New Star Asset Management Holdings Ltd v Evershed

This appeal by New Star Asset Management Holdings Limited (‘New Star’) is against an order dated 31 July 2009 made by the Employment Appeal Tribunal (Underhill J, the President, sitting alone) reversing a judgment sent to the parties on 23 February 2009 by which the London Central Employment Tribunal (Employment Judge Warren, sitting alone) refused to permit Patrick Evershed (claimant in the proceedings and respondent to the appeal) to make an amendment to his ‘ordinary’ unfair constructive dismissal claim.

By his amendment, Mr Evershed sought to add an ‘automatic’ unfair constructive dismissal claim by asserting that the reason, or principal reason, for his dismissal was that he had made a protected disclosure: it was a ‘whistle-blowing’ claim. By its appeal New Star asserts that the decision of the employment judge refusing him permission to do so fell squarely within his discretion in the case management of the proceedings and that he did not misdirect himself in making it. There was, says New Star, no basis for the appeal tribunal to step in and exercise it afresh and differently and the judge’s decision should be restored.

Andrew Hochhauser QC (who did not appear before either tribunal below) and Nicholas Randall (who appeared before both) represented New Star. Daphne Romney QC (who also appeared before both tribunals) represented Mr Evershed.

On 27 October 2008 Mr Evershed, a former employee of New Star, presented his claim at the employment tribunal for unfair constructive dismissal: he had resigned from New Star with effect from 23 September 2008. His particulars of claim included the following assertions. New Star had been launched in 2000 by John Duffield (its executive chairman) and managed several retail and institutional funds. Mr Evershed, a fund manager of 40 years experience, was recruited in February 2002 to set up and manage the New Star Select Opportunities Fund. On 18 September 2008 he emailed a letter of grievance to Helen Steel, head of the human resources department, complaining about Mr Duffield and Gregor Logan (joint chief investment officer). His letter raised wide-ranging allegations, as follows:

The raising of that grievance led, Mr Evershed asserts, to his prompt summoning to Howard Covington (chief executive officer), to whom he explained his unhappiness. Mr Covington told him that he was ‘clearly emotionally disturbed and unfit to manage money’ and suspended him until further notice. He was given 15 minutes to leave the building. As he passed Mr Duffield’s office, Mr Duffield told him he could see him on 24 September 2008 when Mr Duffield would decide when he could return; and he warned Mr Evershed to be ‘very careful’ as ‘this might be very expensive to you.’ On 19 September 2008 New Star wrote to Mr Evershed stating that he had been seeing a psychiatrist (which he denies), was unable to manage funds, that his authority to make investment decisions was being withdrawn and that he would not be allowed back until a practitioner chosen by New Star had confirmed him well enough to make investment decisions. Later New Star briefed the press that he was taking time off because of ill health despite a written agreement between the parties that no public statement would be made other than one saying that he had ‘left New Star’.

Mr Evershed asserted that ‘this’ (the events of 18 September 2008) was the culmination of a series of events going ‘… to the root of [his] contract, destroying the duty of trust and confidence implied in that contract and putting [him] in an intolerable position, leaving him with no choice but to leave on the grounds of constructive dismissal.’ His particulars of claim then went back in time, setting out a ‘brief history’ and matters of complaint that were ‘calculated to and did destroy [his] trust and confidence in [New Star].’

The account includes that at the outset Mr Duffield agreed with him that he would have total independence in relation to his fund and that its marketing would stop when the investments reached £50m. This limit was regarded by Mr Evershed as critical to his agreement to work for New Star because his skill and reputation depended on his ability to select and monitor the performance of a limited number of small quoted companies, and it would be compromised if the fund was expanded much above £50m. In the event his fund performed so well that it attracted applications from investors in such numbers as to suggest a need to break through the £50m ceiling, for which Mr Duffield pressed and which Mr Evershed resisted. Mr Duffield’s views prevailed, the fund trebled in size and the result was that Mr Evershed became subject to impossible pressures that led to an underperformance of the fund. Instead of accepting responsibility for this, Mr Duffield became increasingly angry, antagonistic and unpleasant towards him. Instances were given of such conduct. Mr Evershed asserted that Mr Duffield’s aggressive manner was well known in the investment industry and he devoted a single-spaced page and a half to general and particular allegations of bullying by Mr Duffield, said to have been directed not just against himself but also (‘hour in and hour out, day in and day out’) against his fund managers generally. Mr Evershed’s particulars also included complaints of humiliating conduct directed towards him by Mr Logan in 2007 and 2008. Underhill J rightly described the pleading as ‘somewhat discursive and general’, providing few particulars and making no attempt to formulate the unfair dismissal claim by reference to section 98 of the Employment Rights Act 1996.

New Star filed its ET3 in response to the claim on 25 November 2008. It set out a comprehensive and detailed defence, denied that Mr Evershed was dismissed, either actually or constructively, and denied any breach of the implied duty of trust and confidence. Its case is that Mr Evershed resigned. It sought further particulars of his claim on 10 December 2008, which he provided on 6 January 2009 and supplemented on 12 February 2009. He in turn sought further particulars from New Star on 20 January 2009, which it provided on 11 February 2009.

Mr Evershed’s claim came before Employment Judge Potter, sitting alone, on 6 January 2009 for a case management discussion. Ms Romney represented Mr Evershed and Mrs Strand represented New Star. Judge Potter’s summary of the issues and the orders she made were sent to the parties on 9 January 2009. She said in paragraph 1:

That paragraph does not say so, but the making of the alleged disclosures was said to have been by the grievance letter of 18 September 2008. Judge Potter made orders providing that on or before 30 January 2009 [sic: apparently a mistake for 20 January] Mr Evershed must provide New Star and the tribunal with his application to amend; that by 27 January 2009 New Star was to indicate whether it resisted it and, if so, why; and for disclosure by lists by 27 January 2009 and inspection by 3 February 2009. That part of Judge Potter’s direction reflected that New Star was (inter alia) to disclose all documents concerning complaints of bullying by staff within the previous six years. One possible inference from her directions is that she did not foresee that any permitted amendment would or might require wider disclosure than the then current issues. She fixed a pre-hearing review for 12 February 2009 at which (if disputed) the amendment application would be considered as would ‘any disputes regarding specific disclosure.’ She directed the agreement of the trial bundle by 17 March 2009, exchange of witness statements on 31 March 2009 and a nine-day hearing on liability and remedy in April 2009.

On 20 January 2009 Mr Evershed’s solicitors, Monro Fisher Wasbrough, gave notice of his wish to amend his claim by adding the following new case:

Sections 43B and 43C of the Employment Rights Act 1996, in Part IVA ‘Protected Disclosures’, provide, so far as material:

Section 103A, headed ‘Protected disclosure’, provides that:

New Star did oppose the amendment and Mr Evershed’s disputed application was heard by Employment Judge Warren at the pre-hearing review on 12 February 2009. Mr Evershed was again represented by Ms Romney and Mr Randall represented New Star. The judge refused the application and gave an oral decision immediately after the hearing, one followed by the sending to the parties on 23 February 2009 of what he described as a ‘Judgment’ although Underhill J noted that arguably it was an ‘order’. Paragraph (i) read:

Mr Evershed did want ‘full written reasons’ for that somewhat superficial explanation for the rejection of his application. They were sent to the parties on 27 March 2009. The employment judge opened them by summarising the claims in Mr Evershed’s ET1. He then said, in paragraph 4, that Ms Romney’s argument was that the protected disclosure claim was already included in Mr Evershed’s pleaded case, albeit not labelled as such. If that was wrong, she said that the ET1 had anyway referred to the grievance letter, which itself raised Mr Evershed’s bullying allegations, the amendment therefore did not take New Star by surprise and so, despite its lateness, it should be permitted. She further argued that there had been no need to raise a grievance under section 32 of the Employment Act 2002 in respect of the protected disclosure claim as a grievance had properly been raised about bullying and it was that grievance that was being relied upon as constituting the relevant disclosure.

As regards that last point, the judge said, in paragraph 11, that Mr Randall had argued for New Star that ‘the failure to grieve’ (I do not know whose choice of words that was, but I express my hope that it does not catch on) was fatal to the amendment application, for which reliance was said to have been placed on Highland Council v. TGWU and others [2008] IRLR 272. The judge did not record, although it is common ground (see also paragraph 28 of Underhill J’s judgment), that Mr Randall argued in the alternative that even if the absence of a grievance was not a knock out blow, it was at least a factor for the judge to take into account; and it was also, and still is, common ground that he was right about that (see again paragraph 28, citing paragraph 34 in the judgment of Lady Smith in the Highland case, which supported Mr Randall’s alternative submission, although not his primary one).

In paragraphs 5 to 9 the judge recorded Mr Randall’s points that (i) the amendment raised a new cause of action – one of ‘automatically unfair dismissal’ – that was of a nature fundamentally different from ‘ordinary unfair dismissal;’ (ii) in such a claim the motivation of the employee assumes a relevance it does not have in an ‘ordinary’ one; (iii) the tribunal would need to analyse each of the allegations made under section 43B; (iv) the making of the new cause of action would require additional evidence and ‘a need for [New Star] to amend its reference’ (words I do not understand); and (v) whether Mr Evershed acted in good faith would have to be considered. Ms Romney’s response was that the tribunal will anyway have to ascertain why Mr Evershed resigned and why only hours after his grievance New Star suggested that he was unfit to work.

In paragraph 13 the judge listed six authorities to which he was referred but, as is common practice in tribunal reasons, unhelpfully omitted any explanation of what he had derived from them. In paragraphs 14 and 15 he set out his reasons for refusing the amendment, as follows. When Underhill J quoted them in his judgment, he divided them into seven sections, A to G, as will I:

As Underhill J noted, the reasons do not appear to have been proof read and in places the English or punctuation has gone wrong. They do, however, make clear the factors that the judge took into account in exercising his discretion to refuse the application. In particular, and despite what he had said in paragraph 11, I do not interpret him as refusing it on the basis that the failure to precede the new claim with a grievance was fatal, but infer that he was simply bringing that failure into account as a factor, in line with Mr Randall’s alternative submission. The fact that the claim was out of time was also not automatically fatal, but its lateness required explanation, whereas Mr Evershed had vouchsafed none. (The judge did not here refer expressly to the lateness point, although he had done in paragraph 1(iii) of the brief reasons given in his prior judgment; but I interpret his reference to the lack of such explanation in F as, at least in part, implicitly reflecting it).

The judge was, in the two quoted paragraphs, therefore reflecting the essence of the arguments against the amendment that Mr Randall had advanced (including his alternative argument on the omission of any grievance), arguments which he had said in his earlier judgment that he had accepted. Central to them was that the amendment sought to raise late a new, different claim that would require additional evidence resulting in a longer, and more expensive, hearing that would cause prejudice to New Star. One of the authorities to which the judge had been referred was Selkent Bus Co Ltd v. Moore [1996] ICR 836, in which Mummery J, giving the judgment of the appeal tribunal, provided valuable guidance on the considerations to be taken into account in ruling on an amendment application such as that before Judge Warren, the key part of which is at 842F to 844C. It is unnecessary to cite from it but it is apparent that the judge’s shortly reasoned conclusions reflected relevant factors to which Mummery J there referred.

I record at this point that it was no part of Mr Evershed’s challenge to that decision before the appeal tribunal that Judge Warren’s reasons were inadequate, nor was any such argument advanced to us. I will come later to Mr Hochhauser’s submissions in support of his order, but say now no more than he submitted that, however short his reasoning, Judge Warren apparently took all relevant considerations into account and exercised a proper case management decision with which the appeal tribunal had no business to interfere. Nevertheless it did so interfere, and to that I now turn.

In his analysis of the judge’s reasons and Ms Romney’s attack upon them, Underhill J referred first to point A, namely that the amendment raised a new basis of claim. He pointed out that a mere ‘re-labelling’ is much more likely to be permitted than an amendment introducing ‘very substantial new areas of legal and factual inquiry’. He said the judge engaged in no explicit analysis of this, although that did not matter if his views were apparent from the remainder of his reasoning. There is no dispute before us that the amendment was more than mere re-labelling.

The judge’s point B was that the new claim would require ‘wholly different evidence’ from the existing claim. Underhill J said that the judge’s failure to explain that was an error of law. So he engaged in the exercise of assessing whether there was in fact any underlying substance to the judge’s conclusion and he did so by reference to the amendment on a sentence by sentence basis. Sentence one raised an issue as to the reason for the dismissal, as to which he said full evidence would anyway be required. Sentence two raised issues as to whether Mr Evershed believed that the disclosure tended to show either or both of the section 43B(1)(b) and (d) matters, whether any such belief was reasonable and whether, under section 43C, the disclosure was made in good faith. He did not accept that those matters would open up new and extensive areas of inquiry and made the point that the matters alleged in the grievance were essentially the same as those already pleaded and which the tribunal would anyway have to consider. He recognised that the issues already pleaded would require a determination only of whether the allegations were true and proved (or contributed to) a breach of the implied term of trust and confidence; but he said that in practice their investigation would also enable the tribunal to form a view on the genuineness and reasonableness of Mr Evershed’s claim that the complaints showed disclosable conduct and whether he had made the disclosures in good faith. He added that Mr Evershed’s state of mind in September 2008 was already in issue because he had to prove that he resigned in response to the pleaded breaches. He said that that inquiry would raise a substantial overlap with the one required by sections 43B(1) and 43C.

Underhill J referred to Mr Randall’s submission that the amendment went materially wider than the existing pleading in that it raised allegations as to Mr Duffield’s treatment not just of Mr Evershed but also of other employees, allegations that were irrelevant to the ‘ordinary’ unfair dismissal claim. He recognised the force of that but said that Mr Duffield’s conduct towards others could be of evidential relevance and that he would anyway expect the tribunal at the hearing to exercise careful case management so as to prevent the claim becoming bogged down in what he called ‘collateral issues about the treatment of third parties’.

Sentence three raised an allegation as to Mr Duffield’s interference in Mr Evershed’s fund, another matter already pleaded. Underhill J also noted Mr Randall’s submission that this sentence alleged interference by Mr Duffield in the funds of other managers as well, which raised a potentially wide evidential inquiry into New Star’s business over several years, but he regarded that as an unrealistic point. He referred to the fact that the original pleading had itself, in its penultimate paragraph, included the allegation that:

Underhill J then discussed point C in the judge’s reasons, which did not feature in the oral argument before us. As for point D, he said he was not satisfied that Mr Evershed in fact failed to comply with any relevant obligation, in which case Judge Warren misdirected himself by having regard to such supposed breach, although he added that the factor was anyway of minimal weight. Point E, going to prejudice, was linked to point B. As Judge Warren had been wrong in relation to point B, it followed that so was he in relation to point E. Underhill J then considered points F, G and H but no point on them was raised before us in the oral argument. His overall conclusion, in paragraph 37, was that he believed Judge Warren had ‘misdirected himself in relation at least to points B and E and probably also in relation to point D’, which was sufficient to undermine his decision.

Underhill J then proceeded, with the parties’ assent, to determine the amendment application himself and gave his reasons for allowing it. They were that the new claim would not involve a substantial increase in the scope of the factual inquiry and that the events of 18 September 2008 would anyway be central to the hearing; the application was made at an early stage in the proceedings, and even though the equivalent free-standing claim would have been out of time, it would only have been so by a short time; whilst there would be obvious prejudice to New Star in having to meet the new claim, which could perhaps significantly increase its liability, that was balanced by the equal and opposite prejudice to Mr Evershed in being deprived of the opportunity to advance the claim.

Mr Hochhauser submitted that the issue before Employment Judge Warren was one raising a discretionary question of case management which he had dealt with by taking account of all relevant factors and arriving at a conclusion properly open to him. No complaint was made to the appeal tribunal that his reasoning was inadequate or (in particular) that he was not entitled to take into account as a factor that no grievance had been raised in relation to the protected disclosure claim: the latter point had been raised by Underhill J. He submitted that the main focus of this court should anyway be on the correctness or otherwise of the decision of the employment judge, namely as to whether he had made any error of law, which Mr Hochhauser supported by reference to Campion v. Hamworthy Engineering Ltd [1987] ICR 966, 972C to F, per Mustill LJ in a judgment with which Woolf and Purchas L.JJ agreed; Yeboah v. Crofton [2002] IRLR 634, paragraph [11], per Mummery LJ; and Balfour Beatty Power Networks Ltd and another v. Wilcox and others [2007 IRLR 63, paragraph [71], per Peter Gibson LJ. He submitted that an appellate court ought only to interfere with an employment judge’s conclusion on a case management issue if it was clear that an error of law had been committed: as Buxton LJ had observed in Housing Corporation v. Bryant [1999] ICR 123, at 127D to F, ‘… the tribunals themselves are the best judges of case management decisions.’ In the present case Judge Warren had been referred to Mummery J’s guidance as to amendment applications in Selkent Bus Co Ltd v. Moore [1996] ICR 836 and Mr Hochhauser said that it was striking that Judge Warren had specifically taken into account factors expressly considered relevant in Selkent. His reasons were admittedly short, but they were sufficient to tell the parties why he had reached his conclusion. No criticism was advanced in the appeal tribunal that they were insufficient; or that the judge had failed to take a relevant factor into account.

By reference to Underhill J’s lettering of paragraphs 14 and 15 of Judge Warren’s reasons, Mr Hochhauser said that factor A – new cause of action - was plainly one that the judge was entitled to take into account. The amendment was not a mere ‘re-labelling’. A protected disclosure claim raises issues of fact and law significantly different from those raised in an ‘ordinary’ unfair dismissal claim. The special features of a protected disclosure claim were expressly recognised by Mummery LJ in ALM Medical Services Ltd v. Bladon [2002] ICR 1444, in particular at paragraphs [17] to [22].

The bulk of the argument before us turned on linked factors B and E: if Underhill J was right about factor B, so was he about factor E, and vice versa. Mr Hochhauser’s submission was that he was wrong in his approach to factor B. The essence of an ‘ordinary’ unfair constructive dismissal claim is, he said, quite different from that of a whistle-blowing claim. The former claim will focus on New Star’s conduct towards Mr Evershed over the period relied upon by way of an inquiry as to whether he has made good his claim to have the victim of a breach of the implied term of trust and confidence justifying his claim to have resigned in response. Such a claim will also raise a question as to the alleged unfairness of the claimed dismissal. Importantly, in such a claim any allegations raised by the claimant as to the employer’s conduct towards third parties – for example, other employees – is at most only of peripheral relevance. In paragraph 59 of its ET3 in response to the original claim, New Star had pleaded as follows:

By contrast, Mr Hochhauser submitted that in the whistle-blowing claim that Mr Evershed had sought to advance, the investigation of New Star’s conduct of third parties will be central to the claim. The starting point is the factual allegations that Mr Evershed’s claim seeks to make, with the task for the employment tribunal being to consider whether, by his grievance letter, Mr Evershed had made qualifying disclosures under section 43B(1). That will require the tribunal to consider with respect to every allegation made by Mr Evershed (i) whether he had a reasonable belief, and (ii) whether the disclosure tended to show either (a) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject (in the present case, the implied term of trust and confidence) or (b) that the health or safety of any individual has been, is being or is likely to be endangered. The tribunal will also have to consider whether or not the relevant disclosure was made in good faith for the purposes of section 43C(1). The proposed amendment raised general and sweeping allegations regarding the treatment of other employees and fund managers which Mr Evershed claims were qualifying disclosures made by him. It is apparent, said Mr Hochhauser, that Judge Warren was rightly sensitive to the material widening of the factual inquiry that the amendment, if allowed, would raise. He had indicated in his Judgment that he accepted Mr Randall’s arguments; and he had referred in paragraphs 6, 7 and 9 of his subsequent reasons to the facts that the motivation of Mr Evershed will now be in the frame for consideration, that each of the new allegations will require analysis and that Mr Evershed’s good faith will require consideration. These considerations underpinned his conclusions in points B and E.

Mr Hochhauser emphasised that there was real substance to these conclusions. The potential scope of the new case must be tested by reference to the nature of the factual case that Mr Evershed has sought to raise. The inquiry into Mr Evershed’s motivation will be potentially complex, of a nature substantively different from that relevant to whether he resigned in response to any breach of his own contract that he may prove (that is, why he made the disclosures as opposed to why he chose to resign). In addition, sentence three of the amendment opens up a whole panorama of factual inquiry, which (on the face of the amendment) will compel an investigation relating to all funds operated by New Star, their performance, the treatment of each fund manager and the reaction of each such manager to such treatment. None of this can be relevant to the ‘ordinary’ unfair dismissal claim, in which New Star need do no more than meet the allegations concerning Mr Evershed.

Underhill J had of course recognised, in paragraph 21, that the grievance and proposed amendment extended to allegations not just about Mr Evershed’s own fund, but those of other fund managers. He took the view, however, that it was unrealistic for such wide-ranging inquiries as Mr Hochhauser now foreshadows to be required or undertaken. He said that it was clear that, under both heads of claim, Mr Evershed’s claim would stand or fall by the evidence about Mr Duffield in relation to him: if he cannot prove both cases in relation to himself, he is hardly likely to be able to show that he genuinely or reasonably believed it to be wrong in the case of other fund managers. Again, he would expect the tribunal to keep the exploration of collateral issues under tight control.

Mr Hochhauser submitted that in that respect Underhill J was simply wrong. If, in a whistle-blowing case, several complaints are made, all have to be investigated. Suppose, he said, two complaints are made of which one is apparently well founded and the other is found to be outrageous and motivated by the employee’s wish to use these matters for an improper purpose. Only by investigating the hollowness of the unfounded complaint can there be a fair investigation of whether the complaints as a whole were made in good faith. It is not open to the tribunal to cut down the inquiry in the way that Underhill J suggested. It is Mr Evershed who has sought to open up a wide range of allegations and, so long as they all remain part of his case, all will have to be investigated. Underhill J’s reference to the allegations relating to third parties as being ‘collateral issues’ misses the point that, if the amendment is allowed, they are no longer collateral. They will occupy centre stage. It followed, he said, that it is the duty of the tribunal to hear and consider all the relevant evidence relating to Mr Evershed’s allegations and to allow New Star to challenge his case. He referred in support to what Mummery LJ had said in the ALM Medical Services Ltd case, at paragraph [19].

Mr Hochhauser also addressed us on factor D in Employment Judge Warren’s reasons. His point was that the relevance of the omission to raise a grievance about the proposed new claim was that the employer had not had the opportunity to investigate the claim before it was brought, a factor that the judge was, as is accepted, entitled to take into account, as Judge Warren did.

In defence of Underhill J’s decision, Ms Romney focused her oral argument on linked factors B and E, and briefly also on D, the grievance point. Taking first factor B, Ms Romney pointed out that in a claim, as here, for unfair constructive dismissal, it is necessary for the employee to show that he resigned in response to the employer’s breach of his employment contract. The motive of the employee is therefore centrally in issue, as also in many cases (including this one) will be the history of his employment. New Star had itself, she said, deliberately put Mr Evershed’s motivation in issue in his ‘ordinary’ unfair dismissal claim by suggesting that he was a serial litigant, for which she referred to paragraph 7 of the ET3 and paragraph 1 of New Star’s response to a request for further particulars, both of which passages had been cited to Employment Judge Warren, although were not referred to in his reasons.

It followed, said Ms Romney, that the employment judge had materially overstated the position by holding that wholly new evidence was required by the whistle-blowing claim. Mr Evershed’s motivation was already in issue; and even if he had not sought to amend his claim, all the matters raised in his grievance of 18 September 2008 were also already in issue in the ‘ordinary’ unfair dismissal claim. They included all the allegations against Mr Duffield about creating an atmosphere at New Star and as to his bullying of Mr Evershed and others. All of this, in particular the alleged creation of an atmosphere in the working environment, was directly in point even if the claim remained confined to one of unfair constructive dismissal.

As for the protected disclosure claim, that depended on whether there had been a disclosure, which she said there plainly had; whether it tended to reveal one of the factors set out in section 43B; whether it was made in good faith; and whether it was made to the proper person (in this case it was made to the head of the human resources department, obviously such a person). The question then was as to the motivation behind it. Mr Hochhauser had stressed that the disclosures were in the nature of multiple disclosures, but she said that the important point was that, although the legal ingredients for Mr Evershed’s two claims (‘ordinary’ and ‘automatic’ unfair dismissal) were different, the evidence in relation to both claims would be the same. She said that it had not been shown how the evidence in relation to the new claim would be additional and different.

Ms Romney accepted that several allegations had been raised in the grievance letter but said that in essence it had raised a single complaint and that it was mistaken to regard the fact that several allegations had been raised as making the inquiry at the substantive hearing more difficult. In particular, Mr Evershed’s good faith was already squarely in issue. The error on the part of Judge Warren that was complained of was not that he had not properly reasoned his decision – although he had not – but that he did not conduct any analysis justifying his conclusion on factor B. He arrived at that conclusion by misunderstanding the ambit of the case already pleaded and by failing to recognise that the evidence in relation to both claims would be the same. Ms Romney pointed out that she had made it clear to Judge Warren, as she had to Judge Potter, that Mr Evershed would be giving evidence and would be calling others who had also been bullied (I have referred to the ‘bullying’ disclosure that Judge Potter had directed). She had also informed Judge Warren that Mr Evershed’s evidence on the ‘ordinary’ unfair dismissal claim would not be enlarged by the case made by the amendment. Moreover, she said, case management directions could be made to control the range of the evidence that might be called in relation to the whistle-blowing claim.

Ms Romney also argued that Judge Warren’s reference in paragraph 11 of his reasons to Mr Randall’s erroneous point (which she said was his primary submission in this context) that the ‘failure to grieve’ was fatal resulted in the judge either treating the point as a knock out blow, or at least as giving it undue weight in his conclusions. I will only say about that point that I do not accept that he did regard that point as fatal to the amendment application. If he had, it would have been unnecessary for him also to invoke, and apparently rely upon, the other factors to which he referred. I infer that he treated it as no more than a factor he was entitled to take into account.

I have found this a difficult case, mainly because of what I regard as the, with respect, somewhat unsatisfactory handling of the case by the employment judge. The cause of the appeal to the appeal tribunal, and now to this court, was his omission to articulate even briefly the basis for his conclusion in relation to factor B that the new claim would require ‘wholly different evidence’. That has led to arguments both before the appeal tribunal and this court as to whether there was in fact a sound basis for his conclusion.

Following the conclusion of the argument, the court was provisionally attracted by the thought that one way of resolving the appeal might be to remit the case to a different employment judge to consider the amendment application afresh. The court sought further written submissions from counsel on that, and I express my gratitude for their responses. Having been a party to that provisional thought, I have however reminded myself that as the arguments ultimately crystallised, they focused not on whether the employment judge’s reasons were Meek compliant (Meek v. City of Birmingham District Council [1987] IRLR 250) – which, as Mr Hochhauser emphasised, was not a ground of appeal to the appeal tribunal - but on the point mentioned at the end of my previous paragraph. Mr Hochhauser said that if inadequacy of reasons had been a ground of appeal, New Star would have sought a reference back to the employment judge inviting him to expand his reasons.

Underhill J, in the appeal tribunal, carried out his own investigation into whether the judge’s conclusion on factor B was soundly based and held that it was not. Mr Hochhauser has challenged his conclusion before this court. The outcome of this appeal must, I consider, turn on the correctness or otherwise of that challenge.

Just as Ms Romney asserted to the employment judge that the amendment would not increase the evidence proposed to be called by Mr Evershed, so Mr Randall asserted to him that it would entail more, at any rate from New Star. Whatever was said about this by counsel, Judge Warren did not apparently consider that he could or might allow the amendment on terms limiting the evidence that might be called in relation to it. I am not surprised that he did not, because such a course could itself have worked an injustice on one or other party or both. He appears instead to have taken what I would regard as the conventional view on applications such as that before him; namely, that he had to make the best assessment he could of the likely effect of the proposed amendment upon the case, including the extent to which it would be likely to increase the factual inquiry that would have to be undertaken by the parties and the burden, length and expense of the proceedings; and, having done so, to factor those considerations, together with other material ones, into the overall judgment that he was called upon to make.

In that context, Mr Randall’s submissions to Judge Warren (as, later, to Underhill J) were to the effect that even if the amendment was not going to require Mr Evershed to expand the evidence that he was originally going to call (which will apparently include evidence from other New Star fund managers), it would certainly require New Star to expand its own investigations and evidence in order to meet the new issues raised by the amendment. Mr Hochhauser emphasised that sentence three of the amendment raised potentially wide ranging factual issues which, on their face, are not directly material to the determination of the ‘ordinary’ unfair constructive dismissal claim but would be squarely in play in the protected disclosure claim. If Mr Evershed is to be allowed to mount a new case that is centrally dependent upon assertions to the effect that Mr Duffield’s overbearing and bullying manner has damaged other New Star funds and the reputations of their respective managers and thereby breached contractual obligations owed by New Star to those employees, New Star will want to leave no stone unturned in investigating and seeking to meet each element of that case. That exercise will, it is said, involve a potentially complicated and expensive investigation in relation to the fortunes of each fund over several years and the alleged treatment over such time of each of their managers. It will also require a proper investigation into the justification for the disclosures and Mr Evershed’s good faith in making them. New Star’s wish to cover all the angles is not surprising. I have referred to the potential significance of the amendment, by which Mr Evershed wishes to remove the compensation cap to which his current claim is subject.

Ms Romney advanced cogent submissions in defence of the appeal tribunal’s order. It was not, however, clear to me that she was defending Underhill J’s reasons for that order. The essence of his reasoning was that (contrary to her submission), Mr Evershed’s wish to invoke New Star’s conduct towards third parties in support of his ‘ordinary’ unfair constructive dismissal claim was to adduce evidence which, while perhaps not wholly irrelevant, would probably be of peripheral relevance such that its extent could and should be controlled by case management decisions: he regarded it as going to ‘collateral issues about the treatment of third parties’ (paragraph 20). Her submission was, however, that such an investigation would be close to the centre of the inquiry, since an investigation of the atmosphere that Mr Duffield’s alleged bullying created amongst the fund managers was of direct relevance in assessing the conduct that Mr Evershed had to endure.

As for the point that the amendment would involve a wide-ranging inquiry into the sorts of matters alleged in sentence three, Underhill J regarded this as unrealistic, taking the view that Mr Evershed’s protected disclosure case was going to stand or fall on New Star’s conduct towards him and that he would again ‘expect the Tribunal, whether the claim is amended or not, to keep exploration of any such collateral issue under tight control.’ (paragraph 21). Ms Romney’s position was the different one that all the issues raised by the amendment were already in play in the ‘ordinary’ constructive dismissal claim, so that the amendment was anyway not going to raise any material different additional factual inquiry.

The heart of the difference between counsel lay, as I see it, in their rival approaches to the relevance to the ‘ordinary’ unfair dismissal claim of the ‘third party allegations’ made in the original particulars of claim. Mr Hochhauser’s submission was that they are irrelevant, a stance reflecting New Star’s express refusal in paragraph 59 of its defence to plead to them. Ms Romney’s submission was that, whatever New Star’s view about those allegations may be, they in fact form a material part of Mr Evershed’s ‘ordinary’ unfair dismissal case. They go to his case that Mr Duffield’s bullying conduct created an intolerable atmosphere at New Star in which he had to work, undermined the confidence and morale of the New Star fund managers and had a serious adverse effect on nearly all the New Star retail funds. Mr Evershed alleges that:

Although New Star asserts the ‘third party allegations’ to be irrelevant to the resolution of the ‘ordinary’ unfair dismissal claim, they have not been struck out; and Mr Evershed proposes to call evidence directed to making them good. They are part of the overall case that he proposes to make and I do not, for my part, consider it appropriate for this court to attempt any assessment at this stage of the potential relative importance to his case of the various evidential strands that he proposes to deploy in support of it.

That, it seems to me, is really the key to the resolution of this appeal. A comparison of the allegations in the amendment (including sentence three) shows that the amendment raises no materially new factual allegations. The original pleading and the amendment both accuse Mr Duffield of damaging the performance of New Star funds, although the amendment adds the assertion that he caused a consequential damaging of the managers’ reputations. The allegations in the pleadings are admittedly not identical. But the thrust of the complaints in both is essentially the same. In my view, so long as the original pleading retains its ‘third party allegations’, Ms Romney is entitled to say that those allegations have already been put squarely in issue; and they do not cease to be so merely because New Star has chosen to take the line (she would say wrongly) that they are irrelevant to the ‘ordinary’ unfair dismissal claim. Whatever New Star’s attitude in that respect may be, Mr Evershed intends to prove those allegations in making good that claim; and, if permitted to do so, also to rely on essentially like allegations in support of the ‘automatic’ unfair dismissal claim. The amendment does not, therefore, raise materially new factual allegations.

In my judgment Ms Romney’s approach is to be preferred. I agree with her that the amendment does not raise any materially new factual allegations. New Star’s assertion to the contrary effect proceeds on the fallacious basis that, because the ‘third party allegations’ are said to be irrelevant to the ‘ordinary’ unfair dismissal claim, they should be treated as airbrushed out of it. As I have said, I am not prepared to accept that they are irrelevant or can be treated as so excised. In my judgment, the amendment raises factual allegations that are essentially akin to those raised in the original pleading. True it is that the ‘whistle-blowing’ case made by the amendment will require the investigation of the various component ingredients of such case. But I would accept Ms Romney’s submission that such investigation is not going to require the adducing of what the employment judge called ‘wholly different evidence’.

I therefore arrive at the conclusion that the employment judge was in error in holding that the trial of the case made by the amendment would require ‘wholly different evidence’. That undermined factor B of his conclusions and, therefore, also factor E. Whilst I have not agreed in all respects with the route by which Underhill J arrived at his like conclusion, I would respectfully endorse the manner in which he re-performed the relevant case management exercise. Nor, were this court to come to the view that I have, was it questioned that Underhill J’s decision should stand.

I would dismiss the appeal.

I agree.

I also agree.