United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 265_93_2001

Appeal No. EAT/265/93

I N T E R N A L

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 20th January 1994

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MR T S BATHO

MRS E HART

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DAVENPORT VERNON CROXLEY GREEN LIMITED          APPELLANTS

MRS P D TUCKER          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR S SHARPLES

(Of Counsel)

Messrs Wallace Jones

Solicitors

108 Beaufort Street

London SW3 6BU

For the Respondents MR A CLARKE

(Of Counsel)

Messrs Camerons

Solicitors

1 Peterborough Road

Harrow

HA1 2YW


 


MR JUSTICE MUMMERY (PRESIDENT): This appeal is from a decision of the Industrial Tribunal held at London (North) on the 20th January 1993. The Tribunal unanimously decided that Mrs Tucker had been constructively dismissed by the Respondent, Davenport Vernon Croxley Green Limited, and that the dismissal was unfair. They ordered compensation to be paid to Mrs Tucker in the sum of £5,758.91. The decision was notified to the parties on the 15th February 1993. Davenport Vernon were dissatisfied with the decision. By Notice of Appeal to this Tribunal dated 23rd March 1993 they sought to have the decision reversed on the grounds stated in the Notice of Appeal.

In order to understand the grounds of appeal and the rival submissions advanced on this appeal it is necessary to look briefly at the facts which gave rise to Mrs Tucker's claim. Mrs Tucker was employed from the 23rd October 1985 onwards as an Accounts Clerk with a Company called "Caldon of Watford Ltd". At the relevant time her basic salary was £11,000 a year for a 30 hour, 4 day, week - plus bonuses in relation to use of a car and private health insurance.

On the 16th July 1992 Caldon ceased to trade and on the following day the goodwill and assets of that Company were acquired by the Respondent, whom I shall refer to as Davenport. Davenport started trading on the 17th July 1992.

On the 20th July 1992 Mrs Tucker had an interview about her terms of employment and was given a letter. What was proposed was that Mrs Tucker would have changed terms of employment under which, for a five day week, instead of a four day week, she would have her salary reduced to £10,000. The benefits in form of right to use the Company car, when available, and private health insurance would be discontinued. Mrs Tucker did not agree to those proposed alterations, even after two further meetings and discussions on the 27th and 31st July 1992. On the 31st July she took the view that Davenport were in fundamental breach of her contract of employment. She left, and claimed in her Notice of Application presented on the 12th August 1992 that she had been constructively dismissed.

The facts were not seriously disputed by Davenport. In the Notice of Appearance, they stated:

"On 20th July Mrs Tucker, along with all other staff, were interviewed by myself and presented with a letter seeking to alter terms of employment. During this interview and subsequent meetings [I mentioned] on 27th and 31st July the reasons for the changes were put forward, these being as laid out in my letter of 14th August 1992.

Mrs Tucker decided at the meeting of 31st July that she was not prepared to work any longer for Davenport. . ."

The letter of 14th August 1992 referred to Caldon trading in Receivership before the purchase of its assets by Davenport. It stated that one of the main reasons for Caldon going into Receivership was the high cost base it had operated. With this in mind Davenport were seeking to apply principles to bring down costs to a level more in line with those that apply in the motor industry. The letter referred to discussions which had taken place to air the variations in conditions of employment requested. It said that these changes were sought to be brought about for the benefit of the future of the companies (ie the companies in the Group) and to the greater good of its employees. The letter expressed disappointment that an agreement had not been reached with Mrs Tucker, as Davenport would have preferred to retain her employment.

When the matter came before an Industrial Tribunal, on the 20th January 1993, the Tribunal found that Davenport had purchased the goodwill and assets from the Receiver and that the Transfer of Undertakings Regulations 1981 applied to the transaction. The Tribunal went on to set out the facts, in more detail than I have mentioned, and concluded that Mrs Tucker was constructively dismissed. They also found that the dismissal was a dismissal after a relevant transfer, within the meaning of the Regulations, and that the reason for dismissal was one connected with the transfer and was the principal reason for her dismissal within Regulation 8(1) of the 1981 Regulations.

The arguments on this appeal have centred on paragraphs 7 and 8 of the decision. They relate to the Tribunal's findings and conclusions on Regulation 8(2) of the 1981 Regulations. I will read 8(1) and 8(2) in whole. Regulation 8 provides:

"(1) Where either before or after a relevant transfer, any employee of the t transferor or transferee is dismissed, that employee shall be treated for the purposes of Part V of the 1978 Act and Articles 20 to 41 of the 1976 Order (unfair dismissal) as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal.

(2) Where an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after a relevant transfer is the reason or principal reason for dismissing an employee -

(a) paragraph (1) above shall not apply to his dismissal; but

(b) without prejudice to the application of section 57(3) of the 1978 Act or Article 22(10) of the 1976 Order (test of fair dismissal), the dismissal shall for the purposes of section 57(1)(b) of that Act and Article 22(1)(b) of that Order (substantial reason for dismissal) be regarded as having been for a substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."

Before the Industrial Tribunal it was argued, on behalf of Davenport, that it was for an economic, technical or organisational reason entailing changes in the workforce that Mrs Tucker had been dismissed. The Tribunal considered the arguments and evidence and came to these conclusions:

"7. We find that the reason for the dismissal was for an economic reason and we accept the Respondent's evidence when it is stated that there had to be a reorganisation to enable the company to trade profitably. However we cannot find from the evidence that this organisation reason entailed changes in the workforce of the company. We are assisted by the case of Crawford v. Swinton Insurance Ltd [1990] ICR 192 and we refer specifically to the judgment of Knox J when he states at page 192 `what, in our judgment has to be looked at is the workforce as an entity, that is to say as a whole, separate from the individuals who make it up and then it has to be seen whether the reason in question is one which involves a change in that workforce, strength or establishment and we are satisfied that there can well be a change in workforce if the same people are kept on but they are given entirely different jobs to do. We would regard a workforce that was engaged in a different occupation as being for the purposes of Regulation 8(2) changed if that happened as a result of the organisational change on a relevant transfer . . .".

The Tribunal concluded, at paragraph 8:

"8. In this case the identity of the actual employees remained the same and the intention of the Respondents was that the employee would remain doing her same job as she has always done before hand but on a five day basis at a lower wage with none of the additional perquisites. In those circumstances we find that the exception in Regulation 8(2) does not apply and this dismissal therefore was unfair."

Mr Sharples, on behalf of Davenport, appeals against the decision of the Tribunal on Regulation 8(2) on this ground: that the Tribunal failed properly to apply the law to the evidence before them. He submits, in particular, that the decision was perverse in that no reasonable tribunal could have arrived at this decision on Regulation 8(2) on the evidence given to the Tribunal by two witnesses for Davenport; the two witnesses being Mr Keith Hayles. A Managing Director of Davenport, and, Pamela Lacey, who is the Company Secretary of Davenport.

Mr Sharples' submissions start with the material findings of the Tribunal, that is that Davenport had taken over Mrs Tucker's contract of employment; that the 1981 Regulations applied to the transfer; that Mrs Tucker had been constructively dismissed and that the dismissal was one to which Regulation 8(1) should apply, so that the dismissal was presumptively unfair. He also referred to the Tribunal's findings that Mrs Tucker had been dismissed for an economic reason in circumstances where there had to be a re-organisation to enable the Company to trade profitably. Mr Sharples proceeded to his submissions on Regulation 8(2) which, if correct, have the effect of negativing the presumption in Regulation 8(1) and lead to a consideration of Section 57(3) of the 1978 Act. What Mr Sharples did was to draw a distinction between matters of evidence recorded in the Chairman's Notes and matters which were not recorded.

The Chairman's Notes have been provided in typed form to this Tribunal. Referring to the evidence of Mrs Lacey, Mr Sharples pointed out that, according to the Chairman's Notes, Mrs Lacey stated there were nine companies under her charge. The Group were in the process of installing a new computer system as part of decentralisation of the Group. Davenport was the parent Company of a group consisting of 20 companies engaged in car dealing. Mr Hayles was appointed by the Board to manage Davenport. The Group was being restructured. This necessitated a change in accounting procedures within Davenport. This change also required that someone should be in the Accounts Office at all times.

Mr Sharples contrasted this with matters which he asserted were stated in evidence at the hearing, but are not recorded anywhere in the Chairman's Notes of Evidence. The particular matters which he mentioned, which are absent from the Chairman's Notes, are changes in Group staff, which had been implemented as a result of the Group restructuring. These included a new Finance Director and Group Managing Director, and a new Group Assistant Accountant who had been appointed with responsibilities for Davenport. Mr Sharples submitted that in relation to Mrs Lacey's evidence the Tribunal failed to take proper account of evidence in coming to its decision. It had failed to take proper account of those matters and, therefore, the decision was perverse. He pointed out specifically that Mrs Lacey was not cross-examined on her evidence. No evidence was brought by Mrs Tucker to challenge Mrs Lacey's evidence.

The difficulty with this submission is that this Tribunal simply does not know what further evidence was given to the Tribunal other than what is recorded in the Chairman's Notes. Mr Clarke, who appeared for Mrs Tucker, pointed out that there is an established procedure for dealing with questions arising out of the evidence given to the Tribunal and the Chairman's Notes of the evidence. He referred to two cases relevant to this point. First the case of Dexine Rubber Co Ltd v. Alker [1977] 434 at 438G-439 where Cumming-Bruce J dealt with this problem as follows:

"The situation in the instant case is, of course, different: there is a note by the chairman, who was under a judicial duty to take it, and there is a difference of recollection between the chairman and counsel and solicitor for the employers in this court as to whether the chairman's note was accurate. The chairman, having considered the question, was satisfied that his own recollection was correct and that the recollection of counsel and solicitor for the employers was imperfect. All we would say is that: that where a party to proceedings in the industrial tribunal has received a chairman's note which he challenges as inaccurate, it is his duty, as was done here, to send the criticisms he wishes to make to the chairman for his observations. If the chairman replies that, having considered the criticisms, he is satisfied that his (the chairman's) recollection was accurate and that his note is the correct material for use in the appeal tribunal, the party who is criticising the chairman's note must accept the chairman's conclusion, unless, after submitting his criticisms to the advocate on behalf of the opposite party, there is confirmation from both sides that the chairman's note and recollection is incomplete or imperfect. That was not done in this case, and in that situation this appeal tribunal refused to admit any material other than that before them by the chairman's note of proceedings. We would suggest for the future that where such a criticism is going to be made by one party, that party should submit the criticism to the advocate for the opposite party before submitting the criticism for the comments of the chairman of the tribunal. This is likely to make it easier for the chairman of the tribunal to appreciate whether there is a risk recognised by both parties that his note is incomplete or inaccurate, and that is the procedure that should be followed in future if such a situation arises again."

That procedure has not been followed in this case. There is a short reference on this point in the later case of Aberdeen Steak Houses Group plc v. Ibrahim [1988] ICR 550 at p.556B where it is said:

"It is clearly right that where the parties cannot agree between themselves upon the accuracy or inaccuracy of the notes of the court that version given by the court should remain supreme. In the absence of some such rule it would be impossible to keep any control over the number of continuing issues on the subject."

In those circumstances we have looked in detail with Mr Sharples at the Chairman's Notes of the evidence of the two witnesses called by Davenport. We also have the notes of the examination in chief and cross-examination of Mrs Tucker. There is nothing in the notes of the evidence given by Mrs Tucker relevant to the matters covered by Regulation 8(2). We bear in mind, in particular, that, as a matter of burden of proof, the onus is on the employer, transferor or transferee, who is seeking to invoke Regulation 8(2), to adduce evidence to establish the matters relevant to economic, technical or organisation reasons entailing changes in the workforce. It was not for Mrs Tucker to lead evidence on this point. Nothing appears to have been put to her in cross-examination out of the Regulation 8(2) point.

Mr Sharples recognises that the note of Mr Hayles' evidence has no more than an oblique reference to this point at the end of his cross-examination when he is recorded as saying:

"We as a group needed to change the accounting procedures."

There is a note in the preceding four lines of the Chairman's Note that:

"I [Davenport] took over 15 people. Two ladies in Accounts Department. I replaced her immediately. I believe there had to be a 5 day working week. I knew she wasn't prepared to work on Thursdays. I was prepared to carry on negotiating."

Looking at those Notes, by which we are confined, as the proper procedure has not been followed for challenging their accuracy we have no hesitation in deciding that the conclusions of the Tribunal in paragraphs 7 and 8 of their decision were conclusions which they were entitled to reach on the evidence.

The essential conclusion in paragraph 7 was that the Tribunal could not find from the evidence that the organisation of reason entailed changes in the workforce of the Company. If all the evidence before them was that in the Notes, as we must take it to be, that was a decision which a reasonable tribunal, appreciating the law and understanding the evidence, was entitled to reach. There was no misdirection as to the construction of Regulation 8(2). There was no misapplication of Regulation 8(2) to the facts. There was no perversity in that conclusion.

For those reasons this appeal will be dismissed.

APPLICATION FOR COSTS

For the reasons given earlier this appeal is dismissed. Consequent on dismissal Mr Clarke, on behalf of the successful Respondent, Mrs Tucker, relied on Rule 34 of the Employment Appeal Tribunal Rules 1993 in support of an application that Davenport should pay Mrs Tucker's costs of the appeal. Rule 34 provides:

"(1) Where it appears to the Appeal Tribunal that any proceedings were unnecessary, improper or vexatious or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings the Tribunal may order the party at fault to pay any other party the whole or such part as it thinks fit of the costs or expenses incurred by that other party in connection with the proceedings.

(2) Where an order is made in paragraph (1) of this rule, the Appeal Tribunal may assess the sum to be paid, or may direct that it be assessed by the taxing officer. . ."

Mr Clarke argues that there was unreasonable conduct in the bringing and conducting of this appeal. Having regard to the grounds on which the appeal was brought it was incumbent on Davenport to invoke the procedure laid down in the two cases mentioned. One of them was Dexine Rubber Co Ltd v. Alker decided as long ago as 1977. It is a well established procedure, known to practitioners. That procedure was not followed. There was no prospect of this appeal succeeding on the ground advanced. It was unreasonable to pursue an appeal without first following the prescribed procedure.

Mr Sharples resists the application for costs. He said that the appeal was not doomed. It was brought out of a genuine grievance on the part of his clients that the Tribunal had not properly appreciated the evidence relevant to the reliance of Davenport on Regulation 8(2) of the 1981 Regulations.

It is not the normal practice of this Tribunal to award costs against an unsuccessful Appellant. We are, however, satisfied in this case that it was unreasonable for Davenport to pursue this appeal without following the established procedure. Without following that procedure it was impossible to mount an argument on the inaccuracy or lack of completeness in the Chairman's Notes.

Mrs Tucker has been unreasonably put to unnecessary costs in resisting this appeal. We shall make an order under Rule 34 that the costs of the appeal will be paid by Davenport and taxed by the Taxing Officer, unless agreed.