In Addison Lee Limited v Afshar and others [2014] EAT 114, the Employment Appeal Tribunal (‘EAT’) has given important guidance on the principles which govern the making of deposit orders under rule 39 of the Employment Tribunals Rules of Procedure and has considered the appropriateness of deposit orders in a case involving multiple claimants where some of the issues to be determined had been decided against the respondent in earlier proceedings involving different claimants.
Factual background
The Claimants are or were in the past engaged by Addison Lee (‘AL’), the well-known provider of private hire services, as drivers. They have brought proceedings in the Employment Tribunal claiming that they are or were workers within the meaning of section 230(3)(b) of the Employment Rights Act 1996 (‘limb (b)’) and the related provisions of the Working Time Regulations 1998 and the National Minimum Wage Act 1998.
The Claimants’ claims were preceded by three earlier claims presented by Mr M Lange and two other AL drivers (‘the Lange claimants’), which were upheld in September 2017 by an employment tribunal presided over by Employment Judge Pearl (‘the Pearl Tribunal’). The Pearl Tribunal concluded that the Lange claimants were limb (b) workers and that they were entitled to be paid as workers for the whole period of time during which they were logged on to AL’s operating system. AL appealed against the Pearl Tribunal’s decision but its appeal was dismissed by the EAT on 21 November 2018. The Court of Appeal refused AL’s application for permission to appeal on 22 April 2021, holding that the appeal had no reasonable prospect of success in light of the Supreme Court’s decision in Uber BV v Aslam and others [2021] ICR 657.
AL’s amended grounds of resistance (‘AGoR’) in the Claimant’s claims deny that the Claimants were limb (b) workers at any point during the periods in which they have worked for AL, including periods of time when AL’s business model and working arrangements were the same as those considered by the Pearl Tribunal. AL also contends that the Claimants’ working time was at all material times limited to the period from when the driver picks up a customer to when the customer is dropped off at their destination.
Claimants’ application to strike out or for deposit orders
The Claimants made an application to strike out certain paragraphs of AL’s AGoR on the ground that they were inconsistent with the findings of the Pearl Tribunal and therefore an abuse of process. They also invited the tribunal, in the alternative, to make deposit orders in respect of the arguments in question.
The Employment Judge (‘EJ’) declined the Claimants’ application to strike out the relevant arguments but decided to make deposit orders in respect of them in favour of any claimants who worked for AL during the period considered by the Pearl Tribunal in its decision (1 July 2014 to 24 May 2016). In concluding that the relevant arguments fell short of being an abuse of process, the EJ took into account the rule in Hollington v Hewthorn [1943] KB 587, in which it was held that findings of fact made in earlier proceedings are not admissible as evidence of the facts so found in later proceedings, if one or more of the parties in the later proceedings are different.
Although unwilling to strike out any part of AL’s AGoR, the EJ held that AL has little reasonable prospect of persuading a new Tribunal to arrive at different conclusions in relation to essentially the same business model and working arrangements as were considered by the Pearl Tribunal, particularly when the Pearl Tribunal’s finding that the drivers were limb (b) workers when logged on to AL’s operating system had been upheld by the EAT and Court of Appeal.
The EJ limited the total amounts of the deposits which AL was ordered to pay to £75,000 in respect of one set of arguments and £25,000 in respect of each of two other sets of arguments. The deposit orders were finalised by the Judge at a later preliminary hearing, by which time the parties had agreed a list of the claimants who had worked for AL during the period 1 July 2014 to 24 May 2016. 329 claimants were ultimately agreed by the parties to be beneficiaries of the deposit orders.
AL’s appeal against deposit orders
AL appealed against the deposit orders on numerous grounds. Of these, the most important were (i) that the EJ had erred in taking into account the findings of fact made by the Pearl Tribunal when making the deposit orders, because to do so was contrary to the rule in Hollington v Hewthorn; (ii) that the deposit sums ordered by the Judge were penal and did not accord with the principle that a deposit order should be proportionate, as explained by the EAT in Wright v Nipponkoa Insurance (Europe) Ltd UKEAT/0113/14 (unreported); (iii) that the EJ ought not to have made deposit orders in favour of any claimants who were represented under damages-based agreements; and (iv) that the EJ had erred in refusing to take into account limitation defences which potentially applied to some of the claimants.
The EAT’s decision
The EAT dismissed AL’s appeal.
Griffiths J held that, in assessing whether the specific arguments which were the subject of the deposit orders had little reasonable prospect of success, the EJ was entitled to take into account the outcome of the Lange litigation, in which similar arguments had been raised on the basis of identical facts but rejected. In his view, the rule in Hollington v Hewthorn did not preclude the Judge from taking into consideration the findings made in the Lange proceedings. The rule applies to a trial and should not be extended to a tribunal’s consideration under rule 39 of whether a specific argument has little reasonable prospect of success. When exercising its discretion under rule 39, the tribunal is not conducting a trial or making any binding decision about the argument in question but is rather making a summary assessment of whether the relevant argument has little reasonable prospect of success. Agreeing with what was said by Simler J (as she then was) in Hemdan v Ishmail and another [2017] ICR 486, Griffiths J observed that the summary assessment which the tribunal is required to make under rule 39 must necessarily be a matter of impression. It is wrong, he said, for the tribunal to conduct a mini trial, let alone a trial, in relation to the specific allegations or arguments which are the subject of the application for a deposit.
Griffiths J also rejected AL’s contention that the deposit orders made by the EJ were penal and disproportionate. He observed that the purpose of a deposit order is persuasive. It is intended to deter a litigant from pursuing an argument which has little reasonable prospect of success, and although it should not be fixed at a level that would restrict access to justice, it is desirable and legitimate that it should “create a serious opportunity and motive for cool reflection and reconsideration”. Noting that it was conceded by AL that the total deposits which had been ordered were well within its means, Griffiths J said that he did not see how they could sensibly be regarded as penal. He added that although the order made by the EJ exceeded £1,000 in respect of each of the relevant arguments, that was because AL had decided to persist with arguments which affected all 329 claimants. In his view, the EJ was entitled to make a deposit order in respect of each claimant in respect of whom the relevant arguments were being pursued. Although some of those claimants might not be involved in any test or sample cases, the weak arguments would hang over all of them.
Turning to AL’s contention that the EJ ought not to have made deposit orders in favour of claimants who were represented under damages-based agreements, Griffiths J pointed out that it is not a requirement of rule 39 that the beneficiary of a deposit order should be paying for legal representation. He held that a deposit order is a measure directed against the paying party and the EJ had therefore correctly held that the costs arrangements entered into by the Claimants were irrelevant.
AL’s contention that deposit orders should not have been made in respect of claimants whose claims were vulnerable to limitation arguments in relation to the period in respect of which the deposit orders were made was also rejected. Noting that the issue under rule 39 is not whether the paying party will win the case as a whole but rather whether a specific allegation or argument has little reasonable prospect of success, Griffiths J held that the EJ had been entitled to decline to enter into a consideration of limitation issues when exercising his discretion whether to make deposit orders. He went on to observe that it is undesirable for deposit order hearings to become mini trials which consider all the issues in the round and their impact on each other, and not merely the merits of the “specific allegation or argument” in question.
Oliver Segal KC and Melanie Tether acted for the Claimants, instructed by Liana Wood and Cecile Jeffries of Leigh Day
