PATEL v CLEMENCE HOAR CUMMINGS [2006] UKEAT 0214_06_2306

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2006] UKEAT 0214_06_2306

Case No Appeal No. UKEAT/0214/06

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

PATELAPPELLANT

CLEMENCE HOAR CUMMINGSRESPONDENT

Before

His Honour Judge Burke

Date 23 June 2006

[1]APPEARANCES For the Appellant Mr A Patel (The Appellant in Person) Mr M West (Representative) Instructed by: Peninsula Business Services Ltd Riverside New Bailey Street Manchester M3 6PB Summary The dismissal for redundancy was, in general terms, clearly procedurally unfair; but the Tribunal found that section 98A(1) did not apply while section 98A(2) did; and on the basis of section 98A(2) the employers would probably have dismissed anyway, with the effect that the dismissal was, as a result, not unfair. Held that section 98A(1) & (2) applied or did not apply together, that the transitional provisions in Regulation 18 of the Dispute Regulations applied to section 98A(1) – because that subsection is dependant on the applicability of the statutory procedures – and that, because dismissal was first contemplated before 1.10.04, neither subsection applied; the dismissal was procedurally unfair. Remitted to assess compensation. HIS HONOUR JUDGE BURKE QC In the course of this appeal, by Mr Patel against the dismissal of his claim of unfair dismissal by the Employment Tribunal sitting at Stratford and chaired by Mr Dabezies, it is necessary for us to decide, before proceeding to hear the arguments on the Appeal proper, an issue which has arisen as to the admission, at this appellate level, of new evidence. In order to make it clear how that issue arises it is necessary to set out the history of the litigation in brief terms.

[2]Mr Patel became employed by the Respondents, a firm of accountants called Clemence Hoar Cummings, who we will call "CHC", in April 2002 when CHC took over his previous employers, McGaughie & Co. Mr Patel's employment was transferred to CHC pursuant to the Transfer of Undertakings Regulations. He was given three months notice of dismissal on 6 October 2004, it was said on the grounds of redundancy; and his employment ended on 4 January 2005. His appeals against his dismissal finally failed on 24 March of that year. In his claim form presented to the Employment Tribunal thereafter, he complained, by implication arising from his assertion that a new employee, who was the son of one of CHC's partners, had been taken on in the same capacity a few days before his dismissal, that the dismissal was not genuinely for redundancy. He claimed that he had been unfairly singled out and there had been no consultation. In their response CHC set out a detailed account of their alleged need to make cost savings because of falls in turnover in the years 2002/3 and 2003/4, which appeared by October 2004 to be likely to be followed by a further such fall in 2004/5. They claimed that this declining position had been addressed by a continuing process of reduction in the number of fee earners and in particular the number of employees at the grade or grades of qualified accountants who were not partners, Mr Patel being in that category. They set out that the number of partners had fallen from 8 to 6 between April 2003 and 31 March 2005 and the number of managers over that period had fallen from 6 to 2. Mr Patel, with admirable frankness, has accepted that he knew that the Respondent's case was that there had been a series of redundancies among the senior non-partner fee earning category.

[3]The hearing before the Tribunal took two days. Mr Patel was unrepresented. CHC were represented by counsel, instructed by a highly experienced firm of London solicitors. There had been an order for disclosure of documents, made prior to the hearing on 19 May. To what extent there had been disclosure of documents is not clear; but certain documents to which we will shortly refer had not been disclosed as part of that process. The evidence on behalf of CHC consisted of Mr Grady, the firm's Managing Partner, who gave evidence on the first day and another partner, Ms Humphry, who gave evidence from the start of the second day. Mr Patel then gave evidence on the second day; and the hearing was concluded. On the morning of the second day, as the Tribunal recorded in their judgment, CHC disclosed for the first time a number of documents which, plainly, should have been disclosed much earlier. Those documents consisted of their financial statements for the years 2002/2003 and 2004/2005; whether they also included the statements for 2003/2004 is not clear and does not matter because the results for 2003/2004 are set out in the results for 2004/2005. The Tribunal said, at paragraph 13 of their judgment, that Mr Patel did not challenge the genuineness of those documents.

[4]CHC also produced for the first time at that stage notes of a partner's meeting on 13 September 2004, when it was decided that Mr Patel should be made redundant, and a copy of a compromise agreement between the firm and a Mr Bell dated 9 September 2002. Mr Bell had been in the employment of CHC, having also transferred under the TUPE Regulations from McGaughie & Co, and had left in 2002. He was of a similar status to that which Mr Patel occupied at the time of his dismissal; and indeed Mr Patel says that he moved into Mr Bell's position when Mr Bell left. The compromise agreement shows that CHC had paid Mr Bell £12,000 as compensation for loss of employment, without admission of liability. That agreement contains, at clause 9, a clause entitled "Confidentiality of Settlement" which reads as follows: "The employer and employee agree to keep confidential and not disclose (other than in confidence to professional advisors or as required by law) the existence or terms of this agreement".

[5]A further document which was disclosed for the first time in this way was a document sent by Mr Grady to a Mr Smith, another employee in the same or similar category, dated 25 August 2004, setting out that he had been paid an ex-gratia payment of £2,000 as part of a redundancy package. Mr Bell was one of the employees upon whom CHC had relied as having been made redundant. Mr Smith was another such employee. Mr Patel knew that the firm relied on the termination of the employment of both persons as having been attributable to redundancy. No explanation was provided as to why these documents were disclosed so late or at the stage at which they were disclosed. The Tribunal in their judgment do not refer to any explanation; and they were rightly critical of this very late disclosure.

[6]The Tribunal found that Mr Bell and Mr Smith, although they did not name them, had been made redundant; see paragraph 16; there is no dispute about the identity of the persons who were there referred to. In his notice of appeal Mr Patel complains that the Tribunal's decision was based on the additional documentary evidence provided on the second day with which, in the time available, he could not be expected to deal. He says, in his Notice of Appeal, that, had the documents to which we have referred been provided in good time, he would have asked Mr Bell and Mr Smith, (although he does not in the Notice of Appeal identify them by name) to give evidence.

[7]At the sift stage of this appeal the view was taken, on paper alone of course, that it had no reasonable prospect of success. However Mr Patel exercised his right to seek an oral hearing, pursuant to rule 3(10) of the Employment Appeal Tribunal Rules; and at that hearing on 29 March 2006, HHJ McMullen QC ordered that the appeal should proceed to a full hearing. He also allowed Mr Patel's application to adduce new evidence, namely witness statements from Mr Bell signed on 3 March 2006 and from Mr Smith signed on the following day; but, as is usual when such an order is made at a hearing in which the other side is not taking part, CHC were given the right to apply on notice to vary or discharge that order. CHC made such an application; and on 23 May 2006 HHJ Birtles ordered that that application be dealt with as a preliminary point before the start of but on the day of the hearing of this appeal. It is that application in respect of which we now give this judgment.

[8]The grounds on which new evidence can be admitted at an appellate stage before the Employment Appeal Tribunal are almost too familiar to require repetition by us. It is, of course, only in exceptional cases that fresh evidence is admitted at this stage. The conditions for such admission are set out in the well known case of Ladd v Marshall

[1954] WLR 1489

, subject to one modification in the Practice Direction of the Employment Appeal Tribunal at paragraph 8.2; and those principles have not been in issue in the hearing of this application. They are that, in order to obtain the admission of fresh evidence, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the Employment Tribunal Hearing, that it is relevant and would probably have had an important influence on the hearing and that it is apparently credible. In addition it is necessary to have regard to the overriding objective.

[9]Mr West, on behalf of CHC, objects to the introduction of the two new witness statements, on the basis of all three of those pre-conditions which, he says, are not satisfied in this case. As to the first, he submits that Mr Patel knew of both witnesses before the hearing, knew what the issues were, knew that it was the case of CHC that Mr Smith and Mr Bell had been dismissed as redundant and therefore knew that he needed, if he wished to rebut that part of their case beyond his own evidence, to call Mr Bell and Mr Smith. Mr Bell, Mr West tell us and it is not in dispute, was present throughout the first day of the hearing. Mr West, (who was not there because solicitor and counsel were at that time instructed for CHC), tells us that Mr Bell was there during the second day as well. Mr Patel says that Mr Bell was not present because he had another engagement which he had to attend, having attended on the first day in order to assist Mr Patel. Whether he was present on the second day or not is not material to our decision; and we need not try to resolve that dispute of fact.

[10]Thus, on that basis, Mr West submits that the evidence of Mr Bell was evidence which Mr Patel either did realise or should have realised was important evidence. It was evidence which he could have called and did not call. The same applies to Mr Smith. Mr Patel's response to these points is two-fold; firstly he explains that Mr Bell attended on the first day only and was not present on the second day when the new documents appeared; secondly he says that he had approached Mr Bell before the hearing about giving evidence; Mr Bell had told him what had happened between himself and CHC but had declined to give evidence because of Clause 9 of the Compromise Agreement, which we have already read in the course this judgment. However, Mr Patel says, once CHC had on the morning of the second day disclosed that document, the position changed. Mr Bell has subsequently indicated that, now that the document is in the open, he is prepared to give evidence; but since he was not present on the second day he could not be asked whether he had changed his mind and thus called. Mr Patel says that it was late disclosure, in particular in Mr Bell's case of the compromise agreement with the confidentiality clause to which we have referred, which changed the position. The disclosure of that document came too late for him to be able to call Mr Bell. As for Mr Smith, Mr Patel submits that Mr Smith had also declined to give evidence, in particular because he did not have a full time job at the time and therefore did not want to jeopardise his future employment position, but has since changed his view in the light of the disclosure by CHC of the letter between Mr Grady and Mr Smith to which we have also referred.

[11]Mr West further submits that the evidence of Mr Bell is prima facie not credible because he was disbelieved when giving evidence as a witness in proceedings between CHC and one of their clients; and, as to Mr Smith, he submits that the payment, which he had been made for redundancy on an ex gratia basis, had been accepted and had not been repaid; and evidence from him that he had been dismissed not for redundancy but for poor performance in those circumstances was not credible. Finally Mr West submitted that it was common ground that both Mr Bell and Mr Smith had been dismissed and had not been replaced; therefore there was he said self-evidently a redundancy situation in respect of both of them.

[12]We do not accept these latter two submissions. The evidence of Mr Bell cannot be said not to be prima facie credible merely because he was disbelieved in court on one other occasion on wholly different issues at a wholly different time. It has not been suggested that the contents of his witness statement are not prima facie credible, although of course CHC say that they are inaccurate. The attack on his credibility is, in our judgment, unsustainable. The same applies to Mr Smith. Mr Smith could hardly be expected to repay the ex gratia payment to his ex-employers merely because they had given it to him on the grounds that they had dismissed him for redundancy when he took the view that his dismissal was on the basis of issues of competence.

[13]The fact that it is common ground that Mr Bell and Mr Smith had been dismissed and not replaced does not mean that it is common ground that Mr Bell and Mr Smith were dismissed for redundancy. It is entirely open to an employer to dismiss an employee for other reasons and then to decide not to replace him. That point does not, in our judgment, take CHC anywhere in this application.

[14]However what we have to focus our attention on is the first criterion, namely whether the evidence could not have been obtained with reasonable diligence for use at the Employment Tribunal hearing. That involves our considering whether the disclosure of the documents to which we have referred, at the very late stage at which they were disclosed, changed the picture in terms of calling Mr Bell and Mr Smith for Mr Patel.

[15]The only document which is relied upon, so far as Mr Bell is concerned, is the compromise agreement. In our judgment that did not change the picture and could not be said to have changed the picture in terms of whether it was or was not possible for Mr Patel to put before the Tribunal the evidence of Mr Bell, had reasonable diligence been used. All that had changed by the disclosure of that document was that the document itself was in the open and Mr Bell may have thought that, the document being in the open, he could now give evidence without any question of breaking the terms of clause 9 of that document; but he could in any event have given evidence without breaking the terms of clause 9 of that document. Had Mr Patel explained the difficulty to the Tribunal at the outset, they would no doubt have explained to him that the right course was to obtain an order that Mr Bell should give evidence. Mr Bell would then have been called; and Mr Bell would have been told that he had to give evidence and would have given evidence. Indeed it is clear that the term at paragraph 9 does not require him not to give evidence; for it permits him to disclose the existence and the terms of the agreement if required to do so by law. Mr Patel, we have no doubt, did not appreciate that; he was unrepresented; and some may think that it is harsh for us to take the approach that we feel obliged to take. We certainly recognise that the late disclosure of the documents in this case put Mr Patel into a very difficult position; but they did not, in our judgment, change the position to any substantial extent, so far as the availability of Mr Bell's evidence was concerned. That evidence could have been put before the Tribunal and it was not.

[16]So far as Mr Smith's evidence is concerned, the position in our judgment is even stronger. The relevant document does not provide any new information, other than that £2,000 had been paid by the employers as a payment as part of a redundancy package. It does not, any more than does Mr Bell's compromise agreement, provide material which undermines the case of CHC that Mr Smith and similarly Mr Bell had been dismissed for redundancy. The other documents which were also disclosed at that late stage do not have any effect so far as the issues are concerned either.

[17]The conclusion which we have reached, we have to say with some reluctance, is that the evidence which Mr Patel now seeks to put forward, as set out in the witness statements of Mr Bell and Mr Smith, is not evidence which could not have been obtained with reasonable diligence for use at the Employment Tribunal hearing and is not evidence about which Mr Patel is entitled to say "Well I couldn't have been expected to call that until these documents were disclosed". The documents, in our judgment, made no real difference on the vital issues. Thus we have come to the conclusion that the application to set aside the judgment made unilaterally at the Rule 3(10) hearing succeeds; and that order must be set aside. HIS HONOUR JUDGE BURKE QC The History The Tribunal's Conclusion The Grounds of Appeal Subsections 98A(1) and (2) of the Employment Act 2002 "These Regulations shall apply in relation to dismissal and relevant disciplinary action where the employer first contemplates dismissing or taking such action against the employee after these Regulations come into force…" Thus the Dispute Resolution Regulations, themselves set out that the standard dismissal and disciplinary procedure, contained in Part 1 of Schedule 2 to the 2002 Act, do not come into force in relation to a dismissal, where the dismissal was first contemplated before 1 October 2004. Mr Patel's submission is that the Tribunal should not have held that CHC, in this case, first contemplated dismissal before 1 October 2004, that the note of 13 September meeting was a sham or forgery and that the first contemplation of dismissal should be treated in this case as having been on 4 October, when Mr Grady told Mr Patel of the firm's intentions. He argues that, for that reason, Section 98A(1) applied, the statutory standard dismissal and disciplinary procedure plainly had not been complied with in any real sense, entirely due to the shortcomings of CHC, and, thus, the Tribunal should have held that his dismissal was automatically unfair. Mr West puts forward a wholly different argument. It is that Regulation 18 of the Dispute Regulations is a transitional provision in relation to the Dispute Regulations but not a transitional provision in relation to the effect of Section 98A, that there is no such transitional provision in the case of Section 98A and, therefore, Section 98A came into force on 1 October, irrespective of the date on which the dismissal was first contemplated. However, he says, because the dismissal was first contemplated on 13 September, the statutory dismissal and disciplinary Procedure did not apply by virtue of Regulation 18; therefore, although Section 98A was in force, it was of no effect because none of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 applied in relation to the dismissal. The fact that Section 98A(1) was of no effect did not, he submits, have the consequence that it was not in force or that Section 98A(2) was not in force. Section 98A(2) was in force; and the Tribunal rightly applied it. Conclusion