Appeal No. UKEAT/1005/03/MAA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 5 March 2004

Before
THE HONOURABLE MR JUSTICE HOOPER
MS N SUTCLIFFE
MR D WELCH

MRS E WILLIAMS	APPELLANT

FERROSAN LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MS DAPHNE ROMNEY
(Of Counsel)
Instructed by:
Messrs Stanley Tee
Solicitors
High Street
Bishop’s Stortford
Herts
CM23 2LU	
For the Respondent	MR ADRIAN CRAWFORD
(Solicitor)
Messrs Donne Mileham & Haddock
100 Queens Road
Brighton
East Sussex
BN1 3YB	

SUMMARY

Jurisdiction of Employment Tribunal to entertain a review.

THE HONOURABLE MR JUSTICE HOOPER

1.	At the conclusion of the hearing we announced our unanimous conclusion that the appeal should be allowed and gave our reasons.  Unfortunately it transpired that the recording equipment was not working.  With the aid of notes of the decision prepared by Mr Crawford who appeared for the respondent and prepared by the solicitor for the appellant (for which we are very grateful), we have rewritten our judgment.

2.	Mrs Williams appeals against the unanimous decision of the Employment Tribunal dated 1 August 2003 not to review its remedies decision given on 14 June 2001.  By a decision sent to the parties in February 2001 the tribunal found that the respondent had discriminated against the appellant on the ground of sex, had constructively dismissed her and had wrongfully dismissed her.

3.	A remedies hearing took place on 14 June.  During the course of the hearing an issue arose as to whether that part of the award which reflected loss of future earnings was taxable.  The Chairman provided the parties with a guidance note handed to him as part of training which he had recently received.  The document is at page 45 of the bundle and includes the Chairman’s hand written notes.  It groups awards into a number of categories for the purposes of determining whether tax would be payable: the “Untouchables”, the “Taxables”, the “Gourleys” and the “Hybrids”!There is no dispute, as Mr Crawford very fairly accepted from the outset of the hearing before us, that the Chairman, the then counsel for Mrs Williams and a solicitor then representing the respondent were all under a misapprehension that there would be no tax liability in respect of loss of future earnings and that therefore the amount to be awarded by the Tribunal in respect of loss of future earnings should be calculated net of tax.  There is also no dispute that the Employment Tribunal intended to make an award in respect of the loss of future earnings upon which Mrs Williams would thereafter not be expected to pay tax which would otherwise be due on her wages.  

4.	We make it clear that neither Miss Romney nor Mr Crawford appeared at the remedies hearing.  

5.	There is also no dispute that all three, the chairman, counsel and the solicitor were wrong and that tax was payable on that part of the award relating to the loss of future earnings and that therefore the Employment Tribunal ought to have made a gross award.  If that had happened the employer would have deducted from the award the tax due by Mrs Williams and paid the balance to her.  

6.	We asked Mr Crawford what would have happened if Mrs Williams had sought to appeal to this tribunal rather than to seek a review.  Provided that she was able to obtain the necessary extension of time, Mr Crawford very fairly accepted that the appeal would have been allowed and the claimant would have been awarded an amount in respect of loss of future earnings which would have been gross of tax.  That, as we say, would have been in accordance with the expectations of the chairman and of the parties at the June remedies hearing. 
After the remedies hearing there was much correspondence.  The Inland Revenue directed that tax was payable on that part of the award that related to the loss of future earnings.  Thereafter Mrs Williams set about seeking a review so as to put her in the position that all had agreed she should have been in at the hearing.     
7.	The employment Tribunal upon the appellant’s application extended the time in which the application for a review could be made.  
The tribunal reviewed the authorities and concluded: 
“The result is that the Tribunal has concluded that the decision reached was the result of error of both representatives.  On the authorities provided, that does not amount to a ground for applying for a review under rule 13(1)(e) of the Rules of Procedure.  The respondent is entitled to the benefit of the principle of the finality of litigation, at least in so far at the tribunal as a court in the first instance is concerned.”

The Tribunal declined to increase the award by the necessary £60,000 or so.

8.	Before looking at the authorities we remind ourselves of the terms of rule 13 of schedule 1 of the Employment Tribunal (Constitution) Regulations 2001.  Rule 13 provides that an employment tribunal shall have the power, on the application of a party or of its own motion, to review any decision on a number of grounds there set out.  The relevant ground here is in sub-paragraph (e):
“The interests of justice require such a review.”
9.	Rule 10 provides:
“That the overriding objective of the rules is to enable tribunals to deal with cases justly.”
By virtue of sub-paragraph (2):
“Dealing with a case justly includes, so far as practicable - 
(a) ensuring that the parties are on an equal footing; 
(b) saving expense; 
(c) dealing with the case in ways which are proportionate to the complexity of the issues; 
(d) ensuring that it is dealt with expeditiously and fairly.”
By virtue of sub-section 3; 

“A tribunal shall seek to give effect to the overriding objective when it exercises any of the specified powers including the power to review a decision under paragraph 13 of schedule 1 which interprets any such rule.”  

By virtue of sub-section 4; 
“The parties shall assist the tribunal to further the overriding objective.”

10.	Both Miss Romney and Mr Crawford have taken us to a decision of this Tribunal in Trimble v Supertravel Ltd [1982] IRLR 451, presided over by Browne-Wilkinson P.  The Industrial Tribunal had held that the appellant’s dismissal was unfair but then decided that she had failed to mitigate her loss.  At the conclusion of the hearing, the Tribunal announced its decision and stated that she was to get no compensatory award because of that failure.  Her solicitor said nothing.  When he received the written decision of the tribunal he initially put in an application for review.  He submitted in the grounds for review that he had not had the opportunity to address the Tribunal on the issue of mitigation of loss.  The Tribunal therefore held a review hearing, following which it held that the error, if there was an error, was a major error of law and that the jurisdiction of the Industrial Tribunal was limited to small matters and did not extend to a substantial or important area of law.  On that basis the Tribunal held that the interests of justice did not require a review because the right step, if any, was an appeal to the Employment Appeal Tribunal, something which the appellant had not set in motion.  The EAT allowed the appeal from the refusal to carry out a review.

11.	The EAT noted that the case had become overcomplicated by technicalities (paragraph 5) and continued:
“6. Instead of dealing with the substance of the matter, we have now got into a complicated series of reviews and appeals from reviews which will still leave the fundamental question unresolved.  However, the parties, have chosen to adopt their course and, therefore, we must deal with the appeal against a review decision on its merits.
7.  As it seems to us the fundamental question is whether or not the Industrial Tribunal’s decision that Miss Trimble had failed to mitigate her loss was reached after Miss Trimble had had a fair and proper opportunity to present her case on the point, being aware that it was a point which was in issue.  We do not think that it is appropriate for an Industrial Tribunal to review its decision simply because it is said there was an error of law on its face. If the matter has been ventilated and properly argued, then errors of law of that kind fall to be corrected by the Appeal Tribunal.  If, on the other hand, due to an oversight or to some procedural occurrence one or other party can with substance say that he has not had a fair opportunity to present his argument on a point of substance, then that is a procedural shortcoming in the proceedings before the Tribunal which, in our view, can be correctly dealt with by review under Rule 10 however important the point of law of fact [sic] may be.  In essence, the review procedure enables errors occurring in the course of the proceedings to be corrected but would not normally be appropriate when the proceedings had given both parties a fair opportunity to present their case and the decision had been reached in the light of all relevant argument.
8.  It is suggested that there are authorities binding us to hold that it is inappropriate for an industrial Tribunal to deal with anything other than minor slips or small points of detail.  The first case relied upon in support of that proposition, which was relied upon by the Industrial Tribunal, is Blackpole Furniture Ltd v Sullivan (1978) ICR 559.  In that case this Employment Tribunal was having to consider whether there was any impropriety in an Industrial Tribunal considering an application for review even though their decision was under appeal to this Tribunal.  The Employment Appeal Tribunal decided there was no impropriety in so doing and, in the course of giving their reasons for that, said this:
‘One of the reasons why it is not necessarily undesirable to carry on with the application for a review is that experience shows that very often we have appeals perhaps related to compensation or matters of that kind where the real complaint is that some trivial error has been made - perhaps in computation, calculation or something of that sort – and where all we can do, if we are satisfied that it has, is to remit the matter to be reheard on that particular point.’
That passage does not indicate that only trivial matters can properly be the subject of review; the Employment Appeal Tribunal was there giving its reasons for saying that there was no harm in the review continuing as a general rule because, as is indeed the fact, many review applications relate to trivial matters.
9.	The other case relied on was D G Moncrieff (Farmers) v MacDonald [1978] IRLR 112 where the Employment Appeal Tribunal, referring to an earlier decision, said that, in their view, review procedure was only appropriate in exceptional circumstances.  We certainly do not demur from that; it will be only in exceptional cases that a review is appropriate in exceptional circumstances.  
10.	In British Midland Airways v Lewis (1978) ICR 782 at p.785E the Employment Appeal Tribunal said this:
‘It seems to us that in a case like this where, as the law then was, a mistake may have been made and the matter has come to light, it is desirable for the Industrial Tribunal, if there is an application for review, to correct the matter even if it involves overturning the original decision of the Industrial Tribunal.  From time to time we have appeals sometimes in relation to small matters of compensation, sometimes in relation to matters where there has been a slip or an error of law of some sort or another and the mistakes have come to light quite soon after the hearing of the Industrial Tribunal.  It seems to us that the convenient course is for such mistakes, when they occur and are recognised, to be corrected by review rather than by appeal because the appeal takes much longer and is much more expensive.’”

12.	This case and the cases cited therein preceded the introduction in 2001 of rule 10 (the overriding objective).  In the Moncrieff case it is said that the review procedure is “only appropriate in exceptional circumstances”. The EAT in Trimble did not demur from this proposition and said that it would only be in exceptional cases that a review is appropriate. In the light of rule 10 we express some doubt about the need to show “in exceptional circumstances”.  Those words do not appear in rule13 (1)(e) which, as we have seen,  provides that a Tribunal shall have the power to review any decision on the grounds that the interests of justice require a review.  It seems to us that there is a difference between saying that a case to which rule 13(1)(e) applies will in practice be unusual or exceptional and saying that rule 13(1)(e) should be read as if inserted into it are the words “exceptional circumstances”.  We see no reason now in the light of rule 10 that some sort of:  “exceptionality hurdle” should be read into rule 13(1)(e).  One of the many advantages of the Civil Procedure Rules has been that a rule which, prior to the introduction of the CPR, had become “encrusted” by numerous cases can be looked at afresh.

13.	We were also referred to Dhedhi v. United Lincolnshire Hospitals NHS Trust, judgment delivered 25 March 2003 EAT/1303/0/DA.  In that case the Employment Tribunal had decided that a Polkey discount was to be made.  At a subsequent remedies and review hearing, the Tribunal allowed the appellant to open up the issue of the Polkey discount, which had been decided at the earlier hearing.  Having heard evidence, the Tribunal altered the percentage Polkey discount in favour of the appellant.  His Honour Judge Ansell, giving the decision of the EAT said (in paragraph 9) that there was no suggestion in the original decision that either representative had any difficulty dealing with the issue of the Polkey discount.  It was clear from the detailed reasons that the Tribunal had fully explored all the facts of the case relevant to the Polkey discount.  The EAT said:
“11. In Trimble v Supertravel Ltd [1982] IRLR 451, this court held that the industrial tribunal should have allowed a review where an applicant’s solicitor had not had the opportunity to address the Tribunal on their decision announced at the end of the hearing before giving written reasons that there was a failure to mitigate.  In Harber v North London Polytechnic [1990] IRLR 198, a representative’s decision to withdraw a complaint of unfair dismissal was consequent upon the Tribunal Chairman putting the wrong question about continuous employment to the representative.  At paragraph 26 Balcombe LJ put the position thus;
‘In other words, if there is a mistake made by the litigant’s representative, it is not conclusive.  The court – in this case the chairman of the Tribunal being asked to exercise a power to order a review – had a discretion.  That discretion should be exercised on certain well-established principles, one of which must be: was there any mistake made at the original hearing?  It cannot be just to hold Mr Harber to the mistake of his representative if that mistake was induced in part by the failure of the [North London] Polytechnic solicitors to send all the relevant documents to the Tribunal so that the Tribunal was acting, at least in part, under a misapprehension, in part by a misunderstanding or misstatement of the law by the chairman of the Tribunal itself, and in part by an apparent refusal to look at the relevant cases which were put before the Tribunal in the correspondence and a refusal of the request for an opportunity to give oral submissions.  In my judgment the learned chairman, in refusing to grant a review here did not properly exercise her discretion.  The Employment Tribunal did not give proper consideration to the test that she should have applied.  I have no doubt that there was here a mistake and that the interests of justice do require a review.’
12. Mr Linden for the Respondents has referred us to Lindsay v Ironsides Ray [1994] ICR 384.  In that case the Tribunal had allowed a review following the failure of the Applicant’s representatives to make submissions on the issue of extending time under Section 68(6) of the Race Relations Act 1976, which had been raised before the Tribunal by the employers.  The Tribunal had observed that the representative was not a lawyer and that it was “apparent she was out of her depth”.  The employer’s appeal was allowed by this Court and at page 394, Mummery J said this:
‘The facts in the present case cannot be properly viewed as a ‘procedural mishap’ or ‘procedural shortcoming’ or ‘procedural occurrence’ of a kind which constitutes a denial to a party of a fair and proper opportunity to present a case.  The facts, as they appear to us, are that the applicant was represented at the first hearing by Mrs Grenham.  The solicitor representing the employers clearly raised before the industrial tribunal in his opening, as well as in his closing remarks, that there was an issue of extension of time under section 68(6).  The tribunal was aware of this and made a decision on the point.  The failure of Mrs Grenham to make any submission on the point and the failure of the tribunal to identify to Mrs Grenham the way in which it was considering its exercise of discretion did not, in our view, amount to denial of a fair opportunity to present an argument on a point of substance.  The fact that the tribunal thought it necessary, in its review decision, to make criticisms of Mrs Grenham’s ability indicated that the reason for granting a review was that, in the view of the industrial tribunal, the applicant’s case was not properly argued as a result of Mrs Grenham’s shortcomings.  Failings of a party’s representatives, professional or otherwise, will not generally constitute a ground for review.   That is a dangerous path to follow.  It involves the risk of encouraging a disappointed applicant to seek to reargue his case by blaming his representative for the failure of his claim.  That may involve the tribunal in inappropriate investigations into the competence of the representative who is not present at or represented at the review.  If there is a justified complaint against the representative, that be may the subject of other proceedings and procedure.  It is thus our view that the industrial tribunal erred in law in granting a review under rule 10(1)(e) of the Rules of Procedure 1985.’
13. We take the view that the facts of this case are in no way different from the situation as set out in the Lindsay decision.  There has not been a mistake, or a procedural mishap, or procedural shortcoming which constitutes a denial to a party of a fair and proper opportunity to present a case.  Submissions on Polkey deductions are very much the ‘bread and butter’ of many Tribunal hearings and if there was any shortcoming on the part of Mr Bourne, we cannot see that this entitled the Tribunal to review the decision for that reason.”

14.	In paragraph 16 the EAT held that even if the Tribunal had been justified in holding a review, it saw no reason why the Tribunal should have altered the percentage in the manner in which it did.  

15.	Miss Romney relies upon the overriding objective.  She stresses the fact that the mistake made was made by the Chairman as well as the parties and relies upon the comparatively small amount of money involved. 

16.	Mr Crawford points to the principle of finality of litigation and said that by the time of the review on 20 August 2003 the relevant yearly accounts of the company had been closed.  When we asked him if there was any particular prejudice to the respondent to which he wished to draw our notice he said there was not.  He said there was no procedural error here and issues of tax are the “bread and butter” of practitioners.  Failings of a party’s representatives will, as Mummery J said, not generally constitute a ground for review. Counsel for the appellant ought to have come ready to argue the point and ought to have known that tax was payable on an award for future loss of earnings. 

17.	Although this is not a case where a party has been denied a fair opportunity to present its case before the Tribunal, it seems to us that the “dangerous path” argument adverted to by Mummery J is less persuasive when, as in this case, the mistake was made by both parties and by the Chairman.   If the error is more than a minor one, that does not, in the light of Trimble prevent a review.  It being agreed that this error would have been corrected by the EAT if an appeal had been launched and a necessary extension of time given, it seems to us, in accordance with rule 10, that using the review procedure to remedy the error saves expense and helps to ensure that the matter is dealt with expeditiously.  As was said in British Midland Airways, an “appeal takes much longer and is much more expensive”.  On the facts of this case, we have no doubt that the “interests of justice” required that the error be put right at a review and that putting it right at a review would be dealing with the case “justly”.  
18.	We allow the appeal and order the respondent to pay the now agreed gross sum in respect of loss of future earnings.