Ince Gordon Dadds Llp and Others v J Tunstall and Others: EAT 19 Jun 2019

Practice and Procedure – Stay – Paragraph 43(6) Schedule B1 Insolvency Act 1986
The Claimant had commenced Employment Tribunal (‘ET’) proceedings against eight Respondents. Subsequently, the first two Respondents (one of which had been the Claimant’s employer) went into administration and a stay was imposed on the proceedings under paragraph 43(6) Schedule B1 Insolvency Act 1986. Although accepting (absent the consent of the administrators or permission from the Companies Court) that stay must be remain in respect of the First and Second Respondents, the Claimant applied for the proceedings to be continued in relation to the remaining Respondents (the Third to Seventh being employees or agents of the First and/or Second Respondents; the Eighth Respondent being said to be a the relevant transferee of the First and/or Second Respondent’s business (or relevant part) under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’)). The ET agreed with the Claimant, holding that paragraph 43(6) did not prevent legal proceedings being continued in respect of stand-alone claims against other Respondents (those proceedings being pursued against the Third to Seventh Respondents by virtue of section 110 Equality Act 2010; against the Eighth Respondent under regulations 4 and 7 TUPE). The ET considered the potential prejudice the remaining Respondents might face, in particular in relation to disclosure (it being accepted that the First and/or Second Respondents would possess most of the relevant documentation) and privilege. It did not, however, consider these were issues that necessarily arose from the stay under paragraph 43(6) but, in any event, took the view that orders for disclosure could nevertheless be made against the First and/or Second Respondents under rule 31 ET Rules 2013; more generally, the ET did not consider that there was yet any evidence to suggest that disclosure/privilege issues would arise such as to give rise to any overwhelming prejudice against the Third to Eighth Respondents.
The Third, Fourth, Fifth, Seventh and Eighth Respondents appealed.
Held: dismissing the appeals
Notwithstanding the potential vicarious liability of the First and/or Second Respondent (whether by reason of section 6 Limited Liability Partnership Act 2000 or under section 109 Equality Act 2010) and the likely application of the doctrine of res judicata (understood as giving rise to a cause of action or to an issue estoppel), paragraph 43(6) Schedule B1 Insolvency Act 1986 did not require the ET to continue the stay in relation to the Third to Eighth Respondents; the issue was not one of jurisdiction but of case management discretion. The ET had taken into account the potential liabilities faced by the First and/or Second Respondents and the likely application of the doctrine of res judicata but had permissibly concluded that it was a matter of choice for the administrators as to whether they consented to the proceedings being continued against the First and/or Second Respondents in these circumstances: that was not a ‘choice fallacy’, as the Respondents contended as the option of consenting to the continuation of proceedings was expressly allowed by paragraph 43(6). As for the potential prejudice to the remaining Respondents, the ET had taken proper account of the risk to professional reputation and of the difficulties arising in respect of disclosure and questions of privilege. It had correctly identified that these were largely issues arising in the proceedings in any event, not as consequences of the stay. It had also been right to point to its power to make disclosure and information orders under rule 31 of the ET Rules 2013. The ET had, moreover, not discounted the possible problems that might arise but had decided it would be wrong to simply assume that this would necessarily arise be so, allowing that this might be a question to be revisited if there was actual evidence of prejudice faced by the Respondents.
[2019] UKEAT 0141 – 19 – 1906
England and Wales

Updated: 01 February 2021; Ref: scu.639217