England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF HIS HONOUR JUDGE POULTON
(Canterbury County Court)

		Royal Courts of Justice Strand London WC2 Thursday, 14th March 2002

1. LORD JUSTICE KENNEDY: This is an appeal by permission of the trial judge from a decision of His Honour Judge Poulton who, at Canterbury County Court on 16th July 2001, ordered that the claimant's claim be dismissed with costs.

Facts

2. The background facts which give rise to the claim are clearly set out in the judgment of the judge. The appellant was a lorry driver and in late 1988 or early 1989 his employment was transferred to the defendants from Car Transport Ltd. On 8th February 1989 the defendants - who I understand to be the same company although their name has very slightly changed, then Richard Lawson (European) Ltd - and the Transport and General Workers' Union entered into an agreement covering the employees of the Port Richborough Depot where the claimant was employed. The effect of that agreement was to create a closed shop. Clause 4 of the agreement provided:

"It is accepted by both parties that employment under this Agreement is dependent on any prospective employee being a member of the Transport and General Workers' Union and adherence in entirety to the terms of the Agreement."

3. Clause 5 dealt with the position of the shop steward. Under the heading "Recognition" it provided:

"The Company will recognise the Shop Steward and the Deputy Steward formally elected by the members of the Depot as the official representatives of the Union. The Stewards agree to act in a responsible manner and confine themselves to specific issues relating to the welfare of their members."

4. Subsequently there were problems apparently over holiday pay. On 14th August 1996 Mr Cowie, the finance director of the defendants, met Mr Selsby, the shop steward, to try to resolve those problems. The result was an agreement which, in due course, they both signed, details of which I need not recite.
5. In 1997 the claimant volunteered for redundancy. His holiday pay entitlement was calculated in accordance with the agreement of 14th August 1996. It was contended on his behalf that the 1996 Agreement was not binding and that he was entitled to be paid in accordance with earlier agreements made in 1989 and 1990, under which, he contended, he was entitled to an additional £4,290.63 by way of holiday pay.

Pleadings

6. Proceedings were commenced. On 17th May 2000 District Judge Taylor ordered that paragraphs 4, 5, 6, 9 and 10 of the amended defence be tried as a preliminary issue. Hence, the matter came before Judge Poulton in the way to which I have referred. Paragraph 4 referred to the agreement of 14th August 1996. Paragraph 5 asserted that -

"Mr Mick Selsby, who represented the Sheerness drivers at the meeting, and who signed the agreement on their behalf, had actual or alternatively ostensible authority to sign on their behalf."

7. Paragraph 6 asserted that, in consequence, from 14th August 1996 the terms of that day's agreement applied to the claimant's holiday entitlement.
8. Paragraphs 9 and 10 related to an alternative defence case, namely that if the question of holiday entitlement was not resolved in 1996 then it was resolved by meetings and correspondence in 1997. That was referred to as the compromise agreement and, as the judge said, if he resolved the issue in relation to the August 1996 Agreement, that is to say the variation agreement in favour of the defendants, the need to consider the alleged compromise agreement did not arise.

Before the Judge

9. The case for the claimant was presented on the basis that Mr Selsby, although shop steward, had no authority to conclude the 1996 Agreement.
10. The agreement was said to offend Sections 178 and 179 of the Trade Union and Labour Relations Consolidation Act 1992, but, as the judge explained, those sections were not relevant, so the issue then became simply whether the August 1996 Agreement was binding and that turned on the status of the shop steward.
11. The judge referred to the judgment of Mr Justice Kilner-Brown in Land & Wilson v West Yorkshire Metropolitan County Council (1979) IRLR 174 and to the speech of Lord Wilberforce giving the decision of the House of Lords in Heaton's Transport v Transport and General Worker's Union [1973] AC 15. In the light of those decisions he concluded that where there is a closed shop agreement there can be no doubt that the shop steward of the Transport and General Workers' Union has authority to negotiate on behalf of the members. He then considered the form of authority vested in the shop steward. Was it actual (express or implied), or ostensible? The judge found that the August 1996 Agreement was, in his words, "well within" the shop steward's implied authority.
12. For the appellant reliance was placed on the evidence of Mr Alec Young, the Branch Secretary, who said that in August 1996 established Transport and General Workers' Union procedures were not followed. The agreement in draft was not discussed with the drivers and shop stewards and sent to the Union's district office as it should have been. He relied on a Transport and General Workers' Union document of 11th December 1991 sent to Union branches, part of which reads:

"There may be circumstances where a substantive agreement has to be varied, but advice should be sought from a full-time officer before contemplating any such action. In any event, it is for the full- time officers to be signatories to substantive agreements."

13. That, it was said, deprived the shop steward of express authority. The judge doubted that, but went on to say that the wording of the document was not such as to restrict the ordinary implied authority of a shop steward so that if he makes a variation agreement of whatever kind then he is outside the ambit of his implied authority. That made it unnecessary to consider ostensible authority. But the judge held that Mr Selsby, in his words, "was indeed held out by the work-force as having authority to act on their behalf".
14. The judge then went on to deal with the compromise agreement and on that issue he found in favour of the claimant.

This Appeal

15. As was pointed out by Mr Evans, early in his submissions to us today, the hearing before the judge proceeded without evidence being called although witnesses were in attendance at court. That was at least in part because Mr Ramsden for the defendants made it clear to the judge that in relation to the issue of ostensible authority he was prepared to proceed upon the basis that everything said by the claimant's witnesses in their statements was true. He did not make that concession in relation to other issues. So it seemed logical to invite Mr Evans and Mr Ramsden to address us, first, in relation to the issue of ostensible authority and that they have done.

Relevant Facts

16. On the assumption noted above (that is to say where the statements disclose a conflict of evidence that conflict should be taken to be resolved in favour of claimant) certain facts emerge that seem to me to be relevant or potentially relevant to the issue of ostensible authority.

(1) From 1988 onwards the claimant was offered employment and then employed by the defendants on terms which the employers believed to be endorsed by his union. Our attention was drawn to a letter of 21st September 1988 addressed to the claimant individually by the defendant. Part of it reads:

"I am therefore pleased to offer you a permanent position with our company as a transport driver under terms and conditions which are subject to agreement and ratification with the Trade Union.

Once these terms and conditions have been agreed upon, I will write to you again confirming them, at which time I shall require from you confirmation of your acceptance or otherwise of our offer of employment."

17. On 11th January 1989 the defendants wrote again to the claimant:

"Following the completion of our negotiations with your Trade Union representative, I am now pleased to confirm that we have agreed on terms and conditions for your employment with our company on the Peugeot contract at Port Richborough.

Thus, you are now formally offered permanent employment with our company as a transporter driver commencing on Monday 6th February 1989 under the terms and conditions of the agreement, details of which can be provided for you by your Trade Union representative or obtained from a copy which is held in the depot office by the Depot Manager.

Given that these terms and conditions are acceptable to you, then I would ask you to sign the attached acknowledgement of acceptance of employment and return it to me in the envelope provided."

18. I would infer that that was done.

(2) As indicated earlier in this judgment, the defendants on 8th February 1989 made an agreement with the Transport and General Workers' Union as a result of which Port Richborough became a closed shop (clause 4) and the elected shop steward and his deputy were recognised as the official representatives of the union (clause 5).

(3) Subsequently, as one would expect, over the years between 1989 and 1996, the shop stewards did negotiate with the employers in relation to a variety of matters, including holiday pay (see, for example, the addendum to Agreement No. 6 dated 18th September 1990 at page 166 of Vol II of the exhibits).

(4) Mr Selsby was in 1996 the duly elected shop steward. He had apparently been elected in 1989 and re-elected subsequently.

(5) On 11th June 1996 Mr Selsby and Mr Nolder, another union official, met Mr Cowie, the defendants' finance director, and discussed holiday pay. The employers produced a list of holiday entitlement for the men to consider prior to entering into an agreement to put all holidays on what was described as "real time".

(6) There was an issue as to whether in fact what happened on 11th June was put to the claimant and his workmates, so the case must proceed at this stage on the basis that it was not.

(7) However on 14th August 1996 Mr Cowie and Mr Selsby negotiated the variation agreement which Mr Selsby returned signed in October 1996. Mr Selsby asserts that between August and October he obtained the drivers' approval of the agreement which he had in due course signed. That is disputed. For present purposes it must be assumed that he did not obtain that approval and that, as the claimant contends, he was not fully aware of the agreement until the problem of redundancies arose in 1997.

(8) As Mr Evans points out, and as this claim demonstrates, the 1996 variation reduced the holiday pay entitlement of the claimant in the event of redundancy.

(9) On the evidence available to the claimant which again, for present purposes, is accepted, it was not custom and practice at the defendants' depot for shop stewards to negotiate and agree matters affecting pay without prior consultation with the workforce.

(10) According to the claimant in this case there was a standing instruction of the Transport and General Workers' Union issued in 1991, to which I have referred, which was not complied with in that the agreement was concluded without reference to the union's district officer. For present purposes, I would accept that there was non-compliance.

Law

19. That summary of facts is not intended to be exhaustive, but it indicates the general nature of the factual basis upon which the judge had to proceed.
20. It is trite law that where a person, by words or conduct, represents to a third party that another has authority to act on his behalf he may be bound by the acts of that other as if he had authorised them. In the present case the defendants contend that the claimant and his fellow employees each made such a representation to their employer in relation to Mr Selsby when they elected and re-elected him as their shop steward, and when they permitted him to negotiate on their behalf in the way I have described. In practice, he could not be expected normally to have authority to enter into any bargain which might be disadvantageous to his members without an opportunity to obtain their approval. But in the context of this case the employers were entitled to assume that having raised the issue on 11th June 1996, and negotiated in relation to it on 14th August 1996 when Mr Selsby returned the agreement in October 1996 duly signed, he did so with the approval of those he represented. Nothing of which the employers were aware in the history of the relationship at this depot suggested otherwise.
21. For the appellant Mr Evans submitted that the mere existence of a closed shop does not mean that any agreement which the management negotiated with the shop steward automatically takes effect in relation to the contracts of the men he represents. I agree. He further submits that from a member's point of view, mere membership of a union, even where there is a closed shop, does not automatically vest the shop steward with unlimited ostensible authority to alter contacts of employment on behalf of his members. Again, I agree. What ostensible authority a shop steward enjoys, and its limitations, must be a question of mixed fact and law to be resolved according to the facts of each individual case.
22. Mr Evans invited us to consider the decision of Mr Justice Arnold, as he then was, at the Employment Appeal Tribunal, in Burton Group v Smith [1977] IRLR 351 which concerned the effective date of redundancy. At paragraph 21 of that judgment Mr Justice Arnold said:

"There is no reason at all why, in a particular case, union representatives should not be the agents of an employee to make a contract, or to receive a notice, or otherwise effect a binding transaction on his behalf. But that agency so to do does not stem from the mere fact that they are union representatives and that he is a member of the union; it must be supported in the particular case by the creation of some specific agency, and that can arise only if the evidence supports the conclusion that there was such an agency."

23. In the present case, as it seems to me, the evidence does support the jduge's conclusion that there ewas an agency of the type which I have described.
24. Mr Evans also relied on a decision of Mr Justice Hobhouse, as he then was, in Alexander v Standard Telephones and Cables Ltd [1991] IRLR 287. That case concerned selection for redundancy. The men contended that the terms of a collective agreement incorporated into their individual contracts of employment required selection for employment on the basis of seniority (last in, first out) whereas the employers wished to decide for themselves who should be retained. At paragraph 27 Mr Justice Hobhouse said:

"The so called `normative effect' by which it can be inferred that provisions of collective agreements have become part of individual contracts of employment is now well recognised in employment law. However, serious difficulties still arise because the principle still has to be one of incorporation into the individual contracts of employment and the extraction of a recognisable contractual intent as between the individual employee and his employer. The mere existence of collective agreements which are relevant to the employee and his employment does not include a contractual intent. The contractual intent has to be found in the individual contract of employment and very often the evidence will not be sufficient to establish such an intent in a manner which satisfies accepted contractual criteria and satisfies ordinary criteria of certainty. Where the relevant subject-matter is one of present day-to-day relevance to the employer and employee, as for example wage rates and hours of work, the continued relationship between employer and employee, the former paying wages and providing work, the latter working and accepting wages, provides a basis for inferring such a contractual intent. Where, as in the case of redundancy, the situation is one which does not have daily implications but only arises occasionally, the inference will be more difficult to sustain. Here, there had not previously been any question of compulsory redundancies. There is no previously tested position by which a local custom could be demonstrated, nor was there any previous situation involving any of the relevant individuals, or for that matter any other employees of the defendants from which it could be inferred as a matter of individual contractual intent, that individual contracts of employment were to include as a matter of contractual right and obligation selection for redundancy on the seniority principle."

25. The middle sentence of that extract seems to me to be capable of supporting the submission that even if there had been no meeting in June 1996 and no gap after the meeting on 14th August 1996 before the agreement was signed, it could still be regarded as having a contractual intent. But the defendants do not have to go that far.
26. As Mr Evans submitted, there is a distinction between collective agreements and individual contracts of employment. In the case of Alexander the judge found that the collective agreements gave rise to no contractual rights. He went on to point out at paragraph 59:

"An employer is not entitled unilaterally to vary a contract since that would be to impose terms upon the employee to which the employee has not agreed. The same principles of variation of contract apply to contracts of employment as to any other contract; it is a consensual exercise."

27. In paragraph 60 the judge said that the employer can always, in effect, give notice and renegotiate. He continued:

"In practice the unions or other representatives of the employees play a valuable role in negotiating and facilitating variations in the individual contracts of employment and frequently, probably normally, the matter is dealt with less formally; revised terms of employment are negotiated with the employees' representatives and adopted by the employees either as a matter of ratification or by implied acceptance by continuing to work for the employer upon the new terms."

28. That, as it seems to me, is precisely what would seem to have happened in this case. Revised terms of employment were negotiated with the shop steward who plainly had authority to negotiate. There was then an interval during which, so far as the employers were concerned, it was reasonable to conclude that the revised terms were adopted by the employees and thereafter the work went on apparently on those terms.
29. In my judgment, this claim, even at its highest, is a plain case of apparent or ostensible authority. Accordingly, the judge was right to decide that the claim must fail. What the conclusion would have been as to actual or implied authority if evidence had been called and tested, I cannot say. But in relation to the preliminary issue identified by the district judge, I am satisfied that the trial judge was right to decide as he did in relation to the issue of ostensible authority, and I would dismiss this appeal.
30. LORD JUSTICE MANTELL: I agree.
31. SIR SWINTON THOMAS: I agree.
Order: Appeal dismissed with the costs assessed in the sum of £7,395.49.