FOXTONS LTD v MS C RUWIEL [2008] UKEAT 0056_08_1803

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2008] UKEAT 0056_08_1803Case No Appeal No. UKEAT/0056/08Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
FOXTONS LTDAPPELLANTMS C RUWIELRESPONDENT
Before
Mr Justice EliasDate 18 March 2008
[1]APPEARANCES For the Appellant (of Counsel) Instructed by: Foxtons Legal Department Chiswick Business Park 566 Chiswick High Road LONDON W4 5BE For the Respondent (of Counsel) Instructed by: Messrs Charles Henry & Co Solicitors P O Box 2687 ROMFORD RM2 6XE SUMMARY Practice and Procedure - Amendment Tribunal allowed amendment to add a sex discrimination claim to an existing unfair dismissal claim. The EAT upheld the appeal principally on the basis that the Tribunal had acted on the misapprehension that this was merely a change of label whereas it was not. THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT) This is an appeal against the case management decision in which the employment judge allowed the amendment of an unfair dismissal claim so as to permit the addition of a sex discrimination claim. The complaint of unfair dismissal was then withdrawn. A further application to amend, to include a claim of victimisation, was refused. The background to the application was this.[2]The claimant was employed by the respondent on 2 January 2007. She was dismissed because of alleged poor performance and misconduct on 4 June. She had not completed the qualifying period necessary to claim unfair dismissal, but nonetheless pursued that claim.[3]By letter dated 28 June 2007 the claimant's lawyers made various allegations concerning the manner in which the dismissal was carried out. At the end of the letter they said this:
"We have cause to raise the fundamental ground, but not limited to this, that our client has been the victim of sexual discrimination."
No indication was given as to the basis for that observation.[4]The claimant filed an ET1 on 8 August, which I am told she prepared herself. It does not identify sex discrimination, but only unfair dismissal. It does state that she was criticised for inappropriate dress, and she notes that she was better dressed than other female members in her team. She also alleged that she had been bullied and her manager had made her cry. She gave some details about that. She did not, however, suggest that either of these matters were the consequence of sex discrimination. The ET3 made the point that the claimant did not have the necessary continuity of employment to bring her unfair dismissal claim.[5]By an email dated 12 November 2007 the solicitors again repeated their previous assertion that the underlying ground was that the unfair dismissal was as a result of sexual discrimination and harassment.[6]At the case management discussion on 14 December the claimant's counsel withdrew the unfair dismissal claim which could not succeed, given the lack of relevant continuity, and made an oral application to amend to plead that she was the victim of sex discrimination.[7]The employment judge, in allowing the amendment, said this:
"An application to amend the claim to include a complaint of sex discrimination was allowed. This was a case where the label was being changed but reliance is being placed on the same facts. The application was originally made on 12 November and so was 2 months out of time. However, notice had been given to the respondent on 28 June before the claim was presented to the Tribunal but the claimant was alleging that she had been the victim of sexual discrimination. Her solicitors were clearly inept, and it makes no difference that they are a charity; they are still bound by The Law Society Rules to take only those cases which they can conduct properly. However, the prejudice to the claimant is not being allowed the amendment in circumstances where she has no other case as she has not gained the right under section 94 of the Employment Rights Act 1996 not to be unfairly dismissed was significantly greater than the respondent which was on notice of the allegation and would have to defend the claim."
The relevant law.[8]The leading case is still that of the EAT in Selkent Bus Company Limited v Moore [1986] ICR 836 (Mummery P presiding). The relevant parts of the judgment are material to this appeal (p.843F-844C):
"Whenever the discretion to grant an amendment is invoked, the Tribunal should take into account all the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it. What are the relevant circumstances? It is impossible and undesirable to attempt to list them exhaustively, but the following are certainly relevant: (a)The nature of the amendment Applications to amend are of many different kinds, ranging, on the one hand, from the correction of clerical and typing errors, the additions of factual details to existing allegations and the addition or substitution of other labels for facts already pleaded to, on the other hand, the making of entirely new factual allegations which change the basis of the existing claim. The Tribunal have to decide whether the amendment sought is one of the minor matters or is a substantial alteration pleading a new cause of action. (b) The applicability of time limits If a new complaint or cause of action is proposed to be added by way of amendment, it is essential for the Tribunal to consider whether that complaint is out of time and, if so, whether the time limit should be extended under the applicable statutory provisions eg, in the case of unfair dismissal, S.67 of the 1978 Act. (c)The timing and manner of the application An application should not be refused solely because there has been a delay in making it. There are no time limits laid down in the rules for the making of amendments. The amendments may be made at any time – before, at, even after the hearing of the case. Delay in making the application is, however, a discretionary factor. It is relevant to consider why the application was not made earlier and why it is now being made: for example, the discovery of new facts or new information appearing from documents disclosed on discovery. Whenever taking any factors into account, the paramount considerations are the relative injustice and hardship involved in refusing or granting an amendment. Questions of delay, as a result of adjournments, and additional costs, particularly if they are unlikely to be recovered by the successful party, are relevant in reaching a decision."
[9]In the later decision of the Housing Corporation v Bryant [1999] ICR 123 , the Court of Appeal considered what amounted to re-labelling. In that case the claimant made complaints of unfair dismissal and sex discrimination. The sex discrimination claim was dismissed because it was out of time and the Tribunal did not think it appropriate to extend time. The applicant then sought to amend her originating application to include a complaint of victimisation.[10]The Employment Tribunal refused to allow this on the grounds that the originating application had not disclosed a claim of victimisation at all, the application was out of time, and there was no reason to extend time.[11]The Employment Appeal Tribunal upheld the claimant's appeal, but the Court of Appeal reversed that decision and restored the judgment of the Employment Tribunal. The Court held that in order for the claimant to be able to allege that this was a mere re-labelling exercise it had to be shown that there was a proper factual substratum for the claim now being made. That in turn required there to be a causative link between the making of the allegation of sex discrimination and the dismissal. If that causative link was not present then that was fatal to the issue of whether the originating application made a claim in respect of victimisation.

Lord Justice Buxton said this (page 130B):

"…It is not enough to say that the document reveals some grounds for a claim of victimisation, or indicates that there is a question to be asked as to the linkage between the alleged sex discrimination and the dismissal. That linkage must be demonstrated, at least in some way, in the document itself."

Lord Justice Peter Gibson made similar observations, noting that (page 132E):

"It is … a crucial element in such a claim that the less favourable treatment constituted by her dismissal was by reason that she made the allegation."
[12]It follows that it is not enough even to make certain observations in the claim form which might indicate that certain forms of discrimination have taken place; in order for the exercise to be truly a re-labelling one, the claim form must demonstrate the causal link between the unlawful act and the alleged reason for it. In other words, in this case it would have to identify not merely that there had been some discrimination but that the dismissal was by reason of sex discrimination.[13]The significance of the claim being a re-labelling exercise or not is this. If it is a purely re-labelling exercise then it is well-established that it matters not whether the amendment is brought within the time frame for that particular claim or not: see the decision of the Court of Appeal in British Newspaper Printing Corporation v Kelly [1989] IRLR 222 and of the EAT in Home Office v Bose [1979] ICR 481.[14]By contrast, as the extract from Mummery P's judgment in Selkent makes clear, where the claim was a fresh one and is out of time it is essential for the tribunal to consider whether time limits should be extended. The grounds of appeal.[15]There are three grounds to this appeal. In the first the appellant submits that this is plainly not just a change of label as the judge stated. It is submitted that this was plainly not just a re-labelling exercise. It was converting what would have been an unfair dismissal claim to a very different, sex discrimination, claim. None of the facts which supported that claim had been pleaded and it was wholly inappropriate for the employment judge to treat it in this way.[16]I was shown a number of cases where the EAT has permitted amendments on the grounds that the essential facts were already pleaded, but they do not take matters much further. I was also shown other cases where the EAT has held in the past that the addition of a sex discrimination claim to an unfair dismissal claim is a category 3 amendment within the Selkent classification. Perhaps most materially is the case of Care Fairs Healthcare Ltd v McLaren [2004] UKEAT/0982/03, in which the observation was made that for a case of this kind to come into Selkent category 2,: "It would have been necessary for the original complaint to have been tantamount to an allegation that the respondent was a victim of sex discrimination, even if the IT1 did not use the words "discrimination" or refer to the act because this would be a case of the "additional or substitution of other labels for facts already pleaded to".[17]Ms Gonzalez-Merello, who put the case attractively for the claimant, submitted that her claim had always been one of sex discrimination, but as a lay person she had not fully appreciated the difference between that and an unfair dismissal claim. However, her subjective understanding of her case can have no bearing on the question whether the amendment is a relabelling exercise or not. Moreover, it is surprising that if sex discrimination was at the heart of the case, it was not specifically stated somewhere in the claim form.[18]I have no doubt that in this case this was no mere re-labelling exercise. There had been simply a one sentence assertion of sex discrimination in the letter of 28 June, but neither that allegation nor any of the relevant facts necessary to sustain it were raised in the ET1 at all. Although the judge referred to the Bryant case, he nowhere identified the information in the ET1 which established a causal link between the dismissal and the alleged reason of sex. His approach was, therefore, misguided.[19]The second ground of appeal is that the Tribunal erred in saying that the amendment was two months out of time whereas a proper analysis of the case showed that it was three months. That may be so, but I think nothing of real significance turns on that.[20]Finally, it is said that the employment judge erred in assessing the balance of prejudice. The employment judge was wrong to treat as material that she had no other claim, that was an irrelevant consideration; and he also failed to have had regard to the additional costs which the respondent would inevitably have to bear as a consequence of allowing the amendment.[21]I accept that the first ground was an irrelevant consideration. It is not legitimate to allow a claimant to pursue a case well out of time, which would otherwise be rejected but for the fact that there is no other claim available. Nor can she be in any better position by having lodged an ET1 with a claim which was manifestly hopeless. However, I do not accept that the potential cost would have been out of the mind of the Tribunal. It is obvious in virtually all amendment cases where new causes of action are allowed to be advanced that additional costs will be incurred. Disposal[22]However, I am satisfied that in this case there was an improper exercise of discretion. In the circumstances, the case will have to be remitted to a fresh tribunal to consider whether the amendments should be allowed.