United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr A Pattni (Representative)
For the Respondent	Mr R Walker (Father of Respondent and Solicitor)


 


JUDGE PETER CLARK: This case has so far led to two Employment Tribunal hearings and four Employment Appeal Tribunal hearings including preliminary hearings. The background to the present appeal can be taken from the judgment which I delivered on behalf of the appeal tribunal in the first appeal on 1 April 1997. The Applicant Mr Walker, commencement employment with the company as a sales executive on 9 April 1994 under a written contract of employment dated 11 October 1994, his salary was payable monthly in arrears normally on the last working day of each month and each side was required to give one months' notice of termination of the contract.

On 20 July 1995 the Applicant gave one months' written notice of termination of the employment, that is to expire on 19 August. The relationship between the parties then deteriorated and on 28 July they entered into a written agreement which provided "Nebraska and Michael Walker hereby agree to terminate the contract of employment signed by both parties on October 11 1994". The document then dealt with the restrictive covenants contained in the original contract and the Applicant covenant not to deal with the company's clients for a period of 36 months from the date of the agreement.

On 1 August the Applicant called at the company's premises and asked for his July pay cheque, he was told that it was not ready. He returned home assuming that it would arrive at the end of August after the final reckoning. He acknowledged that he owed some money to the company for computer components. There was then correspondence between solicitors acting for the parties.

In due course, an itemised pay statement for July was sent to the Applicant which prompted a letter from his solicitor, his father, Mr Walker Senior, dated 10 October in which he pointed out that no cheque for £918.86, the net pay due for July according to that statement, had been enclosed. No cheque was subsequently received, correspondence continued and finally on 22 November 1995, the Applicant presented an Originating Application to the Central Office of Industrial Tribunals setting out a complaint under the then Wages Act for unpaid wages from 1 July to 20 August 1995, the date on which he claimed his original notice of termination took effect.

By a letter dated 3 May 1996, the Applicant added to his claim a claim for unpaid commission estimated at £400. On 14 May 1996 the Stratford Employment Tribunal, at a preliminary hearing, heard the issue as to whether or not the claim had been presented within time. It found that it had. Against that decision the company appealed and finally that appeal was heard and dismissed by this Tribunal on 17 April 1997. On that occasion I made it clear in the judgment of the Tribunal that although at the first Employment Tribunal hearing the Tribunal had purported to find that the contract continued until 20 August 1995, that was not a necessary finding so as to bind the company under the principles of issue estoppel and accordingly it was left to the next Employment Tribunal, which was to hear the claim on its merits, to decide what was the effective date of termination of the contract.

The matter returned to the Stratford Employment Tribunal for a hearing on the merits on 3 July 1997 before a Chairman, Mr H R L Purse, sitting alone. The Applicant, represented by his father, attended that hearing, the company did not appear. Based on the unchallenged evidence of the Applicant the Chairman found that he was not paid gross wages of £1,250 for July 1995 and £780.90 for the period 1-20 August 1995, when he found on the basis of the Applicant's evidence the contract of employment came to an end. In addition, the company had not paid outstanding commission in the sum of £400 gross, so the Chairman found. He awarded the Applicant the total sum of £2,430.90 in respect of unlawful deductions from his wages.

Against that decision, promulgated with extended reasons on 24 August 1997, the company appealed. At a preliminary hearing before a division of this Tribunal presided over by Mr Justice Morison on the 26 March 1998, this Tribunal permitted the appeal to proceed to a full hearing on two points. First, that the award made by the Chairman did not allow for deductions for tax and national insurance from the gross sums of awarded; secondly, on the question as to whether the Chairman had taken into account the contents of the company's Notice of Appearance in reaching his decision.

As to the first point, Mr Walker Senior accepts, and accepted prior to the preliminary hearing before the President's Tribunal, that tax and national insurance fell to be deducted from the award. We shall return to that concession when considering the proper order to be made in this appeal.

As to the second point, in their Grounds for Resistance attached to the Notice of Appearance the Respondents said this:

"2. The Respondent denies that there has been an unlawful deduction. On 20th July 1995 the Applicant gave written notification of his situation to resign from the Respondent's employment at the expiry of one month. On 28th July 1995 by written agreement entered into between the Applicant and the Respondent the Applicant agreed the immediate termination of his contract of employment as a result of such resignation.

3. The Applicant agreed with the Respondent that monies were owed by him to the Respondent comprising:

Income protection £111.20

Private Health Care 170.50

Unpaid leave 313.90

Personal computer purchases 809.50

Of that amount the Applicant still owes to the Respondent the sum of £488.24."

Before us today Mr Pattni has sought to argue the factual issues there raised. His difficulty is that, save for the question of unpaid leave, there was no agreement by the Applicant in writing to those items being deducted from his wages. The company accepts that the deductions were made. It follows that such deductions are unlawful by virtue of section 13(1)(b) Employment Rights Act 1996. As to the unpaid leave item of £313.90, the Applicant denied in evidence that those monies were properly deductible by the company. Although it is accepted that there is written agreement to such deductions, when properly made, contained in the contract of employment which we have referred, the Chairman accepted the Applicant's evidence on that point. We cannot re-open that question of fact.

The short answer to the second point on which this appeal was allowed to proceed is that in his witness statement dated 24 June 1997, which formed his evidence in chief below, the Applicant dealt specifically, at paragraph 12, with the issues raised in the Notes of Appearance. It must follow that the Chairman considered the Notice of Appearance and thus discharged his duty under Rule 9(3) of the Industrial Tribunal Rules of Procedure. Accordingly, that ground of appeal fails.

It also follows that, by consent, the appeal will be allowed to the extent that the company is directed within 14 days, to provide an itemised pay statement to the Applicant setting out the tax and national insurance payable to the relevant authorities on the total gross wages and commission of £2,430.90. Those deductions are to be accounted for by the company to those authorities. The balance is to be paid to the Applicant. We have framed our order in this way in the absence of agreement between the parties as to the proper figure for those statutory deductions.

The final point is this. It is clear from the EAT decision in Potter v Hunt Contracts Ltd [1992] ICR 337 that it is not now open to the company to pursue any civil claim, whether in the Country Court or elsewhere, in respect of those items referred to in paragraph 3 of the grounds for resistance in view of the fact that the company unlawfully sought to deduct those sums from Applicant's wages, save insofar as those amounts exceed the net award payable under this order once the calculation of tax and national insurance deductions has been completed. In particular, even although the Applicant orally agreed that he owed a sum in respect of computer equipment, the quantum not being admitted, that claim cannot now be pursued in accordance with the principles laid down in Potter v Hunt Contracts Ltd.

COSTS

Following our judgment in this case, Mr Walker Senior makes an application for costs in this appeal. Our powers to order costs are prescribed by Rule 34(1) of the EAT Rules 1993, in these terms: "34(1), where it appears to the Appeal Tribunal that any proceedings were unnecessary, improper or vexatious, or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings, the Tribunal 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." If an order is made then we can either assess, cross or direct that the costs be taxed.

It is right to say that this matter was allowed to proceed to a full hearing as a result of the judgment of the President, delivered on 26 March 1998. As we indicated two points arose for argument. The first related to the deduction of tax and national insurance from the Tribunal's award, it is accepted by Mr Pattni that Mr Walker on behalf of the Applicant conceded that point in advance of that preliminary hearing. It follows that this hearing was unnecessary on that point.

As to the second point whether or not the Tribunal Chairman properly took into account the contents of the Notice of Appearance for purpose of Rule 9(3) of the Industrial Tribunal Rules of Procedure, we acknowledge that the company did not appear and was not represented before the Employment Tribunal on 3 July 1997. However we are equally satisfied that once they had sight of the skeleton argument and bundle of documents served by Mr Walker on the company by letter dated 28 September, and read at any rate on or after 2 October, that it was quite clear from the statement of the Applicant dated 24 June 1997, which formed part of his evidence before the Tribunal below, that the issues raised in the Notice of Appearance were ventilated before the Chairman and that he accordingly took those matters into account. It follows in our judgment that this appeal hearing was unnecessary within the meaning of Rule 34(1), because the second point was plainly unarguable in the light of that information.

In these circumstances, we are satisfied this is a proper case in which to make an order for costs. The next question is what costs should be ordered. Both parties invite us to assess costs and we do so. Mr Walker Senior has told us that his costs of today at his normal charging rate as a practising solicitor would be £75 per hour for a 10 hour day, that is £750; however he candidly accepts that he at no time proposed to charge his son, the Applicant, for his legal services and in that sense the costs are not recoverable. Furthermore, he has told us that he has retired from practice, so this is not a case of him missing a day's work in his ordinary law practice for which he, through the firm, would have been remunerated. In these circumstances, we think the proper order is one which is limited to his proper travelling expenses and other disbursements of today which we are told total £75. Accordingly, we shall make an order for £75 costs in favour of the Applicant against the company.