MR M POTTER v SOUND CONTROL MODERN MUSIC STORES LTD (IN ADMINISTRATION) [2009] UKEAT 0543_08_2301

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2009] UKEAT 0543_08_2301Case No Appeal No. UKEAT/0543/08Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR M POTTERAPPELLANTSOUND CONTROL MODERN MUSIC STORES LTD (IN ADMINISTRATION)RESPONDENT
Before
His Honour Judge Peter ClarkDate 23 January 2009
[1]APPEARANCES For the Appellant MR D EVANS (Adviser) Milton Keynes Citizens Advice Bureau Employment Law Unit Acorn House 361 Midsummer Boulevard Milton Keynes Bucks MK9 3HP For the Respondent No appearance or representation by or on behalf of the Respondent SUMMARY PRACTICE AND PROCEDURE Appearance/response Striking-out/dismissal Default Judgment: no response entered by Respondent company (in administration) within 28 day period. Judgment entered on liability; part of the Claimant's claim not well-founded. Appeal allowed. Default judgment procedure designed to allow judgment to be entered in favour of Claimant, in an appropriate case; not in favour of Respondent who is in default. That part of default judgment set aside and case remitted for hearing on its merits. HIS HONOUR JUDGE PETER CLARK This appeal raises a point on default judgments. The parties before the Bedford Employment Tribunal are Mr Potter, Claimant and Sound Control Modern Music Stores Ltd (in administration), Respondent. This is an appeal by the Claimant against part of a liability only default judgment entered by Employment Judge Adamson on 30 July 2008. Reasons for that judgment are dated 1 September. Today the Claimant is represented by Mr Evans; the Respondent does not appear and is not represented. Background[2]The Claimant was employed by Sound Control at its Milton Keynes branch from 13 December 2004 until 30 April 2008. On that day John Reid and Bill Dawson of Deloitte were appointed joint administrators of the Sound Control Holding Company and other companies within the group. It seems that the business operated through 26 stores nationwide. On appointment the administrators closed 14 outlets including the Milton Keynes store at which the Claimant worked. He received a letter of that date from the administrators telling him that he was redundant with immediate effect.[3]On 5 June the Claimant presented a form ET1 to the Tribunal. He there set out his dates of employment and raised complaints of unfair dismissal, failure to provide employment particulars and a failure to consult over his redundancy, citing sections 188A and 189 of the Trade Union and Labour Relations (Consolidation) Act 1992 . He identified Sound Control (in administration) as Respondent and gave the details of Deloitte. No response was received from the Company or its administrators within the 28 day period provided for in ET Rule 4(1) and on 30 July

Judge Adamson, without a hearing, entered a Default Judgment (Liability Only) in these terms:

"The title presenting a response having expired and no valid response having been presented and on the basis of the information before the Judge, the Tribunal declares that - (1) The Tribunal makes a declaration the Claimant has been made redundant. (2) The Claimant's claim for failing to provide written statement of terms is well founded. (3) The Claimant's claim for protective award under the Trade Union and Labour Relations (Consolidation) Act 1992 is not well founded."
Default Judgments[4]Rule 8 of the Employment Tribunal Rules provides, so far as is material:
"(1) In any proceedings if the relevant time limit for presenting a response has passed, a chairman may, in the circumstances listed in paragraph (2), issue a default judgment to determine the claim without a hearing if he considers it appropriate to do so. (2) Those circumstances are when … (a) no response in those proceedings has been presented to the Employment Tribunal Office within the relevant time limit. (3) A default judgment may determine liability only or it may determine liability and remedy. (4) Any default judgment issued by a chairman under this rule shall be recorded in writing and shall be signed by him ... The Secretary shall also inform the parties of their right to have the default judgment reviewed under rule 33. (5) The Claimant or Respondent may apply to have the default judgment reviewed in accordance with rule 33."
The Appeal[5]On 9 October 2008 the Claimant lodged a notice of appeal to the Employment Appeal Tribunal settled by his advisors, the Milton Keynes Citizens Advice Bureau, to which Mr Evans is attached. The appeal is directed to paragraph 3 of the default judgment only. The grounds of appeal raise two points of law which were permitted to proceed to this full hearing on the paper sift by order of HHJ Burke QC, dated 15 December 2008. The first is that the Judge below was wrong to dismiss the Protective Award claim under the 1992 Act without any evidence being considered. The second is that the Judge misconstrued the meaning of "establishment" in Section 188(1) of the Act. Review[6]By a letter dated 10 October 2008

Judge Adamson directed as follows:

"'On consideration of the Case papers I intend to review the Judgment I made on 30 th July 2008 (i.e. the Claimant has been made redundant), on the grounds that the interest of justice require a review. The Claimant has not made an application for a declaration in respect of a redundancy payment, but has complained of Unfair Dismissal which complaint has not been dealt with in the default Judgment.' The case will be heard at Bedford Employment Tribunal on Friday, 16 January 2008 at 10.00 am. It has been given a time allocation of 2 hours."
[7]Following the hearing on 16 January at which the Claimant appeared in person and the Respondent did not appear,

Judge Adamson issued the following review order under a heading Prehearing Review Judgment:

"Sent to the parties on 30 July 2008 which provided the Tribunal makes a declaration the Claimant has been made redundant is revoked. Orders: (1) There will be a hearing on 6 March 2009, two hours being allowed, to determine liability in respect in those parts of the Claimant's claim which are not determined, including for the avoidance of doubt any part of the judgment sent to the parties on 30 July 2008 which may be overturned by the Employment Appeal Tribunal."
[8]Directions were then given for that hearing on 6 March; and

the Judge added this note:

"At the outset of today's Prehearing Review I suggested to the Claimant that it may be appropriate to consider a review of the third part of the default judgment referred to above. The Claimant informed me that he had consulted solicitors, namely the Milton Keynes CAB, that the matter was due to be heard at the Employment Appeal Tribunal next week and he did not wish to consider that matter here today; in those circumstance that matter was not addressed."
Discussion[9]The purpose of rule 8 appears reasonably clear to me. Where, on the present facts, a Respondent fails to put in a response (form ET3) within the prescribed 28 day period (see Rule 4(1)) it is open to the Employment Judge to enter a judgment determining liability if he thinks it appropriate to do so. Plainly, it seems to me, that means determining liability in favour of the Claimant in default of a response by the Respondent. It would make a nonsense of the procedure if, without any hearing or further representations or evidence from the Claimant, the default judgment was to determine liability in favour of the Respondent who had not entered any defence in a claim falling within the Employment Tribunal's jurisdiction.[10]Unhappily, that would seem to be the logical reading of paragraph 3 of this default judgment. A declaration that the protective award claim is not well founded suggests that the claim has been dismissed. That cannot be right. The Judge's reasons indicate that Order was made because the Claimant did not, in terms I would add, give any indication that 20 or more employees of the respondent were to be dismissed at the establishment where the Claimant was employed. That may or may not be the position after a hearing on liability. The Claimant's second point in the appeal goes to the substantive merits of the protective award claim by reference to the standard authorities Rockfon [1996] IRLR 168 (ECJ) and MSF v Refuge Assurance Plc [2002] IRLR 324 (EAT Lindsay P and members). But when a Claimant raises a claim under sections 188 to 189 of the 1992 Act (a claim within the Tribunal's jurisdiction) and asserts that his workplace was one of 14 outlets closed on the day of his dismissal that is a matter, in the absence of any response from the Respondent, which ought to proceed to a hearing. That may be a PHR under Rule 18 or a substantive hearing. But in my view it was plainly wrong to dismiss that part of the claim on paper for the reasons given by the Judge. It would be otherwise if the claim raised fell outside the Tribunal's jurisdiction (for example a claim in defamation) but in those circumstance I would expect that the claim form would not have been accepted by the Tribunal by virtue of Rule 3(2)(b).[11]In these circumstances I shall allow this appeal and set aside paragraph 3 of the default judgment.[12]Mr Evans urges me to make comments on the second point raised in the appeal as to what is the meaning of "establishment" for the purposes of the 1992 Act. I decline to do so. It seems to me that the issue as to whether or not the Claimant is entitled to a protective award under the Act is one which must be determined by the Employment Judge having heard the evidence and received the submissions of the parties; or at any rate the submissions on behalf of the Claimant if the administrators continue to take no part in the proceedings.[13]However, I cannot leave this case without reverting to the PHR held on 16 January. Judge Adamson was plainly correct, in my view, to give the Claimant an opportunity to have that part of his default judgement reviewed under Rule 33. Had that opportunity been taken this Appeal hearing might well have been rendered unnecessary and the protective award claim would then have been considered on its merits at the hearing fixed for 6 March. Having allowed this appeal, I now give that direction. In fairness to the Claimant, I understand from Mr Evans that he, being unrepresented at the PHR and unaware that the possibility of a review of paragraph 3 of the default judgment would be raised by the Employment Judge, felt uncomfortable dealing with the matter then and there. That is an understandable position to take.