United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 132_94_1502

Appeal No. EAT/132/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 15 February 1995

THE HONOURABLE MR JUSTICE MUMMERY (P)

MRS M E SUNDERLAND JP

MR G H WRIGHT MBE

---

TAYLORPLAN SERVICES LTD           APPELLANTS

MRS J RYAN AND OTHERS          RESPONDENTS

---

Transcript of Proceedings

JUDGMENT

Revised


 


---

APPEARANCES

For the Appellant MR KERRY UNDERWOOD

(SOLICITOR)

Messers Underwoods

Solicitors

1 Holywell Hill

St Albans

Herts AL1 1ER

For the Respondents MISS J EADY

(OF COUNSEL)

Messers Brian Thompson & Partners

Richmond House

Rumford Place

Liverpool L3 9JW


 


MR JUSTICE MUMMERY (PRESIDENT): This is the hearing of an appeal from the decision of the Industrial Tribunal held on 15, 16 & 17 November 1993 and 15 December 1993 at Liverpool. For reasons notified to the parties on 10 January 1994, the majority decision of the Tribunal was that the Transfer of Undertakings (Protection of Employment) Regulations 1981 applied to the contract for the provision of domestic services made between Aintree Hospitals NHS Trust and, Taylorplan Services Ltd, in 1992.

Taylorplan were dissatisfied with the decision and appealed by notice of appeal served on 7 February 1994. The background to the dispute is that the proceedings were started by an originating application presented on 15 January 1993 by a large number of employees. The lead applicant was Mrs Joan Ryan who had began work for the Walton Hospital Trust on 2 April 1974, and claimed that she had worked continuously until transferred to Taylorplan Services Ltd on 23 October 1992 as part of the transfer of undertakings. Her complaint was that it was incorrectly stated on her terms and conditions that her continuous employment began on 23 October 1992 rather than the date on which she started work for the transfer or that is the dispute which she wanted decided by the Tribunal, along with what other particulars ought to have been included in her terms and conditions.

She made a further claim for unauthorised deductions from wages. Taylorplan contested the application. Their submission was that Mrs Ryan, and others in a similar position, began to work for them on 23 October 1992 that she would receive three months notice of termination of her employment from her previous employer and would receive the corresponding redundancy pay. There was no contractual agreement between Taylorplan and Walton Hospital to take on existing staff. However, Taylorplan agreed to grant each and every one of Waltons former employees an interview. That was done. It was submitted that it was Taylorplan's prerogative whether to offer or not employment to Mrs Ryan and others in a similar position and to make the offer based on Taylorplan's terms and conditions of employment, including rates of pay. It was Mrs Ryan's prerogative to accept the offer or not. The offer was accepted. An engagement record accepting the duties, hours of work and rates of pay was accepted and signed. It was said that there was no transfer to Taylorplan of part of Walton Hospitals business or undertaking including the cleaning of the hospital in which Mrs Ryan and others were engaged. That was not part of the hospitals business. The Transfer of Undertakings Regulations and the Directive were not applicable to the case.

Those documents make clear the issue before the Industrial Tribunal for decision. The Industrial Tribunal found in favour of the Applicants on all points. They found that there was an undertaking within the meaning of the 1981 Regulations, that there was a transfer of it and that the undertaking transferred was "in the nature of a commercial venture" and therefore did not fall within the exclusion in the definition of an "undertaking" contained in the unamended 1981 Regulations, regulation 2(1), which provided:

""undertaking" includes any trade of business but does not include any undertaking or part of an undertaking which is not in the nature of a commercial venture."

Initially Taylorplan appealed against all the rulings. In the notice of appeal the grounds of appeal said that the Tribunal had made an error of law in holding that the domestic services department of the hospital was part of the transfer or as a separate undertaking for the purposes of the Regulations, that there was an error of law in the Tribunals failure to consider whether, as a result of the agreement which had been made between Taylorplan and the Hospital, an undertaking had been transferred and there was also raised the question as to whether the Tribunal had erred in law in its conclusion that the Domestic Services Department was an undertaking in the nature of a commercial venture. On that point it was stated, as a ground of appeal, that the decision of the majority was unsupported by any evidence and was perverse.

The only point for argument on the hearing of the appeal today was the last point. The remaining points were abandoned by the solicitor now acting for Taylorplan. He notified Miss Eady, counsel for Mrs Ryan, that it was no longer intended to rely on the other grounds. That information was given to her at 5.30 on 1 February. As to the sole surviving point of the appeal it is necessary to read the paragraph which is alleged to contain the error (paragraph 9). Having set out the findings of fact and having quoted the relevant provisions of the Directive and the Regulations the Tribunal summarised the submissions and came to the conclusion on the commercial venture point:

"9. In applying these principles the Chairman and one member of the Tribunal first noted that the Regulations do not require an undertaking to be a "commercial venture", but "in the nature of a commercial venture". It must be assumed that the words "in the nature of" have been included deliberately, and their effect must be to include within the definition ventures which are not wholly commercial, but which are similar to commercial ventures. Most hospitals always had a part which had a commercial element in that they provided, not only free treatment, but also private treatment for which a charge was made. In 1991 however a considerable change was made when the NHS Trust was set up. No evidence as to the effect of this was given, but it is common knowledge that such trusts are run on a business-like footing completely different from the way that NHS hospitals were formerly operated, and it appeared to the Chairman and one member that the activities of the Trust from July 1991, while not being a full commercial venture, were certainly an undertaking in the nature of a commercial venture, and that the domestic cleaning department was a separate part of that undertaking and accordingly also an undertaking in the nature of a commercial venture. It appears from this that the Regulations do apply since there was a relevant transfer. The applications may therefore proceed on this basis.

10. The other member was not convinced of the fact that the Trust's undertaking was in the nature of a commercial venture, and did not therefore consider that the Regulations applied."

In his submissions Mr Underwood stated that the only point now in issue was whether the undertaking was in the nature of a commercial venture. It was common ground that the relevant question was whether it was in the nature of a commercial venture before the transfer. It was also common ground that that was a question of fact and questions of fact and matters exclusively within the jurisdiction of the Industrial Tribunal. In his submission Mr Underwood had one point; that the Industrial Tribunal on its own admission in paragraph 9 had failed to consider any facts, but had simply relied on the existence of an NHS Trust from 1991 onwards in support of the conclusion that there was an undertaking in the nature of a commercial venture. He says that in paragraph 9 the Tribunal came to a crucial conclusion central to the whole case which, it admitted in terms, was unsupported by any evidence. He submitted that the Tribunal appears to find that in its pre-Trust form, the domestic services department of the hospital was not in the nature of a commercial venture but the very fact of change in status to the NHS Trust in 1991 converted it into something in the nature of a commercial venture.

He argued that the effect of a change to a Trust was not to be dealt with as a matter of common knowledge. It had to be a matter of evidence. That was a matter of considerable public and political disagreement. Although recognising that decisions of Industrial Tribunals are not to be subjected by this Tribunal on appeal to over meticulous analysis, he submitted that, on the question of fact exclusively within the jurisdiction of the Industrial Tribunal, the Appeal Tribunal had a duty to interfere in a case in where an Industrial Tribunal admitted that it had reached a finding of fact on a contentious issue without any evidence. If those submissions were made out on the decision and the circumstances in which it was reached they would constitute a valid ground for appeal. It is perverse of a Tribunal to come to a conclusion of fact unsupported by any evidence or contrary to uncontradicted evidence.

The key question on this appeal is whether Mr Underwood is correct in his submission that this decision on the commercial venture point was reached without any evidence. In our view, he has not made out that ground. He has what appears to be first sight to be a raft on which to base this submission. That is in the form of the two sentences in the middle of paragraph 9:

"In 1991 however a considerable change was made when the NHS Trust was set up. No evidence as to the effect of this was given, but it is common knowledge that such trusts are run on a business-like footing completely different to the way NHS hospitals were formerly operated."

None of the members of this Tribunal read that statement as a confession by the Tribunal that they were coming to critical conclusion for which they had had no evidence. We have all read it as meaning no evidence was given specifically to the effect that the NHS trust hospital was run on a business-like footing. It does, however, appear from witness statements from those people called to give evidence at the three day hearing at the Tribunal that ample evidence was placed before the Tribunal sufficient to support their conclusion that the undertaking of the domestic service department of the NHS Trust was in the nature of a commercial venture.

On this aspect of the case we have received helpful submission from Miss Eady. She submitted on the 1 February a lengthy skeleton argument which deals in detail with all the points on the appeal. She prepared that argument at a time when it was her belief that Taylorplan were pursuing all the points in their notice of appeal. The only part of the argument for Miss Eady to develop at todays hearing has been that which starts on paragraph 12 and deals with her submission that the undertaking was in the nature of a commercial venture. Having referred to the relevant provisions of the Regulations and to the propositions of that may be derived from the authorities on the Regulations and on the Directive, Miss Eady drew attention to the test of perversity laid down by Lord Donaldson in the well known case of Piggott Brothers v Jackson in which he said;

"the appeal tribunal will almost always have to be able to identify a finding of fact which was unsupported by any evidence or a clear self-misdirection in law by the industrial tribunal. If it cannot do this, it should re-examine with the greatest care its preliminary conclusion that the decision under appeal was not a permissible option and has to be characterised as "perverse"."

That is a quotation from the report of Piggot Brothers in [1992] ICR 85. There was no complaint by Taylorplan of a misdirection. The complaint was solely of perversity. The submission made by Miss Eady, which we accept, is that the decision of the majority of the Tribunal that this undertaking was in the nature of a commercial venture, was not based solely on common knowledge about the operation of NHS trusts. It appeared from the totality of the evidence, as well as their own knowledge, that this Trust operated activities in a certain way from 1991 onwards. She referred us to the evidence before the Tribunal in support of the commercial venture conclusion. The witness statements were those of Mr Peter Ballard, who was employed by the NHS Trust as a chef and had been employed at Walton Hospital since 1968. In his witness statement he gave detailed evidence, particularly at pages 5 & 6, which provided support for the conclusion that the Tribunal ultimately reached. Miss Eady was able to point out similar passages on the witness statement of Alice Winstanley, who, for ten years prior to retirement in December 1992, was the domestic service manager at Walton Hospital. Pages 2 & 3 of her statement are particularity relevant. A statement was also given by Irene Roberts who had been employed by the Aintree Hospital NHS Trust and was at the time of making a statement monitoring officer. She had started work in the domestic department of the hospital on 11 November 1974 and worked as a supervisor for two years, then as assistant domestic service manager for two years prior to transfer. The first two pages of her statement give details of the operation of the domestic department which would support the conclusion that the undertaking of that department was in the nature of a commercial venture.

Finally, Miss Eady pointed to the witness statement of a witness called on the behalf of Taylorplan, Mr Michael Ryan, the support services manager at Walton Hospital's NHS Trust. There are passages on the first two pages and on the fourth page of his statement which support the Tribunals' conclusion. In those circumstances we accept Miss Eady's submission that there was evidence before the Tribunal sufficient to support the conclusion reached as to the commercial nature of the venture of the domestic service undertaking.

In those circumstances we reject Mr Underwood's submission that the decision was perverse or unsupported by any evidence. In our view, his principal plank is a misreading of the reasons of the decision, in particular, a misreading of the two crucial sentences in paragraph 9 of the decision.

For those reasons the appeal is dismissed. We add that in addition to the passages in the witness statements, there are other material passages in the decision. In particular, in the finding of fact in paragraph 4(d) of the decision which lends support to the conclusion on the point under appeal. The remaining matter is the question of the costs of the appeal. Miss Eady made an application on behalf of the Respondents for an order for costs. The application is made under rule 34 of the Employment Appeal Tribunal Rules 1993. The Appeal Tribunal has jurisdiction to order costs where there has been unreasonable conduct in bringing or conducting the proceedings. If the Tribunal is satisfied as to that it 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. Where an order is made the Tribunal may either assess the sum to be paid or may direct it to be assessed by the tax and officer.

In support of a submission that we should order four fifths of the Respondents' costs to be paid by Taylorplan, Miss Eady has rested her case on the abandonment at a late stage of the points of appeal relating to whether there was a transfer and whether there was an undertaking. As already mentioned the chronology was that, although the notice of appeal taking all these points was served on 7 February 1994, and although the decisions in the case of Dines and Schmidt v Spar were reported during the course of the summer of 1994, the points raised on transfer and whether there was an undertaking were not conceded until the 1 February 1995, after a brief had been received by Miss Eady and after a substantial amount of work had been done on the preparation of the arguments of the appeal on all points, including the preparation of the detailed skeleton argument. Mr Underwood opposed this. He explained to us his personal position which we fully understand. He was only instructed late in this matter. Within a short time of being instructed, he gave advice to his clients which led to the abandonment of the points on the transfer question and the identity of an undertaking question. He submitted that there should be no order as to costs. The points had been withdrawn. That had saved time on the argument on the appeal. He said that the general principle on appeals is that there is to be no order as to costs against an unsuccessful Appellant. He also said he was not disposed to dispute the proportions, that is the four fifths that Miss Eady soughtg if we were inclined to order costs.

Our decision is that this is one of those cases where an order for costs should be made. In our view, it was unreasonable to delay the abandonment of the appeal on the transfer and the undertaking point to so late in the day. But we are not inclined to accede to on order as great a proportion of the costs as Miss Eady has sought. We have come to the conclusion that the fair and reasonable order to make in the circumstances is that Taylorplan pay fifty percent of the costs incurred by the Respondents on this appeal. That is to reflect our view that it is unreasonable of parties to maintain points of appeal which are unarguable down to a late stage. We appreciate the position of Mr Underwood, as he explained it to us, but that is irrelevant. The order for costs is not sought against him for the way he has conducted the case. It is sought against his clients for the way in which they have conducted their case through their advisers.

The result of the case is that the appeal is dismissed and an order is made that Taylorplan pay fifty percent of the Respondents costs.