Lycatel Services Limited v Robin Schneider

On an application to stay Employment Tribunal proceedings in favour of concurrent High Court proceedings, the question is which forum is most conveniently and appropriately suited to try the dispute. The tribunal must conduct a balanced assessment of all relevant circumstances. These include complexity, value, technical evidence, procedural suitability, costs, delay and any prejudice to the employee or worker.

There is no presumption that a claim must remain in the Employment Tribunal merely because it was commenced there or the claimant has a statutory right to bring it. The issue is not whether the tribunal is capable of deciding the claim, but whether the alternative forum is more appropriate. Where contractual issues of substantial value require precise pleadings, technical quantification evidence and determination of matters such as authority or shadow directorship, the High Court may be the appropriate forum.

The claimant brought Employment Tribunal proceedings for an alleged unauthorised deduction from wages. He claimed a contractual bonus of £7,995,124.89. The respondent denied that any contractual entitlement existed and issued High Court proceedings seeking negative declarations on the same dispute.

The respondent applied under rule 29 of the Employment Tribunal Rules for a stay of the tribunal proceedings pending the High Court claim. The East London Employment Tribunal refused the application. It considered that the claimant was entitled to choose the tribunal and that there was no factor making it an inadequate forum.

The respondent appealed. The central issue was whether the tribunal had applied the correct test when deciding which forum should determine the parties’ dispute.

1. Appeal allowed. The Employment Tribunal’s refusal to stay its proceedings was set aside. The tribunal had to apply the test in Bowater: taking account of all relevant circumstances, in which forum would the dispute most conveniently and appropriately be tried.

2. The tribunal instead treated the question as whether it was an adequate forum and proceeded on an impermissible presumption that it should hear a claim which the claimant had a statutory right to bring. That reproduced the error identified in Carter. A right to commence a claim in the tribunal does not confer an automatic right to have it determined there in preference to concurrent High Court proceedings.

3. The tribunal also failed properly to assess relevant complexity. If the claimant’s factual account were accepted, difficult issues could arise concerning the authority of a person who was neither a director nor employee of the respondent, the asserted shadow directorship or agency, contractual variation, conditions precedent, construction, certainty, consideration and quantification. It was wrong to reduce the case to a choice between competing oral accounts.

4. The tribunal further erred by treating the respondent’s High Court claim for negative declaratory relief as perverse, and its application as an attempt to dictate the forum. Such relief could sensibly resolve a real and present dispute. The respondent was entitled to commence High Court proceedings and seek a stay.

5. Exercising the discretion afresh, the EAT held that the High Court was the more appropriate forum. The claim was for nearly £8 million, involved potentially technical evidence and complex contractual and company-law issues, and required more precise identification of the claimant’s case. The claimant’s choice, possible delay and the differing costs regimes were considered. The respondent’s undertaking that the High Court claim would be subject to the Employment Tribunal costs regime was material and tipped the balance.

6. Pursuant to section 35 of the Employment Tribunals Act 1996, the EAT stayed the Employment Tribunal proceedings pending determination of the High Court claim.

• Employment Appeal Tribunal: Allowed the respondent’s appeal and replaced the Employment Tribunal’s refusal of a stay with an order staying the tribunal proceedings pending the High Court proceedings: [2023] EAT 81.
• East London Employment Tribunal: Employment Judge Housego, sitting alone, refused the respondent’s stay application on 8 August 2022.