Esparon & Anor v Roucou

On a review application seeking to set aside a default judgment, an Employment Judge must not treat an inadequate explanation for delay as determinative. The assessment must also address the prospective merits of the proposed defence and the balance of prejudice between the parties.

Where those matters are arguably favourable to the respondent, the application should not be rejected summarily on paper. A review hearing is required so that the application can be determined on evidence.

The claimant obtained a default judgment in the Ashford Employment Tribunal after the respondents did not file an ET3 or attend the hearing. The judgment upheld employment claims and awarded compensation of £223,616.58.

After receiving notice of enforcement, the respondents applied out of time for a review. They contended that the claim had been sent to the wrong address, that they had never employed the claimant, and that they had therefore had no opportunity to defend the claim. Employment Judge Sage refused the review application on paper, principally because it was late and it was not just and equitable to extend time.

The respondents appealed. The issue was whether the review application could properly be rejected by considering delay alone.

1. Appeal allowed. The Employment Judge erred in law by treating the respondents’ explanation for their delay as the sole basis for refusing the review application.

2. Under rule 33 of the Employment Tribunal Rules, an application to review a default judgment requires a broader assessment. Following Pendragon v Copus [2005] ICR 1671, failure to give a good reason for not entering a response in time is not determinative. The tribunal must also consider the prospective merits of the defence and the balance of prejudice.

3. On the material before the Appeal Tribunal, each matter was at least arguable. The claim had apparently been served at the wrong address; the respondents asserted a complete defence that the claimant had never been their employee; and they faced a substantial award without having had an opportunity to contest the claim. The claimant’s corresponding prejudice was the loss of an award that might not survive a properly contested hearing.

4. The review application could not therefore properly be rejected summarily on paper. The Appeal Tribunal declined to set aside the default judgment itself. It remitted the review application to a different Employment Judge for a fresh hearing on evidence and in accordance with the relevant principles.

• Employment Appeal Tribunal: Allowed the respondents’ appeal and remitted the review application for a fresh hearing before a different Employment Judge.
• Employment Tribunal (Ashford): Employment Judge Sage refused the respondents’ out-of-time review application by a judgment with reasons dated 12 December 2011.
• Employment Tribunal (Ashford): Entered default judgment for the claimant on 28 August 2010 after the respondents did not lodge a response or attend the hearing.