Addison Lee v H Afshar & Ors

The Employment Appeal Tribunal dismissed Addison Lee’s appeals against deposit orders made under rule 39 of the Employment Tribunals Rules of Procedure. The EAT held that an employment tribunal may, when considering a rule 39 application, have regard to the outcome of prior litigation on identical facts and arguments even where the parties are not identical; the rule in Hollington v Hewthorn does not exclude such material from a non‑binding, preliminary merits assessment under rule 39. The EAT emphasised that the strike‑out test differs from the test for imposing deposit orders and that rejection of strike‑out does not preclude deposit orders.

The tribunal’s staged approach to identifying beneficiaries and capping total deposits was within case‑management powers and lawful. The judge was entitled to make proportionality and affordability enquiries (including a limited review of publicly available accounts) and to adopt a broad assessment of likely costs as part of the proportionality exercise. The tribunal was also entitled to decline to determine limitation or funding (damages‑based agreement) issues as part of the rule 39 decision; limitation and funding arrangements may be considered later when liability and costs consequences are finally decided.

Background and parties: Addison Lee Limited appealed deposit orders made by Employment Judge Tynan against it in three consolidated sets of proceedings brought by hundreds of drivers (most represented by Leigh Day) who alleged limb (b) worker status under section 230(3)(b) of the Employment Rights Act 1996 and associated WTR and NMW claims. The deposit orders targeted specific arguments in Addison Lee’s Amended Grounds of Response (paras 11/11(i); 15–16; 30–33) and were made after the earlier Lange proceedings in which three drivers had succeeded; the Lange findings had been upheld on appeal.

Nature of the application: The current proceedings were appeals against (i) refusals to strike out certain parts of Addison Lee’s Amended Grounds of Response and (ii) the making of deposit orders under rule 39. The deposits ordered were capped in total sums (£75,000; £25,000; £25,000) and applied to named claimants driving in the period identified by the Judge.

Issues before the EAT: The EAT considered whether the Employment Tribunal had erred in: (1) relying on the Lange findings for a rule 39 assessment contrary to Hollington v Hewthorn; (2) making deposit orders after refusing strike‑out; (3) making staged/inchoate orders that initially did not identify beneficiaries; (4) proceeding where claimants did not provide an initial beneficiary list; (5) checking publicly available account information; (6) relying on anecdotal briefing fee evidence; (7) proportionality and alleged punitive effect; (8) making orders where some claimants had damages‑based agreements; (9) failing to take limitation into account; and (10–11) procedural/substantive errors in Decision 2 concerning reconsideration and limitation.

Court reasoning: The EAT reasoned that rule 39 requires a summary, non‑binding evaluation of whether a specific allegation or argument has little reasonable prospect of success and is therefore distinguishable from a trial context in which Hollington bars admission of prior findings. Where prior proceedings involved the same facts and the same party resisted the claim, those earlier findings are admissible as relevant indicators in the preliminary rule 39 assessment. The differing legal standards for strike‑out and deposit orders mean that refusing strike‑out does not make deposit orders impermissible. The tribunal lawfully exercised case‑management powers in making provisional orders, capping totals and later identifying named beneficiaries; the final orders (Decision 3) named claimants and set payment deadlines. The judge was entitled to carry out a high‑level proportionality and affordability appraisal, including limited review of publicly available accounts and experience‑based estimates of likely costs, and to keep the rule 39 process summary rather than turning it into a mini‑trial. The tribunal could properly leave limitation and the validity of damages‑based agreements to be addressed later at liability and costs stages.

Appeal dismissed. The EAT held that the Employment Tribunal acted within its discretion in making deposit orders under rule 39. Prior findings from the Lange litigation were admissible as relevant indicators in a non‑binding preliminary merits assessment; the tests for strike‑out and deposit orders differ; the tribunal had jurisdiction to make staged directions and to consider proportionality and affordability; and limitation and damages‑based agreement issues need not be resolved at the rule 39 stage.

This appeal challenges three decisions of Employment Judge Tynan (Decisions 1, 2 and 3) following preliminary hearings (30–31 March 2023; reserved Decision 1 sent 17 May 2023; further hearing 19 July 2023 with Decisions 2 and 3 sent 15 August 2023). The appeals arise in consolidated Employment Tribunal proceedings (multiple EA case numbers) in which many claimants rely on the earlier Lange litigation, itself considered on appeal (see Addison Lee Ltd v Lange and others [2021] EWCA Civ 594) and in the context of Supreme Court authority in Uber BV v Aslam [2021] UKSC 5 discussed in the judgment.