MISS S M GRADY v HM PRISON SERVICE [2002] UKEAT 67_02_0512

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2002] UKEAT 67_02_0512Case No Appeal No. EAT/67/02Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MISS S M GRADYAPPELLANTHM PRISON SERVICERESPONDENT
Before
His Honour Judge J McMullenDate 5 December 2002
[1]APPEARANCES For the Appellant MR M MULHOLLAND (of Counsel) Instructed By: Messrs Linder Myers Solicitors Phoenix House 45 Cross Street Manchester M2 4JF For the Respondent MR J JOHNSON (of Counsel) Instructed By: The Treasury Solicitor Queen Anne's Chambers 28 Broadway London SW1H 9JS JUDGE J McMULLEN QC : This is an appeal which raises a question of Employment Tribunal procedure and an issue concerning the entitlement to bring proceedings of a person who is bankrupt. The Applicant, Miss Grady, worked for the Prison Service, the Respondent, from 1985 until she resigned on 25 November 2000. She was an Administration Officer. She brought proceedings in the Leeds Employment Tribunal claiming unfair dismissal, breach of contract, wrongful dismissal and disability discrimination, that is, three separate claims.[2]The hearing was set following detailed and comprehensive directions given by the Regional Chairman in May 2000. The hearing took place, as appointed to begin for three days on Monday, 12 November 2001, before an Employment Tribunal (Chairman, Mr A.J. Simpson). Both parties were represented by Counsel.[3]The Tribunal found a gross disregard of the Regional Chairman's directions with the Applicant more responsible and at fault than the Respondent. The Applicant had asked for an adjournment which was refused. The Employment Tribunal, under powers conferred by Rule 4(8) and Rule 15(2)(d) of the 2001 Regulations, struck out the Originating Application. It declined, if it was necessary to do so, by a majority, to strike out the Notice of Appearance. It ordered the Applicant to pay costs up to a maximum of £5,000 subject to a detailed assessment in the County Court on the standard basis.[4]The Decision was promulgated on 14 November 2001. The Applicant lodged a Notice of Appeal on 21 December 2001, in which she made a number of criticisms of the approach of the Employment Tribunal indicating that the Tribunal appeared to have given little reasoning behind its decision and that faced with a gross disregard of the directions, it failed to consider alternative responses less than the severe and fatal blow of a strike-out. It was made clear to us that, notwithstanding the failure to carry out the directions in respect of obtaining medical evidence, both parties were prepared to go ahead on the majority, if not all, of the case, on that day or, if need be, day two and, in any event, to complete the proceedings within time.[5]Skeleton arguments have been exchanged in the appeal but, since the Notice of Appeal was lodged, the Applicant was adjudged bankrupt on 31 January 2002. That has certain consequences which were recognised by the Applicant's legal team. They wrote to the Respondent's solicitors indicating that it was intended on her behalf to take an assignment from the Trustee of Bankruptcy of the proceedings known here as "a thing in action". We are assured by Mr Mulholland that the Trustee is well aware of today's proceedings and has taken no formal step to present himself here.[6]The Respondent takes the point that the Applicant has no standing to continue with her proceedings on appeal. We do not criticise Mr Johnson for taking this point in his Skeleton Argument, nor Mr Mulholland for not dealing with it, or either of them in the earlier exchanges of pleadings, but it is now squarely put before us as a matter of jurisdiction. Procedurally, therefore, Mr Mulholland opened his appeal on all points, addressing in part the argument he anticipated from the Respondent. We then invited Mr Johnson to make the point on jurisdiction and gave Mr Mulholland a full right of reply. We accede to the submission that the Applicant does not have standing to bring these proceedings and that we have no jurisdiction to hear it.[7]The position of a bankrupt is regulated by the Insolvency Act 1986 . Section 306 vests the bankrupt's estate in the trustee:
"306 (1) The bankrupt's estate shall vest in the trustee immediately on his appointment taking effect or, in the case of the official receiver, on his becoming trustee. (2) Where any property which is, or is to be, comprised in the bankrupt's estate vests in the trustee (whether under this section or under any other provision of this Part), it shall so vest without any conveyance, assignment or transfer."
What forms part of the bankrupt's estate is defined by Section 283 which, so far as is relevant, provides as follows:
"283 (1) Subject as follows, a bankrupt's estate for the purposes of any of this Group of Parts comprises – (a) all property belonging to or vested in the bankrupt at the commencement of the bankruptcy, and (b) any property which by virtue of any of the following provisions of this Part is comprised in that estate or is treated as falling within the preceding paragraph."
Section 436 contains the definition of property:
"In this Act, except in so far as the context otherwise requires ... 'property' includes money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property ..."
In Heath v Tang [1993] 1 WLR 1421 at 1423, Hoffmann LJ said this:
"The property which vests in the trustee includes 'things in action': see section 436. Despite the breadth of this definition, there are certain causes of action personal to the bankrupt which do not vest in his trustee. These include cases in which 'the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind, or character, and without immediate reference to his rights of property': see Beckham v Drake [1849] 2 HL Cas.579, 604 per Erle J. and Wilson v United Counties Bank Ltd [1920] AC 102. Actions for defamation and assault are obvious examples. The bankruptcy does not affect his ability to litigate such claims. But all other causes of action which were vested in the bankrupt at the commencement of the bankruptcy, whether for liquidated sums or unliquidated damages, vest in his trustee."
[8]The distinction is between an "action personal to the bankrupt", such as assaults on the body or character, on the one hand, and all other actions on the other. The question which arises before our Tribunal is in which category does the Originating Application, or more properly, each of the claims within it fall? As Aldous LJ held in Ord v Upton [2000] Ch. 252, at 360:
"Section 436 is not in truth a definition of the word 'property'. It only sets out what is included. As will appear later from the cases that have been decided over many years, actions which relate to a bankrupt's personal reputation or body have not been considered to be property and therefore they do not vest in anybody other than the bankrupt."
Aldous LJ was dealing with a personal injury action. Having looked at that particular cause of action, he said this: "I cannot accept [Counsel's] submission that the cause of action is personal. It is a claim for damages for injury to his body and mind and also his capacity to earn and can therefore be considered as a 'hybrid' claim, in part personal and in part relating to property. I have come to the conclusion that such an action vested in the trustee. It would only have remained with Mr Ord if it fell within an exception established by the authorities to be excluded from the definition of property now found in section 436 of the Act of 1986. To do so it must relate only to a cause of action personal to the bankrupt. All causes of action which seek to recover property vest in the trustee whether or not they contain other heads of damages to which the bankrupt is entitled. The authorities to which I now turn lead to that conclusion." [See page 361]. It is not necessary for us to cite further, having extracted Aldous LJ's own analysis of that position.[9]It is conceded, on behalf of the Applicant, that a claim for wrongful dismissal and breach of contract would fall within the property category. As for the claim under the Disability Discrimination Act 1995 , it is accepted that this includes economic property claims but also, since there is a right to claim damages for injury to feelings, might also include what has been described as "a personal claim". It thus would fall, as Mr Mulholland accepts, within Aldous LJ's "hybrid" category and vest in the Trustee as a property claim.[10]It is necessary finally to focus on the unfair dismissal claim. At the outset Mr Mulholland submits that it is not necessary to obtain an assignment of the unfair dismissal claim. The reason why unfair dismissal is different from wrongful dismissal is because of the remedy. In an unfair dismissal case the primary remedy is a declaration and reinstatement. The secondary remedy is re-engagement and only thirdly does a Tribunal consider an award of compensation. This has been the legislative intent since the institution of unfair dismissal legislation 30 years ago. As a matter of fact, orders for re-engagement and reinstatement are very rare and enforcement of them is possible only by means of additional awards of compensation. In that respect, therefore, the remedy ultimately is monetary as it is in a wrongful dismissal case. The jurisdiction is entirely statutory for the statutory tort of unfair dismissal.[11]The Employment Rights Act 1996 contains certain provisions for proceedings to be conducted where the Applicant is no longer able so to do. Most relevant is Section 206 which enables a personal representative, in certain circumstances, to maintain certain of the rights contained under the Employment Rights Act 1996 following the death of the Applicant. Nothing is said about a trustee in bankruptcy. On the other hand, in the Extension of Jurisdiction Order 1994 , which gives the Tribunal jurisdiction to hear breach of contract claims in certain circumstances, specific provision is made for a claim to be continued by a trustee in bankruptcy: see Article 9(2). On this basis Mr Mulholland contends that Parliament has recognised that an unfair dismissal claim falls within what Hoffmann LJ described as "a personal claim" and not within the category of all other claims.[12]We consider this submission is incorrect. It would be wrong for "the cause of action" or "the thing in action", to use the statutory term, to change its character according to the remedy which may be available in certain circumstances. The thing in action in the unfair dismissal proceedings is a claim of a nature which includes the right to an award of compensation but unlike claims for discrimination does not include, in the assessment of damages, the right to claim for injury to feelings or to reputation.[13]It seems to us that unfair dismissal is closely analogous to a wrongful dismissal claim which, it is accepted, resides in the property class of cases. The test therefore that we apply is answered, not by reference to a possible remedy awardable by a Tribunal but by analysis of what the right is. We hold that the right to claim unfair dismissal is a form of property right and is not a form of personal right, as defined in the authorities which we cited.[14]Another approach it is to turn Mr Mulholland's submission around. Given that a tribunal is constituted by the Employment Tribunals Act 1996 and has only the jurisdiction given to it by that statute, and in respect of unfair dismissal by the Employment Rights Act 1996 , it would require a clear provision to allow the proceedings to be conducted by a trustee in bankruptcy. That cannot be assumed in this case.[15]Furthermore, Part XII of the Employment Rights Act 1996 contains a set of rights available to an employee whose employer has become insolvent. It would be odd if proceedings could be brought against an insolvent party but no by one, yet there is no specific provision for the latter.[16]It is not necessary for us formally to decide whether the trustee in bankruptcy could, in any event, weigh proceedings in the Employment Tribunal absent a specific provision since we have decided the issue on the first submission made to us and we are not concerned with the consequences that may or may not ensue. We do not know whether the point would have been taken had the trustee in bankruptcy made an assignment, or had the trustee continued to maintain the proceedings before us. It is only necessary for us to decide on the point in issue between the parties before us today.[17]In those circumstances, we uphold the submission that there is no standing in the Applicant to maintain the proceedings. The proceedings, we think, are the Originating Application but if we are wrong, then they include the proceedings before the Employment Appeal Tribunal which were in play when the bankruptcy order was made and which are relevant to us today.[18]Having canvassed the order sought by Mr Johnson, and considered, it is our judgment that the effect is that an order should be made dismissing the appeal in the absence of jurisdiction in the Employment Appeal Tribunal in this case to hear it, the Applicant being a bankrupt and that is what we propose to do.[19]In these circumstances, it is not necessary for us to decide the substantive issue, but in deference to the very full Skeleton Arguments which have been put before us, and acknowledging that we had only one side of the story, we make a very tentative comment. This decision represents the condemnation by an Employment Tribunal of parties for failure to carry out directions given, it must be said, for their benefit so that the issues they wish to raise are brought forward expeditiously.[20]Tribunals are given substantial new powers in case management to give directions and to see that directions are carried through in the interests of justice. Failure to follow directions is rightly regarded by Tribunals and by us as a serious matter. Having said that, it is not in every case appropriate to take the drastic step of a strike-out, particularly where parties acknowledge they will not be prejudiced by continuing in the proceedings in whatever state they are and where a fair hearing could take place at the time or even after an adjournment. An award of costs is an appropriate measure in such circumstances and at all times the Tribunal must consider the fairness of the proceedings and whether or not a fair hearing could occur, notwithstanding, as here, a gross disregard of directions.[21]Those are general observations and do not affect the approach we take to the case before us since, as we have said, we have not heard full argument upon it.[22]An application was made, on behalf of the Respondent, for the costs to be paid, pursuant to Rule 34 of the EAT Rules. Mr Johnson based his contention on the following words:
"Any proceedings were unnecessary, improper or vexatious, or that there had been unreasonable delay, or other unreasonable conduct in bringing or conducting the proceedings"
. The proceedings, it has turned out, have been resolved by our deciding the new point of law raised in the bankruptcy issue. It seems to us, it was necessary for this point to be argued and we do not consider it would be right to award costs in this case. It has not been improper, unnecessary, vexatious or unreasonable to have this point litigated. That brings us to an application for permission to appeal made by Mr Mulholland.[23]We will grant permission, since there is no authority on this point, although we have attempted to apply provisions of general application and authorities of the Court of Appeal, but we do indicate that he may have substance in his claim that the law is unclear about the way in which claims of unfair dismissal should be categorised and it may be that a different view from ours is taken about that and upon the consequences, as we have determined them to be. Permission is granted.[24]Since giving this Judgment we have become aware that Judge Reid QC and members considered the bankruptcy point in Ellison v Petrie Tucker & Partners Ltd [2002] ICR Part 13 xxv, EAT/795/01 handed down on 29 August 2002. The EAT upheld the decision of an Employment Tribunal that it had no jurisdiction to hear an unfair dismissal claim by a bankrupt whose Trustee had not assigned it to him, and who did not himself prosecute the case. Costs were awarded by the Employment Tribunal and the EAT dismissed the appeal with £1500 towards the Respondent's costs. That judgment strengthens our own view, but does not affect our grant of permission to appeal.