Trinity Mediator Explores Recent Case Where Civil Courts & Employment Tribunal Meet
Former Employment law judge and CEDR accredited mediator at Trinity barristers, Michael Malone has prepared the following analysis that will be of interest to employment lawyers and solicitors, specifically in relation to the overlap between the employment tribunal and the civil courts.
What does a claim against an ex boxer for repayment of an alleged deposit on a property purchase have to do with employment law? The answer is that the case established a procedural rule which is regularly referred to in employment tribunals as well as in the courts.
The above rule and a further common law rule were applied in the recently reported appeal decision in Hossaini v (1) Eds Recruitment Ltd t/a J & C Recruitment and (2) Tesan Distribution Ltd UKEAT/0297/18/BA.
Mr Hossaini described himself as a Muslim of South African/Turkish/Iranian origin. He had been an agency worker employed by Eds and assigned to Tesan as a driver. He brought a number of claims against both respondents. One of his allegations was that two individuals, one employed by each respondent, had called him ‘babaji’. He said that this was an inherently discriminatory term and that its use was an act of racial and religious harassment.
All his claims were rejected by the employment tribunal. It was admitted that the above term had been used, but one of the first respondent’s managers produced a report from a translation company which appeared to show that the term had no racial or religious connotation.
The tribunal were referred to without prejudice correspondence which showed that when settlement discussions were well advanced Mr Hossaini increased the sum he was seeking from £4,000 to £40,000. He was ordered to pay costs of £10,000 to each respondent on the ground that he had acted unreasonably in the negotiations.
Subsequently Mr Hossaini’s wife was able to obtain a copy of the document which the translation company had provided to the first respondent. This document gave an additional meaning of the term ‘babaji’, as an ‘ugly word for a Muslim male’. The implication was that the document provided to the tribunal had been doctored.
Mr Hossaini sent to the tribunal a long document applying for reconsideration of the tribunal’s decision. It contained many detailed criticisms of the tribunal’s judgment, but it also raised the translation document as important new evidence. The employment judge rejected the application without engaging with that issue. Mr Hossaini appealed against the original judgment and also against the rejection of the application for reconsideration.
The new evidence issue
The authority which was relevant to this issue and which is frequently referred to is the 1954 Court of Appeal decision in Ladd v Marshall  1 WLR 1489. Mr Marshall owned a bungalow and two plots of land. The building licence under the regulations in force at the time limited the price at which he could sell the bungalow to £1,500. A proposed sale to Mr Ladd didn’t proceed. Mr Ladd had paid a deposit of £50 for which he had a receipt. He claimed that he had also paid an under the counter deposit of £1,000 in cash and that he had counted the money out on the carpet and that Mrs Marshall had been present as well as Mr Marshall. Both Mr and Mrs Marshall denied that this money had been paid and the judge accepted their evidence.
Mr Ladd failed to appeal within the stipulated period, but shortly after that period expired he applied for leave to appeal out of time and to adduce new evidence. He relied on an affidavit by Mrs Marshall. She was no longer living with her husband and indeed had obtained a decree nisi of divorce. She stated that the evidence which she had given at the trial was false and that Mr Ladd had indeed paid the £1,000 in cash in her presence. The reason why she had given the false evidence was that she was still living in her husband’s house at the time, he was an ex boxer and she feared physical violence if she failed to support his evidence.
Lord Denning in the Court of Appeal set out the three tests which are regularly applied in new evidence cases:
(1) The evidence could not have been obtained with reasonable diligence for use at the trial.
(2) If the evidence had been given at the trial it would probably have had an important (not necessarily decisive) influence on the result of the trial.
(3) The evidence is apparently credible.
In Mr Ladd’s case, the new evidence which he had from Mrs Marshall failed the third test. In Lord Denning’s pithy phrase, ‘a confessed liar cannot usually be accepted as credible’.
In Mr Hossaini’s case, however, the new evidence passed all three tests. His appeal was allowed and the case remitted for re-hearing by a new tribunal.
The without prejudice issue
Once Mr Hossaini succeeded on the new evidence issue, the costs order against him could not stand. The order was also defective because the tribunal’s reasoning did not demonstrate that it had properly exercised its discretion. The order also fell foul of a common law rule relating to costs applications based on without prejudice discussions and correspondence.
The general rule is that without prejudice negotiations cannot be relied on in support of an application for costs. That rule was established in 1889 in Walker v Wilsher (1889) 23 QBD 335.
There is an exception to the rule where correspondence is marked ‘without prejudice except as to costs’ - or words to that effect - the ‘Calderbank’ offer. The case of Calderbank v Calderbank  Fam 93 was a family law case, but the exception for Calderbank offers applies in civil litigation generally, at least where a payment into court is not appropriate. That was decided by the Court of Appeal in Cutts v Head  Ch 290, a case concerning disputed access to a fishery.
An attempt to establish a further exception to the rule was defeated in Reed Executive plc and another v Reed Business Information Ltd and others  EWCA Civ 887,  1 WLR 326. This was a trade mark case. A party applied for a special costs order based on the other party’s refusal of offers to mediate. That other party said that it would not be possible to explain its grounds for refusal without reference to without prejudice correspondence. The first party therefore applied for an order for disclosure of the correspondence That application and the costs application were refused by the Court of Appeal.
The without prejudice rule also applied in Mr Hossaini’s case. The tribunal should not have looked at the without prejudice correspondence and without that correspondence there were no grounds for the costs application.