England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM BRADFORD CROWN COURT
His Honour Judge Benson
T20060236

		Royal Courts of Justice Strand, London, WC2A 2LL
		7 April 2009

Lord Justice Moses :

1. The issue in this appeal is whether there was evidence on which a reasonable jury could conclude that the appellant was an employer and, if so, whether the judge adequately directed the jury as to that issue. That was the only live issue in the case.
2. On 24 May 2007, at Bradford Crown Court, the appellant was convicted of an offence under s.33(1)(a) of the Health and Safety at Work Act 1974 (the 1974 Act) in failing to discharge a duty pursuant to s.2(1) of that Act and of contravention of the Work at Height Regulations, contrary to s.33(1)(c) of that Act. He was convicted of another offence irrelevant to this appeal. The only dispute was whether the appellant fell within the scope of the Act. If he did, it was not disputed that he was in breach of the relevant provisions of the Act and Regulations. We can, accordingly, deal with the facts shortly.
3. During 2005 the appellant took charge of the building of an extension to a detached house in Bradford. A number of unqualified Slovakian nationals were paid between £25 and £30 per day to work at the site. On 28 November 2005 one of them, Dusan Dudi, fell from a raised platform where he was demolishing a wall. When he fell, the wall collapsed and fell on top of him. Tragically, he suffered severe brain injuries, leaving him with permanent disabilities relevant to the application for permission to appeal against sentence.
4. The issue, as we have indicated, was whether the prosecution could prove that the appellant was an employer of any of the Slovakian men within the meaning of the 1974 Act. By s.53 of the 1974 Act:-

"'Employee' means an individual who works under a contract of employment…and related expressions shall be construed accordingly;"

The essential submission of the defendant at trial, both before the judge, at the close of the prosecution case, and before the jury, was that none of the Slovakian workers were employees within the meaning of s.53. The full court gave leave to argue that the judge wrongly ruled that there was evidence on which a reasonable jury, properly directed, could conclude that the appellant employed one or more of the Slovakian workers. It appears the full court did not give permission in relation to the related ground as to the terms in which the judge directed the jury. We shall do so.

5. The scrupulous accuracy of submissions advanced by Mr Robert Smith QC, who did not appear at trial, enables us to avoid any lengthy exegesis as to the principles by which employment can be identified for the purposes of the 1974 Act. Mr Smith submitted that before the jury could be sure that the defendant was an employer there first had to be evidence of a contract. This required evidence of what has been described as "mutual obligations", in other words, evidence that both the defendant and a worker owed each other obligations. That would be sufficient only to establish a contract. Secondly, the prosecution had to prove that the nature of the contract was one of employment, in other words, that in return for payment the worker placed himself under an obligation to work. It is on that issue that the appeal is focussed. Thirdly, if the worker was under an obligation to the defendant to work, it was necessary to prove that the contract was one of employment and not for services. For that purpose the prosecution would have to prove that the worker was under the control of the defendant. In the instant case, Mr Smith submitted, there was no evidence that any Slovakian worker was under any obligation to the defendant. True, some of them, in fluctuating numbers, turned up daily to work on the site and when they worked for a day they were paid. But it was not possible to infer from that fact alone that during the day any worker was under any obligation; there was no evidence to establish other than that he was free to leave at any time he chose.
6. Framed carefully as those submissions were, they accurately represent the relevant legal principles. Indeed, we did not understand the prosecution to dispute them. There is ample authority for the proposition that a worker who is under no obligation to work every working day and who chooses when he will turn up for work may, nonetheless, be under a contract of employment, during the period he is working. Casual workers may be working under a contract of employment, when they choose to work. Difficulty has arisen because of confusion between cases in which it was necessary to identify a global contract of employment pursuant to which a worker is obliged to turn up for work and an employer is obliged to provide work, and those cases in which despite the absence of any overarching contract, whilst working his stint, the worker is, nonetheless, under an individual contract of employment.
7. The distinction was observed in Carmichael v National Power PLC [2000] IRLR 43, the case of the guides working on a "casual as required basis". Lord Irving LC noted that the case was not advanced on the basis that when actually working as guides the claimants did so under successive ad hoc contracts of employment (see §§ 3 and 20 of his speech). Contrast the case of Cornwall County Council v Prater [2006] IRLR 362 in which a teacher did work under a contract of service even though the local authority was not under any contractual obligation to offer pupils and she was under no contractual obligation to accept them. In that case the issue was whether, whilst she taught, she was teaching pursuant to a contract of service (see Longmore LJ, § 43). Nowhere, we respectfully suggest, is the issue more clearly put than by Elias J in Stephenson v Delphi Diesel Systems Limited [2003] ICR 471:-

"11. The significance of mutuality is that it determines whether there is a contract in existence at all. The significance of control is that it determines whether, if there is a contract in place, it can properly be classified as a contract of service, other than some other kind of contract…

13. The question of mutuality of obligation, however, poses no difficulties during the period when the individual is actually working. For the period of such employment a contract must, in our view, clearly exist. For that duration the individual clearly undertakes to work and the employer undertakes to pay for the work done. This is so, even if the contract is terminable on either side at will. Unless and until the power to terminate is exercised, these mutual obligations (to work on the one hand and to be paid on the other) will continue to exist and will provide the fundamental mutual obligations.

14. The issue whether the employed person is required to accept work if offered, or whether the employer is obliged to offer work if available, is irrelevant to the question whether a contract exists at all during the period when the work is actually performed. The only question then is whether there is sufficient control to give rise to a conclusion that the contractual relationship which does exist is one of a contract of service or not."

As that judge was later to point out in a different statutory context, the fact that there is no overarching or umbrella contract and therefore no employment status in the gaps does not preclude such a status during the period of work (see James v Redcats (Brands) Limited [2007] IRLR 296 § 84). Elias J adopted the observations of Waite LJ in McMeechan v Secretary of State for Employment [1997] IRLR 353 that:-

"The better view is not whether the casual worker is obliged to turn up for, or do, the work, but rather if he turns up for and does the work, whether he does so under a contract of service or for services." (page 359)

8. If a casual worker is under a contract whilst at work the question then arises whether the degree of control over the worker is sufficient to recognise a contract of employment and not for services (see Ready Mix Concrete (South East) Limited v Minister of Pensions and National Insurance [1967] 2 QB 497 at 515-516).
9. Mr Smith submits that there was no evidence that even when the Slovakian workers turned up for work at site they were under any obligation to remain for any period of time on the particular day they appeared. True, there were some Slovakian workers who regularly appeared for work; others made clear in evidence that they regarded themselves as free to turn up or not. But even when they did turn up for work on site there was no evidence they regarded themselves as under any obligation to stay at work on that particular day, nor evidence that the defendant expected them to do so.
10. Ground 1 of this appeal contends that the judge wrongly failed to appreciate the importance of evidence as to the nature of any, if any, obligation a Slovakian worker was under when he did turn up for work. When ruling at the close of the prosecution case, the judge merely considered the issue of control without grappling with the logically prior issue of the nature of any obligation the worker was under whilst at work.
11. In giving his ruling the judge referred to the need to establish an "irreducible minimum of mutuality of obligation". Mr Greaney, on behalf of the defendant, had relied on the evidence of casual workers who made it clear that they did not regard themselves as being under any obligation to turn up for work on site and would go home to Slovakia when they chose. The judge identified evidence of control whilst the men were on site. He also referred to what he described as "the economic reality" supported by aspects of the evidence which established that the defendant paid for the labour and provided transport for them, sometimes picking them up, bringing their lunch and providing materials for their work. On that basis he ruled that the jury would be entitled to conclude that the relationship of employer and employee existed.
12. Mr Smith rightly points out the judge made no explicit reference to the question whether the workers, when they did turn up for work, were under any obligation to remain at work until the end of that working day. Rather, having noted that their evidence was they were under no obligation to turn up for work at all, he focussed his attention on the issue of control and the transport and food provision the defendant from time to time made available to the workers.
13. We agree that the judge ought, more explicitly, to have directed his attention to the essential issue whether those workers who did turn up for work on any particular day were under an obligation to work and remain at work during the day for which they were paid.
14. It seems to us that the reason why the judge did not explicitly deal with that issue is attributable to the way the defence case was canvassed before him at that stage of the trial. The defence statement had contended that "there was insufficient mutuality of obligation between those said to be employees and the person in charge to render those people employees". The judge correctly identified the legal principles in his citation of Harvey on Employment Law. He noted that Mr Greaney, on behalf of the defendant, had relied upon Carmichael v National Power PLC but that, as we have demonstrated, does not deal with the question relevant in this case, namely whether, during the period they worked, the Slovakians worked under a contract of employment. Mr Greaney had referred to evidence relevant only to the question whether there was any overarching obligation to turn up for work. But that evidence did not deal with the question of the nature of any obligation when at work during the day. In those circumstances it is not surprising that the judge made no specific reference to the question whether there was evidence that a Slovakian was under an obligation to work throughout the day at the end of which he expected to be paid. The question for us is whether there was, at that stage of the case, evidence that each worker who turned up for work was under an obligation to work and remain at work throughout the day for which he expected to be paid.
15. In our view there clearly was such evidence. Although no specific question was asked of any Slovakian worker, it seems to us fanciful to suggest that once a worker had turned up for work or had been brought to work in transport provided by the defendant he would have regarded himself as free to quit the site during the day, leaving others to get on with the work. The obvious inference from the circumstance of turning up for work seems to us to be that the worker expected to work during that day and to be paid for that work at the end of it. Some evidential support for that natural inference is to be derived from the fact that from time to time the defendant picked them up, provided transport and sometimes brought them their lunch. It would be odd if he bothered to do that if they felt free to work for half an hour and then leave. On the contrary the judge notes evidence that the working hours of the day were 9 to 5.
16. In those circumstances, whilst we acknowledge the point was not explicitly taken, nor referred to by the judge, there was evidence, at the close of the prosecution case, on which a jury could reasonably conclude that once the worker had turned up at the beginning of the day he was under an obligation to remain at work until the end of that working day. It was for that that he was paid. For those reasons we reject the first ground of appeal.
17. We turn then to the manner in which the judge directed the jury. Two substantial criticisms are made of the summing up. The first criticism is that the judge failed properly and clearly to identify the issues on which the jury had to reach conclusions before it could convict the defendant, as an employer, and thus within the scope of the 1974 Act. We stress how important this was in a case such as this. A worker had suffered a terrible injury which was likely to attract the sympathy of the jury. The only defence advanced was, so it might appear to the jury, technical. It was thus all the more important that the judge should make clear to the jury the issues it was necessary to resolve against the defendant before they could convict and to remind them of the evidence which went to those issues.
18. The judge started his directions of law by correctly telling the jury that it had to be sure that a contract of employment existed between the defendant and some or all of the workers. He then referred to Mr Greaney's reference, on behalf of the defendant, to "mutuality of obligations". It is true that that was a phrase which readily springs to the lips of the Employment Appeal Tribunal and of the Court of Appeal (see e.g., the EAT in McMeechan and the Court of Appeal in Clark v Oxfordshire Health Authority [1998] IRLR 125 at § 22). It is not however a phrase, we imagine, familiar to a Bradford jury. The judge accurately explained that it meant that the jury would have to be sure that there should be more than just work provided on the one hand, in exchange for payment on the other. He reminded the jury of the defence submission that the relationship between the Slovakians and the defendant was so casual that it did not amount to the relationship between employer and employee. That, as it seems to us, is not particularly informative as to how the jury should judge whether such a relationship existed.
19. The judge then turned to what he described as the badges or indicators of a contract of employment. He referred to control, selection, supervision, responsibility for payment and what he described as "continuity of a body of individuals". But he continued:-

"Those are some of the factors. They are not exhaustive and, at the end of the day, it is for you to consider the evidence and decide firstly does it establish that Pola was in charge of the site so as to be responsible for the activities on it and secondly…you must go on to consider whether he was, in fact, the employer of the Slovakian workers…"

20. The judge went on to outline the evidence given. It is apparent that neither any worker called on behalf of the prosecution nor the defendant or his witnesses explicitly dealt with the question now raised as to whether any worker who turned up for work was under an obligation to remain on site until the end of the working day.
21. In our judgment the judge did fall into error in failing to explain to the jury what factors it should deploy to test the question whether the relationship between Slovakian workers and the defendant was so casual as not to amount to a contract of employment. Furthermore, when dealing with what he described as the badges or indicators of a contract of employment the judge dealt with those factors compendiously even though they went to different issues. The factors which he identified went to the question of whether there was any contract at all, and also to the question of whether even if there was a contract, it was a contract of service as opposed to a contract for services. By dealing with the factors compendiously the judge failed to focus the jury's attention on the separate questions which they were bound to answer.
22. Furthermore, the judge failed to direct the jury that it had to consider those different factors before it could reach a conclusion adverse to the defendant. By using the expression "the factors I suggest you consider" and referring to them as being "some of the factors", his directions were insufficiently prescriptive. Without proper consideration of those relevant features the jury could not reach a conclusion as to whether the prosecution had proved there was a contract of employment? For the effect of those errors, it is necessary to look at the directions as a whole in the context of the factual issues and evidence to which the judge referred. It must have been plain to the jury as a result not only of the submissions advanced on behalf of the defendant, a copy of which we have seen, but of the directions to the jury that they had to be sure that there was a contract of employment with one or more of the Slovakian workers. Moreover, although the factors were dealt with compendiously and by way of suggestion rather than direction they were the only factors which had been canvassed before the jury. In those circumstances we reject the possibility that the jury were left to speculate as to whether there were other factors which they might have taken into account.
23. We then turn to the second ground on which the summing up is criticised. As we have accepted, the jury had to be sure, before it convicted, that when at work the worker was under an obligation to work during the day for which he was paid. The jury had to be sure that a worker was not entitled to leave work on a particular day as and when he chose. Mr Smith QC rightly points out that the jury's attention was never drawn to this issue nor was it drawn to any evidence which went to the resolution of that issue. Counsel for the defence had made it clear in his submissions that there was no evidential basis on which the jury could be sure that any of the Slovakian workers were under an obligation to work. But he had gone on, as he had done in submission, to refer to evidence from the workers that they could turn up for work when they wanted. As we have already remarked, that did not directly go to the question whether they were under an obligation to work after they turned up for work at the beginning of the day.
24. We accept the submission that the judge ought to have made that point clear to the jury, even though he may have been deflected from doing so by the way the defence put its case.
25. But despite that criticism it does not follow that the verdict, based on the conclusion that the defendant was an employer, is unsafe. The point had not been canvassed directly before the jury because no witness had been asked about it directly. Of course, it was for the prosecution to establish the point but we are not surprised that no witness was asked directly about it. The answer seems to us to have been obvious. It seems to us fanciful to suggest that any particular worker, when they turned up for work at the beginning of the day to a building site, regarded himself as free to walk off site during the course of the day, leaving his fellows to get on with their work. We are prepared to infer from the very nature and pattern of the work on the building site no one who turned up for work expecting to be paid for a day's work would have regarded himself as free to leave during the course of that day. In those circumstances we reject this ground of appeal also. In doing so we wish to acknowledge the difficulty of providing clear and comprehensible directions to a jury in a branch of the law which has produced, despite so much learning, abundant difficulty. Despite that difficulty, we also wish to emphasise the importance of a judge making clear to the jury, in comprehensible language, the issues which it must determine and the evidence on which it was necessary for the jury to focus in order to resolve each issue. However, for the reasons we have given, the appeal against conviction is dismissed.

Mr Justice Hedley:

SENTENCE

26. The applicant renews his application for leave to appeal against sentence confining his submissions to the making of the compensation order in the sum of £90,000 in respect of his sentence on Count 4 of the indictment. We propose to grant leave on that limited ground.
27. Compensation orders are now governed by the provisions of Section 130 Powers of Criminal Courts (Sentencing) Act 2000. It is accepted that the judge had power to make such an order in this case, the question being whether he should have exercised that power. The provisions requiring a court to give reasons why it is not making a compensation order – Section 130(3) – and those giving priority to a compensation over a fine – Section 130 (12) – strongly suggest an intention on the part of Parliament to encourage the making of such orders.
28. In this case there is no doubt but that the person affected by the breach of Regulations has suffered personal injuries and that the appellant is good for the sum of £90,000 ordered by the judge. It is noteworthy that the fines were tailored to accommodate the compensation order and that no prosecution or defence costs were ordered. It follows that it is very much for the appellant to show why no order (or indeed this order) should have been made.
29. Count 4 involved a breach of the Work at Height Regulations which were themselves made under the Health and Safety at Work Act 1974. The incident arose out of a fall sustained by one Dusan Dudi, a Slovakian citizen who was working on the appellant's premises in circumstances in which the jury found the appellant to be subject to the duties of an employer. Mr Dudi sustained serious injury described in the report of 30^th March 2006 by Dr. M. Busby, a consultant neurologist, as follows –

"…..a severe head injury. This has resulted in him being left in a severely disabled and dependent state. I think it highly unlikely that he is going……..to be able to return to work. Indeed I think it likely that he will be left in some state of dependency for the rest of his life."

The Judge had two further pieces of written evidence available to him. The first was evidence from an occupational therapist and the second was a statement from Mr. Dudi's brother-in-law in Slovakia (whence Mr. Dudi had returned) which described his continuing dependent state and disabilities.

30. The judge gave a full and careful ruling in respect of the making of the compensation order. The learned judge carefully reviewed and considered the above evidence. He reminded himself that he could have regard to the Judicial Studies Board "Guidelines for the Assessment of General Damages in Personal Injuries Cases." In the 9^th Edition (2008), if one took this to be moderate brain damage in which there is moderate to modest intellectual deficit, the ability to work is greatly reduced if not removed and there is some risk of epilepsy, the suggested bracket for general damages for pain and suffering alone is £58,000 to £96,000. There are some features which might arguably put this case in a higher bracket.
31. The judge had satisfied himself that this injured man could not benefit from an insurance policy and was unlikely to have an effective civil remedy in damages (mainly because of the appellant's means and the incidence of costs). It was also clear that he was entitled to state benefits neither here nor in Slovakia and, of course, the offence committed was not within the criminal injuries compensation scheme. In all the circumstances it was unsurprising that the judge should conclude that it was just to make the order that he did.
32. It was submitted to the judge, and repeated to this court, that he should not have exercised his powers as he did. This submission is founded in a series of cases which emphasise that compensation orders should be confined in their use to simple and straightforward cases where the amount of compensation can be readily and easily ascertained – see Donovan [1981] 3 Cr.App. R (5) 192 per Eveleigh LJ at 193. This approach has been adopted and followed in Hyde v Emery [1984] 6 Cr.App R (5) 206, Briscoe [1994] 15 Cr. App. R. (5) 699 and Berwick [2008] 2 Cr.App R (5) 31. It is noteworthy that Berwick (by some way the most recent case) involved detailed and complex matters as well as disputed oral evidence in a case of cheating the revenue.
33. This court has, however, derived assistance from an early consideration of compensation orders by Scarman LJ (as he then was) in Inwood [1975] 60 Cr. App. R. 70 where at p.73 he says this –

"Compensation orders were not introduced into our laws to enable the convicted to buy themselves out of the penalties for crime. Compensation orders were introduced into our law as a convenient and rapid means of avoiding the expense of resort to civil litigation when the criminal clearly has means which would enable the compensation to be paid. One has to bear in mind that there is always the possibility of a victim taking civil proceedings, if he be so advised. Compensation orders should certainly not be used when there is any doubt as to the liability to compensate, nor should they be used when there is a real doubt as to whether the convicted man can find the compensation. It is true the section leaves a considerable area of judgment to the court. The statue requires only that the courts shall have regard to the means of the convicted man, so far as they appear or are known to the court. In a number of recent cases before this Court, however, it has been made clear that the courts must follow a common sense course, bearing in mind the factors to which I have referred."

This court also notes that since the time even of Briscoe the courts have developed expertise in financial assessment from experience in the now frequent confiscation proceedings under the Proceeds of Crime Act 2002 and its statutory predecessors. It may be that the very cautious approach adopted in the early cases needs some modification and full weight to be given to the words of Scarman LJ.

34. It is submitted on behalf of the appellant that on the basis of the actual information available to the judge, he should not have made the order he did. It is contended both that the information is partial and inadequate and also that the complexities raised by it take this outside the ambit of those cases for which this Court has said compensation orders are designed. Even if it be accepted that in simple cases (e.g. those below the criminal injuries compensation minimum award) a compensation order may be made in respect of personal injuries, it should not be done in a case of this medical complexity.
35. We have considered with care both the reasoned ruling of the learned judge and the criticisms of it made on behalf of the appellant. We are satisfied that the judge was not only entitled to make the order that he did but was right to do so. Our reasons are as follows. First, there was a clear causal link between the conviction and the injury. Secondly, the judge had available to him sufficient evidence of the gravity of the injury to demonstrate that it was worth far in excess of anything that he was minded to award. Thirdly, the judge had satisfied himself that there was no more convenient or practicable alternative route of which Mr. Dudi might avail himself. Fourthly, the judge had satisfied himself that the appellant had the means to satisfy the order that he had in mind. Fifthly, the order was compliant with both with the policy of Section 130 of the 2002 Act and its practice in that he gave priority to the compensation order over any other financial order. Lastly, and in our view importantly, the order was just and proper in the context of the proven culpability of the appellant.
36. Accordingly whilst we give leave to appeal against the making of the compensation order, the appeal is itself dismissed.