Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION
	[2013] CSOH 133
P619/13	OPINION OF LORD BANNATYNE in the cause FOX SOLICITORS LTD a company incorporated under the Companies Acts and having its place of business at 44 York Place, Edinburgh Petitioners; for Judicial Review of draft regulations imposing a structure of fees payable by claimants in the Employment Tribunals and the Employment Appeal Tribunal made by The Lord Chancellor Respondent: ________________

Petitioners: Mitchell, QC; Balfour & Manson LLP

Respondent: Carmichael, QC; MacGregor; Office of the Advocate General

Interested Party: McGuire; Equality and Human Rights Commission

11 July 2013

Introduction
[1] The petitioners in this case are a firm of solicitors who trade under the name Fox and Partners. They represent a substantial number of claimants in the Employment and Employment Appeal Tribunals in Scotland, in particular in cases involving claims for equal pay and in respect of discrimination in employment. The respondent is the Advocate General for Scotland as representing The Lord Chancellor and the Secretary of State for Justice.

[2] The petitioners were represented by Mr Jonathan Mitchell Q C, the respondent by Ms Carmichael Q C and Mr McGregor, advocate. The Equality and Human Rights Commission as interested parties were represented by Mr McGuire, advocate.

[3] The matter initially came before me as a motion in which the petitioners sought certain interim orders.

[4] Following discussion at the motion roll hearing, the interim orders were not sought by Mr Mitchell. Rather a first hearing was fixed for Tuesday 9 July 2013.

[5] On 9 and 10 July, I heard argument in relation to the substantive issues which were raised in terms of the petition. Given the way that argument developed before me, I offered to Ms Carmichael during the course of her submissions on 10 July an adjournment to consider her position. Ms Carmichael accepted that offer and after the adjournment she advised me that the responsible course was for her to seek a discharge of the first hearing in order that she could have sufficient time to obtain further information which she believed would be of assistance to the court in its deliberations. The motion was not opposed by Mr Mitchell. It appeared to me to be appropriate given the way that argument had developed before me, that the respondent be given further time and I accordingly granted the motion and a continued first hearing was fixed for a later date.

[6] Following the said decision, Mr Mitchell moved that I should once more consider the position regarding interim orders.

Background
[7] The background to the petition for judicial review was a challenge to the actings of The Lord Chancellor in promulgating the Employment Tribunals and the Employment Appeal Tribunal Fees order 2013 (hereinafter referred to as "the order").

[8] There are five grounds of challenge advanced by the petitioners which can be summarised as follows:

(a) The order offends against the principle of equivalence in European Law;

(b) It offends against the principle of effectiveness in European Law;

(c) It is indirectly discriminatory without justification;

(d) It was made in breach of section 149 of the Equality Act 2010;

(e) In mass claims it operates perversely so as to raise revenue rather than a contribution towards costs as intended.

It was contended that on the basis of each of these arguments that the order was ultra vires.

[9] The said order is due to be brought into force on 29 July 2013.

Submissions of behalf of the petitioners
[10] Mr Mitchell sought an interim interdict against the making of the order. He commenced his submissions by drawing to the attention of the court that he would not be moving for interim interdict if an undertaking were offered on behalf of The Lord Chancellor to the following effect:

The Lord Chancellor would undertake that during the period while the issues raised in the present proceedings were being litigated, the Employment Tribunal and Employment Appeal Tribunal would not seek the fees in terms of the order, rather what would happen would be that the prospective claimant would sign a form of I.O.U. promising to pay the requisite fees in terms of the order should it be declared lawful.

Mr Mitchell advised that the precise language of any undertaking could be the subject of discussion between himself and Miss Carmichael, however, an undertaking to that broad effect would be acceptable to him and he would not move for interim interdict, if it were offered.

[11] Miss Carmichael advised that The Lord Chancellor was not prepared to grant an undertaking to that effect. She did however, offer the following undertaking:

"Undertaking
The Lord Chancellor gives an undertaking that if he is allowed to make the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013, and if following exhaustion of appeal rights, it is found to be unlawful, he will reimburse all fees that have been paid."

[12] Mr Mitchell advised that an undertaking in those terms was not acceptable to him.

[13] Mr Mitchell's submissions as regards the motion for interim interdict were in fairly short terms. He first submitted that the court should be satisfied that the petitioners had a prima facie case. In support of that contention he referred me to the detailed written note of argument which had been lodged on behalf of the petitioners and to the lengthy submissions which he had made in relation to the various legal arguments summarised earlier in this opinion.

[14] On the issue of balance of convenience, he accepted that the undertaking offered by The Lord Chancellor protected those claimants who actually proceeded to make claims, following the introduction of the order. However, it was his position that certain potential claimants would be deterred from making claims because of the introduction of the fees at the levels at which they were set. He advised that in relation to many applications to the Employment Tribunal the time limits for making them were short and were rigidly enforced. Thus he contended that such persons, should the order be held to be unlawful, would have no effective remedy in that by the time they sought to make their claims they would be time barred.

[15] Beyond that Mr Mitchell submitted that certain arguments were put forward on behalf of The Lord Chancellor in the written submissions lodged on his behalf regarding losses that would be sustained if the order was not allowed to come into force on 29 July. His position was that a complete answer to this point was his willingness to accept an undertaking in the terms he had suggested. It was his position that such an undertaking was reasonable and would protect all claimants and The Lord Chancellor. If the order were held to be lawful, The Lord Chancellor would have the benefit of the I.O.U.'s and could recover the sums promised therein.

Reply on behalf of the respondent
[16] Ms Carmichael submitted first that the court should not be satisfied that a prima facie case had been shown. In support of her said submission she referred to the detailed note of argument which she had lodged together with the oral submissions which she had made. In addition to the arguments she had advanced in relation to the broad grounds of challenge advanced on behalf of the petitioners she reminded me of her challenge on the issue of the petitioners' standing.

[17] On the issue of balance of convenience her position was this:

(a) The undertaking which The Lord Chancellor had offered gave sufficient protection to claimants and also properly protected the position of The Lord Chancellor who had to be prudent and fiscally responsible.

(b) The undertaking which Mr Mitchell wished, she submitted did not offer proper protection to The Lord Chancellor. Her position was that it was likely during the currency of the present proceedings that a very large number of these I.O.U.'s would be granted and there was no guarantee that they would be honoured by those who had granted them. On the other hand, it was clear that The Lord Chancellor would be in a position to meet the undertaking which he had offered.

[18] In addition she argued that if The Lord Chancellor had to raise actions against a large number of people who had granted I.O.U.'s in order to enforce his position then the practical difficulties in doing this would be substantial, given that a large number of actions of small value throughout the UK would be necessary.

[19] Overall she submitted that The Lord Chancellor should not have to bear the risk that a substantial amount of fee income would not be recovered.

[20] The second strand to her argument as regards the issue of balance of convenience was to point to the income loss to The Lord Chancellor if the order were not brought into effect at the due date, together with other irrecoverable losses which would be caused as a result of the order not coming into force on its due date.

[21] The final strand of her argument related to practical difficulties which would be caused to the operation of the Employment Tribunal and Employment Appeal Tribunal should the order not be brought into force on its due date.

Discussion
[22] I considered overnight my decision in this matter and the following day I gave a short oral judgment. Following delivery of this, Mr Mitchell asked if I would have what I had said extended as a written opinion and I do so now.

[23] What I said in terms of my oral judgment was this:

(1) First, it was not disputed that the granting of the interim interdict sought by Mr Mitchell was competent.

(2) Accordingly I turned to the two issues that were argued before me;

(a) Had the petitioners shown a prima facie case?

and

(b) The issue of balance of convenience.

(3) As regards the question of whether the petitioners had shown a prima facie case, I advised that I was satisfied that the petitioners had shown that they had such a case. I advised that under each of the five heads in terms of which they had developed their argument that the order was unlawful, I was satisfied that a prima facie case had been shown. I was also satisfied that the petitioners had shown a prima facie case regarding the issue of standing.

[24] I did not when setting out my judgment in court outline any detail regarding my reasons for reaching this view. I advised at that time that I did not believe it appropriate to do so in light of the way that the case had developed before me. Given the view I took at the time when I read out my oral decision, I do not set out my reasoning herein.

[25] Turning to the issue of balance of convenience I believe that the starting point in considering this issue is the undertaking offered by The Lord Chancellor.

[26] This undertaking, as was accepted at all hands, protects the claimant who, in the period while the present matter is being litigated, makes a claim and pays the appropriate fee. If eventually the order is held to be unlawful, such a person would be reimbursed and thus in no way disadvantaged.

[27] If that had been the only consideration, it seemed to me that the balance of convenience would have clearly favoured The Lord Chancellor. However, at the core of much of the petitioners' case is an access to justice argument.

[28] The contention made on behalf of the petitioners is that the introduction of the order requiring applicants to pay fees at the level set within the order would materially deter parties from raising and persisting in claims before the Employment Tribunal and Employment Appeal Tribunal.

[29] As regards that contention, I had before me certain observations from various impartial sources with expertise in the Employment Tribunal and Employment Appeal Tribunal area which to some extent supported this contention. These are conveniently summarised at pages 12 and 13 of the petitioners' note of argument.

[30] Mr Mitchell's position was that in light of that information, the balance of convenience favoured the granting of the interim interdict in that if the court did not grant interim relief as sought, then, this group of people who would be deterred by the introduction of the fees in the order would not make a claim and if the order were eventually held to be unlawful, due to the short time limits applying to many Employment Tribunal applications, they would be entirely deprived of their rights.

[31] It seemed to me that the contention put forward by Mr Mitchell required to be examined in the context of the undertaking offered by The Lord Chancellor and the undertaking that would have been acceptable to Mr Mitchell.

[32] It appeared to me that whichever of these two undertakings were in place, a potential applicant, who was in the group of people who would be discouraged from engaging in litigation in the Employment Tribunal or Employment Appeal Tribunal by the introduction of a fee system, would be in essentially the same position, namely:

(a) That person would have to decide whether he or she was prepared to take a chance that the fee order would be held to be unlawful and thus the fee paid would eventually be recovered or the I.O.U. would not require to be met.

(b) If the order were held to be lawful the result would be the same whichever undertaking was in place, namely; the requisite fee would be paid.

(c) If the order were held to be lawful then in terms of The Lord Chancellor's undertaking the fee would be paid at the time the claim was made and in terms of the undertaking which was acceptable to Mr Mitchell it would be paid when the order was held to be lawful.

(d) In my view in essence, so far as this group of people who would be discouraged by the introduction of the fee system, the two proffered undertakings would make no real difference to the decision which they had to make when considering whether to claim.

[33] In light of the above, I am satisfied that the undertaking offered by The Lord Chancellor would probably result in no fewer persons making a claim than if the undertaking proposed by Mr Mitchell were in place. Alternatively, even if I am wrong in holding this, I believe that the difference would be de minimis.

[34] In the whole circumstances I believe that if the undertaking offered by The Lord Chancellor were to be in place, no claimant would be denied a remedy, in the interim period.

[35] Set against the foregoing on the other side of the balance would be the following losses to The Lord Chancellor if the order is not allowed:

(a) The income stream of £800,000 per month which it is predicted will be raised by the introduction of the fee system.

(b) £41,000 per month which is committed to on-going support costs to its IT suppliers.

(c) £66,000 per month in relation to allocated staff resources to the administration of the fee system.

[36] In addition there are practical difficulties which would arise within the Employment Tribunal and Employment Appeal Tribunal were the system not to be introduced given the introduction of a new form and new online submission service which are to come into place on 29 July.

[37] In conclusion it seemed to me that with The Lord Chancellor's offered undertaking in place there would be no real prejudice to applicants ad interim if the interim interdict were refused. On the other side of the balance I believed there would be substantial prejudice to The Lord Chancellor if the interim interdict were granted and for these reasons I found that the balance of convenience favoured the respondent and I thus refused the interim interdict.

[38] One further matter which I had regard to when considering the issue of balance of convenience was this: I believed there may be arguments which suggest that even if challengeable from a Scottish stand point the order may not be so easily challengeable in England. However, the interim interdict which I was being asked to pronounce would have had an effect in England as well as in Scotland.

[39] This was a matter to which I had regard when making my decision on balance of convenience, however, as I pointed out in my oral judgment this issue was not decisive and I would have reached the same conclusion as regards balance of convenience even had this issue not been before me.

[40] There was one final subsidiary matter which was the question of expenses for the two day hearing before me.

[41] Mr Mitchell sought the expenses of the hearing against The Lord Chancellor. He submitted that as a result of the respondent's motion the two day hearing before me had been wasted and matters would have to be entirely reheard. It was his position that the matter was as simple as this: the petitioners were ready, the respondents were not.

[42] Miss Carmichael's position was that there should be no expenses due to or by. She submitted that there was no fault on the part of the respondent in him having to seek to have the hearing put off. This had arisen as a result of the expedited date fixed for the first hearing and the way that the arguments had developed in the course of that hearing.

[43] I preferred Mr Mitchell's argument. It appeared to me that the two day hearing before me had at the end of the day achieved nothing as I was unable to issue an opinion on the substantive issues upon which I had heard considerable argument. It did appear to me that this matter would have to be argued of new. The situation before me was that the petitioners were content to proceed, however the respondent was not. The interim interdict issue could have been dealt with on the day when this matter first came before me without the necessity of the two day hearing. Against that background I believed that it was appropriate to find the respondent liable to the petitioners in their expenses arising from the two day hearing.