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Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> HR Holfeld (Belfast) Ltd v Construction Industry Training Board [2009] NIIT 783_08IT (20 January 2009)
URL: http://www.bailii.org/nie/cases/NIIT/2009/00783.html
Cite as: [2009] NIIT 783_8IT, [2009] NIIT 783_08IT
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THE INDUSTRIAL TRIBUNALS
CASE REF: 783/08
APPELLANT: HR Holfeld (Belfast) Ltd
RESPONDENT: Construction Industry Training Board
DECISION ON APPEAL AGAINST ASSESSMENT OF CONSTRUCTION INDUSTRY TRAINING BOARD
The unanimous decision of the tribunal is that this appellant ought not to have been assessed to the levy in respect of the year 2006/2007 base period. Accordingly, the tribunal rescinds the relevant assessment.
Constitution of tribunal:
Chairman: Mr P Buggy
Members: Mr W Irwin
Mr T Martin
Appearances:
The appellant was represented by Mr M Wolfe, Barrister-at-Law, instructed by Irwin McGrath Solicitors.
The respondent was represented by Mr J Coyle, Barrister-at-Law, instructed by Cleaver Fulton Rankin Solicitors.
REASONS
The appellant appeals against a levy which the respondent assessed in respect of the April 2006/April 2007 base period.
The legislation
The respondent is an industrial training board of the type envisaged by Article 23 of the Industrial Training (Northern Ireland) Order 1984 (“the 1984 Order”). Article 23 of that Order provides that an industrial training board may submit, to the relevant Government Department (“the Department”), for the Department’s approval, proposals for the raising and collection of a levy to be imposed for the purpose of raising money towards meeting that board’s expenses.
The same Article provides that the Department may make an order imposing a levy, which would give effect to the levy proposals, and which would provide for the levy to be imposed on employers in the relevant industry (except in so far as they are exempted from it by a relevant industrial training order or the levy order).
As Article 15 of the 1984 Order makes clear, the general purpose of any industrial training board is to encourage adequate training of persons employed or intending to be employed in the relevant industry. Clearly, in the context of the respondent to these proceedings, the relevant industry is the construction industry.
Article 23 of the 1984 Order was implemented, in respect of the period which is relevant in the context of this appeal, by the Industrial Training Levy (Construction Industry) Order (Northern Ireland) 2007 (“the 2007 statutory rules”).
Article 2 of the 2007 statutory rules provided for the imposition of the levy in respect of the relevant period. Article 2(2) provided that the levy was to be assessed “… in respect of each construction establishment of an employer …”. (In the context of this appeal, it is agreed between the parties that the appellants have only one relevant establishment).
According to Article 2(2) of the 2007 statutory rules, a levy can be imposed only in respect of a “construction establishment”.
Article 1 of the 2007 statutory rules defines “construction establishment”, for the purposes of those statutory rules, as meaning “… an establishment in Northern Ireland engaged wholly or mainly in the construction industry.”. (It is agreed between the parties that, for the purposes of this appeal, the tribunal should assume that there has been no relevant change, throughout the levy period, whether in terms of quantity or type, in the activities carried out by the appellant firm).
Article 1 of the 2007 statutory rules defines “construction industry” in the following terms:
“[in this Order] “construction industry” means any one or more of the activities which, subject to the provisions of paragraph 2 of Schedule 1 to the Construction Board Order are specified in paragraph 1 of that Schedule as the activities of the construction industry”.
In the present context, “the Construction Board Order” means the Industrial Training (Construction Board) Order (Northern Ireland) 1964, as amended by SRO 1967/236, and by SR 1994/312, and by SR 1997/45.
The scheme of Schedule 1 of the Construction Board Order is to specify certain activities in paragraph 1 of that schedule which, subject to certain limited exclusions (provided for in paragraph 2), are to constitute “the activities of the construction industry”.
Sub-paragraphs (a)-(f) of paragraph 1 consist of a list of activities. (In this Decision, we refer to those activities as “the listed activities”.
Sub-paragraph (g) of paragraph 1 has the potential to be of practical importance in the context of the factual circumstances of this case. The effect of sub-paragraph (g) is to provide that, when carried out in association with or in conjunction with any of the listed activities, any of the following activities are to be regarded as activities of the construction industry:
“(i) research, development, design or drawing;
(ii) operations in connection with sale, packing, warehousing, distribution or transport;
work done at any office or laboratory, at any store, warehouse, or similar place, or at a garage …”.
Sub-paragraph (h) then adds the following:
“(h) any other activity of industry or commerce carried out at or from an establishment engaged mainly in one or more of the foregoing activities”.
In our view, in the factual context of the present case, sub-paragraph (h) does not have practical effects on the scope of the term “activities of the construction industry”.
Issues
In this appeal, the appellant alleges that it ought not to have been subjected to a levy, because, at the relevant time, the appellant firm’s establishment did not constitute a “construction establishment” within the meaning of the 2007 statutory rules.
Are they right in that contention? In order to decide that issue, it is necessary for us to arrive at conclusions on the question of whether or not the appellant firm’s establishment is one, which, at the relevant time, was engaged mainly in one or more of the activities which are specified in paragraph 1 of Schedule 1 of the Construction Board Order. (See Article 1 of the 2007 statutory rules).
The respondent identifies only the following activities of the appellant as coming within the scope of the sub-paragraphs (a)-(f) list: the tasks of installing, commissioning, repairing and maintaining pumping equipment at a customer’s premises. (See paragraph 12 above).
Accordingly, in order to decide this case, it has been necessary for the tribunal to consider the following:
We have had to identify any activities of the appellant, at the relevant time, which fell within the scope of the list set out (at sub-paragraphs (a)-(f) inclusive) in paragraph 1 of the Construction Board Order.
We have found it necessary to arrive at conclusions on the extent of each such “listed” activity.
We have found it necessary to arrive at conclusions on the extent of any activities falling within the scope of (g) which were carried out by the firm, at the relevant time, in association with, or in conjunction with, any of such listed activity.
For the respondent, Mr Coyle realistically accepts that the appellant’s establishment was not wholly engaged in one or more of the specified activities
The sources of evidence
Mr Leslie Cloughan, the General Manager of the appellant firm, gave evidence on their behalf. No witness gave evidence on behalf of the respondent. We also saw:
two large bundles of documents; and
various miscellaneous documents which were provided to us by the parties during the course of the hearing.
We told the parties that we would only have regard to any document within a bundle if our attention was specifically drawn to that particular document.
The arguments
At the request of the parties, their arguments were made solely in writing. The procedures in relation to those written Submissions (“Submissions”) broadly followed those recommended by the EAT in Barking and Dagenham London Borough v Oguoko [2000] IRLR 179. The parties exchanged Submissions. Each party had the opportunity to provide written Comments (“Comments”) in relation to the opposing party’s Submission. The appellant provided Comments. The respondent did not provide Comments.
In arriving at our decision, we have taken careful note of all the arguments which have been made to us. Specific reference is made to some of those arguments during the course of this Decision. The Submissions and Comments provide a permanent record of the main arguments on each side of the case. In those circumstances, it is unnecessary to provide comprehensive details, in this Decision, of all of the arguments.
The facts
In relation to matters relevant to the issues which have been determined by us, we made the following findings of fact:
We regarded Mr Cloughan as an accurate and truthful witness on all the key factual matters which we have had to decide in this case.
Only the appellant firm’s two technicians carried out any listed activities (any tasks of installing, commissioning, repairing or maintaining equipment at a customer’s premises).
Mr Cloughan accurately told us that his best estimate was that the listed activities of the two technicians constituted approximately 30% of their workload. He recognised that this was a rough estimate. However, he did not ever concede that his estimate was anything other than the best readily available estimate, and he did not concede that the listed activities might constitute as much as 50% of each technician’s workload. We accept that Mr Cloughan’s estimate is the best available estimate.
In a CITB “pre-registration form” which he completed in 2000, Mr Cloughan answered the question “What are your business/trade activities?” in the following terms:
“Supply and installation of water and sewage pumping equipment”.
On that occasion, when asked to describe the main activity of the appellant firm, he answered as follows:
“[Supply and installation of water and sewage pumping equipment], but additional consulting services”.
In May 2005, Mr Cloughan again completed a form for CITB. On that form, he was again asked:
“What is the main activity of your business?”
On that occasion, he answered as follows:
“Supply, installation and repair of pumping equipment mainly for water service and industry”.
We construe the replies as constituting an acceptance, on the part of the respondent, that their main activities comprised the following activities:
supply,
installation and
repair
However, the answers to the relevant questions do not constitute an acceptance on the part of Mr Cloughan that on-site installation, commissioning, maintenance or repair activities take up more than 50% of the workload of the establishment’s staff.
We have also been shown an undated advertisement by the H.R. Holfeld Group. We do not regard the statements in that advertisement as being inconsistent with the sworn testimony of Mr Cloughan in this case.
In the interests of readability, we have included some additional findings of fact elsewhere in this decision.
The law
The following is a statement of the applicable legal principles:
We have already set out the substantive legislative framework in detail. (See paragraphs 2-14 above).
Provision for levy appeals is made at Article 24 of the 1984 Order. According to Article 24(4), a person assessed to levy may appeal to an industrial tribunal.
Article 24(5) provides that, if the appellant satisfies the tribunal that he ought not to have been assessed to the levy, the tribunal shall rescind it. Accordingly, this appeal must fail unless the appellant satisfies the tribunal that it ought not to have been assessed to the levy.
In his Submission, Mr Coyle has drawn our attention in particular to the operations listed at (i), (iii) and (vi) of sub-paragraph (a) of paragraph 1 of the Construction Board Order:
“…
(i) the … alteration, … of a building;
…
(iii) the construction … repair … of any … drainage work …waterworks, bore-holes, well … filter bed, sewage works, sewer …pipe-line or defence installation;
(vi) the provision or continued provision for any building or other construction or work above-mentioned of water, gas, electricity, lighting, heating or ventilation, being operations undertaken in, upon, above, or under the building or the close, cartilage or precincts thereof, as such construction of work, or any site above-mentioned;” [Our emphasis].
The respondent has drawn our attention to the decision of an industrial tribunal in the Sermet NI Ltd case (Case Ref 186/03), in which, in the factual circumstances of that particular case, the tribunal dealt with the interaction between the provisions of sub-paragraph (g) with the provisions of sub-paragraph (a)-(f). According to the Decision in Sermet:
“Although the directors were not much involved in any activity which would fall within [the scope of sub-paragraphs (a)-(f) of paragraph 1], they are engaged in sales, an activity which is brought within the scope definition when it is carried on in association with or in conjunction with the previous activities. As the company is already engaged in construction or provision activities, the sales element is included in the definition as well. The overall position of the company therefore is that its three active employees are all engaged in activities which fall within the scope definition. The other two employees are administrative and support the activities of the other three. Consequently, the company can be said to be wholly or mainly engaged in the construction industry on the basis of the definition contained in the relevant schedule”.
We note that the tribunal’s conclusions in Sermet were fact-sensitive and that, in that case, the appellant accepted that, as regards the company’s core activity, more than half the boilers supplied had actually to be constructed on site.
A different view of the interaction (between sub-paragraphs (a)-(f) on the one hand, and paragraph (g) on the other hand) was taken in the Woodburn Engineering Ltd case (Case Ref 324/05). Again, that conclusion was fact-sensitive, and was influenced by the particular factual context of that particular case. The tribunal expressed the relevant conclusion at paragraph 6 of its decision, in the following terms:
“Mr Coyle, Barrister-at-Law, on behalf of the Board, argued that the provisions of sub-paragraph (g) and (h) of paragraph 1 of Schedule 1 were sufficiently wide to enable all activities in relation to design, transport, warehousing and all activities in relation to a garage to be taken into account in relation to the installation work which properly fell within paragraph (a). However, the tribunal has concluded that it cannot be properly said that such work was carried out in association with or in conjunction with the installation work which comprised particularly in a case of the motorway gantries, a tiny part of the overall activities of the claimant company. It would be stretching the wording of the legislation too far in the tribunal’s view to convert what appears to be essentially an engineering company into a construction company by the use of sub-paragraph (g) and (h)…”.
Conclusions
Our conclusions are as follows:
The appeal must be allowed because the work of installing, commissioning, repairing and maintaining pumps at a customer’s premises does not constitute at least 51% of the activities of the appellant company, even when due allowance is made for the effect of sub-paragraph (g).
We have arrived at that conclusion, having paid particular regard to the following findings and conclusions.
The appellant employs nine people. Only two of those people (two technicians) carry out listed activities, and those two people only carry out such work for approximately 30% of their working time.
Those two technicians are supported, in carrying out all their activities (both listed and non-listed activities), by some other members of staff.
Mr Cloughan, as the General Manager, provides some such support (mainly in terms of leadership and management). The three administrative staff carry out some functions (such as billing, reception and work of that type), which is supportive of the work of the two technicians. The storeman carries out some work which supports all the activities of the technicians.
However, the level of relevant support provided to the work of the technicians by the three salesmen is minimal. (In the main, the sales activities of the company are largely independent of the activities carried out by the technicians). The work of the salesmen (which includes the sales activities of Mr Cloughan) is substantially supported by the three administrative staff.
We are satisfied of the following:
Activities falling within the scope of sub-paragraph (a)-(f) only constitute approximately a third of the workload of two fee-earning staff of the appellant (out of a total fee-earning workforce of five).
The work of the sales team, and the work carried out by support staff in respect of sales, are activities which are carried out largely independently of the technicians’ sub-paragraph (a)-(f) work.
Against that background, we are satisfied that the work of the sales staff, and the work of the support staff which is associated with the work of the sales staff, cannot properly be regarded as having been carried out “in association with or in conjunction with” any listed activity.
Chairman:
Date and place of hearing: 2 December 2008, at Belfast
Date decision recorded in register and issued to parties: