United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 328_94_3110

Appeal No. EAT/328/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 31 October 1994

HIS HONOUR JUDGE J HULL QC

MISS A MADDOCKS OBE

MR A D SCOTT

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SECRETARY OF STATE FOR EMPLOYMENT          APPELLANTS

(1) MR S E BAGGETT

(2) MISS N WOODWARD (T/A RAYMOND GUILDFORD)          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR S KOVATS

(OF COUNSEL)

The Treasury Solicitor

Queen Anne's Chambers

28 Broadway

London SW1H 9JS

For the 1st Respondent RESPONDENT IN PERSON

For the 2nd Respondent NO APPEARANCE BY OR

REPRESENTATION ON

BEHALF OF THE 2ND

RESPONDENT


 


JUDGE HULL QC: This is an appeal to us by the Secretary of State for Employment. What happened was that there was an application to the Industrial Tribunal by Mr Baggett who had been very long in employment with the Respondent Miss Woodward, applying (because the employer had apparently disappeared) for holiday pay, pay in lieu of notice and redundancy monies. He was entitled to make those complaints and I will come to the statutory provisions in a few moments.

The Industrial Tribunal considered the matter. The Applicant did not appear but the Secretary of State was represented by an executive officer so they had to do the best they could in the absence of other help. They were presided over by Mr Milton and the Industrial Members were Mr Howe and Mr Smith. They found that the employer was the Applicant's employer at all material times and that at the time of the Applicant's dismissal he had completed 35 years (they mistakenly say 45 years) service and was 52 years old. They work out his redundancy payment and they say they have heard various representations put before them by the executive officer and considered a closely related decision in respect of the same employer.

They say:

"It is obvious from the papers that the Applicant was dismissed when the business closed down and ceased to trade. It is furthermore, therefore, obvious that the Applicant was dismissed by reason of redundancy ie. the cessation of the business in which he was employed. The Secretary of State has intervened in these proceedings since the Applicant, in due course, applied to the Secretary of State for payment of the statutory sums under section 106 and section 122 of the Act.

The Secretary of State has opposed the application on the grounds that the first Respondent's business was not "insolvent" within the meaning of section 106 [the first Respondent being the employer] and furthermore that the Applicant had not taken "all reasonable steps" within the meaning of section 106 to recover his payments.

Whilst we have not had the benefit of evidence from the Applicant, we find it to be unreal and inconceivable to accept the proposition that the Applicant would not first of all have attempted and did not in fact attempt to recover his due outstanding payments from his employer for whom he had worked some 35 years. We have no hesitation at all therefore in coming to the conclusion that he has taken all reasonable steps to recover his redundancy payment and on any view therefore he qualifies under section 106(1)(a)."

There is no appeal against that finding.

"His entitlement to claim notice pay from the Secretary of State arises under the stricter provisions of section 122 which only imposes liability upon the Secretary of State if it is established that the employer is "insolvent" within the interpretation section of section 127 of the Act.

The Applicant has asserted in his application that at the time when he was seeking to recover monies he was told that his employer was "bankrupt". That statement is also recorded by the employer himself in a handwritten letter in the documents before us. The Secretary of State has brought no evidence to contradict the proposition that the employer in this case is "bankrupt". Bearing in mind the indisputable facts that the business has ceased to trade and that the Applicant has taken all reasonable steps to recover his monies, it seems to us obvious that the employer in this case plainly falls within the definition of "insolvency" of sections 122 and 127 and the liability for notice pay, therefore, also unfortunately passes on to the long suffering State purse."

With regard to his holiday pay they made no finding. They had not heard any evidence about it. They had studied some papers which are not before us and they felt able to reach those conclusions.

The Secretary of State has appealed. It is something which we have noticed in other cases that the Secretary of State's staff seem unwilling to provide the Industrial Tribunals with proper support in these cases in the sense of laying before the Tribunal such matters as they can with reasonable industry and energy gather to show whether the claim is properly maintainable or not. Several times, in my experience certainly, we have heard in this Tribunal appeals which essentially mean raising a new case, new contentions, putting forward new evidence, matters of that sort. These cases raise quite important issues about significant sums of money. It does appear that the Industrial Tribunal did not receive the assistance which they were entitled to expect from a public department doing its duty to preserve public money and to uphold the rule of law as shown by the statute.

The Notice of Appeal by the Secretary of State asks the following question:

"whether there was any evidence before the Industrial Tribunal to support the Industrial Tribunal's finding that the employer, N Woodward, t/a Raymond Guildford, was formally insolvent within the meaning of section 127(1)(a) of the Act"

and continues:

"there was no formal evidence that the employer had been adjudicatd bankrupt or had made a composition with her creditors, and the limited material before the Industrial Tribunal did not permit of the inference drawn."

That was signed by Counsel and would have been an interesting question; whether the mere assertion by Mr Baggett or admission of the other material would support an inference that there had been a bankruptcy or insolvency within the terms of the Act.

Today, and this by a Skeleton Argument which was received by this Tribunal fairly late on Friday and which we have all seen for the first time today, the whole case has altered. The Secretary of State seeks leave to amend the Notice of Appeal we are told and to adduce fresh evidence. The Secretary of State accepts that if the application is granted the matter will have to be adjourned so there will be, of course, further expense. The Secretary of State abandons the sole ground contained in the existing Notice of Appeal and then the Secretary of State, through Counsel (a very well drafted Skeleton Argument) says that he accepts that it was open to the Industrial Tribunal to find that Mr Baggett had taken all reasonable steps to recover the redundancy payment; but then says that there is no jurisdiction to hear the claim in the Industrial Tribunal or, alternatively, that the Industrial Tribunal had no jurisdiction to make the declaration about the Secretary of State's liability, as the employer was not insolvent.

The jurisdiction point is abandoned by Mr Kovats today, but the insolvency point is taken and it is said to be a point of jurisdiction; and Mr Kovats sets out the statutory provisions. At paragraph 11 of his Skeleton Argument we read:

"SS seeks to adduce evidence that Mr Woodward has not been adjudged bankrupt [I think it should read Mrs Woodward] and has not made a composition with his creditors."

The Secretary of State produces, as the new evidence which it is sought to adduce, two letters, a letter from the Insolvency Service dated 29 September saying:

"A search of the Register of Individual Voluntary Arrangements has been completed on the above individual. I can advise that I can find no trace of an arrangement under that name and address"

that is Nicola Woodward, 44 Sycamore Avenue, Upton, Wirral. We are told that this lady has disappeared so far as Mr Baggett is, concerned and he and his colleagues have tried to find her, but without success.

Then there is a formal notice from the Bankruptcy Public Search Room which says that there is no trace in the search for bankruptcy proceedings and that is dated 29 September. It certainly appears as if there was no official trace at any rate under this name, Nicola Woodward, in either the Bankruptcy Public Registers or in the Register of Individual Voluntary Arrangements.

Mr Kovats very frankly tells us that of course this evidence could have been obtained and could have been laid before the Industrial Tribunal, but it was not. Why not? Well there is no excuse for it. He says prima facie it is credible. We agree; although there is the caveat which I have mentioned that a person who disappears, as this person is alleged to have done, may very well change their name. It is perfectly lawful to use any name unless you do it with fraudulent intention and it may therefore be that that is an explanation. But it is on the face of it credible. It is on the face of it conclusive, subject to matters of the sort I have mentioned. Should it be admitted? It is not fresh evidence in the sense that it could not have been obtained before.

We must look at the statute because Mr Kovats' submission, and this is the essence of his case, is that this is a matter which goes to jurisdiction and therefore we should not observe the strictness of the rules which are undoubtedly binding on this Tribunal and we should allow the evidence to be adduced and should adjourn for that purpose. We have had cited to us two cases - Barber v Thames Television [1991] ICR 253 and Wileman v Minilec Engineering [1988] ICR 318. Those cases undoubtedly establish the principles upon which we admit fresh evidence and indeed allow fresh points to be taken that were not taken below. Here this is not strictly a fresh point. It was submitted to the Tribunal that there was no evidence of insolvency and the Appeal was originally on the ground that there was insufficient evidence or no evidence on which the Tribunal could properly come to that conclusion but now the Secretary of State seeks to adduce positive evidence that there was no bankruptcy and no insolvency.

So we look at the statutory provisions. The statutory provisions which precede section 122 deal with rights against an employer and then section 122 provides as follows:

"(1) If on an application made to him in writing by an employee the Secretary of State is satisfied -

(a) that the employer of that employee has become insolvent; and

[(aa)...

(b) that on the relevant date the employee was entitled to be paid the whole or part of any debt to which this section applies,

the Secretary of State shall, subject to the provisions of this section, pay the employee out of [the National Insurance Fund] the amount to which in the opinion of the Secretary of State the employee is entitled in respect of that debt."

Among the debts which are mentioned are (a) any arrears of pay (b) any amount which the employer is liable to pay the employee for the period of notice required and (c) any holiday pay. That is in subsection (3) of section 122.

So the Secretary of State doing his duty of course through his officers will pay such a sum as he adjudges to be due if he is satisfied of two things; first that the employer has become insolvent and secondly that the employee was entitled to be paid the whole or any part of the debt.

When it comes to insolvency those words do not have their ordinary meaning. The ordinary meaning of insolvency in the Courts, and certainly in the accountancy profession and in business generally, is that a person is unable to pay his debts as they fall due and in those circumstances, no matter what contingent assets he may have or assets which cannot be realised for the moment, he is insolvent in the sense that he is unable to meet his creditors' lawful and proper and immediate demands and it may be, although normally it is not, possible to rescue from the wreckage substantial payments for creditors by processes of bankruptcy or of course a voluntary arrangement with the debtor.

But what section 127 does is to give a very narrow meaning to insolvency. It reads:

"(1) For the purposes of sections 122 to 126, an employer shall be taken to be insolvent if, but only if, in England and Wales, -

[(a) he has been adjudged bankrupt or has made a composition or arrangement with his creditors;..."

That is the narrow meaning of insolvency which Parliament has given to the phrase when it is used in among other places, section 122. So of course unless the Secretary of State was satisfied with those matters he would not pay. If the Secretary of State does not pay, and it is conceded that this is the position here (an application was made to him), then under section 124 a remedy is provided:

"(1) A person who has applied for a payment under section 122 may, within the period of three months beginning with the date on which the decision of the Secretary of State on that application was communicated to him... present a complaint to an industrial tribunal that -

(a) the Secretary of State has failed to make any such payment...

(2) ...

(3) Where an industrial tribunal finds that the Secretary of State ought to make a payment under section 122 or 123, it shall make a declaration to that effect and shall also declare the amount of any such payment which it finds the Secretary of State ought to make."

The Tribunal, in effect, tells the Secretary of State that his duty is to make the payment.

As I have already said the whole basis of this application to adduce this new evidence is that it goes to jurisdiction and so we have considered that submission.

The applicant does not have to show that the employer is insolvent within section 127 before he makes his application to the Secretary of State. No doubt the Secretary of state will make such enquiries as he thinks right. The application being made to him he may or may not conclude that the employer is insolvent within the narrow meaning of the Act. However that may be, if the Applicant is not satisfied with a refusal he goes off to the Industrial Tribunal. Again he does not have to show, to found jurisdiction in the Tribunal, that in fact the employer is insolvent in the narrow meaning. He may have a fairly good idea of that or where he can find the evidence of that, but he can leave all that to the stage of proof, that is to say when the hearing is held and he adduces such evidence as he can and asks the Tribunal to make such inferences as they think right; so even at that stage no question of jurisdiction arises. The application is perfectly competent even if it turns out that the employer is not insolvent.

Finally, we get to the stage of the hearing and then it is for the Industrial Tribunal to say whether they are satisfied on the evidence that the employer is insolvent within the meaning of section 127 so that the Secretary of State ought to make such a payment; and it appears that subsection (3) is drafted with that view of the matter well in mind. It does not say that the Industrial Tribunal is to find that the Secretary of State ought to have made a payment (in other words that all matters were such, when the application was made to the Secretary of State, that he was then obliged to make a payment); it has to find, if the Applicant is to be successful, that the Secretary of State ought to make a payment. In other words it appears that it is enough for the Applicant to prove, even at that late stage, that the employer is insolvent in one of the two narrow senses provided by section 127.

In this case the Industrial Tribunal, it is said had no sufficient evidence to allow it to make that inference, but that appeal is abandoned and what is sought now is to adduce positive evidence. It seems to us that the basis of this appeal, as it is now presented, does not go to jurisdiction. It is a matter of evidence. The Industrial Tribunal of course, if it had had this evidence before it, would in all probability have reached a different conclusion. It is evidence which on the face of it is likely to be conclusive. It is evidence which on the face of it is credible. It is evidence which could perfectly well have been laid before the Tribunal in the first place and it appears to us not to go to jurisdiction but to go quite shortly and simply to the merits of the case.

The Industrial Tribunal made an inference which is said to be unjustified. Here is some evidence which shows that it was indeed unjustified; that is not about jurisdiction; that is evidence. Of course it can be said, in a sense, that everything which an Industrial Tribunal has to consider before it can make any finding or award goes to jurisdiction. We do not think that is the sense in which the exception to the general rule about fresh evidence is stated. We think we should consider this on the ordinary principles under which fresh evidence is considered. There is not the slightest doubt that according to those principles the evidence ought not to be admitted. It is evidence which could and should have been adduced and we again express our regret that the Secretary of State on this occasion seems not to have taken steps which were clearly open to him to defend this substantial claim and protect the public purse which he now tells us, and of course we accept, he is anxious to protect. In the circumstances we think that we ought not to allow this appeal and accordingly it is dismissed.