United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 921_93_2705

Appeal No. EAT/921/93

I N T E R N A L

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 27th May 1994

Before

THE HONOURABLE MR JUSTICE KNOX

MISS A MACKIE OBE

MISS A MADDOCKS OBE

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MR B M JAMES          APPELLANT

SECRETARY OF STATE FOR EMPLOYMENT          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised


 


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APPEARANCES

For the Appellant MR B M JAMES

(In Person)


 


MR JUSTICE KNOX: This is an appeal by Mr Brendon James against a decision of the Industrial Tribunal that sat at Cardiff on the 23rd September 1993 and decided that Mr James was not an employee, the decision reads, "of the respondents", which is the Secretary of State for Employment, within the definition of s.153(1) of the Employment Protection (Consolidation) Act 1978, I will call that "the Act". That is obviously a mistake in the sense that no one at any stage suggested that Mr James was employed by the Secretary of State for Employment. What appears quite clearly from the rest of the decision was that what was meant was that Mr James was not an employee as defined by Section 153 of the Act of the Company of which he was the Managing Director and one of the two holders of one issued share. It was a £100 Company. There were only those two issued shares, one held by Mr James, the other held by his wife.

The matter is set out in the Industrial Tribunal's decision in this way: B J Reclamation Ltd, ("the Company") was formed on the 27th June 1991. It paid Mr James £2,000 per month gross and tax was paid by PAYE on that remuneration down to January 1992 when the Company suffered cash flow problems on such a scale that no more such payments were made to Mr James. He kept himself afloat by a loan to himself personally, by the Bank, which had been supporting the Company and that state of affairs continued until the liquidation that ensued, it was a creditors voluntary liquidation, in March 1993. So one has two periods, of which the first ran from June 1991, or perhaps a little later than that, when the Company was formed, until January 1992 during which there were payments and deductions of tax for PAYE which the Industrial Tribunal inaccurately describes as having been paid by Mr James. That of course is not how PAYE operates, it is the employer that makes the deduction and accounts to the Inland Revenue for the sums thus deducted. But Mr James has told us, and it seems fairly clear that the Industrial Tribunal accepted, that that was all done in a perfectly proper manner during the period when Mr James was drawing these sums from the Company. In the second period after January 1992 until the liquidation no payments were made to Mr James. The issue that arose was whether Mr James could show that he had an enforceable contract for further payments by way of unpaid wages and holiday pay when the Company went into liquidation, which undoubtedly terminated any employment that he had previously held.

The Industrial Tribunal dealt with the matter by saying that there was no contract. Clearly there was no written contract and since this was, what is popularly called, a "one man Company", in the sense that the Company only had two shareholders who were married to each other and one of whom was the Managing Director, there was no very satisfactory evidence of Mr James having effectively talked to himself and created an oral contract in his own favour as between the Company and himself.

There is no question of the Industrial Tribunal not having appreciated that there were two legal persons involved, Mr James on the one hand and the Company on the other, and the first ground of appeal that the Tribunal misdirected themselves in failing to differentiate between the two is clearly erroneous. The Industrial Tribunal appreciated that rather elementary fact. Secondly, they appreciated that contracts can perfectly well be written or oral and indeed it may be that the Industrial Tribunal was not entirely accurate in saying that because there was no oral contract proved in evidence before them, it therefore followed that there was no relationship of a contractual nature between Mr James and the Company. But all that, even if one accepts that in favour of Mr James, as seems perfectly arguable to us, unfortunately avails Mr James very little because on that evidence of payments from June 1991 to January 1992 and no payments from January 1992 to March 1993 it is, so far as we can see, quite impossible to infer, and it has to be a matter of inference because there is no specific contract either written or oral, that there was a definite contract for Mr James to receive £2,000. The only inference that one can draw from that history as it seems to us is that the situation as between Mr James and the Company was that Mr James would get paid £2,000 a month, if and so long as there was money available to pay him, but if and so far as there was not money to pay him he would not get it, and that of course is not good enough for Mr James' purposes because Mr James has to have an enforceable contract before he can succeed in his claim to recover holiday pay and unpaid wages. That draws us to the conclusion, which is not one that we feel any great enthusiasm for, in the sense that we feel that Mr James has behaved perfectly honestly and respectably, but nevertheless we are driven to the conclusion that there simply is not the material available for this appeal to go forward with any prospect of success because the highest that the case can be put on behalf of Mr James is that there was some relationship of a contractual nature between him and the Company but that it fell short of being one under which he had enforceable rights to recover particular sums as claimed. It would be doing Mr James no great service if we allowed this to go forward to a full hearing because there would then be further expense incurred on both sides with no serious prospect of any favourable result from Mr James.

In those circumstances we have no alternative but to dismiss the appeal.