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STRIKING THE RIGHT BALANCE: KIERAN WILSON ON STRIKE OUT AND DEPOSIT ORDER APPLICATIONS IN THE EMPLOYMENT TRIBUNAL

Employment lawyers, particularly those acting for respondents, will be used to having case strategy discussions about whether to apply for strike out or a deposit order in respect of a claim. Clients are often keen to make such applications, seeing them as an opportunity to dispose of claims at an early stage, thereby avoiding cost and inconvenience.

Frequently, however, the situation is more nuanced, and the possible pitfalls of such applications may outweigh the perceived advantages. That is particularly true when the application relates to a claim for discrimination, which Tribunals are particularly reluctant to strike out. This article provides a reminder (and, perhaps, an update) to the position regarding such applications, as well as offering some strategic and practical considerations.

The Tribunal rules

The key powers of the Tribunal which are relevant for the purposes of this article are contained in rule 37 and rule 39 Employment Tribunals Rules of Procedure 2013.

Rule 37(1) provides the following in respect of strike out:

“At any stage of the proceedings, either on its own initiative or on the application of a party, a Tribunal may strike out all or part of a claim or response on any of the following grounds—
 (a) that it is scandalous or vexatious or has no reasonable prospect of success;”

Rule 39(1) deals with deposit orders:

“Where at a preliminary hearing (under rule 53) the Tribunal considers that any specific allegation or argument in a claim or response has little reasonable prospect of success, it may make an order requiring a party (“the paying party”) to pay a deposit not exceeding £1,000 as a condition of continuing to advance that allegation or argument.”

The orthodox position: Anyanwu, Ezsias etc.

The general caution against striking out discrimination claims is something that appears to be indelibly etched in the minds of both employment practitioners and employment judges alike. The most commonly cited authorities are as follows:

  • Anyanwu v. South Bank Student Union [2001] ICR 391 at [24], per, Lord Steyn:

    “For my part such vagaries in discrimination jurisprudence underline the importance of not striking out such claims as an abuse of the process except in the most obvious and plainest cases. Discrimination cases are generally fact-sensitive, and their proper determination is always vital in our pluralistic society. In this field perhaps more than any other the bias in favour of a claim being examined on the merits or demerits of its particular facts is a matter of high public interest.”

And at [37] per Lord Hope

“I would have been reluctant to strike out these claims, on the view that discrimination issues of the kind which have been raised in this case should as a general rule be decided only after hearing the evidence. The questions of law that have to be determined are often highly fact-sensitive. The risk of injustice is minimised if the answers to these questions are deferred until all the facts are out. The tribunal can then base its decision on its findings of fact rather than on assumptions as to what the claimant may be able to establish if given an opportunity to lead evidence.”

“It would only be in an exceptional case that an application to an employment tribunal will be struck out as having no reasonable prospect of success when the central facts are in dispute. An example might be where the facts sought to be established by the claimant were totally and inexplicably inconsistent with the undisputed contemporaneous documentation. The present case does not approach that level.”
There are, however, clear acknowledgments in both of those cases that strike out may be appropriate in some circumstances, with Lord Hope in particular observing that, “[t]he time and resources of the employment tribunals ought not to taken up by having to hear evidence in cases that are bound to fail” – see Anyanwu at [39], and also Ezsias at [29]. Nevertheless, the practice which has developed is that Tribunals are generally very reluctant to strike out discrimination claims, particularly where there is a dispute of fact.

While the test for making a deposit order is necessarily lower than for strike out, these authorities tend to colour a Tribunal’s approach to assessing the merits of a discrimination claim at an interim stage.

 

A shift towards greater flexibility?

Recent authorities may indicate that a slightly more flexible and pragmatic approach is appropriate, stressing that it is a matter for the Tribunal’s judgment to decide whether a claim should be struck out. 

The question was considered at EAT level by Langstaff P in Chandhok v. Tirkey [2015] ICR 527. Citing Anyanwu, his Lordship went on to say at [20]:

“This stops short of a blanket ban on strike-out applications succeeding in discrimination claims. There may still be occasions when a claim can properly be struck out—where, for instance, there is a time bar to jurisdiction, and no evidence is advanced that it would be just and equitable to extend time; or where, on the case as pleaded, there is really no more than an assertion of a difference of treatment and a difference of protected characteristic which (per Mummery LJ in Madarassy v Nomura International plc [2007] ICR 867 , para 56):

“only indicate a possibility of discrimination. They are not, without more, sufficient material from which a tribunal ‘could conclude’ that, on the balance of probabilities, the respondent had committed an unlawful act of discrimination.”

Or claims may have been brought so repetitively concerning the same essential circumstances that a further claim (or response) is an abuse. There may well be other examples, too: but the general approach remains that the exercise of a discretion to strike out a claim should be sparing and cautious.”

The position was considered further by the Court of Appeal in Ahir v. British Airways Plc [2017] EWCA Civ 1392. While acknowledging the weight of the older authorities, Underhill LJ stated at [16]:

“Employment tribunals should not be deterred from striking out claims, including discrimination claims, which involve a dispute of fact if they are satisfied that there is indeed no reasonable prospect of the facts necessary to liability being established, and also provided they are keenly aware of the danger of reaching such a conclusion in circumstances where the full evidence has not been heard and explored, perhaps particularly in a discrimination context. Whether the necessary test is met in a particular case depends on an exercise of judgment”

It is also apparent from the judgment in Ahir – at [21] and [23] – that the “inherent implausibility” of the claimant’s case was something which Underhill LJ considered the Tribunal could properly take into account in deciding whether to strike out the claim.

The above authorities (coupled with the dicta in Anyanwu at [39] and Ezsias at [29]) arguably provide more scope for the argument that the Tribunal should more often grasp the nettle and strike out hopeless claims (or, as a lesser alternative, to make a deposit order). The battle will often continue to be an uphill one, and in practice many Tribunal judges continue to follow the better-worn path established by the mantras of Anyanwu and Ezsias. But Tribunals may now begin to be more responsive to these sorts of applications than they have previously been.

Strategic considerations and practical tips

Black-letter law aside, there are a number of strategic and practical considerations for a party considering making an application for strike out or deposit order. These include:

  • The fact that a party considers that the other side’s case is untrue or fabricated does not necessarily mean that the case is ripe for strike out or deposit order. While it is clear that the Tribunal can consider the plausibility of a party’s case when considering such applications, the factual truth or otherwise of a party’s claim is something which will usually require determination by a Tribunal at trial. If the Tribunal finds that the party’s case was untrue or fabricated, this might be reflected in a successful costs application following determination of liability.

  • If it is likely that a trial is going to go ahead in any event (for example, because there are causes of action which are not capable of being struck out), the practical impact of an application should be weighed up. It may shave time off the trial listing, but the inconvenience and cost of preparing for an additional Preliminary Hearing, which will often be necessary, may outweigh that benefit. In the case of deposit orders, if there is doubt as to the deterrent effect of the order, there may be little practical impact of obtaining the order other than for the benefit of the costs consequences in rule 39(5).

  • A failed application can have the effect of giving a party a sense of victory, “putting the wind in their sails” and encouraging them to pursue the claim further. If the intention is to try and settle the claim, this can often be undermined by an unsuccessful strike out or deposit order application.

  • If the decision is made to proceed with an application for strike out, it may be possible to have the application heard at a case management Preliminary Hearing. If that is the desired course, the party should write to the Tribunal well in advance of the hearing, so that the Tribunal – if it decides to hear the application then – can give the necessary notice to the other party. It is no good writing two weeks in advance, as that is the length of notice the Tribunal is required to give, and most Tribunal centres are slow in dealing with correspondence. While no formal notice needs to be given of a deposit order application, the Tribunal is likely to be far more amenable to hearing the application if the issue is raised well in advance.

The decision whether to make an application for strike out or deposit order is therefore, in many ways, as much a strategic one as it is a legal one.

Conclusion

There will, of course, always be discrimination cases in which strike out and deposit order applications are entirely appropriate and in which they will be successful. These are likely to include claims where there is nothing more than assertion of difference of treatment and difference of protected characteristic (per Madarassy), or where the claim as framed is simply implausible (per Ahir), as well as the more typical cases where there are limitation issues etc. (as mentioned in Chandhok).

But it is important, when deciding whether to make such an application, both to realistically assess the likelihood of its success, and also to consider the longer-run strategic implications of the application (particularly an unsuccessful one). While this might make litigation feel more like a marathon than the sprint that clients would like it to be, the benefits of a more measured and considered approach are potentially considerable.

Kieran Wilson is a specialist employment and commercial law practitioner. He is frequently instructed to appear in the Employment Tribunal for both Claimants and Respondents, and has a particular interest in discrimination and whistleblowing matters.

Posted: 26.03.2019 at 10:42
Tags:  Comments  Employment Law
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