United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 342_93_1804

Appeal No. EAT/342/93


 

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 18 April 1994

Before

HIS HONOUR JUDGE J HULL QC

MR J H GALBRAITH CB

MR E HAMMOND OBE

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MR P MACKIN          APPELLANT

DENBROOK BUILDERS LTD T/A DRAIN SPEC          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MISS S WINFIELD

(OF COUNSEL)

Messrs Garner Foss

& Worsfold

2 Kings Yard

Uxbridge

Middlesex UB8 1DG

For the Respondents MR M HUSS

(PERSONNEL

CONSULTANT)

Peninsula Business Services

Stamford House

361-365 Chapel Street

Manchester M3 5JY


 


JUDGE HULL QC: In this case Mr Mackin was employed by a company trading as Drain Spec, in fact there were two companies at the material time. The actual details and complexity of the company set up we do not need to go into. He was employed from November 1988 onwards. Apparently the Company, or Companies, trading as Drain Spec were licensees or concessionaires of a most interesting and novel process which could be applied to the stabilisation and reinforcement of sewerage and other pipes. The Company, or Companies, were concerned to exploit that in the United Kingdom, it being, a German invention or process.

There came a time when as a result of two disasters which had taken place in the course of applying this process, Drain Spec got into difficulties and, we understand, not through any fault of their own. In those circumstances on the 21 December 1990, in other words after Mr Mackin had been employed for just over two years, they ceased trading. Both the Companies concerned went into liquidation.

Mr Mackin's employment came to an end and he was dismissed on the 21 December 1990 as a result of this liquidation. Amongst the other people who were dismissed was Mr Vince, who had been a surveyor employed by the business. Almost always when there is a construction industry liquidation there is some "equity" in unfinished projects and it was apparently clear to Mr Vince, and a Mr Highley who was another surveyor employed by the defunct business, that that might be so in the present case. As I say, the process was evidently very promising. The men were skilled and there was nothing wrong with the business except that unhappily these misfortunes had befallen it. What was decided by Mr Vince and Mr Highley was that they would go into business as quickly as possible themselves and they would employ some of the employees of the previous business. They would see whether there were any assets worth taking over and they would endeavour to take over the completion of the work in progress. Clearly, with their expertise and their knowledge, and the expertise of those they were proposing to employ, that would be or might be a very profitable and sensible course to take.

The new company was called Denbrook Builders Ltd and Mr Vince and Mr Highley were the moving spirits. They approached eight employees of whom Mr Mackin was one. Although the liquidators told them they had no assets to sell, they were allowed to take over the trading name, Drain Spec. They also approached the owners of certain plant which was hired to Drain Spec and asked whether the new Company could hire some of the plant, and they took that over. They were also allowed to occupy premises which had been occupied by Drain Spec.

To a casual eye it might well appear that there was a transfer of the undertaking. If there is a transfer of the undertaking then employees enjoy continuity of employment for practical purposes. They do not claim redundancy payments or unfair dismissal there and then. Mr Mackin said that was his case. Mr Mackin continued in employment with the new company, Denbrook Builders Ltd, until November 1991 when he was dismissed. He made a complaint of unfair dismissal. Now of course, if he had been for the first time employed in January then he was not entitled to present a complaint; whereas if his employment was continuous from November 1988 then he was entitled to present his complaint.

Accordingly, the Industrial Tribunal sitting for London North, with Mrs Stoll the Chairman, decided to enquire into that as a preliminary matter. They sat on the 30 March 1992. Before that Denbrook Builders Ltd wrote a letter on 17 March to the Regional Office of Industrial Tribunals setting out a very different case. They said:

"We understand this to be a preliminary hearing on the 30 March to consider whether the applicant, Mr Mackin, is disqualified from the rights not to be unfairly dismissed with regard to the length of his employment.

I would advise you with respect that due to a clear cut situation and the difficulties imposed on our business should I need to be away from it, I have decided not to attend in person. However, I do feel the documentation enclosed answers the question you are addressing quite adequately.

The salient points are that Mr Mackin was employed by us for approximately eleven months, his work had been unsatisfactory for some time, despite repetitive reprimands this did not improve, and we therefore gave him notice of one week as we were required to do and advised by our Solicitor".

As Miss Winfield, who appears for Mr Mackin, well points out, they were already being advised by Solicitors. They were not without legal assistance. The letter continues:

"Mr Mackin used to work for Drain Spec UK Ltd for whom I also worked for a number of years until they ceased trading and went into receivership in December/January 1991. I was made redundant along with Mr Mackin and the rest of the staff in December 1990. In January 1991 I decided to start my own business, Denbrook Welders, employing as many staff as was practicable at the old company. This I feel is where the problems arise. Mr Mackin is not taking into account the fact the company I own is not the company he used to work for. He may indeed have worked for Drain Spec UK Ltd for a number of years but worked for me for only 11 months. For your information we enclose the following documents".

Then there were enclosed a number of documents including letters from the liquidators which, as Miss Winfield points out, in substance set out all material matters which the Tribunal ought to consider from the point of view of the employers.

That letter was sent to the Tribunal and no doubt it was put on the file and we have no reason to suppose that it was not available for the Tribunal. But as Mr Vince said, neither he or any colleague of his, nor any representative of the firm, proposed to attend.

Then the Industrial Tribunal sat on the 30 March, and that is at page 8 of our bundle. They dealt with this problem very shortly indeed. They heard the applicant and they heard his Solicitor. They recorded that the Respondent did not attend and then Mrs Stoll and her colleagues, Mr Rogers and Mr Lewis, said as follows:

"The unanimous decision of the Tribunal is that the Applicant has been employed by the Respondent since November 1988. There has been no break in his employment. An Industrial Tribunal has jurisdiction to consider his application for unfair dismissal".

They went on to say, I can read it all because it is just three paragraphs:

"This matter comes before the Tribunal to consider the preliminary issue of jurisdiction. The Respondent contends that the Applicant has not been continually employed for two years.

The evidence we heard from the Applicant was that he commenced his employment with the Respondent in the first week of November 1988. There has never been any break in his employment. He had never received any redundancy payment. The work he did from January 1991 until his dismissal in November 1991 was in the same place using the same vehicles and for the same or similar customers, as he had been doing before. He received a pay increase.

We find that there has been no break in the Applicant's employment and that he has been continually employed since November 1988 until his dismissal in November 1991".

There the Tribunal is giving no indication whatever that they had paid any attention to the matters in the letter of the 17 March 1992, they were dealing with it in a very summary way. The Respondents had not turned up and the preliminary point of jurisdiction was decided in three paragraphs.

Long after this decision, in November 1992, Mr Vince eventually consulted a firm of consultants in these matters, called Peninsula. Mr Huss is their representative here today and would, if we had called on him, have addressed us. On the 25 January 1993 that firm of consultants wrote a letter which is at page 10 of our bundle.

"This case came for preliminary hearing......

The reason for writing on this occasion is in line with Rule 13(1) of the Industrial Tribunals (Rules of Procedure) Regulations 1985, in that we wish to make an application to the Regional Chairman, or the Chairman of the original Industrial Tribunal, to ask that the same Industrial Tribunal be re-constituted in order for them to review their decision".

They then said that the interests of justice required such a review. They said that the Respondents were led to believe that there was no need for them to attend the preliminary hearing. It was clear that this advice was wrong, they said. They then said that new evidence had come to light. Well, as has been pointed out by Miss Winfield, it was not new evidence. All these matters were plainly set out in the letter of 17 March 1992, or in its attachments, and if the Tribunal had paid attention to those matters then if they had accepted them they would have reached a different decision.

Notwithstanding that, having received this letter, the Tribunal did proceed to sit again on 16 February 1993 and they decided to grant the application for a review. They said that amongst other things they dealt with the lateness of the application for review. Amongst other things they dealt with the lateness of the application for review. They said they accepted Mr Vince's evidence that he was experiencing difficulties which one Tribunal member describes as "nightmarish".

The view of the Tribunal was that the documentation upon which the Respondent relied was in fact available at the time of the earlier hearing. The application under Rule 10(d) Industrial Tribunal Rules of Procedure, that is on the grounds of fresh evidence, therefore failed. The Tribunal were clearly quite right about that. However, having heard the evidence of Mr Vince and having read the documents, the Tribunal found that the significance of the documents had not been realised by Mr Vince until he had seen Mr Huss. The law relating to the Transfer of Undertakings Regulations had not been considered by him. He had not appreciated, as a layman, what the complicated issues might be.

The Tribunal held that in the circumstances, the interests of justice required that they grant the application for a review, under Rule 10 (1) (e). They then went on to consider whether they should reach a different decision. They decided that they should revoke their original decision, and they said that the unanimous decision of the Tribunal was that the Industrial Tribunal had no jurisdiction, as the applicant had not been continuously employed by the Respondent Company for a minimum period of two years.

They went through the facts, many of which I have already mentioned. They heard Mr Mackin. They also of course heard Mr Vince. They then referred to the authorities and finally, they said in paragraph 6:

"We find, therefore, that there was no transfer of an undertaking. That the new Company, the present Respondent, employed the applicant under a new contract and there was no continuity of employment from the Applicant's former employer which would enable him to have the necessary 2 year qualification. We find, therefore, that an Industrial Tribunal has no jurisdiction to consider the unfair dismissal application."

Miss Winfield says that this was an application which was in the nature of an application to adduce fresh evidence although it was not fresh evidence. It was evidence which was available and indeed which should have been studied carefully by the Tribunal in March 1992.

There are most unusual factors in this case. First of all, it seems perfectly clear to all of us that the Industrial Tribunal cannot have studied, on its first hearing in March 1992, these documents. It should have done that, but one has to remember the circumstances of practical life. The Respondents had chosen not to attend, they say on wrong advice. The Applicant did attend with his Solicitor. The matter was dealt with very shortly in three paragraphs which give no indication whatever that the Respondent's case had been considered. It looks very much as though the Tribunal, instead of going into the merits, treated the matter as undefended.

Of course it does not stop there. In February 1993, the Tribunal had not finished with this case. They were in the middle of it. All that they had done in March 1992 was to decide that they had jurisdiction. It was then made very clear to them, by the letter to which I have referred from Peninsula, that they had not got jurisdiction and that in due course when they came, to try the question of unfair dismissal and the question of compensation they and all the questions which arose they would be doing so in the quite clear recognition that they had made a mistake in saying that they did have jurisdiction. So it was not, as in the other cases to which we have been referred, a case of a Tribunal or Court which has disposed of the case.

This Tribunal had decided a preliminary issue. It was then made to appear to them that they had wrongly decided it. Rather than embark on what would have been an entirely vacuous exercise if that contention were right and tried out a case where they had no jurisdiction, leaving the luckless parties to go to appeal on the whole matter, the Tribunal agreed that they would review their own decision and see whether indeed it could be said that there was no jurisdiction. Having heard for the first time both sides of the matter they decided that they had not got jurisdiction. Miss Winfield says that although their decision is not accepted (so to speak) there is no question of appeal, it is regarded as a question of fact.

In our belief the authorities, important and interesting of course as they are, do not apply directly to a situation such as this. This was indeed an exceptional circumstance; namely, that there was a serious possibility of a great waste of time and money and a serious injustice if this Tribunal did not agree to review their decision. If they reviewed it and decided that their earlier decision was wrong then they had no jurisdiction. No Court, no Tribunal should proceed on the basis that it has no jurisdiction and that it has made a mistake in that regard. We think this Tribunal therefore acted correctly.

In those circumstances we are unable to accept the submission which is made to us which is that they acted in breach of principle. This Tribunal were acting in a reasonable manner, although other Tribunals might have acted differently. It was very well within their powers to review this decision.

There is no error of law disclosed by the decision to exercise their discretion or in the way in which it was exercised. Therefore in the exceptional circumstances we feel obliged to dismiss the appeal. We are very much indebted to Miss Winfield for the thoroughness and the economy of her argument.