MONFORT INTERNATIONAL PLC v MR T A MCKENZIE [2007] UKEAT 0155_06_0602

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2007] UKEAT 0155_06_0602Case No Appeal No. UKEAT/0155/06Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MONFORT INTERNATIONAL PLCAPPELLANTMR T A MCKENZIERESPONDENT
Before
His Honour Judge Peter Clark Dr S R Corby Mr B M WarmanDate 6 February 2007
[1]APPEARANCES For the Appellant MR MARTYN WEST Representative Peninsula Business Services Ltd Riverside New Bailey Street Manchester M3 5PB For the Respondent MR DAMIAN BROWN (Of Counsel) Instructed by: Messrs Raleys Solicitors Regent House Regent Street Barnsley South Yorkshire S70 2EG SUMMARY Case management Costs Constitution of ET – member falling ill when case part-heard; Regional Chairman appointed new member for remedies hearing without consulting parties – ET Chairman gave parties opportunity to object. None did. No procedural irregularity. Pedder v Bird (EAT 790/93) considered. EAT costs: opportunity to settle, obviating need for final hearing. Unreasonable conduct. Limited costs order made. HIS HONOUR JUDGE PETER CLARK This is an appeal by Montfort International Plc, the Respondent before the London (South) Employment Tribunal, against the Employment Tribunal's Remedies Judgment promulgated on 22 April 2005. Written Reasons for that Judgment were sent to the parties pursuant to the Employment Appeal Tribunal's direction on 12 January 2006. Background[2]The Claimant, Mr Todd, was employed by the Respondent from 1 November 1998 until 16 or 17 October 2003. Following his resignation from the employment he commenced proceedings in the Employment Tribunal on about 14 January 2004 complaining of constructive unfair dismissal, breach of contract, unlawful deductions from wages and wrongful dismissal.[3]The matter came on initially for a contested hearing on 6 April 2004 before an Employment Tribunal chaired by Ms N Amin, sitting with members, Mr Abrams and Mr Ellis. Judgment was reserved and following a meeting in Chambers on 4 August 2004 that Tribunal's Liability Judgment was promulgated with reasons on 20 October 2004. The Tribunal upheld the claims of unfair dismissal, wrongful dismissal and unlawful deduction from wages. The basis of their decision is encapsulated at paragraphs 6 – 7 of their Extended Reasons where they say:
"6. The unanimous judgment of this tribunal is that: the Claimant resigned because of the fundamental breach of contract by the Respondent in not paying him:- a) his outstanding commission for the period April to October 2003 in the sum of £22,352.92; b) his reasonable business expenses totalling £868.25 during the months of January and June 2003; c) his pension contributions (to be calculated at the remedies hearing). 7. These were all unlawful deductions from the Claimant's wages and for which the Respondent had no prior written agreement to deduct from the Claimant's wages."
[4]The outstanding issues as to remedy were adjourned and the Claimant was directed to serve an up-dated schedule of loss by 8 November 2004. That date was later extended to 5 April 2005, the remedies hearing being fixed for 6 April. That Schedule set out total losses claimed of £93,852.53. We are satisfied that despite the short notice the Respondent lodged a counter schedule in response. Meanwhile, the Respondent had appealed the Liability Judgment (EAT/0034/05/DM). That appeal was dismissed with costs.[5]Further, one of the members of the Employment Tribunal, Mr Abrams, became ill and was hospitalised. Not knowing how long it would be before Mr Abrams was fit to resume sitting the Regional Chairman, Mr John Warren appointed a substitute member Mr Rao, who sat with Ms Amin and Mr Ellis at the remedies hearing held on 6 April 2005. No objection we have found in our preliminary ruling, having heard evidence in the appeal as to the new constitution of the panel, was taken by Mr McLoughin of Peninsula Business Services, then appearing on behalf of the Respondent or by the Claimant, who appeared in person.[6]The only issue at the remedies hearing was the full compensation for unfair dismissal following on from the earlier Liability Judgment, which rejected, among other things, a contributory fault argument advanced by the Respondent. In our view the outstanding commission claim was resolved in favour of the Claimant at the original hearing.[7]The Employment Tribunal calculated the compensatory award for unfair dismissal, gross, at £58,444. The basic award was £1,040. The Employment Tribunal applied the current statutory cap as at the date of the remedies hearing (£56,800) to the gross calculation. That was an error, as the Respondent points out in this appeal. The relevant cap is that in force at the effective date of termination of the contract of employment in October 2003 (see Employment Rights Act 1996, Section 124(1)). The figure then was £53,500. So the Claimant has been over-compensated by the Tribunal to the extent of £3,300, as the Claimant has conceded from the outset of this appeal. The Appeal[8]The principal point taken in the appeal is that the remedies hearing was a nullity due to the alteration in constitution of the Tribunal panel. On this basis, submits Mr West, the remedies judgment should be set aside and that aspect of the claim retried before a fresh Tribunal.[9]In support of this submission Mr West contends that the parties ought to have been informed by the Regional Chairman of his intention to replace the indisposed Mr Abrams by a fresh member and seek their views as to whether the Tribunal should reconvene with 2 members only or start afresh with a new Tribunal, or have a substitute member. He relies on observations made by the Employment Appeal Tribunal in Pedder v Bird (EAT/970/93. 22 November 1994. Holland J presiding); the case of Clarke v Arriva Kent Thameside Ltd (EAT/341/00. 25 July 2001. Douglas Brown J presiding), also referred to by Mr West deals with the case of a Chairman sitting alone, as opposed to a full Tribunal panel hearing a case and does not in our view assist us in the present appeal.[10]Before considering Pedder v Bird we remind ourselves of two provisions contained in Regulation 9 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, dealing with the composition of Employment Tribunals. Regulation 9 provides:
"(1) For each hearing, the President, Vice President of the Regional chairman shall select a chairman, who shall, subject to regulation 11, be a member of the panel of chairman and the President, Vice President or the Regional Chairman may select himself. (2) In any proceedings which are to be determined by a tribunal comprising a chairman and two other members, the President, Regional Chairman or Vice President shall, subject to regulation 11, select one of those other members from the panel of persons appointed by the Secretary of State under regulation 8(3)(b) and the other from the panel of persons appointed under regulation 8(3)(c). (Employer and employee panel) (3) In any proceedings which are to be determined by a tribunal whose composition is described in paragraph (2) or, as the case may be, regulation 11(b), those proceedings may, with the consent of the parties, be heard and determined in the absence of any one member other the chairman. (4) The President, Vice President, or a Regional Chairman may at any time select from the appropriate panel another person in substitution for the chairman or other member of the tribunal previously selected to hear any proceedings before a tribunal or chairman."
[11]We note the distinction drawn between Regulation 9(3) and 9(4). Under Regulation 9(3) where an Employment Tribunal is to sit with the Chairman and one member only, the consent of the parties must first be obtained. Further, the parties must be informed, before they can give their informed consent, whether the single lay member is from the employer or employee panel of members. See Rabahalla v BT Group Plc [2005] IRLR 184 (EAT Burton P presiding), following the principle laid down in relation to the similar EAT rule by the Court of Appeal in de Haney v Brent MIND [2004] ICR 348 .[12]Regulation 9(4), on the other hand, does not require the parties' consent before the Regional Chairman appoints a substitute member.[13]Turning now to Pedder v Bird , the rationale of the EAT Judgment in that case was that the Employment Tribunal had not given adequate reasons for their decision that the Claimant had been unfairly dismissed by the Respondent employer and the case was remitted to a fresh Employment Tribunal for rehearing. However, the Employment Appeal Tribunal added a further observation, not necessary for its decision and without hearing full argument, the point having been taken by the Employment Appeal Tribunal itself (See transcript page 14C). It seems that the matter went part heard before the Employment Tribunal and at a later hearing one of the lay members was replaced by another member, a step described by Holland J as having been taken administratively without any invitation to the parties to consider the implications of such a course.[14]The Employment Appeal Tribunal considered the then equivalent of Regulation 9(4), in identical terms, and recognized that whilst the rule gave a discretion to make the substitution it was questionable whether it should be done mid-way through the proceedings.[15]We have paid close attention to the Employment Appeal Tribunal's observations in that case, acknowledging that those remarks were made obiter and without hearing full argument.[16]We see two material distinctions between Pedder and the instant case. First, that in Pedder the issue of liability had not been determined when the substitution took place. We can readily see the undesirability of a new member coming in to decide liability where he or she has not heard all the evidence on that issue.[17]In the present case we accept Mr Brown's submission that all that remained at the remedy hearing was doing the maths.[18]Secondly, in our findings of fact, dealt with in a separate ruling, the Chairman, Ms Amin, gave the parties an opportunity to object to the new composition of the Employment Tribunal at the outset of the remedies hearing and neither party did object. The Respondent was represented.[19]In these circumstances we conclude that the proper approach is that advanced by both advocates before us. The Regional Chairman had power to appoint a substitute member, provided he did so acting judicially.[20]In our view he did. This was becoming a stale case; the Claimant had secured a Judgment on liability but was not receiving compensation pending determination of remedy. No clear prognosis was available for Mr Abrams' return to duty.[21]In these circumstances we are satisfied that the Regional Chairman was not obliged to consult the parties and offer a choice, as Mr West submits he should have done, as to continuing with a two person Employment Tribunal; having the remedies issue heard before a wholly fresh panel or substitution. We say that in circumstances where Ms Amin, the Chairman, very properly gave the parties an opportunity to raise objection; a valid objection may then have led to further delay if a new panel was necessary. Alternatively, it would be possible to continue with the two original members, subject to informed consent being given by both parties. As to that option, we think that the absence of the consent requirement in Regulation 9(4), and its predecessors, compared with Regulation 9(3) is explained by the fact that Parliament has decided that normally (we leave aside the power for Chairman to sit alone) these cases should be decided by a panel consisting of a Chairman and one member from each panel, employer and employee. That tripartite model is to be preferred to an unbalanced two member Tribunal, subject to any real injustice to the parties. None has been demonstrated in this case, either by the representatives at the Tribunal remedies hearing or on this appeal.[22]Accordingly we reject this part of the appeal. Adequacy of Reasons[23]Mr West makes a further challenge to the adequacy of the Employment Tribunal's reasons for the remedies Judgment. First it is said, following Pedder , that the Employment Tribunal ought to have explained in their Reasons the circumstances leading to the change of Employment Tribunal member. If so, that lacuna was filled by the further communications from both the Chairman and the Regional Chairman under what is known as the Burns/Barke procedure. Next, he points to certain errors in transcription which do not, in our view indicate a material lack of reasoning by the Employment Tribunal.[24]However the principal point taken relates to a concession made by the Claimant in his original claim form and repeated in his schedule of loss, that he will give credit for a Director's loan to him by the Respondent of £4,000. That credit is not mentioned in the Employment Tribunal's reasons nor does it appear in their calculation of the award.[25]Following some debate before us Mr Brown, on instructions, conceded that credit should be given in this appeal for the £4,000 Director's loan. In these circumstances we shall dismiss this part of the appeal also. Disposal[26]It follows, by concession, that the Appeal is allowed to the extent only that the Employment Tribunal's overall award is reduced by a total of £7,300; from £80,809.63 to £73,509.63. Costs[27]Following our judgment in this appeal Mr Brown, on behalf of the Claimant (Respondent before us) applies for costs under Rule 34(A) of the Employment Appeal Tribunal Rules 1993 as amended. Sub Rule 1 provides:
"(1) Where it appears to the Appeal Tribunal that any proceedings brought by the paying party were unnecessary, improper, vexatious or misconceived or that there has been unreasonable delay or other unreasonable conduct in the bringing or conducting of proceedings by the paying party, the Appeal Tribunal may make a costs order against the paying party."
Mr Brown puts his application on two bases. First, that in view of our preliminary ruling on the factual issue whereby we concluded that on balance the Chairman did give the parties an opportunity to object to the new member at the remedies hearing, which opportunity was not taken up by either party, that the Appeal on the constitution of the Tribunal point was misconceived and consequently he should have the whole of the costs in the appeal which have been calculated in the Schedule at £6489.44 including VAT.[28]His alternative submission is that, given the finding by the Employment Appeal Tribunal, it was unreasonable conduct on the part of the Respondent not to respond to an offer made on 1 November 2006 on behalf of the Claimant to settle the matter for £76,646.73, that is the original Tribunal award less the £3,300 in respect of the wrong cap figure. There was no counter offer and he invites us to say that had a counter offer been made which took into account the £4,000 Director's loan, judging by Mr McKenzie's attitude today and that he has always accepted that he owes that money, that the matter could then have been settled and it would be unnecessary to proceed this hearing. In response Mr West submits that the composition issue was and remains an arguable point. We have decided against him but such authorities as there are favoured his contention in this appeal and consequently there should be no order as to costs.[29]Putting it shortly we accept Mr Brown's alternative submission. It would not be right to say that this appeal, particularly on the constitution point was improper, vexatious or misconceived. But we think that the wording of Rule 34(A)(1) contemplates separate consideration where there has been unreasonable conduct.[30]Since this appeal has only succeeded on the basis of two concessions which we are quite satisfied would have been made had a counter offer had been received by latest 1 December 2006, it seems to us that the proper course is to order the Respondent to pay the Claimant's costs from and since 1 December 2006. Doing the best we can on the Schedule provided to us that means Counsel's fees of £1,700, disbursements in the form of solicitors' travel costs for today's hearing at £171.00 odd together with the solicitors' time, five hours at £152 per hour. That is £760. We therefore assess costs to be paid by the Respondent in the sum of £2,631.70, plus VAT where applicable.