Appeal No. UKEAT/0318/13/SM

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

		At the Tribunal
		On 10 September 2013

Before
HIS HONOUR JUDGE McMULLEN QC
(SITTING ALONE)

QANTAS CABIN CREW (UK) LTD	APPELLANT

MS C ALSOPP AND OTHERS	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR MARCUS PILGERSTORFER
(of Counsel)
Instructed by:
Hill Dickinson LLP Solicitors
The Broadgate Tower
20 Primrose Street
London
EC2A 2EW
	
For the Respondents	DEBARRED	

SUMMARY

CONTRACT OF EMPLOYMENT – Damages for breach of contract
PRACTICE AND PROCEDURE – Striking-out/dismissal

The law relating to the construction of the Claimants’ contracts was set out by the EAT in Qantas v Lopez.  The Employment Judge erred in law in failing to follow binding precedent and in four other ways.

An Employment Tribunal has no jurisdiction to hear a claim in connection with living accommodation: EJO 1994 Art 5.  

The Claimants were debarred and there was no resistance to the EAT determining the Respondent’s strike-out application without remission to the Employment Tribunal.  The claims were struck out as having no reasonable prospect and an abuse of process.

HIS HONOUR JUDGE McMULLEN QC

1.	The central character in this appeal is not a person but a Judgment: Qantas Cabin Crew (UK) Ltd v Lopez and Anor [2013] IRLR 4.  This is a Judgment of the EAT where I sat with Mr E Evans CBE and Mr J R Rivers CBE and gave Judgment in favour of Qantas.  The case has become a central character for it speaks directly to us on the submissions made in this case about the principles to be applied and the facts.  It is a living document, because reliance is placed upon it by the Appellant in this case, Qantas.  The Claimants in the case, Ms Alsopp and others, are different from the Claimants in the first case, which I shall call Lopez (there were two in that case) and the central issue is: how much can we rely on Lopez in order to determine the issues in this case?  As before, Mr Marcus Pilgerstorfer of counsel appears for Qantas, the Respondent.  The Claimants were represented below by counsel but are debarred for failure to comply with orders of the EAT from appearing in this court or playing any part in it.

Introduction
2.	The approach of Mr Pilgerstorfer has been one of professionalism and generosity, recognising there is no one standing beside him to argue against the points, and for that reason he has taken me in great detail to the written submissions that were made by counsel for the Claimants to the Employment Tribunal, the subject of this appeal.  They run to some 16 pages.  In seeking to uphold Lopez, Mr Pilgerstorfer has trodden a very fine line between professional submission and the avoidance of sycophancy, because he says Lopez is correct and binding.  In exchange, I hope that I will avoid amour propre in my approach to Lopez and treat it with the same dispassionate analysis as Mr Pilgerstorfer does from his perspective.

3.	It is an appeal by Qantas against a Judgment at a Pre‑Hearing Review of Employment Judge Hardwick, sitting at Reading for a day, for which reserved Judgment and Reasons were sent on 8 May 2013.  The Respondent has sought to strike out the ten claims that were then before the Tribunal on a range of grounds broadly summarised as being, “This is a repeat of Lopez”, where the Claimants failed, and the Claimants in this case should not be allowed to succeed, for they had no reasonable prospect of success.  The Employment Judge refused to allow the application and refused to order its default, the lesser order of a deposit, and made a number of other orders.

4.	The claims the Alsopp Claimants brought were of breach of contract, for the Claimants withdrew their claims under section 23 of the Employment Rights Act of unlawful deductions from wages; these were dismissed.  These were the provisions relied on by the Lopez Claimants.  So, the distinction at once is one of law, in that the Claimants here are relying upon a different legal vehicle.

5.	The update of the Claimants’ position is that of the original ten, three now have withdrawn and their appeals are dismissed: Ms Redmond, Miss Vaisanen and Miss L Davies.  There is in the Notice of Appeal a very helpful table in paragraph 29 showing the factual circumstances of the original ten.  The three who have withdrawn do not change the position, in that there are still claimants illustrating slightly different factual backgrounds of the Claimants.  Before the PHR the Claimants had been represented by counsel, but I am not certain whether he played any further part after this.

6.	The issue before the Judge was to decide under rules 18(7)(b) and (c) whether the claims had no reasonable prospect of success and, if not, they would be dismissed.  The Judge heard no evidence but heard submissions from counsel, considered the documents and Lopez.  The Judge decided that Lopez did not control his decision and in various ways distanced himself from it, finding passages in Lopez were either obiter dicta, or that the documents he was considering were different from those in Lopez, and he was not bound by it.  The Respondent appeals.

7.	When this appeal came in, it was accompanied by a letter from the Respondent indicating a preference for me to hear the case for the saving of costs.  That might perhaps indicate that Qantas thought it might get an easy result, and so I directed specifically the Claimants’ attention when providing a Respondents’ answer.  Answer came there none, and so I agreed when I looked at the matter again that it would be in accordance with the overriding objective and not in any way unfair to the Claimants if I should hear the case.  As it happens, they failed to follow any of the directions I gave, and they have been debarred.

The legislation
8.	The relevant provision of the legislation is not in dispute now.  The Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994, Article 5(b), provides for a claim to be made of breach of contract in certain narrow circumstances.  Generally speaking, contract claims do not appear before the Employment Tribunals – the 1994 order so provides – but there is then an exception:

“This article applies to a claim for breach of a contractual term of any of the following descriptions—
[…] (b) a term imposing an obligation on the employer or the employee in connection with the provision of living accommodation.”

9.	If that provision applies, Article 3(b) deprives the Tribunal of jurisdiction to hear the claim.

The facts
10.	The facts can be readily obtained from the Lopez Judgment, and I will not recite them.  A relevant issue is whether or not the Claimants attended a tax briefing. It is fair to say that three of them did not. But they had the calculation sheets, and all had access to the questionnaire that was referred to in Lopez. To a limited extent there was a distinction between the Lopez Claimants and three of the Alsopp Claimants.

11.	The sequence in which the claims emerged before this Tribunal is important to note.  All the Claimants – that is, the Lopez and Alsopp Claimants – expressed grievances internally at about the same time in the early part of 2011; they were rejected.  The Lopez Claimants then filed claims, and witnesses were considered in the Lopez case.  One witness, Ms Azoo, provided a witness statement but was not called.  She was one of the original cohort of the Alsopp Claimants.  All of those waited for the outcome of the Lopez Employment Tribunal before Employment Judge Stacey and members.  When that Judgment was promulgated, the Alsopp Claimants presented their claims; these were stayed, because the Judgment was the subject of an appeal to the EAT, which became Lopez.  The Judgment in Lopez came out, and these cases then were revived.  The stay was lifted, and the PHR was held.

Discussion of the grounds
12.	Because the Claimants are not here, it is convenient to deal with the six grounds of appeal in the order in which they have been produced, and I will indicate the view I take of the Tribunal’s Judgment at the same time.  The outcome sought by Mr Pilgerstorfer is that if he succeeds on any one of these points, the Judgment should be set aside, the discretion as to whether to strike out the claims should be exercised by me, and, in his submission, I should.  I will take his headings.

(1) Wrong contracts
13.	It is plain that the Judge operated on the basis of the wrong contracts, for it was common ground the Claimants were on contracts akin to the October contracts in Lopez.  Every one of them had been given the offer in identical terms and had signed them as being a complete contract containing the terms.  It included living away from home allowance (LAFHA) which, as I explained earlier in Lopez, comprises accommodation and food.  The document put in front of me is that of Ryan Fiechner.  He certifies that he has received the document, he knows he is entitled to independent advice and has had an opportunity to take it, and accepts employment on the basis that it is offered.  Mr Pilgerstorfer submits that the Judge got the wrong provision and failed to follow faithfully what was common ground before him as to what the terms were.  The relevant clauses were similar but not identical to the October contracts in Lopez, but the Judge made a fundamental error, for it is not clear which particular provisions he was adjudicating upon.  In my judgment, the Judge should have made that clear.

14.	As it happens, the decision of the Lopez EAT was that whether it was the October or the November term the meaning was the same, and the meaning is that the Claimants did not get LAFHA on top of basic salary.  Such differences as there were in the Alsopp contracts are, in my judgment, insignificant, for I have been shown an analysis of the contracts with tracked changes highlighted. So the first error by the Judge was in failing to identify the document he was construing and holding that there were differences which were wholly insignificant.

(2) Failure to follow and apply Lopez
15.	The formal position is that a Judgment of the EAT on a relevant principle is binding on all Employment Tribunals in England and Wales and in Scotland too. Unless it could distinguish Lopez the Employment Tribunal was bound to follow it.  The sole difference between the facts found by the Judge and the facts in Lopez is that the Claimants did not attend tax briefings.  It is rare for an appellant in this court to succeed on a perversity appeal, but this is as plain an illustration of one as one could see.  Six of the Claimants did attend, and the documents were provided to all of them.  The finding none attended is perverse, that being the single difference.  If that was the reason why the Judge did not follow Lopez, then, with respect, he erred, and there was no practical difference between them.

16.	It will be noted that the discretion given to a Judge is generally not interfered with unless he is wrong in principle.  He did not, however, hear any evidence in this case, and I am able to look at the material that was before him in a straightforward way without any nuances that might occur had there been evidence.  The factual distinction that he saw is wholly insignificant.  It is certainly wrong in respect of six of the ten, but the others were all invited to the tax briefing.  All the Claimants cited in their claims the Q&A document, which itself includes specific reference to the tax briefings. There was no basis for that factual distinction.

17.	Further, it is contended by Mr Pilgerstorfer that the Judge was wrong to hold that the rulings about the differences between the October and November contracts were obiter dicta in respect of the October contracts.  Since I wrote this Judgment, I am probably the best person to ask whether what I was saying on behalf of the EAT was part of our decision or was an aside; it was the former.  The construction of the documents that we came to was by reason of us taking a simpler route (see paragraph 47 of Lopez); the meaning is the same.  Thus the construction of the October words and the November words was integral to the decision; the construction that the two had the same meaning was a part of the decision and was not an aside from which an Employment Tribunal was free to depart.

(3) Legally erroneous approach to facts and the need for a trial
18.	Since this case was decided on the papers, with submissions, the key Judgment of assistance is Khatri v Co‑operative Centrale RaiffeisenBoerenleenbank BA [2010] IRLR 715, where Jacob LJ said the following:

“3.6. [Quoting from Lewison J in Nigeria v Santolina Investment [2007] All ER (D) 103]  ‘Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without a fuller investigation into the facts at trial than is possible or permissible on an application for summary judgment.  Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.’
4. I would only add this – that one has to be careful not to take the last point too far when the case concerns construction of a written contract.  The factual matrix is key to understanding what the parties must have intended by the words they used.  But it far from follows that the need to know what that matrix was requires a full trial with discovery, evidence and cross‑examination of witnesses.  If there is no actual conflict of evidence on a relevant point of background matrix, it is only when there really are reasonable grounds for supposing that a fuller investigation of the facts as to the background might make a difference to construction that the court should decline to construe the contract on a summary judgment (including strike out) application.”

19.	Thus, while there ought not to be a rush to strike out cases, it is proper to do so when there are no relevant disputes of fact; the Judge can look at the material and make a decision upon it.  In my respectful opinion, the Employment Judge here found questions of fact that were insignificant and took his mind away from the simple construction of the documents and for that reason made an error.  He also made an error, which we pointed out in Lopez, in considering and putting at the forefront of his findings the views of the Claimants as to what the agreements meant.  This of course is wrong, as Hoffmann LJ reiterated in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] WLR 896 at 913A‑B.

(4) Failure to construe the applicable wording
20.	The wording here is of LAFHA.  Grateful as I am to Mr Pilgerstorfer for the exercise that has been done, my view remains the same, which is that there was only one construction of LAFHA; it is the one we gave in Lopez, and it should have been applied in this case.  The short point is, Ms Hooper was wrong to say, “You get LAFHA on top of base salary”.

(5) The 1994 Order
21.	Mr Pilgerstorfer raises a jurisdictional point here, which is, as I have cited above, that the provisions do not apply to living accommodation.  Without any opposing argument, he seems to me to be right.  This is a very wide provision – “in connection with”– and there can be no doubt that the eponymous LAFHA refers to the provision of living accommodation. On the Claimant’s case it relates to a term which imposes an obligation on Qantas in connection with the provision of living accommodation; that is, LAFHA will be paid.  This part of Mr Pilgerstorfer’s argument refers only to the accommodation part of LAFHA and not to the food, otherwise it would have been a knockout of all the claim.

22.	He relies upon the Judgment of the Court of Appeal in Barclays Bank PLC v Commissioners for Her Majesty’s Revenue & Customs [2007] EWCA Civ 442 for a broad approach to be taken to the words “in connection with”.  One can either look at it as meaning “having to do with”, or one can look at the connecting words (see the Judgment of Arden LJ at paragraphs 18 and 20).  By either route, in my view, he is right.  In Lopez itself we looked at what I regard as an analogous provision under the unauthorised‑deduction claims that were being made there.  It can be seen from the Judgment in London Borough of Southwark v O’Brien [1996] IRLR 420 that a wide approach is taken to the meaning of expenses (see Lopez at paragraph 56).  It is quite appropriate to read across from one employment statute in 1994 to another in 1996 when looking at the way in which certain benefits are to be excluded from the protective regime.

23.	I consider that the claims in respect of accommodation are squarely within the exception and there was no jurisdiction to hear these claims.  It may be that they overlap into the food – there is no separate claim in that case – but, in my judgment, the jurisdictional point raised by Mr Pilgerstorfer defeats most of these claims.  He did not extend it to the part of the allowance for food, so that part of the claim would otherwise live on.

(6) Estoppel, abuse and collateral Action
24.	Mr Pilgerstorfer, in a scholarly article, draws upon the principal authority, which is Johnson v Gore Wood & Co [2002] 2 AC 1 (particularly in the speech of Bingham LJ at page 31) in order to indicate the source of his submissions. The first is that the Claimants are the privies of Mr Lopez and Ms Hooper and therefore they are issue‑estopped from denying the conclusion in Lopez.  The source for this is the Judgment in Gleeson v J Wippell & Co Ltd [1977] 3 All ER 54, Megarry J, Vice‑Chancellor, where he defines who are privies, the proposition being that the Lopez and the Alsopp Claimants all had an identity of interest.

25.	I agree with that proposition according to the second limb of Megarry J’s Judgment.  It was extended to include those who might have brought a case but who stood by while litigation was going on.  The Court of Appeal in Skyparks Group PLC v Marks [2001] EWCA Civ 319 followed Lord Penzance in Wytcherley v Andrews [1871] LR 2 PMM by quoting the following:

“[…] that if a person, knowing what was passing, was content to stand by and see his battle fought by somebody else in the same interest, he should be bound by the result, and not be allowed to re‑open the case.  That principle is founded on justice and common sense, and is acted upon in courts of equity, where, if the persons interested are too numerous to be all made parties to the suit, one or two of the class are allowed to represent them; and if it appears to the court that everything has been done bona fide in the interests of the parties seeking to disturb the arrangement, it will not allow the matter to be re‑opened.”

26.	There is then general approval of Wippell.  In my judgment, that is precisely the description apt for these Claimants.  The chronology I have given of their involvement and their interaction with the Lopez case makes that clear.  They stood by, they could have entered into the litigation, and, in my judgment, they are privies in the proper sense and may not start this litigation again.

27.	I also take the view that Mr Pilgerstorfer is correct when he raises the classic doctrine in Henderson v Henderson (1843) 3 Hare 100 as applied in Johnson and, further, that it is an abuse of process in its general sense because this represents a collateral attack on the Lopez Judgment on the lines set out by Gray J in Bezant v Hans Anders Rausing & Ors [2007] EWHC 1118 at paragraphs 126 and 128.

Conclusion
28.	Pulling all those threads together, I accept Mr Pilgerstorfer’s cogent arguments on all six grounds, which is sufficient to defeat all of the cases, except with the short reservation in respect of food allowance under ground 5.  The Judge erred in all six respects.  What to do?  The options are send the matter back to the Judge, send the matter to another Judge or decide it myself.  As I indicated, it was Mr Pilgerstorfer’s ambition that I should do it to save further time and money; it is in accordance with the overriding objective, and it avoids ping‑pong, as the Court of Appeal put it in Bournemouth University Higher Education Corporation v Buckland [2010] EWCA Civ 121, between the ET and the EAT.  Since this case was determined on no evidence, there is as much material before me as there was before the Employment Judge, indeed more, because I tried Lopez.  In my judgment, there is no reasonable prospect of these cases succeeding, and the only correct answer is to strike them out, so that is what I will do.  I would very much like to thank Mr Pilgerstorfer for his arguments this afternoon.