Morgan Motor Company Limited v Morgan

On an application under Rule 38(2), relief from the automatic dismissal caused by breach of an unless order depends on a broad assessment of the interests of justice and the overriding objective. Relevant matters will commonly include the explanation for, seriousness and deliberateness of the default, prejudice, the prospect of a fair trial, and the significance of the unless order. No single matter is necessarily decisive.

An appellate court may interfere where the Employment Tribunal's reasoning shows that it omitted relevant considerations, included irrelevant ones, failed to perform the required balancing exercise, or reached a perverse result. In particular, the Tribunal must take account of the systemic importance of compliance with unless orders and finality in litigation.

The claimant brought claims for ordinary and automatic unfair dismissal and for protected-disclosure detriment. During preparation for a ten-day merits hearing, he failed materially to comply by the deadline with an unless order concerning disclosure. His claims consequently stood dismissed.

The Employment Tribunal later granted his application under Rule 38(2) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 to set aside that dismissal. It found that most disclosure had subsequently been provided, a fair trial was then possible, and costs were an appropriate sanction.

The employer appealed. The central issue was whether the Tribunal had properly exercised its discretion to grant relief from the sanction imposed for breach of the unless order.

1. Appeal allowed. The Employment Tribunal's decision granting relief from the dismissal sanction was unsafe and was set aside. The application for relief under Rule 38(2) was remitted for a fresh determination by a different Employment Judge.

2. The Rule 38(2) question was whether setting aside the dismissal was in the interests of justice, having regard to the overriding objective. It called for a broad discretionary assessment. The factors identified in Thind were relevant guidance, not an exhaustive or determinative checklist. A convincing explanation or special factor was not an additional mandatory threshold imported from Global Torch.

3. The EAT would not re-exercise a properly exercised discretion. It could intervene, however, where the Tribunal omitted relevant matters, considered irrelevant matters, failed to conduct the necessary balance, or reached a perverse conclusion.

4. The Tribunal had conducted some balancing exercise, but its reasons did not show proper consideration of the explanation for the whole period of default. More importantly, they did not bring into the balance the policy objective behind unless orders: compliance with Tribunal orders and the sound administration of justice. That objective was broader than a concern about opening the floodgates.

5. The Tribunal was not necessarily confined to considering whether a fair trial remained possible on the date the sanction took effect. But, if considering the position at the later reconsideration hearing, it had to decide whether that course was appropriate in the interests of justice, having regard to the original breach and finality in litigation. It also had to consider whether costs were a genuine alternative sanction if those costs would in any event be awarded.

6. The EAT could not say that refusal of relief was the only permissible outcome. The matter was therefore remitted for a new Tribunal to make its own findings and decision. The successful employer was awarded appeal fees of £1,600.

• Employment Appeal Tribunal: allowed the employer's appeal, set aside the grant of relief from sanction, and remitted the Rule 38(2) application to a different Employment Judge.
• Employment Tribunal: Employment Judge Kearsley granted the claimant relief from the automatic dismissal of his claims for breach of an unless order on 3 December 2014.