England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM READING COUNTY COURT
HHJ OLIVER
Claim Number: 0RG05946

		Royal Courts of Justice Strand, London, WC2A 2LL
		16/11/2012

Lord Justice Elias :

1. This is a renewed application for permission to appeal following the refusal on paper by Mummery LJ. It is a second appeal and the second appeal test therefore applies. That means that the appeal must raise an important point of principle or practice, or there must be some other compelling reason for the Court of Appeal to hear the appeal. I return to that issue below.
2. I heard submissions from the Company Secretary, Mr Proctor put, if I may say so, in a most attractive and courteous way. He caused me at least to reserve my decision, unusually, in order to give a little more consideration to the points he was making.
3. The background to the case is this. Edward Rehill, together with his brother, John Rehill, were the directors of Marlow Inns Ltd, the appellant company. It operated a public house at Marlow Bottom. Edward was the manager of the pub. According to a statement made by John – although the facts may well be in dispute – John was going to close the pub because of unaccountable stock losses but Edward persuaded him not to because he did not want to lose his employment near his 61^st birthday. It was agreed that the pub would stay open, that Edward would be paid £200.00 per week gross and that if he could improve turnover and margins then he might take a share of the bonus commission on top of that.
4. The pub continued to operate. Edward had to determine his own hours of work. The pub was closed down following Edward's 65^th birthday, when he retired. He complained to the Commissioners that he was not receiving the national minimum wage. The Commissioners agreed after investigating the matter that he had not been paid the appropriate amount and issued an enforcement notice pursuant to section 19 of the National Minimum Wage Act 1998. It required a total sum of £9,349.00 to be paid to Edward by the company, that sum being the Commissioners' assessment of the arrears.
5. There is a right of appeal to an employment tribunal but in the event that was submitted a day late and was dismissed. Thereafter the Commissioners issued proceedings under section 19(D)(1)(c) of the Act (as amended by the Employment Act 2008) to recover the sum owing under section 17 which the company had not paid.
6. A number of defences were originally advanced to resist this action. It is not necessary to deal with them because it is now accepted with respect to most of them that they cannot now be pursued. In particular there is no right to contract out of the Act and I am satisfied that it could not be contended that there was any kind of understanding that Edward would restrict his hours of work such that once he had earned £200.00 at the NMW he would work no longer in that week. In my view it must have been the intention that he would do such work as was necessary to run the pub properly.
7. However, one argument that Marlow Inns submit they ought to have been allowed to run is an argument based on estoppel. The submission as I understand it is effectively as follows:

(1)The action to recover monies due by virtue of section 17 is a claim in contract.

(2) That means that any defence available to a contractual claim ought to be available to the employer; the Commissioners are not in a better position than the employee would have been had he sought to enforce his claim in contract.

(3)Here there was a potential defence, namely that Edward was estopped from claiming this money.

8. The basis of the alleged estoppel, as I understand it, is that by his conduct in not making any complaint at all during his period of employment, Edward was representing that the company was meeting its legal obligations so far as the payment of wages were concerned. He should not now be able to make a claim which was at odds with that representation.
9. The Commissioners contended that this defence (and others which I need not consider) was an abuse of process and disclosed no reasonable defence and they sought in effect summary judgment.
10. The matter was first heard by Deputy District Judge Comiskey who upheld the Commissioners' submissions. He considered that the court had no jurisdiction to hear the matter. But even if it did, he was satisfied that it was contrary to the policy of the Act to allow an estoppel argument to be run in this way.
11. There was an appeal to Judge Oliver in the Reading County Court. He dismissed the appeal. He noted that contrary to the view of the judge below, the estoppel argument could not in fact have been run in the employment tribunal. But he also considered that the estoppel argument would run counter to the policy of the Act, which was to ensure that the statutory minimum wage was paid. He left open the question whether estoppel could be relied upon where the other party to the action were the Commissioners of Revenue and Customs and not the employee himself. The judge observed that if there was any separate issue relating to the duties of Edward as director of the company or any complaint about breach of those duties that would have to be determined in separate proceedings.

Discussion.

12. It seems to me there are three principal issues. The first is whether a second appeal could in principle be justified here; the second is whether estoppel is ins principle capable of being relied upon; and the third is whether it could be established on the facts of the case.
13. I am persuaded by Mr Proctor that if the estoppel argument has any merit as a matter of law then it is a point of some importance to determine whether it could properly be run against the Revenue in a case of this kind where the claim is one in contract.
14. However, the real difficulty, it seems to me, lies in the other two issues. First, I think that there is no realistic prospect of establishing that estoppel would be open as a defence. It is impossible to contract out of the Act by express agreement, so in my view it cannot be possible for the employee's rights to be cut down by estoppel. It would undermine the protection which the Act is designed to provide.
15. Even if I am wrong about that, I do not think it arguable that there is some kind of estoppel binding upon Edward. I do not think it can be said that he has by his conduct - whether it be his actions or his failure to act - represented in any way at all to the company that it company was acting in accordance with the law. First, he may not have known that the company was in breach until he had left. But even if he did know and had cynically and deliberately waited until he had retired to make this claim - which is obviously a possibility - and failed to disclose that he was not being paid the requisite wage when he knew that was the position, that is still not, in my view, capable of constituting a representation that there was no breach of the Act. He may have failed in his duties, but that is a different matter.
16. If there is any claim here it seems to me, as it did below, that it would be for negligence and/or breach of contract in failing to alert the company to the fact that there was breach of the Minimum Wage Act and that the company was building up liabilities to Edward. Whether the company would be able to establish such a breach and perhaps more relevantly, whether the company could establish that a loss had been suffered as a consequence of the breach is another matter, and obviously I say nothing about that. But if there is any claim against Edward, it seems to me that it must lie in that area and no counterclaim of that kind was ever advanced in the courts below.
17. Accordingly, for these reasons I do not grant permission to appeal because I do not think that the appeal has any realistic prospect of success, notwithstanding the able way in which the case was put by Mr Proctor.