England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EMPLOYMENT APPEAL TRIBUNAL
(MR RECORDER UNDERHILL QC)

		Royal Courts of Justice Strand London WC2 Friday, 22nd June 2001

Friday, 22 June 2001

1. LORD JUSTICE JUDGE: Mr Matthews traded as Anton Motors. The respondents are Mr Smith, Mr Gustar and Mr Ide. Mr Smith and Mr Gustar were employed as panel beaters; Mr Ide was employed as a paint sprayer.
2. There is a letter dated 14th May 1999 from Mr Matthews to each respondent saying:

"I regretfully have to inform you that as from 28 May 1999 this business will be discontinued and therefore I have to issue you with two weeks official notice as from 14th May."

3. The application before me is for permission to appeal against the decision of the Employment Appeal Tribunal Chairman Mr Recorder Underhill QC dated 13th March 2001, dismissing Mr Matthews' appeal against a decision of the Employment Tribunal Chairman Mr R H Trickey dated 1st December 1999. The essential decision of the Employment Tribunal was that the three respondents had been dismissed by reason of redundancy.
4. The application for permission was filed on 23rd April, something like a month out of time, but that delay is explained by Mr Matthews in his application. It says:

"I was unable to obtain a copy of the Court file relating to the original hearing as it was in the custody of Detective Sergeant Waters of Brighton Police who was investigating the perjury allegations.... This file was misplaced but eventually found by the police on 27 March 2001 (the date the time for me to lodge an appeal expired)."

5. The reference to perjury is a reference to Mr Matthews putting evidence before the local police that the respondents had committed perjury or had attempted to pervert the course of justice in relation to the original hearing before the tribunal. He tells me today that he is informed that the papers are now before the Crown Prosecution Service for a decision whether there should be any prosecution and that it is not possible for the Crown Prosecution Service to deal with the matter any faster than it has so far, because inevitably of course there are other more major alleged crimes for their consideration.
6. Returning to Mr Matthews' application, he explains how he had instructed counsel by 4th April as soon as he could arrange to borrow money with which to fund those instructions. He explained that he received counsel's advice on 17th April and set about lodging the appeal. I am not prepared to dismiss this application simply because the application has been filed out of time. I shall of course leave it open to the respondents to take any point on time that they may wish.
7. The critical issues before the Employment Appeal Tribunal are set out in the judgment at page 21 paragraphs 3, 4 and 5 of which I adopt, and they provide:

"3. The Appellant's defence before the Employment Tribunal depended on the fact that on 2 June (that is five days after their dismissal had taken effect) the employees had taken over the premises of Anton Motors, including the equipment, from him under what was described as a licence arrangement, paying a rental of £350 per week, and had started their own business doing essentially what they had done before when they had been their employees. He contended that this amounted to the transfer of an undertaking within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981 and that this meant that he was not under any liability to them in relation to the dismissals.

4. The legal analysis lying behind that submission is not very clearly articulated by the Tribunal, perhaps reflecting the submissions before it, but it has been common ground before the parties on this appeal and it can be summarised as follows. If the arrangements between Mr Matthews and the employees constituted the transfer of an undertaking within the meaning of the Regulations any liabilities which Mr Matthews might have owed to them arising out of the dismissal would have transferred to them under regulation 5 and thus effectively have been extinguished – provided that either (a) that they had been employed at the moment of transfer (that is to say on 2 June) or (b) they could be in effect deemed to have been in employment on that date, though not in fact, because they had been dismissed for a 'transfer-related reason' contrary to regulation 8 (see the decision of the House of Lords in Litster v Forth Drydock v Engineering Co Ltd [1991] AC 546).

5. The former - (a) - was not the case because a five day interval had occurred between the termination of employment and the transfer of the undertaking (if that is what it was) – see the decision of the Court of Appeal, approved in Litster, in Secretary of State for Employment v Spence [1986] ICR 651. But Mr Matthews says that the case focused within (b), that is to say that the principal reason for the dismissals was the impending transfer. The Tribunal found explicitly that that was not the case: see paragraph 14 of its Reasons. But Mr Matthews' submission, powerfully and clearly argued on his behalf today by Mr Malone (who did not appear in the Tribunal), is that that conclusion was wrong in law."

8. The end result of the judgment was that the dismissals were based on redundancy within the meaning of the 1996 Act and that liability for dismissals remained with Mr Matthews and did not transfer to his former employees under these regulations.
9. The issues sought to be raised in the appeal are set out in the opinion of counsel which Mr Matthews relies on, in effect, as his argument for permission. The advice is produced in measured terms. It relates the difficulty that arises from the fact that Mr Matthews' application was out of time and raising concern about the prospect of permission being given to appeal on the basis that this is, in reality, would be a third appeal, and therefore run into difficulties under the provisions of Civil Procedure Rule 52.13.
10. Having analysed those points, counsel then tackles what I shall summarise as the merits. He concludes that if permission to appeal were to be granted, Mr Matthews has good prospects on the substantive issues or the merits. He is prepared somewhat unusually, but no harm in the robust approach, to put a percentage possibility on the prospects if the procedural hurdles are overcome, which he puts at 65 percent. He criticises the reasoning of the Employment Appeal Tribunal and in particular describes the problems relating to the Tribunal's analysis of the time of transfer. He then considers the way in which the Employment Appeal Tribunal dealt with the question of whether there had been a dismissal, and believes it to be strongly arguable that there was no dismissal at all but rather an implied agreement to replace the notices of dismissal with an agreement to transfer the applicant's employment. He advises that that, too, is an issue which might properly be remitted.
11. Finally, in relation to the question, were the dismissals such as to place liability for them within the appropriate regulation 5(2)?, he says that this part of the decision is the hardest to analyse. He then accepts the point as a difficult one but explains his view that:

"If an employer who cannot sustain his business gives notice of dismissal to his employees and then secures a relevant transfer of his business before or at about the time when such notices expire, then assuming the dismissals takes effect at all the dismissals are in the event transfer related."

12. In my judgment, given the terms of counsel's advice, it seems to me that there are serious issues to be considered and that it would not be right to refuse permission to appeal. Accordingly, I shall grant permission. The case will be listed before a three-judge constitution; one of the three judges may be a High Court judge.
13. I have already indicated to Mr Matthews the proper approach to the issue of the alleged fresh evidence, which has been put before the police, or may indeed result from a police investigation into the allegations of perjury, but I shall repeat it in summary form: it is not enough for him to come to court with material of this kind, and in effect, wave it at the court saying, here is fresh evidence. The whole question of how that material, whatever form it takes, and whatever the ultimate decision of the Crown Prosecution Service, should be discussed with counsel, and counsel must make the appropriate applications if this Court is to be invited to consider fresh evidence.
14. The final observation I make to Mr Matthews is that he should not misunderstand the effect of the grant of permission. What it means is that I think the case should be considered by the full Court. He must not develop any overwhelming sense of optimism. The decision will be made by three judges after hearing both sides.
(Application for permission to appeal allowed)