added, if the proposed amendment were allowed or, as the case may be, refused."
In this case, where it appears to us that it must be concluded that Queens Moat Houses Plc knew that they were Mrs Linbourne's employer and knew that she was bringing a claim in the Industrial Tribunal, and where, additionally, the merits of the case were investigated both evidentially and by argument before the Industrial Tribunal, in circumstances where both parties reckoned that there was no issue as to who was the correct employer, there can, subject to points which I shall make in a moment, be no possible injustice in allowing an amendment.It does seem to us that this was a genuine mistake. We do not see that there is anything in the facts of this case to suppose that Mrs Linbourne was misleading anybody as to who she was bringing her case against. Indeed, it appears, as I say, that there was no issue on that point between the parties on the day in question and no practical consequences flowed so far as the conduct of the case was concerned, from the fact that an amendment was not then made.The next case that we are referred to is a case called Watts v Seven Kings Motor Co Ltd [1983] ICR 135, a Judgment of the Employment Appeal Tribunal where Browne-Wilkinson J, as he then was, referred, on page 137, to the case of Cocking v Sandhurst and then proceeded to say this:
"That decision was not drawn to the attention of the industrial tribunal. As it seems to us, in the absence of the guidance from that case, the industrial tribunal has approached this matter on the wrong footing. It seems to us that there was no reason why, albeit that a decision had already been given, Mr Alan Reynolds should not have been joined as a party to the original proceedings which had been started against the limited company within the time limited by section 67 of the Employment Protection (Consolidation) Act 1978. In Cocking v Sandhurst (Stationers) Ltd [1974] ICR 650, the National Industrial Relations Court did exactly that, save that in that particular case the proceedings which had been started within time had not, by that stage, matured into a final order. We can see no reason, in principle, why these proceedings should not have been amended so as to substitute, as the respondent to proceedings started within time, the true employer against whom both the IT1 and the particulars given under it showed was the person against whom the claim was intended to be made, namely, Seven Kings Motor Co., the unlimited body carrying on business at 460, Sutton Road.
Accordingly, subject to suitable safeguards to protect Mr Alan Reynolds' position, we think this industrial tribunal erred in principle due to the fact that Cocking v Sandhurst (Stationers) Ltd [1974] ICR 650 was not drawn to its attention. We think that the right order here is to substitute Mr Alan Reynolds, trading as Seven Kings Motor Co., as respondent to the application in place of Seven Kings Motor Co Ltd."It is to be observed that that was a conclusion reached on appeal by the Employment Appeal Tribunal exactly in the way in which we today are invited to make such an order. Proceeding with the Judgment of Browne-Wilkinson J, he goes on as follows:
"The result is that the existing order becomes an order against Mr Alan Reynolds personally made in proceedings in which he was not heard. To leave that position without any protection to Mr Reynolds would be unfair. The facts, as they are presented to us in these proceedings, indicate that Mr Alan Reynolds was in all probability aware of the proceedings before the first industrial tribunal hearing. He was certainly notified of the review hearing and of this appeal. But at no stage has he chosen to take any part in the proceedings at all. However, we indicate that if he can satisfy the industrial tribunal that the original decision leading to the judgment against him was reached in proceedings of which he was unaware and therefore he was unable to present his argument to the tribunal, it would be an appropriate case in which to order a review to enable Mr Alan Reynolds to present his case. If, on the contrary, he simply allowed the matter to slip by on a technicality, then it would be for the industrial tribunal to consider the circumstances of the case and to consider whether a review was necessary. Any such application for a review would be out of time. However, the applicant, by his counsel, has undertaken not to object to any application for a review simply on the basis that it is out of time."
That case is strongly in favour of the proposition that we should allow, on the facts of this case, the party to be amended. In that case the result of substituting one party for another was, quite simply, that the form of the order which the Industrial Tribunal had made became an order against the substituted Respondent. That, however, is not technically the case here because the decision of our Industrial Tribunal was in form no more than that Mr Constable was not the employer of the Applicant. However, we are satisfied that this Industrial Tribunal would have made the order which is indicated had they felt they were able to do so.It remains to consider whether the case in the House of Lords, to which the Chairman referred in refusing to allow an amendment, is one which in effect over-rules the decisions in Cocking v Sandhurst and in Watts v Seven Kings Motor Co . Ketteman v Hansel Properties Ltd [1987] 2 WLR 312, is a decision of the House of Lords in complicated circumstances. Simplifying it for present purposes: plaintiffs obtained leave to join two parties as additional defendants in September 1982; questions of limitation arose and the Court of Appeal held that the action against those defendants had to be taken as having started, for limitation purposes, on the date of the issue of the original writ in May 1980. The House of Lords held, on this issue:
"that a person added as a defendant did not become a party until the writ had been served on him and that the architects, [who were one of these defendants] although never served with an amended writ, had by serving a defence on 6 October 1982 waived the necessity of service and were accordingly joined as defendants from that date; that, further, in computing the period of limitation the date of joinder was not to be related back to the date when the original writ was issued and accordingly time only ceased to run from the deemed date of joinder"
In substance, therefore, the House of Lords was deciding that a party only becomes a party for limitation purposes, in the circumstances of that case, from the date when they were joined.The question is, whether or not that decision over-rules the cases in the Judgments of the Employment Appeal Tribunal and National Industrial Relations Court to which I have referred. It is first of all to be observed, that these industrial cases did not feature at all in the cases referred to by, or cited to, the House of Lords. It is secondly to be observed, that the decision is a decision of construction on the Rules of the High Court and by reference to the Limitation Acts. It is thirdly to be observed, that this is a decision about joining new parties as new defendants and not substituting one party for an existing party by amendment where there has been a mistake.There seems to us to be no basis for supposing that the industrial cases, to which we have already referred in this judgment, were in any sense in the minds of the House of Lords when they were making the Ketteman decision, nor does it appear to us that Ketteman has any bearing on the correctness, in an Employment Appeal Tribunal, of those cases which concern substituting one party by amendment for another when there has been a mistake. Further Cocking v Sandhurst appears to have been taken as correctly decided in the case of British Newspaper Corporation v Kelly [1989] IRLR 222 on other facts.Accordingly, it appears to us that there is no authority preventing us from allowing the amendment that is sought and, indeed, there is clear authority in the cases to which I have referred, in particular Watts v Seven Kings Motor Co , which favour that course being taken. It seems to us, that there are no features of injustice which would go against the making of that amendment and we propose to allow the appeal so as to allow by amendment, the substitution of Queens Moat Houses Plc for Mr Constable. We are alert to the fact that in doing so we must give Queens Moat Houses Plc all proper and fair opportunity to deal with the consequences of that amendment.The reality, as it seems to us, of the decision of the Industrial Tribunal is quite clear. They would have found in Mrs Linbourne's favour in the terms which they stated had they felt able to do so, and in that respect a proper hearing took place. On the other hand, Queens Moat Houses have, technically speaking, never been represented either before the Industrial Tribunal or before the Appeal Tribunal. Additionally, and importantly, they have never had the technical opportunity nor the legal need to question the substantive decision that the Industrial Tribunal came to.They were held not to be parties and upon that basis:(a) they had no liability and(b) they had no locus standi to enter an appeal. It would, therefore, in our view, be quite wrong to make any further order allowing this appeal which shut Queens Moat Houses Plc out from making proper representation as to why a finally enforceable order should not be made against them. They might, for instance, for all we know, wish to argue that the Industrial Tribunal made one or more errors of law in the substantive decision to which they came. The practicalities, however, may be that once the award that the Industrial Tribunal would have made is put in place Queens Moat Houses will accept it and pay the proper amount due. We say may and in making that statement there is no implied pressure that that is something which they ought necessarily to do if they feel that they have proper grounds for opposing it on appeal.Accordingly, it appears to us that the practical and potentially least expensive thing to do is for us to allow the appeal further and to substitute, for the decision that the Industrial Tribunal reached, the decision that they would have reached had they felt able to do so, and at the same time to make it quite clear that that is an order of this Appeal Tribunal which it would be open to Queens Moat Houses Plc to apply to have reviewed under Order 26 of the 1980 Employment Appeal Tribunal Rules. We note that Rule says:
"(1)The Appeal Tribunal may, either of its own motion or on application, review any order made by it and may, on such review, revoke or vary that order on the grounds that- (b)a party did not receive proper notice of the proceedings leading to the order; or (c)the interests of justice require such review"
It is plain as can be that Queens Moat Houses Plc have not received proper notice of today's proceedings because until we make the order, which we have indicated that we are going to make, they will not have been a party to the proceedings. It might be that the interests of justice required a review if Queens Moat Houses reckoned that they were entitled to be heard on the Order that we are about to make.Accordingly, and as we emphasise, with a view to saving expense but with a view also to providing a mechanism for Queens Moat Houses Plc to come back upon such an application if they are so advised to do so, we propose further to allow the appeal and to substitute the order which the Industrial Tribunal would have made. We indicated before I gave these reasons that this was the substance of the order we propose to make and we invited Mrs Linbourne, through her representative, to undertake in those circumstances not to oppose the grant to Queens Moat Houses Plc of any extension of time to enable them to be heard upon the merits of an application to review this decision under Rule 26 of the Employment Appeal Tribunal Rules. She has given that limited undertaking.We have also indicated that it was our view that the 14 days for the making of an application for a review under Rule 26(2) was too short for the purposes of what we conceive is the justice of this case and we are availing ourselves, therefore, of Order 30 Rule 1 here and now, to extend that 14 day period to 30 days. The practicality, therefore, of the order that we propose to make is, that we shall allow the appeal and in doing so make an order that Mrs Linbourne was unfairly dismissed and that she be awarded compensation of £2972.21, but to enable Queens Moat Houses Plc to apply within 30 days of the date of the order to have a review of that decision. It would be open to them, if they choose to do so, on that occasion to advance any argument available to them on appeal why that order should not be made.For those reasons the appeal is allowed and the formal order that we make is as follows.That upon the Appellant by her representative undertaking not to oppose the grant to Queens Moat Houses Plc of any extention of time necessary to enable them to be heard upon the merits of an application to review this decision under Rule 26 of the Employment Appeal Tribunal Rules 1980

Order

(1) Leave to amend to substitute Queens Moat Houses Plc as Respondent to these proceedings(2) Appeal allowed to substitute for the Industrial Tribunal's Decision the Decision that the Appellant was unfairly dismissed and that she is entitled to an award of compensation of £2972.21 as calculated in the Industrial Tribunal's Reasons and for the reasons there given(3) We order that Queens Moat Houses Plc are served with all the documents in the Tribunal's file and with this order forthwith(4) We extend the time in which Queens Moat Houses Plc may apply to this Appeal Tribunal for a review of this order so that they have 30 days instead of the 14 days in Rule 26 in which to make such an application.