United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 888_93_2403

Appeal No. EAT/888/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 24 March 1994

Before

THE HONOURABLE MR JUSTICE MUMMERY

MRS P TURNER OBE

MISS D WHITTINGHAM

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MR H S & MRS Y M STEWART          APPELLANTS

MRS N LANGLEY          RESPONDENT

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Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised


 


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APPEARANCES

For the Appellants MRS Y M STEWART

(IN PERSON)


 


MR JUSTICE MUMMERY (PRESIDENT): This is an appeal by Mr and Mrs Stewart against a decision of the Industrial Tribunal held at Carlisle on 7 September 1993. For reasons notified to the parties on 13 September 1993 the Tribunal decided that the second applicant, Mrs Langley, was unfairly dismissed and that Mr and Mrs Stewart were responsible for payment of compensation to her. The amount of compensation was not decided at the date of the hearing. The Tribunal directed that the application would be relisted for hearing as to remedies when Mrs Langley could attend to supply the requisite information.

We have been informed today by Mrs Stewart, who appeared in person on the appeal, that the amount of compensation has now been assessed in the sum of £3,050.

The circumstances in which the proceedings arose are these. Mr Tonge was the proprietor of the hotel known as the Pennington Arms Hotel, Ravenglass. It had been a profitable hotel for a number of years, but expenses increased and it became unprofitable. Mr Tonge decided to retire and sell the hotel. He advertised it for sale in about October 1992. Mr and Mrs Stewart agreed to buy it. The sale was completed on 22 March 1993. There had been negotiations since October 1992. A solicitor acted for Mr and Mrs Stewart on the purchase. We are told by Mrs Stewart that it was a firm in Carlisle called Karen Messenger. The Tribunal noted that Mr and Mrs Stewart were not made aware of the existence of the Transfer of Undertakings (Protection of Employment) Regulations 1981.

It was provided in the contract that the purchase price would be £42,000 plus stock at valuation in accordance with the schedule. The date of the contract and the completion date were the same, 22 March 1993. It was expressly agreed between Mr and Mrs Stewart and Mr Tonge in clause 7 of the contract that Mr Tonge would terminate the contracts of employment of all employees on the completion date.

One of the employees was the applicant in the Industrial Tribunal, Mrs Langley. The facts found about Mrs Langley were that she was originally employed at the Pennington Arms in March 1972. There was a break in her employment between August 1982 and March 1983. Her employment started again in March 1983. She performed general duties at the hotel and filled the position of an assistant manageress. In addition she worked as a waitress and cleaner and did such other work as was required.

The Tribunal heard evidence from Mr Tonge. We have been shown by Mrs Stewart a statement which Mr Tonge provided to her after the Tribunal proceedings. Mrs Stewart says that the facts set out in that statement were very much the same as Mr Tonge gave in evidence to the Tribunal. The nub of the matter is that Mr Tonge did not, in accordance with the contract, terminate the contracts of employment as he had agreed to; in this case the relevant contract was that of Mrs Langley. Mr and Mrs Stewart believed that he had terminated the contracts and that they were simply taking Mrs Langley on a 4 week trial period. Their belief was that the previous employment would not count as continuous service, so that Mrs Langley could be dismissed if they so wished without being obliged to give a reason.

Mrs Langley worked for several weeks for the Appellants. In the third week Mr and Mrs Stewart decided that she should be dismissed. They were anxious to cut the costs of the hotel as the wages bill amounted to over 50% of the takings. That was excessive. The hotel would be made profitable and so could continue if there was a reduction in staff. Instructions were given to Mrs Stewart's brother, who was working in the hotel, to dismiss Mrs Langley. On Wednesday 13 April Mr Lawson told Mrs Langley that her services were no longer required due to re-organisational reasons, as the family would take over a larger part in the running of the hotel. Mrs Langley left.

The Tribunal came to these conclusions. First, that the transfer of the hotel was a relevant transfer within the meaning of the 1981 regulations and the transfer was the reason for the dismissal. Secondly, Mrs Langley was unfairly dismissed. Thirdly, regulation 8(2) of the 1981 Regulations did not apply. The Tribunal then found that the principal reason for the dismissal was the transfer, not economic, technical or organisational reasons entailing changes in the workforce of the transferee.

The Tribunal added that, even if they were mistaken on that, the dismissal was nevertheless unfair because there was no consultation, no discussion and no consideration of who, among the various employees, should be selected for dismissal.

Mr and Mrs Stewart were dissatisfied with their lack of success. They therefore appealed. In the Notice of Appeal dated 25 October 1993 there were no less than 7 Grounds of Appeal. They can be summarised as follows. First, that the Tribunal came to a decision contrary to the evidence and to common sense in holding that the reason for the dismissal of Mrs Langley was the transfer over the hotel and not, as Mr and Mrs Stewart contended, due to economic, technical or organisational reasons entailing changes in the workforce.

They also took as a ground of appeal that the Tribunal decision that there had been no consultation, discussion or consideration as to who should be selected for dismissal was a decision which no reasonable Tribunal could have come to if it had applied to that decision the proper considerations and directions. A number of other detailed points were taken in relation to the question of consultation, discussion and consideration.

It was also asserted the Tribunal erred in law in finding that Mr and Mrs Stewart had acted unreasonably. The decision of the Tribunal was perverse.

We have considered those various grounds. We are unable to find in them an arguable point of law. Mrs Stewart does not contest the fact that the 1981 Regulations should apply. The effect of their application was that Mrs Langley continued to be employed in the undertaking transferred by Mr Tonge to Mr and Mrs Stewart. The Tribunal found as a fact that Regulation 8(2) was not satisfied. The decision is one that the Tribunal were entitled to come to on the evidence. From what Mrs Stewart explained to us about the reasons for Mrs Langley's dismissal and the economic difficulties which she and her husband found themselves in it is clear that there was no ground for relying on Regulation 8(2). A similar point applies to the decision of the Tribunal that there was no consultation, discussion or consideration of who should be selected for dismissal. There is no evidence that any such consultation or discussion took place. The decision of the Tribunal on that point cannot be challenged in this Tribunal.

On the facts found the Tribunal were entitled to come to the conclusion that this dismissal was unfair. There is a liability to compensate Mrs Langley. There are, however, some disturbing features of the case. The first is the position of Mr Tonge. Mr Tonge has not been represented on this appeal. He was a Respondent to the proceedings which were begun by Mrs Langley and another employee, but no order was made against him by the Tribunal. The reason no Order was made against him was that the Tribunal found as a fact that Mr Tonge had not dismissed Mrs Langley or the other applicant. It is, however, clear from the contract that Mr Tonge was under an obligation, on the completion of the contract, to terminate the contracts of employment of all employees. That would include Mrs Langley. That provision in the contract appears to be recognised by Mr Tonge in the statement provided to Mrs Stewart. He appears to accept that, on Mrs Langley's return from an extended visit to New Zealand, he informed her that he would have to discharge her. He offered to Mrs Langley to ask the new employers (Mr and Mrs Stewart) to take her on. There was a clear recognition by Mr Tonge that he was bound to dismiss Mrs Langley as an employee and, if Mr and Mrs Stewart took her on, it would be a matter of agreement rather than a consequence of the transfer of the undertaking.

We have been told by Mrs Stewart that Mr Tonge has in fact made a payment to another employee of some £4,000. That other employee was a Mr Cecil Higham who was engaged, Mrs Stewart believes, for about 20 years doing various work, including assistant manager's duties. It appears to us on the information available there may be an obligation on Mr Tonge to compensate Mr and Mrs Stewart for any sums that they have to pay out to Mrs Langley as a result of dismissing an employee whom Mr Tonge had contractually agreed he would dismiss. If he had carried out his part of the contract, the liability for dismissal would have fallen directly on him, not on Mrs Stewart and her husband.

We leave the matter in this way. We are not in a position to adjudicate on the rights of Mr and Mrs Stewart against Mr Tonge. But, as a result of the dismissal of this appeal because there is no arguable point of law, Mr and Mrs Stewart may be entitled to look to Mr Tonge to compensate them in relation to the liability to Mrs Langley.

We add this. We do not want to produce a situation in which Mr and Mrs Stewart become embroiled in further litigation against Mr Tonge. It would be expensive and involve them in further costs out of proportion to the amount of money involved. We hope that perhaps an arrangement can be reached between Mr and Mrs Stewart and Mr Tonge about payment of Mrs Langley's compensation.

There is another aspect of the matter for mention. That is the position of Mr and Mrs Stewart's solicitors. We make it clear that we are in no position on this appeal to investigate the rights and wrongs of the matter. Mrs Stewart has told us that she used a firm of solicitors in Carlisle, Karen Messenger, to act on the acquisition of the Pennington Arms Hotel; she and her husband were charged £900 in fees. Since this problem has arisen, they have written to the solicitors and the Law Society, but so far with no result. The position appears to be that the Tribunal found in their decision that Mr and Mrs Stewart were not made aware of the existence of the Transfer of Undertakings Regulations. In addition, it appears from the contract that there was no interval between contract and completion. Both were dated 22 March. Yet it was provided in the contract that Mr Tonge would terminate all contracts of employment of all employees on the completion date.

It might be argued on behalf of Mr and Mrs Stewart that one of the responsibilities of the solicitors acting for them on the transaction was to make sure that, before completion, the seller had performed all the obligations which he had undertaken to perform. There may be grounds on which Mr and Mrs Stewart may claim compensation from the solicitors who acted from them and/or from the Law Society in relation to the way in which that aspect of the acquisition of the Pennington Arms Hotel was handled by the solicitors.

We leave the case with those thoughts. The appeal must be dismissed. There is no point in this matter going to a full hearing when there is no real prospect of its succeeding but we hope that, with the views we have tentatively expressed about the position of Mr Tonge and the solicitors, it may be possible for the difficult situation in which Mr and Mrs Stewart find themselves to be resolved fairly.