New Asset Star Management Holdings Ltd v Evershed

The Court of Appeal dismissed the appellant's challenge to the Employment Appeal Tribunal's decision allowing an amendment to add an "automatic" unfair dismissal claim based on a protected disclosure under Part IVA of the Employment Rights Act 1996 (sections 43B, 43C and section 103A). The court held that the Employment Judge erred in concluding that the proposed amendment would require "wholly different" evidence from the pleaded "ordinary" constructive unfair dismissal claim and had thereby given excessive weight to prejudice and lateness. The appeal tribunal had correctly re-performed the case-management exercise and allowed the amendment because the pleaded grievances and third-party allegations meant that the factual inquiry would substantially overlap and case management could control any collateral expansion.

Background and parties. The claimant, Mr Evershed, a former fund manager, presented an ordinary claim of constructive unfair dismissal after resigning on 23 September 2008. He sought at a later stage to amend his pleaded claim to add an automatic unfair dismissal claim asserting that his grievance of 18 September 2008 amounted to a protected disclosure under Part IVA of the Employment Rights Act 1996.

Procedural history. At first instance Employment Judge Warren refused permission to amend at a pre-hearing review (Judgment sent 23 February 2009). The Employment Appeal Tribunal (Underhill J, President) reversed that refusal (order dated 31 July 2009, UKEAT/0249/09/CEA) and allowed the amendment. New Star appealed to the Court of Appeal.

Nature of the application. The application sought permission to amend pleadings to add an "automatic" unfair dismissal claim under section 103A ERA 1996, relying on qualifying disclosures as defined by sections 43B and 43C. The proposed addition carried potential significance because a successful protected-disclosure dismissal claim avoids the normal compensation cap in section 124 ERA 1996.

Issues framed by the court. (i) Whether Employment Judge Warren misdirected himself in law in refusing the amendment, in particular by concluding the amendment would require wholly different evidence; (ii) whether the appeal tribunal was entitled to re-perform the case-management exercise and allow the amendment; (iii) the relevance of the absence of a prior section 32 grievance under the Employment Act 2002 and the prejudice and lateness factors.

Court's reasoning. The Court of Appeal analysed the judge's brief reasons and the appeal tribunal's re-performance. It concluded the employment judge had not demonstrated a sound basis for saying the amendment would require wholly different evidence. The pleaded particulars already included broad "third party" allegations about the chairman's conduct and its effect on other fund managers and funds; those matters were properly part of the factual matrix in the ordinary constructive dismissal claim and therefore overlapped substantially with the elements required to determine whether qualifying disclosures had been made and were made in good faith. The judge therefore gave undue weight to the factors said to justify refusal (prejudice and lateness), and the Employment Appeal Tribunal had been entitled to allow the amendment subject to case-management controls. The Court of Appeal endorsed the appeal tribunal's re-performance and dismissed New Star's appeal.

Appeal dismissed. The Court of Appeal held that the employment judge had erred in law by concluding that the proposed protected-disclosure amendment would require wholly different evidence from the pleaded ordinary constructive dismissal claim. Because the original particulars already raised broad allegations (including about third parties), there was substantial overlap in the factual inquiry; the Employment Appeal Tribunal was correct to re-perform the case-management exercise and allow the amendment, subject to case-management control.

Employment Tribunal (London Central) – Employment Judge Warren refused permission to amend (oral decision sent 23 February 2009). Employment Appeal Tribunal – Underhill J (President) reversed and allowed the amendment (order dated 31 July 2009, UKEAT/0249/09/CEA). Court of Appeal – appeal by New Star dismissed [2010] EWCA Civ 870 (29 July 2010).