Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REF: 525/05

APPLICANT: Department for Employment and Learning

RESPONDENT: Patrick Duncan t/a Dealers Agency

DECISION

The unanimous decision of the tribunal is that the respondent be prohibited from carrying on, or being concerned with the carrying on, of any employment agency or business for a period of two years beginning with the date of this Order, ie 23 June 2009 and ending on 22 June 2011.

Constitution of Tribunal:

Chairman: Mr D Buchanan

Members: Mr J Kinnear

Mr R Gunn

Appearances:

The applicant Department was represented by Mr A Sands, Barrister-at-Law, instructed by The Departmental Solicitor's Office.

The respondent was represented by Mr M Waters, Barrister-at-Law, acting in a personal capacity.

1. By consent, the title to these proceedings was amended to that now shown, to reflect the proper name of the business carried on by the respondent.
2. In these proceedings the applicant Department sought a prohibition order under Article 5A of the Employment (Miscellaneous Provisions) (Northern Ireland) Order 1981, prohibiting the respondent, Mr Duncan, from carrying on, or being concerned with the carrying on of, an employment agency.
3. In order to determine this matter the tribunal heard evidence from Ms Valerie Reilly, the Head of Department in the Employment Relations, Policy and Legislation Branch of the Department for Employment and Learning (DEL), Mr Kevin McNamara, an officer of the Trading Standards Service of the Department of Enterprise, Trade and Investment, and from Mr Michael Donovan, a designated officer with DEL for the purposes of the 1981 Order. It also heard evidence from the respondent, Mr Duncan, and from Mr Martin McCann, Mr Michael Mason Anderson, Mr Patrick Simpson, and Ms Karen Hasson on his behalf. The tribunal had regard to documentary evidence submitted by the parties.

Before setting out our findings of fact and conclusions relating to the application before us, it is necessary to set out the background to this matter, and to deal with preliminary issues raised by the parties to these proceedings.

4. Background

(i) On 8 March 2005 the applicant, DEL, applied for a prohibition order against the respondent under the provisions of Article 5A of the 1981 Order. The application was heard by a tribunal chaired by the then Vice President of the Tribunals. (These were the first tribunal proceedings.)

(ii) On 10 January 2006 the tribunal issued a decision in the following terms:-

The unanimous decision of the tribunal is that a prohibition order is granted to the claimant but stayed for a period of four years on terms which are set out at the end of this decision.

The terms or conditions which the tribunal specified related to the handling of clients' money, the keeping of records relating to clients' money and the retention of those records, and to general compliance with the Conduct of Employment Agencies and Employment Business Regulations (Northern Ireland) 2005, particularly the requirement to provide written terms and conditions to those seeking work through the agency. The tribunal also required the respondent to sign an undertaking that he would conduct any employment agency or business over which he had control in accordance with the 2005 Regulations. This undertaking included an acknowledgement by the respondent that he was aware that failure to comply with the Regulations or any other relevant legislation would result in the commencement of legal action by DEL against him with the risk that he would be prohibited from operating an employment agency or business for up to four years. In other words, he was at risk of the stay in the order of 10 January 2006 being put into effect. That this was the intention of the tribunal was confirmed in a letter of February 2006 to the Departmental Solicitor in which it was stated : [T]he decision states that the prohibition order is stayed for four years on conditions. If any of the conditions are breached the Department can re-apply to the tribunal to consider the implementation of the prohibition order at any time."

(iii) On 9 November 2007, DEL made an application to the tribunal to make the prohibition order of 10 January 2006 operational for the maximum period of 10 years allowed by the 1981 order on the ground that since the issue of that decision, further complaints had been received in relation to the respondent's conduct, and it was DEL's contention that he was still unsuitable to carry on or be concerned with the carrying on of any employment agency or employment business. (These we refer to as the second proceedings.)

(iv) The respondent, Mr Duncan, sought a pre-hearing review on the ground that the prohibition order was void and therefore could not lawfully be put into operation by a tribunal. He contended that the prohibition order did not comply with the procedural requirements set out in the 1981 Order.

(v) This pre-hearing review was held before the present Vice President of the Tribunals on 10 April 2008. In a decision issued to the parties on 14 April 2008 she held that the prohibition order was void and that she had no power to make it operational. The first tribunal had no power to stay the prohibition order, and additionally it had not complied with the mandatory requirements in Article 5A(3) of the 1981 Order to specify the date on which the prohibition order would end. The Vice President, in dismissing the application to implement the Order of 10 January 2006, made it clear that nothing in her decision should be construed as preventing DEL from starting fresh proceedings for a prohibition order, should it consider that such a course of action was appropriate.

(i) Fresh proceedings for a prohibition order were instituted by DEL on 11 November 2008, and they give rise to the present application before the tribunal.

(ii) At the outset of the proceedings, Mr Sands BL, for the applicant Department, submitted that the doctrine of issue estoppel applied in its favour and that by virtue of that operation of that doctrine, the respondent, Mr Duncan, was precluded from denying facts found and set out in the decision in the first proceedings.

It is not in dispute that the doctrines of issue estoppel and res judicata (cause of action estoppel) apply to industrial tribunal proceedings. Harvey on Industrial Relations and Employment Law, Volume 5, Paragraph 1015, states:-

"In cases where issue estoppel is raised ... in subsequent proceedings, it is normally essential that the issues in those proceedings are identical with those that were determined in the earlier proceedings and also that the findings of fact in the judgment in those earlier proceedings are clear and precise. In either event, if they are not, the plea will fail ... It is likewise essential that the findings in the first proceedings are necessary for the decision in that case, and also that the decision itself is intra vires the court or tribunal making it; if they are not, there can be no estoppel ... ."

In this case it is the last of the conditions set out above which cannot be met. The order made in the first proceedings on 10 January 2006 was void. That seems to us to taint the whole of those proceedings, and we are not prepared to read over facts found in those proceedings to the proceeding before us. We made it clear in our ruling that that did not preclude the applicant Department from adducing before us any of the evidence which it had adduced in the first proceedings.

(i) Mr Waters BL, for the respondent, also made various submissions on behalf of the respondent. As we have ruled against DEL on issue estoppel, we need not deal with Mr Waters' submissions on that point. His further submissions can be summarised as follows:-

(a) that while the application for a prohibition order cannot be neatly categorised as civil proceedings or criminal proceedings, it is more akin to the latter than the former. This is because the case is one between the state and an individual, because the order sought is a serious penalty or sanction, and because the legislation provides criminal penalties if a prohibition order is made and not complied with. (See : Article 5B of the 1981 Order which provides that any person who, without reasonable excuse, fails to comply with a prohibition order shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.) Following from this, Mr Waters submitted that the normal rules in relation to hearsay evidence which apply to other cases before industrial tribunals should not be followed in cases where a prohibition order is sought;

(b) that the scheme of the 1981 Order is incompatible with the Human Rights Act 1998. It infringes the principle of legality, and in particular the 'certainty' aspect of legality. Mr Waters submitted that the meaning of misconduct in the 1981 Order is not defined with sufficient precision to let a respondent know in advance that failure to comply with an infringement or warning letter, or any other form of alleged misconduct, could result in his prohibition from working for 10 years. The terms 'misconduct', 'sufficient reason' and 'unsuitable' in the 1981 Order do not comply with the principle of legality in Convention law because their generalised nature offers no indication of their meaning, and a potential respondent to proceedings does not know in advance what conduct will lead to the making of a prohibition order.

(At this stage we think it worth making the point that if one focuses on the overall fairness of the procedure, rather than on the civil/criminal divide referred to at (a) above, it seems to us that the inspection reports, and infringement letters, to which we refer subsequently, gave the respondent a clear indication of any case he would have to meet.)

(i) As far as Mr Waters' first point is concerned (the category of the proceedings, and the applicability or otherwise of the hearsay rule), we have no doubt that these proceedings are civil in nature. While there is a discernible, modern tendency to refer to proceedings such as this as 'administrative' or 'regulatory', this does not affect our categorisation of them as civil.

Proceedings of this nature are not confined to the regulation of employment agencies. Other legislation, for example, regulating insurance brokers (Insurance Brokers Regulation Act 1977), estate agents (Estate Agents Act 1979), and the licensing of consumer credit agencies (Consumer Credit Act 1974, Part III, Sections 21 – 42), put in place similar, though not exactly identical, regulatory schemes, and it has never been suggested that these are criminal in nature.

The fact that there are criminal penalties at a remove – they come into operation only on breach of a prohibition order – also strongly suggests that the proceedings for that order itself are not criminal.

In the context of the European Convention of Human Rights, it has been stated:-

"the European Court [of Human Rights] has determined that if domestic law classifies the proceedings as criminal, this will be decisive, but where domestic law classifies the proceedings as non-criminal, the [court] will consider the true nature of the proceedings, taking into account the severity of the penalty which may be imposed looking especially at whether imprisonment is a possible penalty; whether the rule applies only to a specific group or to the public generally; whether there is a 'punitive or deterrent element' to the process; whether the imposition of any penalty is dependent upon a finding of culpability; and whether other Member States classify such conduct as criminal." (Smith and Hogan, Criminal Law, 12^th Edition [2008], by David Ormerod, at pp 24, 25; and see generally on classification as civil or criminal cases, M Fordham, Judicial Review Handbook, 4^th Edition [2004] at pp 967, 968.)

In the instant case, there is no question of imprisonment. Indeed the criminal penalty for non-compliance with any order is a fine. The rules apply not to the public generally, but only to those who choose to carry on employment agencies, and while it is perhaps unrealistic to argue that there is no punitive or deterrent element in a prohibition order, which can last up to 10 years, it is clear to us that the predominant purpose of such an order is the protection of the public. For these reasons also, we are satisfied that these proceedings are not criminal. We are strengthened in this view by the fact that in In re: Westminster Property Management Ltd, the Times 19 January 2000, it was held that proceedings to disqualify a company director, which seem to us to bear some analogy to these, were not criminal proceedings for the purposes of Article 6.

Additionally, in the recently reported case of R (on the application of G v Governors of X School and Y City Council [2009] IRLR 434 (which includes a helpful discussion of the relevant authorities), it was held that a disciplinary hearing and appeal for a teacher, which led to a referral to the Secretary of State, and which could result in the teacher's dismissal from employment, was a procedure which attracted an enhanced protection under the civil limb of Article 6, (in this case the right to legal representation at the internal disciplinary hearing). It did not, however, amount to proceedings in respect of a criminal charge.

It follows from this that we are satisfied that the applicable rules of evidence are those which apply in civil cases, as modified in relation to tribunals by Rule 14(2) of the Industrial Tribunals Rules of Procedure which provides that the tribunal "shall not be bound by any statutory provision or rule of law relating to the admissibility of evidence in proceedings before the courts". There is nothing in the Rules disapplying Rule 14(2) to proceedings in respect of prohibition orders.

Again, cases relating to the disqualification of company directors would tend to suggest that the civil rules of evidence apply. See : Re: Rex Williams Leisure plc [1994] 4 All ER 27 (CA), and Secretary of State for Trade and Industry v Ashcroft and Others [1997] 3 All ER 86 (CA). In the latter it was held that the Secretary of State, in making the application, was entitled to rely on an affidavit filed by the liquidator, which contained hearsay evidence. While that decision depended to some extent on the interpretation of the relevant statutory provision, the Company Directors Disqualification Act 1986, the admissibility of hearsay evidence must now be beyond doubt following the enactment of the Civil Evidence (Northern Ireland) Order 1997.

We also note that in relation to certain other types of Order, dealing with behaviour which is far more serious than that alleged against the respondent, such as Anti-Social Behaviour Orders, civil rules of procedure and civil rules of evidence apply to the making of such Orders, albeit the consequences of breaching them are criminal. (See : Smith and Hogan, op cit, p17.) We bear in mind, in finding facts here, that in some of these cases, notwithstanding that they have been categorised as civil, an exacting standard of proof is required before making an order (see: Gough v Chief Constable of Derbyshire [2002] EWCA Civil 351 (football spectator banning order), referred to in Fordham, op.cit, p968).

(ii) As far as Mr Waters' second point relating to certainty is concerned, 'misconduct' is an ordinary English word which should be given its everyday meaning. (Brutus v Cozens [1973] AC 854.) Assistance can also be derived from the judgment of Lindsay J in the case of Department of Trade and Industry v Webster and Others [EAT/539/99], where he states, at paragraph 34, that:-

"the very wide words 'misconduct' and 'unsuitability' within Section 3A(4) [of the corresponding Employment Agencies Act 1973] are not confined to misconduct which is in breach of the Act."

Nor do we think that decisions of the European Court of Justice assist the respondent. In Sunday Times v UK [1979 – 80] 2 EHRR 245 (a case dealing with the common law relating to contempt) the court stated, at Paragraph 49, that while someone potentially affected by legislation should be able to foresee the consequences of his actions:-

"[t]hose consequences need not be foreseeable with absolute certainty; experience shows this to be unattainable ... whilst certainty is highly desirable, it may bring in its train excessive rigidity and the law must be able to keep pace with changing circumstances. Accordingly, many laws are inevitably couched in terms which, to a greater or less extent, are vague and whose interpretation and application are questions of practice."

Courts have refused to accept that common law crimes couched in wide terms are incompatible with Article 7 of the Convention on the ground of vagueness or lack of clarity. (See : Misra [2004] EWCA Crim 2375 (gross negligence manslaughter); Rimmington [2006] UKHL 63 (public nuisance); Wingrove v UK [1997] 24 EHRR 1 (blasphemy).)

8. In the following paragraphs we set out our findings of fact in the application before us.

(i) The respondent, Mr Duncan, carries on the business of an employment agency. The principal role of the agency is to find suitable work for local actors. The respondent had been an actor himself, and had had experience working as an employee for a theatrical agency. In 1997 he went into business on his own account, and at the time of this application carried on business under the name of 'Dealers Agency'.

He currently represents about 430 clients. This includes a core of 80 – 100 professional actors working part-time in Northern Ireland, for whom he finds work in films, television, the theatre and commercials.

(ii) At one time there was a limited company in existence, Dealers NI Ltd. This was struck off the register of companies in 2005 for failure to provide accounts, and during a period when the respondent was bankrupt, his father was somewhat grandly referred to as the 'titular head' of the business. However, we are entirely satisfied that at all relevant times the respondent was in effective control of the business.

(iii) The respondent carried on one of six actors' agencies in Northern Ireland. From the evidence before us from actors for whom he has acted as an agent (Mr McCann, Ms Hasson, Mr Mason Sanderson) and from Mr Patrick Simpson (the father of a young actor), we have no doubt that the respondent's talents are, as he put it himself, on the 'creative and imaginative side', that he is good at spotting theatrical talent, and that he has supported and encouraged young actors and actresses in their careers. Many of these young actors and actresses, including Mr McCann, whose career has taken off outside Northern Ireland, still turn to him for advice and look upon him as a friend as well as an agent.

(iv) We also record at this stage that DEL's case for a prohibition order is based on the respondent's alleged breaches of the Regulations governing employment agencies, and his alleged obstructive and evasive attitude towards its officials. The applicant Department makes no allegations of dishonesty against the respondent, and there has been nothing in the evidence before us which suggests dishonesty.

(i) Employment agencies and employment businesses provide a job-introduction service. The former introduces potentially permanent workers to prospective employers (the hirers) for permanent hire. The hirer will generally pay the agency, which will in turn pay the job-seeker after deducting its fee. Employment businesses, on the other hand, introduce temporary workers.

(ii) Employment agencies and businesses in Northern Ireland are now regulated by Part II of the Employment (Miscellaneous Provisions) (Northern Ireland) Order 1981. Articles 5A – 5C deal with the making of prohibition orders, and we shall return to these provisions later. Article 6 deals with general regulations, Article 7 deals with restrictions on charging those seeking employment, Articles 7A and 7B deal with the appointment of enforcement officers and their powers respectively, and Article 10 contains a further power to make Regulations.

(iii) The Conduct of Employment Agencies and Employment Business Regulations (Northern Ireland) 2005 have been made under Articles 6, 7 and 10 of the 1981 Order. It is clear from the content of these Regulations that their purpose is to secure the proper conduct of employment agencies, and to give protection to the interests of their clients.

(iv) Some of the main provisions of the Regulations concern the requirement that the agency obtains the agreement of the work-seeker as to the terms which will apply between them (Regulation 14), the content of the terms with work-seekers (Regulation 16), the requirement to obtain agreement to terms with hirers (Regulation 17), the requirement to obtain confirmation of the identity, etc of the work-seeker (Regulation 19), and the additional requirements to be complied with where the work-seeker is to work with vulnerable persons (for example, obtaining references, and taking all such steps as are reasonably practicable to confirm that the work-seeker is not unsuitable for the position concerned [Regulation 22]).

Regulation 25 and Schedule 2 concerns client accounts. By virtue of Regulation 25(2) an agency cannot directly or indirectly receive money on behalf of a work-seeker unless it maintains one or more client accounts. Paragraph 2(2)(a) of Schedule 2 provides that every client account must be in the name of the agency, and that the name of the account must include the word 'client'. If the account contains money belonging to a single client, the account must include the name of that client. Schedule 2 goes on to lay down detailed requirements about accounts and records, the requirement to have accounts audited, and rules for the preservation of client account records.

Regulation 26(1) allows actors' agencies to charge fees to work-seekers as an exception to the general restriction on charging fees set out in Article 7(i) of the Order of 1988.

Regulation 29(1) provides that every agency and employment business shall keep records which are sufficient to show whether the provisions of the 1981 Order and the 2005 Regulations are being complied with. The detail of the information required to be recorded is set out in Schedules 4 and 5 of the Regulations.

(v) DEL is the enforcement authority for the Order and the Regulations. It can appoint its own enforcement officers (Mr Donovan is such an officer), or may arrange for officials of any other Northern Ireland department or of a United Kingdom department to act on its behalf. (Mr McNamara was an official of another Northern Ireland department, and on one inspection was accompanied by an inspector from Great Britain attached to the then Department of Trade & Industry).

Under Article 7B of the 1981 order such officials have power to enter and inspect the premises of any employment agency, and to require the production of, and to inspect and examine, remove and copy relevant records. In Northern Ireland they monitor about 300 agencies, of which six or so are actors' agencies.

(vi) DEL's enforcement policy, as in the usual case where agencies are charged with enforcing regulatory schemes, is to encourage compliance with the law. Minor defects discovered on inspection visits are followed up by infringement letters inviting a reply within two weeks setting out what has been done to remedy the defects. More serious breaches are usually followed up by a further visit after time has been given to put them right.

An application for a prohibition matter is very much a case of last resort.

(i) The first inspection of the respondent's business took place on 24 October 2006. It had originally been scheduled to take place on another date, but was re-arranged. It took place at Cathedral House, in Waring Street, which was an accommodation address used by the respondent.

It was carried out by Mr McNamara, of the Trading Standards Service on behalf of DEL. He was accompanied by Mr Keeler of the inspectorate in Great Britain.

(ii) As stated, a prohibition order (the effect of which the tribunal purported to suspend, and which subsequently was held to be void) had been made in the first proceedings on 10 January 2006.

From the evidence of Ms Reilly, who was at that tribunal, and from the respondent's own admissions, we are satisfied that there was no client's account at that time, that there were no adequate records, and that there had been complaints from actor clients of failure to pay money owing to them.

The purpose of the inspection visit on 24 October 2006 was to follow up the prohibition order of 10 January 2006, to inspect agreements with work-seekers, and other records, and to examine the arrangements for the handling of clients' money. It had been a condition of the order of 10 January 2006 that the respondent observe the 2005 Regulations, particularly in relation to the matters just mentioned, and submit to inspections, and he had been required to sign an undertaking in general terms to this effect. The inspection was also designed to investigate complaints from two clients of the agency, a Mr Tohill and a Mr Finnigan, who alleged that they had not received money for acting work carried out in March 2006.

(iii) At the time of this inspection, the respondent had been adjudicated bankrupt, and could not sign cheques. He indicated that he hoped to set up an Individual Voluntary Arrangement (IVA) with his creditors. It was also clear that the company, Dealers NI Ltd, which had been a party to the first proceedings, had been struck off the register of companies for failing to make a return in relation to its accounts.

There is no doubt, however, that despite these handicaps, the respondent was to all intents and purposes the person running the business.

(iv) At this inspection the following deficiencies in compliance with the 2005 Regulations were apparent:-

(a) Regulation 14 (requirement to obtain agreement to terms with work-seekers)

Breaches of this Regulation included the absence of any agreements with Mr Tohill and Mr Finnigan, the clients who had complained about non-payment for acting work. The respondent admitted that they had not signed agreements.

The one example of a signed agreement which the respondent provided, between an Andrew Simpson and Dealers NI Ltd appeared generally to comply with the Regulation, except that although it referred to the 'Agency' it did not clearly state that the agency would operate as an employment agency.

The respondent also produced several so-called 'short-form agreements' with clients. These did not conform to the provisions of Regulation 14.

(b) Regulation 17 (requirement to obtain agreement to terms and hirers)

The respondent accepted that he did not have any such terms drawn up.

(c) Regulation 25 (requirement to maintain a client account)

The business had a main account with the Ulster Bank under the name Dealers NI Ltd. It was being used to receive clients' money, but it was not a client account.

The respondent stated that he was now asking hirers to pay work-seekers directly. Cheques and bankers drafts made out in favour of a work-seeker do not have to be paid into a client account, by virtue of Regulation 25(4)(a). However, invoices and other documents accompanying payment in such cases were listed under the respondent's home address, with the work 'dealers' appearing under the client's name.

(d) Regulation 29 (records)

It was not possible for the inspectors to follow any client's money from the records.

Mr McNamara, in his evidence, described the records kept as 'sporadic and incomplete'.

(v) Subsequent to the inspection, Mr McNamara wrote to the respondent on 29 December 2006, setting out the infringements, and asking him for written confirmation of the proposed steps to remedy these infringements by 31 January 2007.

This letter was ignored by the respondent, as were reminder letters of 1 February 2007 and 14 March 2007.

A further letter was sent on 25 April 2007, asking the respondent to contact Mr McNamara by 11 May 2007. The respondent was warned that failure to make himself available for a further inspection visit might lead to legal action, ie an application to implement the prohibition order.

On 16 May 2007, a Mr McKeown got in touch with Mr McNamara. He said that he was helping the respondent out with paperwork and that he hoped to reply to the correspondence by the end of that week.

He did not in fact do so, but finally telephoned, and an inspection visit was arranged for the afternoon of 8 June 2007.

Around midday on that day, Mr McKeown telephoned to say that he had food poisoning. A visit, subsequently arranged for 27 July 2007, was then re-scheduled for 31 July 2007, and it took place on that date.

(i) The inspection on 31 July 2007 was carried out by Mr McNamara, accompanied by Mr Brian Patterson of DEL. Mr McKeown was present at that visit to represent the respondent, who did not attend.

(ii) By the time of that visit the respondent's father had become the 'titular head' of the business. There were no documents relating to any transfer of the business to Mr Duncan Senior. It is clear that the respondent was continuing to undertake the day-to-day running of the business and that he was carrying on the business as a sole trader.

(iii) Mr McKeown told Mr McNamara that the respondent hoped to put an IVA in place. He (Mr McKeown) had had the business records for four weeks and would probably need another four weeks to put them in any sort of order.

(iv) At the time of this visit no client account had been set up. This was a continuation of a failure which had first been drawn to the respondent's attention in the enforcement letter of 29 December 2006. The respondent was requesting hirers to send payment directly to his client job-seekers, and he would then attempt to recover his commission from the clients.

It is clear, however, that unknown amounts of money were being handed to the respondent on other occasions to pay clients. Regrettably, the evidence in this respect was somewhat misrepresented in the summing up on behalf of the respondent.

An undertaking was given to Mr McNamara that details of payment slips, release forms and other documentary evidence would be forwarded to him, but this was not done.

Schedule 2, Paragraph 10 of the 2005 Order imposed an obligation to have accounts audited. There was no evidence that this had been done. Indeed, it was accepted that the respondent did not have an accountant at that time.

(v) There were still no terms in relation to agreements with hirers in existence (Regulation 17). Apparently there were in existence draft terms based on a template devised by Equity, the actors' union. These were to be forwarded to Mr McNamara, but again this did not happen.

(vi) 'Short-form' client agreements were again produced. These did not comply with Regulation 14. It was also clear that not all clients had signed these agreements.

(vii) Records were still deficient. Mr McKeown admitted as much. He agreed to provide copies of at least three clients' records relating to their signed agreements and details of the work they had undertaken by the end of the following week. This was not done.

(viii) Mr Finnigan remained unpaid for the work he had done in March 2006.

(i) On 12 September 2007, the respondent was sent an enforcement letter which gave him ten days to provide confirmation of the steps he had taken to put matters right.

No reply was received from the respondent, and on 1 October 2007 the respondent was warned that in the absence of a reply on the provision of adequate documentation within 28 days, DEL would apply to make the prohibition order of 10 January 2006 operational.

(ii) In response to the letter of 1 October 2007, the respondent wrote a letter dated 3 October 2007. On 29 October 2007 he handed this in to a security officer at one of the Department's offices.

In it he purported to deal with various matters, including the absence of a client account and agreed agreements with job-seekers.

In relation to the former matter he stated at Paragraph 10 of the letter:-

"10. Bank accounts – still no company account. Please advise on rules as company trading should now recommence following strict client money holding account regulations. Can you send a company representative on a training course on this matter, please advise?"

In relation to agreements with job-seekers he stated:-

"11 ... As discussed at the meeting I can confirm that we are currently collecting signed long form agreement with all ... clients. We understand that the current short form is not sufficient. Will you pay for the paper, ink and storage, as this is an additional expense to what can currently be afforded, and is your need if not held virtually which was Dealers' business choice?"

(iii) It is difficult to look upon this as a genuine effort to comply with the Regulations. The whole tenor of this letter (and indeed of other letters which the respondent wrote to DEL) ignored the fact that the onus was on the respondent, as the person who had made the conscious choice to carry on a particular type of business, to ensure that in doing so he fully complied with the relevant Regulations which governed it.

(i) A third inspection was carried out on 6 August 2006. It was carried out by Mr Donovan, accompanied by Mr McNamara.

Mr Donovan had not taken part in the previous two inspections but he had a general awareness of the problems which existed.

Normally it takes no more than a couple of weeks to set up an inspection visit, but DEL wrote to the respondent on five occasions between May and August 2008 in an attempt to set up this inspection visit.

(ii) On 20 May 2008 the respondent wrote to say that he was unable to submit to an inspection visit. He complained about a lack of notice, stated that he was too 'busy representing the interests of actors', and accused the Department of malice towards him, orchestrating complaints and conducting a vendetta against him, and raised issues about confidentiality of documents.

(iii) DEL, in letters of 30 May, 10 and 30 July 2008, made specific reference to the powers of its appointed officers under Article 7B of the 1981 Order. In the last of these letters reference was also made to Regulation 29 of the 2005 Regulations, and specifically stated that the respondent should ensure that all necessary records were available at the Cathedral House premises on 6 August 2008. The letter continued:-

"Inspectors will expect to see records for all current clients as well as clients on the Dealers Agency books for the past year. In addition the inspectors will inspect the Dealers Agency client account records and transactions to ensure that you comply with Regulation 25 and Schedule 2 of the Conduct Regulations."

It was also explained to the respondent that Article 7B(10) of the 1981 Order provided that no information obtained in the course of an inspection could be disclosed except in certain limited circumstances.

15. At the inspection on 6 August 2008 the following infringements of the legislation were observed:-

(i) Regulation 17 (requirement to obtain agreement to terms with hirers)

No such agreements were available at the time of the inspection, though draft terms were forwarded subsequently on 8 August 2008.

(ii) Regulation 14 (requirement to obtain agreement to terms with work-seekers); and

Regulation 16 (contents of terms with work-seekers)

Drafts of such agreements/terms were e-mailed to Mr Donovan on 14 August 2008. Inaccuracies and omissions were apparent in these drafts.

(iii) Regulation 25 and Schedule 2 (client account)

A client account had now been opened, dating from March 2008. However, notwithstanding this, transactions could not be traced. Mr Donovan summarised the deficiencies in an infringement letter which was sent to the respondent on 4 September 2008. It stated:-

"While you were able to provide copies of the bank statements of the client account ... you were not able to provide copies of the invoices received or remittance notes issued and the few invoices which you did present could not be cross-referenced to the bank statements. It is a requirement of Schedule 2 para' 9 that proper accounts and records relating to client's [sic] monies should be kept. As no such records were produced at the time of the inspection it was therefore not possible to trace financial transactions through the Client Account."

(iv) Regulation 29 and Schedules 4 and 5 (relating to the requirement to keep records)

Very few records were physically present at the inspection, notwithstanding that the respondent had been given notice requiring their production. Some of the records still referred to the business as 'Ltd' when the respondent was carrying on the business as a sole trader. He told the inspectors that hard-copy records were available at an address at 55 Glenview Street, Belfast, where they were stored in the attic. The implication was that they would be made available. However, in the course of his evidence, the respondent said he could not gain access to this address. This had never been mentioned to the inspectors.

He also told them that he had a laptop containing records in the form of 48,000 e-mails. The laptop was not available either. The reason for this, according to the respondent, was that he had been staying with a friend. This friend was a schizophrenic who, according to the respondent, got drunk, 'went mad', and threw the laptop out of a window, thereby damaging it.

(v) The absence of records, referred to above, had the result that a full and meaningful inspection could not be carried out. The inadequacy, or non-existence of records meant that it was impossible to determine if the specific provisions of other Regulations were being complied with, for example the provisions of Regulation 19 dealing with the identities, etc of work-seekers, or of Regulation 22, which covers the situation where work-seekers are to work with vulnerable persons. (It is accepted that this latter Regulation probably had limited application to the respondent.)

Mr Donovan, who has experience in inspecting agencies, found the respondent's record-keeping poor in relation to other agencies which he had inspected.

(vi) The infringement letter of 4 September 2008 pointed out that the records available on inspection were inadequate or non-existent, notwithstanding that, prior to the inspection, the respondent had been asked to have all records available. He was warned that DEL regarded this as a serious breach of the Regulations and would consider what, if any, action to take.

In the meantime the respondent was asked for written confirmation within the following two weeks of the steps taken to deal with breaches of the Regulations.

On 7 October 2008, in the absence of any response, the respondent was sent a reminder letter asking for a reply by 21 October 2008.

This in turn met with no response, and on 11 November 2008, DEL instituted proceedings against the respondent. At this stage the view was taken that no useful purpose would be served by a further inspection.

(vii) From the time proceedings were instituted until the date of hearing the respondent did not contact the applicant Department.

However, after the first day of the hearing, Tuesday 5 May 2009 the respondent e-mailed a copy proforma of his most recent terms and conditions with actors and hirers to Mr Donovan of DEL. He stated that these had become operative as of December 2008, but that he had only recently realised that he had failed to forward these documents.

At the conclusion of Mr Donovan's evidence on 7 May 2009, Mr Waters, the respondent's representative, presented him with a further large ring-binder volume of documents and asked him if they were 'of interest' to the Department. This was most unfair to Mr Donovan, who was clearly not in a position to state whether any of the documentation complied with the legislation.

(i) The respondent, Mr Duncan, in evidence, accepted that he needed to adhere to the 2005 Regulations. He acknowledged that his administrative skills needed improvement. When asked by the tribunal why he did not employ someone in a clerical or secretarial capacity to help him with the paperwork, his reply was that he could not afford it.

(ii) He further acknowledged in evidence:-

(a) that actors were often young, and at the start of their careers especially, were vulnerable to exploitation. They often became entitled to fees (eg repeat fees) years down the line when there would be difficulties in collecting them. They depended on their agents to collect money owing. He accepted that this highlighted the importance of written agreements between agents and work-seekers. Such agreements were also important where a dispute subsequently arose about the amount of commission payable;

(b) that Regulation 16 (governing the content of terms between work-seekers and agencies) set out the matters to be included in agreements in terms which were easy to understand;

(c) that when he finally did open a Client Account with the Bank of Ireland in mid-March 2008, it was something which it had been easy to do. He could give no explanation of why he did not do that earlier, and why he had not done it prior to his bankruptcy.

(iii) In his evidence, the respondent did not contradict the allegations of infringements of the Regulations which had been made against him, but rather focussed on matters which he claimed had made it difficult for him to comply with them:-

(a) In 2002/2003 he had carried on business from premises in North Street Arcade, Belfast. In April 2003 there had been a fire in those premises which had completely destroyed them, and all the records relating to the business had been lost.

Any reasonable person would accept that this must have caused difficulties for him, and have had a knock-on effect. However, we are concerned here with alleged infringements taking place from 2006 onwards, some considerable time after the fire.

(b) In or around March or April 2006, the respondent had been adjudicated bankrupt. He would make the case that he was on the point of turning his business round when bankruptcy intervened. Evidence of dates relating to the various stages of the bankruptcy was somewhat vague, but it appears that the respondent came out of bankruptcy around March 2008 after entering into an IVA with his creditors. Clearly this caused difficulties for him in handling cheques and money and, as has been pointed out earlier, he encouraged work-seekers to collect their own fees and to pay his commission out of their fees, or alternatively attempted to requisition separate cheques for clients and himself from production companies, something it appears it was difficult to persuade the latter to do.

While bankruptcy was no doubt a traumatic experience for the respondent (he indicated to the tribunal that some day he may write a play about his experiences as a bankrupt) he could have taken steps to improve the position, such as making an application to the court to allow him to open, and to operate, a Client Account under appropriate supervision.

(c) The respondent also made the case, particularly in relation to agreements with jobseekers, that there was a general resistance among actors to signing anything. However, Mr McCann who gave evidence on the respondent's behalf, while stating that he did not see the need to sign such contracts, stated that he would have been happy to sign them if the terms were acceptable.

(d) He said that Regulation 17 (which imposed the requirement to obtain agreement to terms with hirers) was unworkable in practice. Hirers, who were large organisations, were uncooperative. Even if this were the case (and we have seen no independent evidence to that effect) it was the respondent's obligation to comply with the law. But, leaving Regulation 17 aside, and giving the respondent the benefit of any doubt, there remains clear evidence of non-compliance with other important Regulations.

(e) He also complained that DEL offered no training to those carrying on employment agencies, a point made again in submissions on his behalf when it was suggested that had DEL spent the time which was taken up by their application to the tribunal in providing training, he would not be in his present predicament. This again ignores the fact that it is the primary responsibility of those carrying on a particular occupation to make themselves familiar with the Regulations governing its conduct.

(f) He also claimed, at a late stage in the day, to have been confused as to whether he was carrying on an employment agency or employment business. However, many of the applicable Regulations apply to both types of business (eg Regulations 14, 19, and 22, and Regulation 16 has an equivalent in Regulation 15), and in any event we are satisfied that the respondent knew perfectly well that his business was an agency.

(i) Having found the facts set out above we now reach the following conclusions.

(ii) We are satisfied that since late 2005 until the date of the hearing of this case the respondent, Mr Duncan, has been persistently in breach of the Conduct of Employment Agencies and Employment Businesses Regulations (Northern Ireland) 2005.

We do not accept, as was put forward on his behalf, that these breaches were 'minor'. On the contrary, the persistence of this conduct, particularly in relation to the failure to keep a proper client account, in our view makes the matter more serious. Indeed in this latter respect, Mr McCann, who gave evidence favourable to the respondent, acknowledged that while he trusted the respondent, he would be concerned if an agent went bankrupt or entered into an IVA while holding clients' monies, and furthermore that he would also be concerned if an agency were not observing the Regulations relating to the keeping of a client account. In this case it was to all intents and purposes impossible for the inspectors to see what had happened to clients' money. It was particularly important that they should be able to do this, given some history of complaints of non-payment of clients' money, and admitted instances of late payment at the least.

We do not regard the respondent's bankruptcy as a mitigating factor. Indeed it appears to us to be an aggravating factor. Although bankruptcy does not lead to disqualification under the 1981 Order and the Regulations, it does not absolve a respondent of the duty of complying with the Regulations.

(iii) Some breaches of the Regulations, for example the failure to keep adequate records under Regulation 29 and Schedule 2, made it impossible for DEL and inspectors acting on its behalf to determine the full extent of the respondent's infringement of other important Regulations.

(iv) The respondent agreed in cross-examination that in the period from late 2005 until May 2009 he had been given every opportunity to put his house in order. He was given a chance by the first tribunal in January 2006. Although the Order made was void, he signed, as a condition of suspending that Order, an undertaking to comply with the 2005 Regulations, particularly in relation to a client account, and to submit to inspections. One cannot, of course, penalise the respondent for failing to comply with a void Order, but where the conditions imposed alluded to obligations under the Regulations with which he was obliged to conform, irrespective of any tribunal Order, we consider we are entitled to take that non-compliance into account. If we are wrong in this, and this evidence is excluded from consideration, there is in any event sufficient other evidence of persistent and substantial non-compliance with the Regulations on the evidence of what was found in the second and third inspection visits.

These inspections disclosed a continuing, thoroughly unsatisfactory, state of affairs with regard to compliance with the Regulations Infringement letters, and subsequent reminder letters were generally ignored. The respondent accused the Department of conducting a 'vendetta' against him. This is palpable nonsense. It acted in relation to him in the same way it would have dealt with any other person who had infringed the Regulations. The only possible criticism of its officials is that they showed him too much indulgence.

(v) Looking at the entirety of the respondent's conduct in this case it is very hard to reach the conclusion that not only was he incapable of adhering to the Regulations, but also that he was disinclined to do so.

DEL, not without justification, regarded the respondent as evasive and obstructive in his dealings with them. The respondent, in evidence, spoke to conducting a 'tactical war' against the Department. Had the time and energy directed to this 'tactical war' been applied to fulfilling his obligations under the Regulations, the respondent might not have been in his present difficulties.

(i) Article 5A of the Employment (Miscellaneous Provisions) (Northern Ireland) Order 1981 provides as follows:-

"5A –

(1) On application by the Department, an industrial tribunal may by order prohibit a person from carrying on, or being concerned with the carrying on of –

(a) any employment agency or employment business; or

(b) any specified description of employment agency or employment business.

(2) An order under paragraph (1) (in this Order referred to as 'a prohibition order') may either prohibit a person from engaging in an activity altogether or prohibit him from doing so otherwise than in accordance with specified conditions.

(3) A prohibition order shall be made for a period beginning with the date of the order and ending –

(a) on a specified date; or

(b) on the happening of a specified event,

in either case, not more than ten years later.

(4) Subject to paragraph (5) and (6), an industrial tribunal shall not make a prohibition order in relation to any person unless it is satisfied that he is, on account of his misconduct or for any other sufficient reason, unsuitable to do what the order prohibits."

(i) We are satisfied that the behaviour of the respondent, as described in the preceding paragraphs constitutes misconduct under the 1981 Order. We have already discussed the meaning of misconduct (at Paragraph 7. above). In particular, we have no doubt that a failure to abide with the Regulation relating to the obligation to keep a client account is capable, on its own, of constituting misconduct. If we are wrong in this, it clearly constitutes 'any other sufficient reason' within Paragraph (4) of Article 5A.

(ii) Having so satisfied ourselves, we must consider whether to proceed to make a prohibition order. Notwithstanding our finding of misconduct, it is clear from the word 'may' in Article 5A(1) that we have a discretion whether or not to make such an order. (See : Department of Trade & Industry v Webster and Others op.cit.) We do not consider that this is a case where we should exercise our discretion in favour of the respondent and decline to make an order. He has been guilty of repeated ongoing breaches of the Regulations, and has failed to remedy these. Failure to make a prohibition order would leave the matter unresolved, and send out the wrong signal to others.

For much the same reason, we decided against adjourning our decision on the making of an order, or making an order, but with specified conditions attached, as is permitted by Article 5A(2). We doubt if the respondent would take the opportunity to put his house in order which would be provided by the first of these options, and in relation to the imposition of conditions, his track record suggests he would not adhere to them.

(iii) We therefore consider that the making of a prohibition order is necessary in this case. It gives us no pleasure to make such an order, which is a draconian measure effectively putting the respondent out of business, but his conduct, and his attitude before the tribunal (where, although most pleasant, courteous, and co-operative, he was, unfortunately, effectively in denial) leave us with no choice if the public is to be protected.

(i) We now turn to the appropriate length of any such order. Mr Sands BL, for the applicant Department, informed us that a prohibition order of ten years was being sought. We assume that this was on instructions from DEL – it is unimaginable that he himself could have thought such a period was remotely appropriate. He made available decisions of employment tribunals in England and Wales on this issue. Admittedly, in some of these cases, ten year prohibition orders have been imposed. In one case, this occurred where the owner of an employment agency had raped a client. The facts there speak for themselves. However, generally, the English decisions are somewhat laconic in their reasoning as to why an order of a particular length has been imposed.

(ii) We consider that we must carry out a balancing exercise, where the seriousness of the respondent's conduct has to be weighed against the mitigating factors which are present. Some general assistance can be derived from the approach of the courts in applications relating to the disqualification of company directors. We would emphasise that we have only looked at such decisions for general guidance. We do not regard them as precedents to be followed slavishly.

In Re: Copecrest Ltd, Secretary of State for Trade & Industry v McTighe (No 2) [1996] BCLC 477, and Re: Sevenoaks Stationers (Retail) Ltd [1991] 3 ACC ER 578 (CA) it was recognised that periods of disqualification (which under the Company directors Disqualification Act 1986 can last up to 15 years) could be divided into three brackets. The top bracket (periods over 10 years) should be reserved for particularly serious cases (including cases where a director may have had a previous period of disqualification), a minimum bracket of two to five years where, relatively speaking, the case is not particularly serious (under the 1986 Act there is a minimum two year period of disqualification), and a middle bracket of disqualification from six to ten years for serious cases which do not merit the top bracket. (See the latter case, op.cit at pp 581, 582 per Dillon LJ.)

(iii) In Re: Westmid Packing Services Ltd, Secretary of State for Trade & Industry v Griffiths and Others [1998] 2 All ER 124 9CA), Lord Woolf MR, at 131 – 145, referred to other more specific matters which may be helpful to consider.

These included the fact that persons who undertake statutory obligations must realise that they have responsibilities, the wider interest of protecting the public and in relation to the person concerned, his general reputation and his conduct in the discharge of his responsibilities (the latter going to the question of the extent to which the public needs protection), his age, state of health, whether he has admitted the conduct alleged, and his general conduct before and after the offence.

He also recognised that a disqualification order, in order to fulfil its role of protecting the public, "would have a deterrent element in relation to the director himself and a deterrent element as far as other directors are concerned". He continued, at 131, 132:-

"Despite the fact that the courts have said disqualification is not a 'punishment' in truth the exercise that is being engaged in is little different from any sentencing exercise. The period of disqualification must reflect the gravity of the offence. It must contain deterrent elements."

(iv) In the course of the decision we have already referred to some factors which are relevant in considering the period of prohibition and we draw them together now. The serious aspect of this case is the persistence with which the Regulations have been breached. We regard the failure to keep a client account (or in the latter period, a client account through which money could effectively be followed) as particularly serious. These failures are aggravated by the fact that the respondent has not only consistently failed to grasp the many opportunities presented to him to rectify the position, but has been evasive and obstructive in his dealings with DEL.

In the respondent's favour, he has undoubtedly helped and encouraged many young actors in their careers. There is no allegation, or evidence of, dishonesty on his part. Although we have seen evidence of complaints of non-payment by actors, these were more in the nature of late-payments, and on at least one occasion the respondent, commendably, paid someone money owing from his own pocket.

(v) We have already recounted how the respondent, in evidence, stated that he might some day write a play about his bankruptcy. If he were to use his undoubted talents to write a play about his compliance with the 2005 Regulations, it would surely have to be a Greek tragedy or, less charitably, a farce. However, be that as it may, we consider that in terms of overall seriousness the respondent's conduct is very much towards the lower to medium end of the scale, and having balanced the seriousness of his conduct against the obvious mitigating factors (an exercise which is necessarily imprecise) we make the following order:-

"That the respondent be prohibited from carrying on, or being concerned with the carrying on, of any employment agency or employment business for a period of two years beginning with the date of this Order, ie 23 June 2009 and ending on 22 June 2011."

(vi) We make no order under Article 5C(4) of the 1981 Order (power to make orders with a view to preventing frivolous or vexatious applications to the tribunal to vary or revoke the order when there has been a material change of circumstances since it was made).

Chairman:

Date and place of hearing: 5 – 8; and 12 – 13 May 2009, Belfast

Date decision recorded in register and issued to parties: