United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 936_95_0602

Appeal No. EAT/936/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 6 February 1996

Before

HIS HONOUR JUDGE C SMITH QC

MS S R CORBY

MR K M YOUNG CBE

---

BOMFORD TURNER LTD          APPELLANTS

MR F CUTLER          RESPONDENT

---

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised


 


---

APPEARANCES

For the Appellants MR W J DIAMOND

(Consultant)

Peninsula Business Services Ltd

Stamford House

361-365 Chapel Street

Manchester

M3 5JY


 


JUDGE C SMITH QC: We have had before us this morning an application, well argued by Mr Diamond on behalf of the Respondents, Bomford Turner Ltd. Originally the application was for leave to proceed to a full appeal in relation to a decision of the Industrial Tribunal sitting at Ledbury and Hereford. The decision was sent to the parties on 26 July 1995 when the Industrial Tribunal held that the Applicant before them, Mr Cutler, had been dismissed on 14 December 1993 on the grounds of redundancy. That was the effect of their finding as we understand it, as appears from paragraph 1.

There was a complicated situation. Mr Cutler had been employed as a Chief Engineer and had been a member of the Board of Directors of Bomford Turner Ltd, the Respondents. What had happened is described most relevantly, in our judgment, in paragraph 8 of the decision. The position was that a Company called Alamo Group (Europe) Ltd of whom a Director was Mr Oran Logan, purchased all the share capital in Bomford Turner Ltd, having already purchased the whole of the equity in McConnel Ltd. McConnel and Bomford Turner Ltd had been in competition and the effect was that there was going to be an amalgamation between the two companies for all practical purposes. What the Industrial Tribunal said in paragraph 8 was:

"8. ... the effect of Alamo purchasing the equity in the respondents, having already purchased the equity in McConnel, was that, immediately prior to 14 December 1993, the respondents and McConnel were both owned by Alamo and all were associated employers."

The Industrial Tribunal then go on to say that they were all members of the same undertaking and then said:

"We are satisfied that both Companies were part of the same undertaking, and that, in considering what Mr Logan did, in deciding that Mr Alan Davies should be the new Head of Engineering and that the applicant should be his inferior, Mr Logan was making a choice as between two Engineers which one he would keep as the Chief and who he would demote, ie dismiss from being Chief Engineer and re-employ as No. 2. Mr Logan, when he appointed Mr Alan Davies Director of Engineering of the two Companies, which were in effect merged, dismissed the applicant from his position as Chief Engineer ... of the respondents."

That is the finding that the Industrial Tribunal made which they found amounted to the making of the Applicant before the Industrial Tribunal redundant. That is what the Industrial Tribunal held in that regard. They then went on to decide that there had been no reasonable selection procedure and no consultation and so they found that the dismissal was unfair, applying Section 57(3) of the 1978 Act. However, it is apparent, in our judgment, that they have made certain findings in paragraph 2 that indicate that they were satisfied that the lack of consultation would attract a full award of compensation, as they state in paragraph 2. They say for example in paragraph 2:

"We are, also, satisfied that each lack of consultation attracts a full award of compensation and not either an award based upon a short, or indeed a long, delay in the dismissal while consultation took place or that compensation can properly be dealt with by being assessed mainly on the basis of "loss of a chance". In relation to the lack of consultation on the 14 December dismissal, it is quite clear that this is not a case where the lack of consultation could sensibly be argued as not attracting a full award of compensation."

Although that is how they dealt with the matter in paragraph 2, on the other hand in paragraph 15 of the decision they repeatedly say, in a number of places, that there was the loss of a chance. They deal with it for example 9 lines down on page 11 of the bundle (page 9 of the decision) in this way:

"15 ... If the applicant had had the opportunity of consulting with and discussing the matter with Mr Logan before the decision was reached, and the opportunity to remind Mr Logan of his promise that the applicant would have a new contract after the 15 January, we find that there was a real chance that Mr Logan, presumably a man of honour, would have realised that he should not go back on his promise."

Then lower down, 21 lines from the bottom of the page:

" ... When cross-examined about what he would have said in consultation we accept the points put forward by the applicant that there were a very large number of things that he would have argued and, we find, argued with force and, providing that he was listened to by someone with an open mind, a good chance of success. ..."

Then, over the page, at the very end of the same paragraph:

" ... Looking at the matter all in all and overall, we are satisfied that if a reasonable employer had looked at the overall situation and had consulted with the applicant and listened to what he had to say with an open and receptive mind, there is a reasonable chance that the applicant would have been retained ..."

Then there is another matter which they clearly had in mind (which we will come back to) before we finish the rest of that sentence. It is apparent from paragraph 15 that what would have emerged in consultation on the Industrial Tribunal's findings was that the Applicant would have accepted a lower standard of remuneration if he had been consulted. Thus, they deal with the matter in this way, at about 16 lines up from the bottom of page 9 in the same paragraph:

" ... We find that the applicant would, indeed, as he said to us, have accepted a lower standard of remuneration, if he had been consulted, and although the bottom line which he suggested, £30,000 would still leave him above Mr Alan Davies, we accept that that was not an insuperable barrier to the applicant continuing in employment. ..."

And then, to return to the remainder of the last sentence in paragraph 15, which we did not read, because it relates to this matter of reduced salary, the Industrial Tribunal say:

"... the applicant would have been retained, not merely as a consultant, but as an employee, albeit at a reduced salary and with a reduction in his fringe benefits."

In our judgment, with respect to the Industrial Tribunal, who were of course concerned with a liability hearing, the findings in paragraph 2 and the findings in paragraph 15 are mutually conflicting. We will have to say a word further about that in a moment.

It is in the light of that background that Mr Diamond, on behalf of the Appellants before us today, initially took two grounds in effect, the second ground being based on two propositions. The first ground of appeal which Mr Diamond sought to argue was based on a submission that on a proper interpretation of the expression "associated employers" and its definition in Section 81(2)(b) of the 1978 Act, it was wrong in law for the Industrial Tribunal in considering what happened on 14 December 1993, to look at anything more than the business of the Respondents alone, Bomford Turner Ltd and in particular, was not proper for the Industrial Tribunal to have considered the position of Bomford Turner Ltd and McConnel Ltd as associated employers.

We understand the technical force of that argument but it emerged during the course of argument that although that may strictly and technically be the position with regard to the dismissal on 14 December 1993, the reality is that when it comes to considering whether there was a fair redundancy, it was accepted as being appropriate for the Industrial Tribunal to have taken into account the relative positions of McConnel and the Respondents and to have looked at the matter in the way they did in paragraph 8 of the decision, in order to determine whether there was a fair redundancy in application of Section 57(3).

Accordingly Mr Diamond no longer pursues that particular ground of appeal and has withdrawn it before us this morning so that we need say no more about it.

With regard to the other matter however, the other ground of appeal is two-fold and is based upon the apparent inconsistency between the findings in paragraph 2 of the Industrial Tribunal decision and paragraph 15 of the Industrial Tribunal's decision, which we have already outlined. We accept that there is an inconsistency between those findings for the reasons we have already set out.

However, in our judgment, it is apparent that in substance what the Industrial Tribunal were dealing with was a hearing on liability only. They make that clear of course and there is no dispute about it really because they say in paragraph 18, the final paragraph of their decision:

"18. We will allow some weeks for the parties to attempt to agree upon remedies, failing which the issue will be re-listed for decision by this tribunal."

In our judgment and we are sure the Industrial Tribunal will appreciate this, it is very well understood that the question of whether consultation would have made any difference and the question (if it arises) of assessing the chance that it would not have made any difference or, to put it the other way, the chance that it would have made a difference, and the question as to what the likely remuneration would have been had the Respondent, Mr Cutler, been kept on, are all matters which fall to be decided when the Industrial Tribunal are making their calculation of the compensatory award under Section 74 of the 1978 Act and accordingly, did not fall to be considered, let alone decided, at the liability hearing.

In our judgment accordingly the right course here is for the matter to go back to the Industrial Tribunal on the clear footing that all the arguments that relate to remedy can be fully made, and must be fully considered by the Industrial Tribunal, on the remedy hearing. In other words it will be open to both sides at the remedy hearing to call evidence as to what the result of consultation would have been and, of course, involved in that would be the question if consultation would, or might, have been successful from the point of view of the Respondent, Mr Cutler, as to what level of salary he would have been retained at.

In our judgment all those matters will have to be looked at before the Industrial Tribunal, on the remedy hearing in the appropriate way before the Industrial Tribunal get down to calculating the amount of the compensatory award, because the questions of whether consultation would have made any difference, and, if so, the assessment of a chance, and, per the decision in Red Bank v Meadows, the rate of remuneration at which the Respondent would, or might, have been retained have to be decided first before the Industrial Tribunal can go on to make the calculation of the amount of the compensatory award. It must therefore be open to the Appellants, Bomford Turner Limited, at the hearing of the Industrial Tribunal, to argue first that consultation would have made no difference at all. Secondly, they must be entitled to be heard on what the percentage chance is that it would have made a difference and thirdly, they must be entitled to be heard on the question of what the likely remuneration would be if Mr Cutler was, contrary to their first submission, successful in persuading Bomford Turner Ltd that he should be kept on.

On the other hand, Mr Cutler the Respondent, must be entitled fully to argue all those self-same points on the remedy hearing. Mr Cutler must be entitled to argue that consultation would have made all the difference. He must be entitled to argue that there is a very high percentage chance indeed that he would have been kept on. He must be entitled to argue that he would have been kept on at a very high salary, perhaps only a slight reduction from the salary which he was enjoying before he was dismissed.

In other words, all those matters must be open to argument before the Industrial Tribunal. We are confident that the Industrial Tribunal will not feel themselves bound in any way, by any of the findings that they have made in either paragraph 2 or paragraph 15 of their decision. With great respect to them, we do find those findings somewhat inconsistent and we are quite satisfied that the most effective, sensible and realistic way of dealing with this application before us today is that the matter should be remitted to the same Tribunal so that they can embark altogether afresh on the remedy hearing, laying completely on one side any findings they have made in relation to the likely result of consultation.

Provided that is done, then, in our judgment, there is no need for this ground of appeal, as Mr Diamond realistically accepted, to be pursued any further, provided the Industrial Tribunal are prepared to take that approach and we are sure they will do so. Then there is no need for this one remaining ground of appeal to be pursued any further.

Accordingly we decide for those reasons that this matter need not proceed to a full hearing. Of course should it be the case that despite everything we have said (and we are confident this will not be the case), the Industrial Tribunal should decline for any reason to enter into such matters as those we have discussed earlier, then of course the Appellants would be able to appeal against the remedy decision and so their rights would be protected in that way.