United Kingdom Employment Appeal Tribunal

APPEARANCES

 

EAT/1224/96 For the Appellant For the Respondents	MR M SHANKS (of Counsel) MR D H ROWLANDS MA (Representative) Employee Relations Consultant 112 Cabul Close Orford Warrington WA2 7SE
EAT/590/97 For the Appellant For the First Respondent For the Second Respondents	MR M SHANKS (of Counsel) MR T LINDEN (of Counsel) Instructed By: Mr K Farrow Nemesis c/o Lloyd Jones Associates Old Bank House Deacon House Widnes WA8 6EA NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE SECOND RESPONDENTS


 


MR JUSTICE MORISON (PRESIDENT): Two appeals were brought by Mr Robinson ["the Appellant"] against decisions of an Industrial Tribunal sitting at Liverpool that he was the correct respondent in relation to the claims made by Mr Samuel Boardman, Mrs Margaret Ward, Mrs Anne Harker, Mrs Alice Whittaker and Mr Stephen Tinker.

1. As the parties' representatives before us agreed, though the factual background to this matter was confusing, the points on appeal were quite discrete.

Background Facts

2. The appeals arose out of the liquidation of the Laportes Sports & Social Club ["the Club"]. The Club was originally set up as a members club providing recreational facilities for employees of Laportes Industries Limited. The Club had a General Committee made up of members of the Club, and a Manager was employed to run the Club's affairs. We have been presented with a document entitled "Suggested New Rules" relating to membership of the Club. The following are relevant passages from that document:

"4.…Election of membership shall be decided by the Committee in its absolute discretion…

8 (1) The Management of the Club including all policy making matters, the day to day running of the Club, the financial administration and the purchase and supply by the Club of intoxicating liquor to Members and Guests, shall be the responsibility of the Committee.

(2) The Committee shall consist of fifteen members, a Chairman, a Secretary, a Treasurer and Twelve Members, all of whom shall be elected at the Annual General Meeting of the Club or at an Extra Ordinary General Meeting of the Club. All Members of the Club who have been Members for at least two years shall be eligible to stand for election to the Committee. Election to the Committee shall be by a simple majority.

(3) The administration and running of the Committee itself shall be arranged by the Committee which shall meet at least once a month.

17. The Committee shall have power to decide upon all matters not specifically provided for in these Rules.

19. Not less than two, and not more than four, Trustees shall hold all Land and Buildings now owned or at any time in the future to be acquired for and on behalf of the Club."

3. On 21 August 1991 the Club premises and land were transferred to the Club's trustees at that time, Alfred Cooper, Graham Fiske, Edwin Gallimore and Vera Newton and membership was opened to people not employed by Laportes Industries. The purchase price for the premises was £625,000 and was provided by loans from two brewers, Daniel Thwaites and Carlsberg Tetley. The mortgages 'tied' the Club to these two brewers making it a condition that all beverages were purchased from them.
4. On 1 September 1992 Mr Boardman, who had been the Club's Manager since 3 September 1990, signed a 5 year Manager's Agreement. The agreement is stated to be between Mr Boardman and the Club represented by Graham Lawrence Fiske, the Chairman of the Club. The agreement contained the following terms concerning the Manager's responsibilities:

"2(1) Diligently and faithfully serve the Club obey all lawful instructions of the Club the Secretary or other officials acting on behalf of the Club.

…

3 THE Manager shall undertake inter alia the following matters on behalf of the Club acting through the Committee and shall refer for specific instruction either to the Chairman Secretary or the full Committee for guidance or clarification in relation to any of these matters

(a) Undertake on behalf of the Committee the ordering and stocking of all items for sale within the premises including all alcoholic and non-alcoholic beverages cigarettes cigars matches and all food stuffs for sale on the premises.

…

(c) Be responsible for the selection and engagement of all staff employed within the Club premises but such engagement and employment is by the Club acting through the Committee which delegates to the Manager the responsibility for engagement and supervision on its behalf."

5. On 10 September 1992 an option agreement was made between the trustees and Committee of the Club and Barkin Developments Ltd ["Barkin"]. The agreement gave Barkin the option of purchasing the estate in fee simple from the Club trustees and the Club's assets free from encumbrances from the Committee. On 27 January 1993 a legal charge of the Club premises was made by the Club's trustees in favour of Barkin in exchange for a loan.
6. On 19 December 1994 a Club Emergency General Meeting was held due to the financial difficulties facing the Club which, as recorded in the minutes of that meeting, had debts in the region of £700,000. At the end of a meeting which has been described as "heated" Mr Boardman resigned his position as the Secretary of the Club Committee. The Appellant was unanimously elected Secretary of the Club Committee in his place.
7. At a General Committee meeting held on 12 January 1995 the matter of Mr Boardman's position as the Manager of the Club arose. The following is an extract from the meeting:

"Sue Jones - Worried about the legal side of Sam's [Mr Boardman's] contract.

Carl Evans - We should make a decision now.

George Robinson - Recommend sacking Sam am worried about his contractual terms.

Stan Newton - We should make Sam redundant.

….

Sheila Ward - Vote on Sam to be made redundant.

Sam 10 in favour of 2 against."

8. On 13 January 1995 Mr Boardman was dismissed as Manager by letter which was written by Mr Newton, the Chairman of the Committee. We have been presented with two dismissal letters, one signed, one unsigned, dated 13 January 1995, both of which are to the same effect. The letter signed by Mr Newton stated that the decision had been taken at a recent Committee meeting to make Mr Boardman redundant as of 13 January 1995.
9. On 18 January 1995 the firm of solicitors then representing Mr Boardman wrote to Mr Newton in his role as Chairman of the Club requesting payment of redundancy and damages for breach of contract. The letter went on to state that in default of payment proceedings would be issued against "the trustees of the Club and those persons who are members of the club committee as at 13 January." We note that the list of Committee members which accompanied that letter included the Appellant.
10. The Committee then attempted to rescind their letter of redundancy by way of a letter to Mr Boardman dated 18 January 1995. It was claimed that the redundancy letter had been sent in error and it was no longer the Club's intention to make him redundant.
11. Mr Boardman subsequently submitted an Originating Application dated 5 April 1995. The application made a claim for unfair dismissal and redundancy in relation to his period of employment as Club Manager from September 1990 to 13 January 1995. The Respondent to the action was stated to be "Laportes Sports & Social Club." A statement setting out the grounds for the claim in greater detail was attached to the application. It stated that the action was being brought against "the committee of Laportes Sports and Social Club for damages arising out of the termination of my employment under the terms of a managers agreement dated the 1^st September 1992."
12. A Notice of Appearance was presented on behalf of the Club, acting by Frank Howard, dated 11 May 1995. It confirmed that Mr Boardman had been dismissed and gave the reason as "redundancy due to an attempt to save embarrassment in connection with Mr Boardman's dealings with monies at the Club." It went on to state that the Committee had been suspicious of Mr Boardman with regard to the loss of several thousand pounds belonging to the Club. It was accepted that Mr Boardman should have been suspended to allow a proper investigation into the missing monies.
13. On 13 July 1995 Barkin's solicitors wrote to the signatories to the agreement made on 10 September 1992 demanding repayment of £334,433. The Club premises were then re-possessed by receivers acting on behalf of Barkin on 19 July 1995. The club then ceased to exist and all employment with the club ended by reason of redundancy.
14. Between 20 September 1995 and 19 October 1995 Mrs Harker, Mrs Whittaker, Mrs Ward and Mr Tinker submitted Originating Applications to the Industrial Tribunal. Mrs Harker's claim was for a redundancy payment and cited the Club and a trustee, Alfred Cooper, as her employers. She cited her date of termination as 28 July 1995. Mrs Whittaker claimed unfair dismissal against the Club alone and stated her date of termination to have been 20 July 1995. Mrs Ward claimed a redundancy payment and her date of termination was 20 July 1995 and the claim was made against the Club and the "Secretary of State". Mr Tinker claimed redundancy pay and holiday pay on termination of his contract on 20 July 1995. His claim was addressed to two trustees, Mr C Smith and Mr A J Cooper. For ease of reference these applicants will be referred to as the "Ward group".
15. Notices of Appearance were then presented on behalf of the Secretary of State for the Department of Trade and Industry and by Mr Cooper and Mr Smith denying liability.
16. The legal representatives of Mr Cooper, Mr Smith and Mr Boardman then wrote to the tribunal informing them that in the light of the Club rules the appropriate employer was the Committee of the Club and requested that the Committee be joined as respondents, represented in the person of the Appellant in both the Boardman and Ward group claims. The tribunal accordingly added the Committee as a respondent and served the papers in the Boardman case on the Appellant on 26 April 1996 and the papers in the Ward group cases on 14 May 1996. On 21 May 1996 the Appellant wrote to the tribunal requesting that his name be removed as respondent to the claims as responsibility for the Club was the responsibility of the receiver and not himself. Notices of Appearance in the Boardman and Ward group cases were then submitted by the Appellant dated 28 May 1996 claiming that he was not personally liable as he was part of a committee administering the Club and that the Club no longer existed as an unincorporated body. It was contended in the IT3 in the Boardman case that Mr Boardman resigned on 19 December 1994 at the EGM.
17. After the Appellant's requests for an adjournment were refused, there was a substantive hearing in the Ward group of cases on 26 September 1996. The Appellant was neither present nor represented. The tribunal, sitting at Liverpool, made the following unanimous findings:

"The correct respondent for these proceedings is Mr G Robinson the Secretary of the Club on his own behalf and on behalf of the committee and the members of the Club. It therefore follows that Mr Cooper and Mr Smith are dismissed as respondents.

The Club premises were re-possessed by receivers acting on behalf of a third party, Barkin Developments, on 19 July 1995; at which point the employment of all the applicants ceased by reason of redundancy."

18. The tribunal found that the Ward group's claims for a redundancy payment succeeded and awarded £567 to Mrs Ward, £699.30 to Mrs Harker, £1,425.60 to Mrs Whittaker and £212.62 to Mr Tinker. Mrs Whittaker's claim of unfair dismissal and Mr Tinker's claim for an unauthorised deduction from wages were dismissed. The Appellant's application for a review was refused.
19. On 2 December 1996 an interlocutory hearing was heard in relation to the Boardman case. A solicitor was recorded as representing both the Club and the Appellant, who was listed as a respondent "on behalf of himself, the committee and members of the…Club." The decision of the tribunal was that Mr Boardman was dismissed with effect from 13 January 1995 and his originating application contained an allegation of breach of contract. Leave was granted to the Club and the Appellant to make an employer's counter-claim against Mr Boardman.
20. A full hearing of Mr Boardman's claim took place at the Liverpool Industrial Tribunal on 24 and 25 February 1997. The Appellant was recorded as the representative on behalf of "the respondent". The tribunal's unanimous decision, promulgated on 18 March 1997, was that the Appellant was the correct respondent "on his own behalf and on behalf of the Committee of the first respondent" [the Club]. Although the tribunal found that there was a genuine redundancy situation because of the Club's needs to reduce its overheads, they found that Mr Boardman had been unfairly and wrongfully dismissed. The tribunal dismissed the counterclaim stating that there was insufficient evidence to support the allegations made and that the claim had been brought out of spite.
21. A remedies hearing was held on 3 April 1997 at which the tribunal ordered the Appellant to pay £1,460 compensation for unfair dismissal and £13,594 damages for wrongful dismissal. On 6 June 1997 the tribunal dismissed Mr Boardman's claim for loss of wages for a six week period between December 1994 and January 1995 and a claim for a telephone bill of £263, as deemed withdrawn.

Counsel's submissions

22. In relation to the Boardman and Ward decisions, two Notices of Appeal were presented to the EAT containing what amounted to two grounds of appeal, (1) that the tribunal erred in exercising its discretion to join the Appellant to the proceedings, (2) the decision that the Appellant was the correct respondent in the cases was inappropriate and unfairly prejudicial to him as he became personally liable for damages and compensation incurred on behalf of the Club.
23. The Appellant was represented by Mr Shanks for whose chronology, and able submissions we are most grateful. He argued that the tribunal failed to consider whether the Appellant was personally the employer of Mr Boardman and the Ward group of applicants at the time of the dismissals. Such a question required detailed consideration of the respective employment contracts, the constitution and rules of the Club and the legal effects of a transfer. In considering the matter of who was the employer, the tribunal should have asked itself whether it was the Committee at the time of commencement of employment or at the time of its termination, or if it was the Club members at the time of commencement of employment or at the time of termination, or even the receivers who had assumed responsibility for the Club. In relation to Mr Boardman's dismissal it was submitted that Mr Newton, who wrote the letter of dismissal, should have been considered as a potential respondent.
24. On the matter of joinder it was argued that the tribunal failed to take into account all relevant circumstances including the balance of justice and relative hardship. The tribunal hearing the Ward group of cases decided that the Appellant was liable as the correct respondent in circumstances when he was not represented and his requests for an adjournment had been refused. In properly exercising its discretion the tribunal should have considered the fact that the time limits for bringing the amended applications citing the Appellant personally as the correct respondent had expired; by over a year in the Boardman case. In addition the Appellant was named as respondent on behalf of the Committee and members of the Club in the Ward group cases, but in Boardman the Appellant was named respondent on behalf of the Committee only. It was essential that all persons to be represented had the same interest and that the parties were precisely defined. The tribunal should also have considered the fact that as the club was defunct and had no money any liability would be borne by individual members who would have great difficulty in meeting those financial demands and may not receive any contribution from other Committee members.
25. In reply on behalf of Mr Boardman, Mr Linden contended that the tribunal were entitled to allow an amendment to show Mr Boardman's employer, the Club Committee, as the correct respondent, and the Appellant was the correct person to represent the Committee.
26. It was argued that there was no doubt that the Committee of the Club was the appropriate employer as the Club rules were drafted with that intention. Our attention was directed to Bradley Egg Farms Limited v Clifford [1943] 2 All ER 378 in which the Court of Appeal held that where an unincorporated association appointed an executive council, that council were liable as principals for the negligence committed by a member. When it transpired that Mr Boardman could not sue the Club itself because it was an unincorporated association, he was entitled to sue the Club Committee as his employer. There was no prejudice in that amendment as the Committee had been on notice of the complaint made against the Club from the date of the presentation of the originating applications, and Mr Boardman specifically cited that the action was brought against the Committee.
27. In relation to the representation order it was contended that where relief was sought against persons who shared the same interest, such as the Committee of the Club, the Applicant was free to cite one or more of them as the respondent. As all the Committee members were liable at the date of the termination of Mr Boardman's employment, they were all jointly and severally liable in respect of the dismissal. Mr Boardman was therefore perfectly entitled to cite the Appellant in particular as the person against whom he sought relief.
28. In response to the Appellant's arguments regarding the unfairness of citing the Appellant over and above any other Club member, Mr Linden argued that the Appellant had been the Secretary of the Committee at the time when the decision was taken to dismiss Mr Boardman. It was therefore disingenuous of the Appellant to claim that because Mr Newton signed the letter of dismissal he was therefore not in a position of responsibility. We were also directed to correspondence in this case which showed that the Appellant was closely involved in the dealings with Mr Boardman's solicitors.
29. The arguments on behalf of Mrs Ward and the three other respondents to the appeal were in similar terms to those presented on behalf of Mr Boardman.

Decision

30. In our view there are three questions to be answered:

1. Who was the correct employer of Mr Boardman and the Ward group?

2. Was the Appellant one of the employers at the relevant time?

3. Was the Appellant correctly cited as the representative on behalf of the employers?

31. The question of who is the correct employer would normally not present a difficulty where the employer remains the same throughout the period of employment or where there is a transfer of employment from one employer to another. However, in the present case the employer was not a company or firm, it was an unincorporated association.
32. Our attention was directed to a passage in Unincorporated Associations: Law and Practice (Sweet & Maxwell 1992 Edition) which argued that, as in tort, an unincorporated association cannot be liable in contract as it has no separate legal persona to acquire liability. The persons who actually made the contract may be liable personally which may include all the members of a committee which was responsible for the appointment of staff. The decision in Bradley Egg Farms Limited, that the executive council of an unincorporated association was liable for employee's negligence, supported the argument that it was the committee of an unincorporated association that is the relevant employer. In our opinion it is quite clear that the management function of the Club was vested in the Club Committee. Decisions on employment matters were made by the Committee and Mr Boardman's contract made it clear that "engagement and employment is by the Club acting through the Committee."
33. The problem that then arises with unincorporated associations is the composition of the committee which acts as the employer. Obviously membership of the Club Committee in this case did not remain static, as members changed from time to time as a result of some members stepping down and others being elected to take their place. In those circumstances the question is whether Mr Boardman and the Ward group were employed by the Club Committee as it was composed at the time they were first employed, or as it existed at the date of dismissal. That problem came before this Court in Affleck and others v Newcastle Mind [EAT 537/98, 538/98, 788/98, 786/98] in which it was held that:

"…employees of unincorporated associations, whether they be registered as charities or not, do have continuity of employment despite changes in the composition in the committee which constitutes their employer. It is our view that the way that comes about is through the contract of employment being made with the management committee and its members for the time being."

34. In Newcastle Mind it was argued that section 218 of the Employment Rights Act 1996 could be applied to a committee so that there was effectively a transfer of an undertaking every time the membership of the committee changed. The Acquired Rights Directive and the Transfer of Undertaking (Protection of Employment) Regulations 1981 would also apply and the effect would be to transfer on to the newly constituted committee the liabilities of the previously constituted committee, because acts done by the previous committee were deemed to have been done by the newly constituted committee.
35. Whilst not rejecting the transfer argument this Court preferred the formulation that employees were employed by an unincorporated association by the relevant management committee as it existed from time to time. We would accordingly adopt that approach in the current case. We consider a purposive approach should be adopted to ensure that people employed by an unincorporated association do not lose their continuity of employment or entitlement to bring an action against their employers because of a change in the composition of the committee by whom they are employed. Any other formulation would offend both business reality and public policy.
36. The next issue is whether or not the Appellant was a member of the Committee at the times of the dismissal of Mr Boardman and the redundancy of the Ward group. On the basis of the findings made by the tribunal and on the documentary evidence presented before us, the answer is yes.
37. Having identified the Club Committee as being the people who were the employers throughout the course of the employment and that the Appellant was the Secretary of the Committee at the times of dismissal, the next issue is that of representation. Where it would be undesirable to name all relevant committee members in an action, a representative order may be made, by which a single member is sued on his own behalf and on behalf of all other committee members. Rule 17(3) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 1993 reads as follows:

"17(3) Where [there are] a number of persons having the same interest in an originating application, one or more of them may be cited as the person or persons against whom relief is sought, or may be authorised by the tribunal, before or at the hearing, to defend on behalf of all the persons so interested."

The rules on joinder are contained at rule 17(1):

"A tribunal may at any time, on the application of any person made by notice to the Secretary or of its own motion, direct any person against whom relief is sought to be joined as a party, and give such consequential directions as it considers necessary."

38. The tribunal was entitled to make an order that the Appellant would be a representative on behalf of the other Committee members. The Appellant may recover from other Committee members the losses which he has incurred as a representative. The fact that the Club in this case was in receivership or that other Committee members may not be forthcoming with a share of the losses is not a ground for objecting to the order. The Appellant chose to become the Secretary to the Committee at a time when the Club's financial difficulties were well known. Just as a Committee member may obtain a benefit from holding such a position, they must take responsibility for the burdens arising from holding such an office.
39. As to the other grounds raised by Mr Shanks, we do not accept that the amended originating applications naming the Appellant personally should be dismissed for being submitted out of time. In Cocking v Sandhurst (Stationers) Ltd [1974] ICR 650 the Applicant claimed in his originating application that he had been unfairly dismissed by his employer, a subsidiary company, when in fact his true employer was the parent company of that subsidiary. The Applicant was allowed to amend his application to substitute the parent company for the subsidiary. The Applicant's complaint, as originally intended and as amended, was the same, in that he claimed that he had been unfairly dismissed by his employer and as the original complaint was presented in time and was within the tribunal's jurisdiction it followed that the amendment would be allowed. In our view the same principles apply in this case. Mr Boardman and the Ward group intended to claim against their employer, the Committee, and submitted applications within time. He was not, therefore, unfairly prejudiced by the amendment of the applications.
40. We also reject the arguments that the tribunal failed to consider properly the fact that the Club was defunct at the time of the hearings and that the Appellant was not present at the hearing of the Ward group cases. The decision to make the Appellant the representative respondent was a question of law and would have been unaffected by the presence of the Appellant or otherwise. We have not found an error in the approach of the tribunal to that matter and accordingly these appeals are dismissed.