Drake International Systems Ltd & Ors v Blue Arrow Ltd (Practice and Procedure) [2016] UKEAT 0282_15_2701

EAT
Drake International Systems Ltd & Ors v Blue Arrow Ltd (Practice and Procedure)
[2016] UKEAT 0282_15_2701 · 2016-01-27
[1]Rule 34 of the Employment Tribunal Rules 2013 provides as follows, under the heading “Addition, Substitution and Removal of Parties”:
“The Tribunal may on its own initiative, or on the application of a party or any other person wishing to become a party, add any person as a party, by way of substitution or otherwise, if it appears that there are issues between that person and any of the existing parties falling within the jurisdiction of the Tribunal which it is in the interests of justice to have determined in the proceedings; and may remove any party apparently wrongly included.”
[2]By its use of the word “may” that Rule provides a discretion. Employment Judge Bedeau sitting at Watford in a case brought by Blue Arrow Ltd (the present Claimant) against Drake International Ltd (whom I shall call “the parent company”) decided to exercise this discretion to substitute four subsidiary companies of the parent company as Respondents to the claim, which was for a breach of Regulation 11 and a consequential claim under Regulation 12 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 .[3]The Respondents, having been substituted for their parent company by that order, now seek to appeal his order upon the basis that before they could be made parties, it was mandatory for an early conciliation process to have been undertaken in respect of them. A reference to ACAS under the early conciliation procedures had been made in respect of the parent company, but none made in respect of any of the four subsidiaries. The subsidiaries are represented before me, as was the parent company below, by Ms Slarks. The Relevant History[4]Blue Arrow Ltd is an employment business. On 12 th January 2015 it took over the service of managing workers at Peel Ports Ltd Liverpool from the parent company “or another Drake International Ltd company” (this alternative being set out at paragraph 1 of the Particulars of Claim annexed to the ET1). The claim continued:- “This claim is brought against Drake International Ltd or the company that was the transferor of the employees under the service. The Claimant has been unable to determine with certainty the company that employed the transferring employees. In the circumstances, the Claimant reserves the right to add further Respondents to this claim.” In its ET3 the parent company responded as follows:
“1.1 From around 1995 until January 2015 Drake International Systems Ltd (DISL) was party to a series of commercial contracts with its client, Mersey Docks and Harbour Company, a wholly owned subsidiary of Peel Ports Ltd (Peel), to supply contract dock labour to its operations at the dock estate in Liverpool (the Contract). 1.2 The Respondent was not party to the Contract and did not employ or provide any employee engaged to work on the Contract. The respondent should be dismissed as a Respondent to these proceedings. 1.3 Each member of the workforce assigned to the Contract was employed (not on a temporary basis) by one of four different wholly owned subsidiaries of the Respondent (DISL, Industrial Overload Ltd, Office Overload Ltd and Drake Personnel Ltd) (collectively, the Transferors ) primarily according to the different work types undertaken on the dock estate.”
At paragraph 18 of the ET3, the parent company further stated:
“18.1 The Respondent was not a Transferor and therefore the claim against the Respondent should be dismissed. 18.2 The Claimant is out of time to bring this claim against any of the Transferors.”
The Notice of Appeal[5]The Judge allowed an application by Blue Arrow Limited in those circumstances for the parent company to be substituted by the present Respondents.[6]The Notice of Appeal submitted on behalf of the subsidiary companies claims that this decision was in error of law. The central question is posed as being whether, when an ET applies Rule 34, “a Claimant escapes their obligation to undertake EC with the prospective Respondent.” (“EC” being Early Conciliation), though the word “escapes” seems both forensic and tendentious, and “their obligation” assumes that which the appeal seeks to prove: for the reasons below, the real question is, rather, whether the Claimant was obliged to make a reference to ACAS under the early conciliation procedures as a precondition of the Tribunal having jurisdiction to decide the claim.[7]The argument was summarised at paragraph 23 – that the obligation to conciliate is a “necessary prior” to Rule 34; that if a Claimant wishes to apply to add a Respondent to proceedings, having already issued a claim, the Claimant must first contact ACAS to obtain an EC certificate in respect of the new prospective Respondent.[8]There are seven reasons given for this:(1) The obligation to engage in early conciliation before issuing the claim was enshrined in primary legislation, whereas Rule 34 was secondary legislation and therefore would be ultra vires if it permitted Claimants to avoid the obligation to engage in EC;(2) The “escape route” would frustrate parliament’s purpose of encouraging the settlement of a claim before issue:
“ACAS should take reasonable steps to speak to each Claimant about each Respondent, and, if possible, speak to each Respondent.” (3) There was no principled reason why simply because a Claimant had engaged in EC in respect of a potential Respondent already, the Claimant should not have to conciliate with new prospective Respondents in advance of claiming against them. (4) Implying this “get-out clause” into the Rules created an absurdity: if a Claimant conciliated with A, but then issued against B, the claim would have to be rejected. However if the Claimant, having conciliated with A, then issued the claim against A but subsequently applied to amend so as to substitute B for A, that Claimant would not have to conciliate at all with B. There was no principled basis for such an absurd disparity or outcome. (5) Rule 34 does not give the Employment Tribunal an “unfettered” power to add or substitute a party: it only does so “if it appears that there are issues between that person and any of the existing parties falling within the jurisdiction of the Tribunal ”
. The last seven words deserve the italics, which do not appear in the statute itself: jurisdiction must first be established, before the power can be exercised. The Tribunal has no power to consider the exercise of discretion where the pre-condition for jurisdiction has not been established. (6) There is no time specified by the legislation within which EC must take place. There is no reason why if a Claimant wishes to add a Respondent, an EC certificate cannot be secured in respect of the new Respondent before issuing. All that is required is contact between the Claimant and ACAS. This is in no way the same as exercising the power under Rule 34 to add a Respondent outside the limitation period, to which such cases as Cocking v Sandhurst (Stationers) Ltd [1974] ICR 650 and Drinkwater Sabey v Burnett [1995] IRLR 238 apply. Moreover, there is a sound reason for a distinction between the Cocking/Drinkwater line of cases and those cases relating to early conciliation. If it were not for a principle such as that expressed in Cocking , it would be virtually impossible for a Claimant to add or substitute a new Respondent to the claim, yet this would obviously be capable of working injustice. By contrast, it remained entirely possible for a Claimant to add a Respondent after proceeding through the early conciliation process. (7) Section 18A of the Employment Tribunals Act 1996 required a prospective Claimant to provide proscribed information in a proscribed manner to ACAS about the prospective claim. The information is proscribed by regulations, the obligation is nonetheless statutory. Rule 34 cannot be permitted to sidestep the intention of Section 18A of the Employment Tribunals Act . The Law[9]The Enterprise and Regulatory Reform Act 2013 inserted section 18A into the Employment Tribunals Act 1996. So far as material, it provides:- “(1) Before a person (“the prospective Claimant”) presents an application to institute relevant proceedings relating to any matter, the prospective Claimant must provide to ACAS prescribed information in the prescribed manner, about that matter.” This is subject to sub-section 7. Sub-section 7 provides that the requirement does not have to be complied with in prescribed cases and gives three instances of cases which might be prescribed. They include:
“…cases where the requirement is complied with by another person instituting relevant proceedings relating to the same matter.”
[10]Section 18A provides:- “(2) On receiving the prescribed information in the prescribed manner, ACAS shall send a copy of it to a conciliation officer. (3) The conciliation officer shall, during the prescribed period, endeavour to promote a settlement between the persons who would be parties to the proceedings. (4) If –(a) during the prescribed period the conciliation officer concludes that a settlement is not possible, or(b) the prescribed period expires without a settlement having been reached, the conciliation officer shall issue a certificate to that effect in the prescribed manner to the prospective Claimant. (5) The conciliation officer may continue to endeavour to promote a settlement after the expiry of the prescribed period. (6) In sub-sections (3) to (5) “settlement” means a settlement to avoid proceedings being instituted… (8) A person who is subject to the requirement in sub-section (1) may not present an application to institute relevant proceedings without a certificate under sub-section (4).”[11]“Relevant proceedings” are defined by Section 18. Though the list of relevant proceedings does not include a claim under regulation 12 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) it is in fact within the definition of “relevant proceedings”: Regulation 12(7) of TUPE itself applies sections 18A – 18C of the Act to such claims.[12]Section 18A does not sit on its own, but together with Sections 18B and 18C. Section 18B applies where ACAS is contacted with a view to a matter likely to give rise to relevant proceedings against the person making the contact, but has not received information from the prospective Claimant; and 18C relates to provisions for conciliation after proceedings have been instituted.

(a) provides:

“Sections 18A and 18B apply in the case of matters which could be the subject of relevant proceedings, and Section 18C applies in the case of relevant proceedings themselves.”
[13]These sections were considered by HHJ Eady QC in Science Warehouse Ltd v Mills [2015] UKEAT/224/15, a decision of 9 th October 2015. In the case before her, the Claimant was permitted by the Employment Tribunal to amend an existing claim. The Tribunal permitted the amendment relevantly holding:
“…whilst it is usually necessary for an early conciliation certificate and number to be obtained prior to commencing proceedings in the Employment Tribunal, it is not a prerequisite of an amendment application.”
The employer argued, however, that an amendment seeking to add an entirely new claim which post-dated the ET1 required the Claimant to go back and invoke the early conciliation procedure once again. The argument for the Claimant echoes the argument made for the Claimant before me. HHJ Eady considered that Section 18A:- “…uses the broad terminology of “matter” rather than “cause of action” or “claim”. It envisages a prospective Claimant and imposes certain obligations in terms of the early conciliation process upon that person, in respect of which there are only limited exceptions (see Cullen) [Cranwell v Cullen UKEATPAS/006/14] (20 th March 2015)” She went on to hold that the early conciliation rules did not require the formal setting out of each cause of action, for each claim separately: its adoption of the expression “any matter” and “that matter” was of concepts which were broad. She added a further point: “Furthermore, Section 18A does not purport to address the case of an existing Claimant, merely that of the prospective Claimant. For those who are existing Claimants who seek to add additional claims to existing proceedings, this will be a matter for the ET, exercising its case management powers… and applying the well known guidance laid down in cases such as Selkent v Moore [1996] ICR 836. 29. Does this approach undermine the objective of the EC procedure, as the advocate [for the Appellant] suggests? Would it permit (using his example) an accrual of new claims simply by way of amendment of existing proceedings and thus avoiding early conciliation? [His] fears in this regard fail to take account of the fact that such amendments would only be permissible if allowed by the ET properly exercising its judicial discretion. An ET is not bound to permit such an application. The fact that it concerns a matter that is entirely new, having arisen only after the ET1 was lodged, may well be a relevant factor weighing against allowing an amendment. If such an application to amend were not permitted, it may be that the Claimant becomes a prospective Claimant in respect of that matter, and there may then be an obligation to invoke the EC procedure unless one of the Section 18A(7) exceptions apply. If the amendment is permitted, however, I cannot see that the EC process arises. It is simply a matter of case management. 30. It seems to me that the most the Respondent can really say is that an ET considering whether or not to allow an amendment might consider the potential avoidance of EC to be a relevant factor. I do not see, however, that it can be determinative. The rationale of the EC scheme is to encourage the settlement of employment disputes before litigation has commenced and positions become entrenched. Apart from the initial obligation to contact ACAS, however, the process is entirely voluntary. If the Claimant has no interest in participating in a conciliation process, she is not obliged to do so; the same is true of the Respondent. EC builds into the ET process a structured opportunity for parties to take advantage of ACAS conciliation; albeit an opportunity that has to be formally acknowledged by the initial contact to be made with ACAS and the issuing of an EC certificate”.[14]In her further submissions in the light of the decision in Science Warehouse , Ms Slarks took four points. First, in that case the content of the potential claim was what was in issue. In the present, it is the identity of the prospective Respondent. Second, the present claim does not turn on the significantly broad word “matter” adopted in section 18A. Third, in that case to impose an obligation to conciliate would have “negative consequences for the litigation process” given that Claimants often do not articulate the heads of claim they are raising at an early stage. By contrast, the identity of the person being challenged is straightforward. Fourth, the obligation to complete the conciliation process before adding a further cause of action was not necessary to achieve the purpose of the statutory regime: whereas by contrast it was necessary for the Claimant to identify each potential Respondent.[15]It may be noted that the first, third and fourth submissions envisaged the central distinction as being between on the one hand the content of the claim and on the other the identity of the Respondent to be subject to it.[16]The Respondent through Mr Brochwicz-Lewinski submitted that the principles expressed in Science Warehouse assisted its case. As to substance, the judgment reflected the Respondent’s argument that the EC procedure applied only to the issue of proceedings, whereas once proceedings were instituted they were governed by established case management powers. Secondly, the width of “matter” is such as to encompass not just the precise facts of a claim which bring it within a cause of action, but are capable of including, for instance, a set of facts which may involve more than one potential Respondent. The option is given to the litigant to seek conciliation in respect of that matter. Discussion and Conclusions[17]In company with HHJ Eady QC, I consider that the starting point is Section 18A. The word “matter” is deliberately chosen. It is not “claim” as it might have been. A “matter” may involve an event or events, different times and dates, and different people. All may be sufficiently linked to come within the scope of “that matter”. Taking this view of the meaning of “matter”, as I do, Section 18(5) provides a continuing role for a conciliation officer, if the officer chooses it. In practical terms, if it is uncertain which of a number of potential Respondents is to face a claim as such, in respect of “the matter”, the officer may continue his efforts to conciliate. The early conciliation rules are scheduled to the Employment Tribunals (Early Conciliation: Exemptions and Rules of Procedure) Regulations 2014, made under Section 18A Sub-Sections (7), (11) and (12). An early conciliation form must contain the prospective Respondent’s name and address (Regulation 2(2)(a)(b). Rule 4 provides that if there is more than one prospective Respondent, the prospective Claimant “must present a separate early conciliation form under Rule 2 in respect of each Respondent or, in the case of a telephone call made under Rule 3, must name each prospective Respondent.”[18]It is however only if the prospective Claimant consents that ACAS contacts the prospective Respondent (Rule 5(2)). The certificate when issued must contain, amongst other material, the name and address of the prospective Respondent. There is, however, no obligation under the Rules to send a copy of the early conciliation certificate to the prospective Respondent if the prospective Claimant has not consented to ACAS making contact with the prospective Respondent.[19]It is clear, from the Rules, that there is an obligation to name the prospective Respondent, and to provide its address. The Employment Tribunal Rules, scheduled to the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 as amended following the Enterprise and Regulatory Reform Act 2013, provide by Rule 10:
“1.

(i) an early conciliation number…”

[20]It is worth noting that under Rule 12 a distinction seems to be made within the Rules as between a claim which a Tribunal has “no jurisdiction to consider” (Rule 12(1)(a)), a claim “which institutes proceedings and is made on a claim form that does not contain… an early conciliation number…” (Rule 12(1)(c)) and a claim “which institutes relevant proceedings and the name of the Respondent on the claim form is not the same as the name of the prospective Respondent on the early conciliation certificate to which the early conciliation number relates” (Rule 12(1)(f)).[21]Rule 12(1)(f) is somewhat curious, since it may only be in limited circumstances that it would ever apply – as I have pointed out, the Respondent is not necessarily sent a copy of the early conciliation certificate; nor do the Rules require that the Tribunal be given sight of the certificate, or a copy of it: merely that the Tribunal is given the unique reference number which appears on it. There is no provision, nor would it be sensible for there to be one, requiring ACAS to send a copy of any early conciliation certificate to the Tribunal. Further, in a case in which a prospective Respondent receives a copy of the certificate but that Respondent is not the Respondent named on the claim form, it is difficult to understand why and how that Respondent would ever be likely to object. I suspect that the answer to this mystery is not to be found in the regulatory regime prescribed by statute, Order and Rules but in the practice habitually adopted by a tribunal on the one hand and by ACAS on the other, and the existence of some form of cross-check between them, though I have no information about it, and it seems to me that I must merely treat Rule 12(1)(f) as referring to an occasion, if it should ever occur, in which the staff at the tribunal office become aware that the name of the prospective Respondent on the EC certificate is not the name of the actual Respondent to the claim.[22]The second starting point for discussion is identifying the purpose of the provisions. I do not think I can put this any better than HHJ Eady did at paragraph 30 of Science Warehouse Ltd . It is to provide an opportunity for parties to take advantage of ACAS conciliation if they wish, led by the wishes of the prospective Claimant in respect of what is broadly termed “a matter”. The present case is typical of many, in which the precise identity of an employing subsidiary which is one amongst others in a group of companies may not be clear to its employees, and for whom it may be a matter which until making a claim has assumed little significance in their life.[23]The link in the present case between the parent company and the present Respondents which the Judge permitted to be substituted is close, as indicated by the fact that the same legal team represents them. The Claimant had an opportunity to seek conciliation in respect of “the matter” in regard to which she ultimately brought a claim. The purpose of the Enterprise and Regulatory Reform Act , the early conciliation rules and the relevant procedure were thus honoured in respect of that matter. The claim when it was made appeared properly instituted as one which the Tribunal had jurisdiction within the meaning of its own rules to consider.[24]What is in issue is the decision to allow substitution of one party by others. That is a case management decision.[25]If the claim against the current Respondents was entirely unrelated to the proceedings against the parent company I can well see that the Tribunal might have declined to permit the amendment. It had a discretion. That discretion was to be exercised in a manner satisfying the requirements of “relevance, reason, justice and fairness inherent in all judicial discretions” ( Selkent Bus Co Ltd v Moore 1996 ICR836, per Mummery J). If there were any sustained suggestion of abuse of the procedures, I would expect a judge to be alert to it and to decline amendment. There may be other occasions upon which he might choose, for proper reason within the Selkent rubric, to do so. But it seems to me that in exercising any discretion the Judge would have in addition to be bound by the overriding objective which applies now to the Rules in a way in which it did not even apply at the time that Mummery J decided Selkent . Fairness and justice which the overriding objective seeks to promote include (Rule 2(c)) avoiding unnecessary formality and seeking flexibility in the proceedings, and “(d) avoiding delay so far as compatible with proper consideration of the issues; and (e) saving expense.” As I have pointed out elsewhere the saving of expense may not simply be restricted to the expense of the parties directly concerned: the expense here is that also of ACAS, whose time and trouble would in a case such as the present be quite likely to be employed considering conciliation again in respect of the substance of a matter which had been raised with it beforehand; and Ms Slarks’ appeal to the need for the Claimant to proceed by asking for early conciliation has on the current facts the ring about it of an empty formality which does no service to justice. If she is right in her submission that all the Claimant needed to do was to make an application to ACAS, she would in effect be submitting that an unnecessary formal step was taken. If the intention behind taking the point, said to be jurisdictional, was to be able to argue that the Claimant was out of time I do not see how, in principle, this differs from those cases in which it has been held, consistently, that the power under Rule 34 may be used to add a Respondent outside the limitation period (see above).[26]Further and separately, the Act and Early Conciliation Regulations speak of a “prospective Claimant” in relation to proceedings which have not yet been instituted. It makes no sense to talk of a “prospective” Claimant once relevant proceedings have been instituted. Insofar as applications to substitute fresh Respondents to an existing claim is concerned, then if permission is refused, the applicant will be a prospective Claimant in relation to those Respondents: but at the time the application is made, that person is not, since “the matter” is then subject to existing proceedings and will, subject only to the grant or refusal of amendment, either remain the subject of existing proceedings, or become the subject of proceedings yet to be instituted.[27]Despite the very attractive way in which the arguments were advanced by Ms Slarks, I do not accept them. There is nothing in Rule 34 which is on the face of it contrary to the early conciliation provisions. In any event, the “obligation to engage in EC” is overstated, since, as I have pointed out, there is no such obligation but merely the need to obtain formal recognition that early conciliation has been considered by the Claimant.[28]As to the second point this takes matters no further. In the present case there was encouragement to consider conciliation. The claim was not settled. The purpose was not frustrated.[29]The third reason fails: the principle applicable is that a matter should not be brought to litigation without the fact that early conciliation has been considered being formally certified – it is an obligation in respect to prospective Claimants and in respect of “matters”.[30]As to the fourth, the “get-out” clause does not create absurdity once one remembers that Rule 34 confers a discretion which is to be exercised judicially. If a Claimant were to issue against one party in order to proceed later against an entirely different party, it is not difficult to see that a judge might well refuse the amendment to substitute that different party.[31]As to the fifth, the reference to “issues… falling within the jurisdiction of the tribunal” refers to the type of claim, as the words (reduced to their essentials) suggest. That does not assist her argument.[32]As to the sixth point, although no time limit is specified within which early conciliation is to occur, the word is “early” in respect of the descriptions “prospective” Claimant and “prospective” Respondent. As I have said, once a claim is brought in respect of a matter, and appropriate early conciliation has taken place, it is no longer appropriate to talk of prospective parties, nor of a claim which is yet to be instituted. Once relevant proceedings have been instituted the very words of Section 18A of the Employment Tribunals Act 1996 make it clear that the obligation to provide information no longer applies, since that applies only “ before a person presents an application to institute relevant proceedings”.[33]As to the seventh ground, I simply do not accept that Rule 34 sidesteps the intention underlying Section 18A.[34]As to her central argument in respect of Science Warehouse , “matter” is a word capable of broad application, and is in my view (in common with that of HHJ Eady) intended to be so, as I have already said in different words in paragraph 19 above. I see no reason artificially to restrict its scope to the content of a dispute, when it may easily comprehend the parties to that dispute as well.[35]It is a happy consequence of my reasoning that the appeal is to be dismissed: if it were not so, there could be a real risk that satellite litigation in respect of the provisions of early consideration might proliferate, with the same stultifying effect that litigation under the 2002 Employment Act had in respect of the provisions of the dispute resolution procedures for which it provided. Since it appears to have been part of Parliament’s intention in enacting the Employment Tribunals Act Sections 18A, B and C in the terms in which they were enacted, and the Rules under them, to avoid such a position (see, for instance, the broad reference to “matter”, and the absence of requiring any particular detail of any particular “matter” to be specified) and to avoid formalities fettering a fast and fair process of justice, I am confident that the view I have reached better serves its purpose than would the adoption of the approach for which Ms Slarks contends.[36]The appeal is dismissed.

Cited in 1 later judgment