Appeal No.	 EAT/0517/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 13 March 2002

Before
MR COMMISSIONER HOWELL QC
MS N AMIN
MR P A L PARKER CBE

ELIZABETH DUFF TRAVEL LTD	APPELLANT

MR B BRAY	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR MARTYN WEST
(Representative)
Peninsula Business Services
Riverside
New Bailey Street
Manchester
M3 5PB	
For the Respondent	RESPONDENT DEBARRED FROM TAKING PART IN APPEAL	

MR COMMISSIONER HOWELL QC

1	This appeal which is before us for Full Hearing pursuant to the Directions of the Appeal Tribunal on 13 September 2001 is by a company, Elizabeth Duff Travel Ltd, against the decision of the London South Employment Tribunal sitting on 26 February 2001, set out in Extended Reasons sent to the Parties on 7 March 2001.  The proceedings before the Tribunal had been brought by Mr Stephen Bray against Elizabeth Duff Travel Ltd, the Appellant before us, claiming wrongful dismissal and unfair dismissal from his employment with them which he had occupied for only the relatively short period from 1 February 1999 to 21 January 2000 as a Financial Controller.

2	The only aspects of the Tribunal’s decision with which we are concerned are their two decisions, first, to refuse Duff Travel Ltd’s application for leave to file a Notice of Appearance out of time and secondly to hold, on the basis of considering only Mr Bray’s case, that he had been wrongfully dismissed by them, with the consequence that the company was ordered to pay him the sum of £2,350 by way of compensation.  The other two aspects of the Tribunal’s decision were to dismiss Mr Bray’s claim for unfair dismissal on the ground that he did not have one year’s service, and to refuse an application by him for leave to amend his Originating Application to include a claim for unlawful deduction of wages for a period he had not previously claimed.  Those aspects of the Tribunal’s decision are not subject to appeal before us and remain as they stand, on any footing.
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3	The appeal as stated in the Notice of Appeal dated 18 April 2001 is based on a claimed misdirection by the Tribunal in refusing to validate the Notice of Appearance (which the company had sought to lodge, admittedly out of time) on the ground that the Tribunal had applied the wrong test by referring to questions of reasonable practicability and failing to take account of the relevant injustice to the parties.  Alternatively, that they failed to give adequate reasons for refusing to allow Duff Travel Ltd to defend the proceedings in all the circumstances.  Mr West, who appeared before us this morning, is a member of, or acts for, Peninsula Business Services Limited, which is a professional firm providing representation and advocacy in Employment Tribunal proceedings and at all material times has acted for Duff Travel Ltd in these proceedings.

4	What happened was, as is recorded by the Tribunal and not in dispute, that following the presentation of the Originating Application on 1 March 2000, Peninsula wrote to the Tribunal on 15 March notifying them that they had been appointed representatives of Elizabeth Duff Travel Ltd and asking that all future correspondence should be sent to them.  A Notice of Hearing was subsequently sent by the Tribunal to the Parties, including to Peninsula as representatives, although the copy sent to them was apparently marked “for information only”.  That appears to have been done because, although Peninsula sought to lodge a Notice of Appearance by fax on 27 March 2000 which would have been within the prescribed time for doing so, unfortunately, by a clerical error on Peninsula’s part, the fax was sent to the wrong fax number and never reached the Tribunal at that date.  Following correspondence and applications for postponement of the originally notified hearing date, a further letter was sent by the Tribunal to Peninsula on 18 October 2000 specifically stating that a request for postponement then made on behalf of the Respondents could not be considered:

“Since they have not entered an appearance to the claim under Rule 3.2 of Employment Tribunals Rules of Procedure 1993 they cannot make such an application.”

Thus, by 18 October 2000 at the latest (and this is not in dispute) Peninsula, as representatives for Elizabeth Duff Travel Ltd, the Respondents to the proceedings, were clearly on notice that no proper Notice of Appearance had been lodged to the claim.  Nevertheless, Peninsula failed, unfortunately, to react to that at that time and it was not until 6 February 2000 that a Notice of Appearance was properly lodged with the Tribunal on behalf of the Respondents.

5	In those circumstances, the first matter the Tribunal considered when the case did come on for hearing on 26 February 2001 was whether the Respondents should be allowed to put forward before the Tribunal the defence that had been set out in their Notice of Appearance, or not.  The Tribunal referred to the provisions of Rule 3 of the Employment Tribunal Rules of Procedure 1993, as then in force, and specifically referred to the provision in Rule 3(4) about costs which records that where a Chairman grants an application under Rule 15 for an extension of time he is to determine whether, having regard to the grounds of his application, it would have been reasonably practicable for the Respondent to present his Notice of Appearance within the time so appointed.  As Mr West correctly points out, that sub rule is a provision concerning what Order it is right for the Chairman to make as regards costs and whether a Respondent is to be treated as having acted unreasonably for that purpose.  It is not a rule which, in terms, makes the issue of reasonable practicability the sole issue to be taken into account by the Chairman or the Tribunal in making the initial decision whether or not to allow a Notice of Appearance to be lodged.

6	Following the citation of that Rule in paragraph 7 of the Tribunal’s Extended Reasons, which does not make that distinction clear, the Tribunal then recorded the reasons why they were rejecting the Respondent’s application in the following terms:

“8	The Tribunal are unanimously of the view that it was reasonably practicable to have served the Notice of Appearance within the 21 day time limit.  The Respondents failed to do so and therefore are debarred from defending this action.  We have to say that the Tribunal are not unsympathetic to administrative errors that occur and it is quite easy especially when it is late in the day to mis-read or mis-dial a number but what has determined our decision is that it was pointed out so many times to the Respondents’ representatives who are a well-known and highly thought of employment specialists and they should have picked it up
9	Mr Marshall [who appeared as counsel for Elizabeth Duff Travel Ltd, but we were told by Mr West, was at that time employed counsel in Peninsula Business Services] then tries to persuade us that even when it was first pointed out it was out of time and the position then was no different than it is today.  We do not believe that is the case …. once it had first been pointed out to the Respondents’ representative that the Notice of Appearance had not been received had they then have submitted a copy with the same explanation as they have done on this occasion then this Tribunal certainly would have accepted that it was a clerical error and would have extended the time to validate the Notice of Appearance.  However [given] the history that there is on this file the Tribunal are not prepared to exercise its discretion to do so.”

The Tribunal then went on to consider the substantive merits of the case, hearing only the evidence of Mr Bray and the case put forward by him, and determined the wrongful dismissal issue in his favour, awarding him damages equivalent to one month’s net wages for failure to give him reasonable notice of dismissal.

7	On the way in which the Tribunal dealt with the question of whether the Respondents should be permitted to defend the proceedings at all, Mr West argues two principal issues with the aid of a helpful skeleton argument and in his oral submissions before us.  The first was that the Tribunal had misdirected themselves by focusing only on the question of whether it had been reasonably practicable for the Notice of Appearance to have lodged, in the first instance, within the original twenty one day time limit, or at any rate, earlier than it was.  On that, he said, the Tribunal had fallen into error in focusing only on that issue as appears to be implicit from their reference to reasonable practicability and the twenty one day time limit and their express statement in paragraph 8 of their Extended Reasons that:

“The Respondents failed to do so and therefore [our emphasis] are debarred from defending this action.”

8	He relied on the authority of an unreported case in the Employment Appeal Tribunal on 
21 October 1981, Horsefield v Roberts, where, in the judgment of Mr Justice Browne-Wilkinson, as he then was, it was emphasised that the test of reasonable practicability which applies for the purpose of determining whether the statutory bar on any application to a Tribunal being entertained beyond the period of three months is to be extended, is a separate test and a stricter test than that which ought to be taken into account by a Tribunal considering a general exercise of discretion under its own rules for an extension of time, such as, for the lodging of a Notice of Appearance.  In that case the Tribunal’s decision not to allow a Notice of Appearance for the reason that:

“The Respondent has not satisfied us that she had reasonable grounds for the delay.”

embodied a misdirection because it was held that the Tribunal had not directed its mind at all to the harm that would have been done to one party or another from its decision on whether the Respondent should be allowed to take part in the proceedings.

9	If it were the case that the Tribunal had directed themselves only to the question of reasonable practicability and the original time limit, as the first two sentences in paragraph 8 of their Extended Reasons appear to suggest, that would, in our judgment, have been a valid ground of appeal to invalidate the decision since it is plain that from the authority cited to us, and, indeed, well established later authority, that the discretion under Rule 13 or Rule 15 of the 1993 Rules as to whether to extend time is to be exercised on a broader basis than simply addressing the question of reasonable practicability.  However, on a fair reading of paragraphs 8 and 9 of the Tribunal’s Extended Reasons, the Tribunal’s consideration as a whole has, in our judgment, been clearly on a broader basis than the first two sentences of paragraph 8 would at first sight appear to suggest.  In our judgment, reading those two paragraphs together makes it clear that the Tribunal did understand, first, that they did have a discretion to exercise and that the matter had not been concluded by the issue of reasonable practicability and the original time limit.  Secondly, from their comment that the Notice of Appearance would have been admitted if action had been taken as soon as the clerical error had been pointed out to the representative, it is clear that the real reason for their decision not to admit the Notice of Appearance out of time was the lack of any adequate explanation for the failure of the Respondents or their advisers to act as they should have done since, at any rate, October 2000 when at the latest the clerical error had been clearly pointed out to them.

10	We accordingly reject the first of Mr West’s submissions that the Tribunal misdirected themselves by focusing entirely on the wrong question.  We however accept the second of his submissions that when one looks at the matters the Tribunal did take into account in determining not to admit the Notice of Appearance out of time, the Tribunal appear to have only addressed the question of the lack of an adequate explanation on the part of the Respondents for their apparent inaction even after October 2000; and do not appear at that stage of their consideration of the case to have sufficiently addressed the question of the relative prejudice to either side from either admitting the Notice of Appearance or deciding that it should be rejected.  That that is a relevant question that always has to be addressed in such cases is established on the leading modern authority on the issues relevant to the Tribunal’s discretion in this context, which is the judgment of Lord Justice Mummery in Kwik Save Stores Ltd v Swain and Others [1997] ICR 49 at pages 54-55.  There, Lord Justice Mummery sets out the principal discretionary factors and begins by saying that the explanation for the delay which has necessitated the application for an extension is always an important factor and in some cases it may be a decisive factor but it is important to note that it is not the only factor to be considered.  As he says at page 55C:

“The process of exercising a discretion involves taking into account all relevant factors, weighing and balancing them one against the other and reaching a conclusion which is objectively justified on the grounds of reason and justice.  An important part of exercising this discretion is to ask these questions: what prejudice will the applicant for an extension of time suffer if the extension is refused?  What prejudice will the other party suffer if the extension is granted?  If the likely prejudice to the applicant for an extension outweighs the likely prejudice to the other party, then that is a factor in favour in granting the extension of time, but it is not always decisive.  There may be countervailing factors.”

It is therefore apparent, in our judgment, that the question of the relative prejudice to the Parties is something that must be taken into account by a Tribunal considering an application of the nature that was before the Tribunal in this case.  We have been satisfied that it does not appear from paragraphs 8 and 9 of the Tribunal’s Extended Reasons that at this stage of their consideration of the case that balancing exercise was in fact present to the Tribunal’s mind.

11	A material consideration, again not apparently taken into account by the Tribunal, was, we think, rightly pointed out by Mr West to us, that this was a case where the Respondents had at all times made the basis of their actual grounds of resistance to the claim clear to the Applicant in the documents that they had supplied.  It was not a case of a Respondent simply turning up on the day of the hearing or at the last moment and seeking then to put forward a basis of defence to the claim for the first time.  That there was potential prejudice to the Respondents in not being allowed to put forward their defence to the proceedings is, in our judgment, demonstrated by what the Tribunal say in the very last paragraph of their decision, having considered the evidence of Mr Bray at paragraph 21, where they recorded that:

“The purpose of these tribunals is to try and do justice between the Parties.  It is unfortunate that the Respondents were in the position of not being able, again for the reasons that they already know, to defend this claim as it may well have been that had  we heard evidence from them that this claim may well not have been successful.”

As Mr West said, that appears to have been a matter taken into account by the Tribunal only after they had heard all the evidence and at a stage of the proceedings after the decision to debar the Respondents from defending the case had already been made.  

12	In those circumstances we have thought it right to allow the appeal and to set aside the decision of the Tribunal refusing to allow the Respondents to file their Notice of Appearance out of time.  It necessarily also follows that we have to set aside the substantive decision of the Tribunal on the claim for wrongful dismissal itself.  Since a matter of only some £2,000 is involved in this case we have given anxious consideration to whether we can properly substitute our own decision for that of the Tribunal in this case, either by confirming the decision that the Respondents should not be allowed to defend the proceedings, or by directing that they should be allowed to defend the proceedings and remitting the matter only for the substantive re-hearing of the wrongful dismissal claim.  Since this does involve an exercise of discretion which primarily is for the Employment Tribunal hearing the factual evidence to determine and there is only one side before us, because the Respondent to the appeal has not appeared before us today, we have concluded that it would not be right for us to substitute our own decision in either direction on the material before us today.  

13	Accordingly, the question of whether the Respondents should after all be allowed to defend the proceedings on the basis of their Notice of Appearance must be remitted to the Tribunal to re-consider.  Consequently, we will direct that the case should be remitted to either the same or any other Employment Tribunal to reconsider for itself on the basis of all material factors whether Elizabeth Duff Travel Ltd should be permitted to defend the wrongful dismissal claim on the basis of their Notice of Appearance (excluding the final paragraph of that Notice which embodies a counter-claim which we were told in any event is no longer being pursued because it has been dealt with in another way).  

14	The practical consequence of that decision has to be that both paragraphs (i) and (iv) of the Tribunal’s decision, as recorded on page three of the appeal file before us, have to be formally set aside and remitted to the Tribunal for re-hearing and re-determination.  Paragraphs (ii) and (iii), on any footing, as we have already said, remain as they are.  The Parties should, we think, be put on notice that, if on the re-consideration of issue one, the Respondents are given leave to defend on the question of wrongful dismissal, then the reconsideration of that issue would have to take place and obviously it would be most convenient if that could be done immediately at the same hearing.  If the Respondents are not given leave to defend the proceedings after all on the reconsideration of issue one, it would, in our judgment, automatically follow that the existing decision on the wrongful dismissal issue would have for practical purposes simply to be affirmed by the fresh Tribunal.  If they are given leave to defend the wrongful dismissal claim, then the whole of that claim would be for reconsideration and re-determination by the fresh Tribunal after hearing evidence in the normal way.  On that footing the appeal is accordingly allowed and the case remitted to the Tribunal for re-consideration.