United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant (Ladies Health & Fitness Club Ltd) and for the Fifth Respondent (Moneywise Services Ltd)	MR ANDREW BURNS (of Counsel) Instructed by: Messrs P D T Solicitors Chancery Court Horsham West Sussex RH13 5AD
For the First Respondent For the Second Respondent (Mr Candy-Wallace) For the Third Respondent (Mr Hoppe) For the Fourth Respondent For Orbital Leisure Ltd For the Receivers, Messrs Begbies Traynor (Mr Davis and Mr Simmonds) and for Ladies Own (UK) Ltd and Focus Health Clubs Ltd (both in Receivership)	Mrs T EASTMOND (the Respondent in Person) MR BERNARD LO (of Counsel) Instructed by: Messrs Allen Ticehurst Solicitors Medway House 18-22 Cantelupe Road East Grinstead West Sussex RH19 3BJ MISS JULIA SMITH MR M P DUNNE (the Respondent in Person) No Appearance or Representation MR DAVIS (the Receiver in Person)

SUMMARY

Transfer of Undertakings and Practice & Procedure

Plainly a TUPE transfer from Company A to Company B but, on almost immediate termination of Company B's licence, retransferred to Company C (no real challenge to ET's Decision, save for elimination of the ET's 'alternatives'): issue whether three of the Applicants objected within TUPE Regulation 5(4)(A) and (4)(B) dealt with erroneously by the ET ('informed consent' not a relevant issue: and see Hay v George Hanson (Building Contractors) Ltd [1996] IRLR 427). To be remitted for rehearing on proper basis by same ET.


 


THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)

1. This has been the hearing of an appeal by Ladies' Health & Fitness Club Ltd ("LHFC") against the unanimous decision of the Employment Tribunal at London (South) in a judgment handed down on 21 November 2002, in favour of five individual applicants. Those applicants had been employed in various capacities in relation to a series of health clubs trading under the style Ladies' Own in the environs of London. The company Ladies' Own (UK) Ltd, (the First Respondent) and another company, Focus Health Clubs Ltd, both, in circumstances to which we shall refer, went into receivership, and the claims in respect of termination of the Applicants' employment, both in contract and under employment legislation, were made against those two companies, represented by a receiver, Messrs Begbies Traynor, but clearly without expectation of any substantial recovery; and the second out of the three original company respondents was a company Orbital Leisure Ltd ("Orbital") which, as again we shall describe, was, for a short period, involved in the running of the fitness clubs and appears to have disappeared into limbo, not being put into liquidisation, but never having any assets. The individual receivers were joined as Fourth Respondents. As a result on 30 January 2002 two additional respondents were joined: Moneywise Services Ltd ("MSL") and the eventual Appellant, LHFC, both companies being owned and/or controlled by a Mr Roy Ward and his son Mr Philip Ward.
2. MSL Ltd was a financing company and had been involved in providing finance, lending it seems some £800,000, towards the end, in order to assist the two companies, which it subsequently put into receivership on 5 September 2003. LHFC was the company which eventually ended up, after that receivership, running the clubs.
3. The finding of the Employment Tribunal was that LHFC was, by virtue of the Transfer of Undertaking (Protection of Employment) Regulations 1981 ("TUPE"), liable in respect of the termination of the employment of the five applicants. The Tribunal ordered various sums to be paid to those applicants. So far as Mrs Eastmond was concerned (who has not been represented before us today, appearing in person) she was to receive the sum of £2,374. Mrs Brereton, who again has been unrepresented, was ordered to be paid what was described as one month's outstanding pay by the company in receivership or by the Secretary of State. She had no claim against LHFC and has not been involved in this appeal, because she in fact gave notice and departed prior to the transfer. Mr Dunne, who was not represented and has appeared in person before us today, was ordered to be paid outstanding pay, holiday pay and notice pay to be agreed. Mr Candy-Wallace, who was a senior employee of Ladies' Own (UK) Ltd (in Receivership), and was largely involved in the events which occurred in August and September 2003, has been represented before us, as he was before the Tribunal, by Mr Lo of Counsel. He was ordered to be paid outstanding wages in a quantified sum, outstanding holiday pay in a quantified sum and three month's net pay to be agreed. Mr Hoppe, who was both below and before us represented by Miss Smith of Counsel, was ordered to be paid outstanding net pay until 20 September and one month's notice pay, that is, net.
4. The appeal by LHFC, represented by Mr Andrew Burns of Counsel, as they were below, was against the finding that it was responsible at all.
5. The hearing of the appeal before us has been complicated to an extent, as I suspect it was rather more before the Tribunal, by the number of parties whose interests have to be considered. Before the Tribunal the options were broad, because LHFC was only one of the companies against whom the Applicants were asserting their rights. As a fallback they would clearly wish to have had a liability finding against the two companies in receivership, in case there might have been some recovery against them, and potentially against Orbital, no doubt perhaps in the hope that the Secretary of State might have some liability. On the face of it at any rate, there was a claim of personal liability by the receivers. There was also a claim against MSL which was the primary company of the Wards, LHFC having been taken off the shelf on 28 August 2003 and eventually used as the vehicle to run the clubs.
6. Before us on appeal the position, so far as those other companies is concerned, has been preserved by both Mr Hoppe and Mr Candy-Wallace, on the basis that if the appeal by LHFC were successful then they would have wished an alternative finding, as a fallback, against one or other of the other Respondents, and to that extent those other Respondents have been represented before us, the receivers and the company in receivership, through Mr Davis appearing in person, and MSL by Mr Andrew Burns, who is also representing LHFC.
7. There were interlocutory orders made by the President for the purpose of this appeal which have not been entirely complied with. The first was that in the particular facts of the apparently somewhat complicated facts of this case an order was made for an agreed Schedule of Issues, and, secondly, there was the usual provision, pursuant to paragraph 7 of the Practice Direction, that if any matters of evidence were sought to be adduced or relied upon by any party from the Employment Tribunal, the procedure laid down by paragraph 7, and specifically prescribed in the Order, should be followed. It was Miss Smith who in her Notice of Appeal and in her Skeleton Argument was seeking to rely on some parts of the evidence below which had not been incorporated, for one reason or another, into the Decision of the Tribunal.
8. It is not in the event a matter that has caused any problems, both because of the well-argued Skeleton Arguments and because in the event we have not had to rely at all on any evidence below that did not appear in the Decision. We take this opportunity, however, to emphasise that the orders and the Practice Direction are there to be complied with, and the fact that, as was the case in relation to these proceedings, the proliferation of parties made it difficult to reach agreement, should not have prevented at least some unagreed document being put before the court.
9. Against that background, we turn to consider the facts very briefly. There is only a need to consider those facts briefly because although the matter took some time before the Tribunal and was complicated, the result of the analysis by the Tribunal in its Decision and by the parties in their Skeleton Arguments and by dint of our exchanges in oral submissions, the issues in this case have been very considerately slimmed, and we did not need to call on Miss Smith or Mr Lo in relation to the substantial bulk of what had previously been in dispute.
10. The indebtedness of the two companies now in receivership ("the old companies"), exacerbated, on the findings of the Tribunal, by the mismanagement of those who ran or owned those companies, a Mr Nuthall and a Mr Rashid, led to what seems to have been a desperate measure. On 24 August 2003 the property companies run by those gentlemen, of which group the old companies formed part, entered into a licence with Orbital, controlled it seems by a Mr Dobson, or at any rate being part of a Dobson group, but one in which it would appear Mr Rashid and/or Mr Nuthall had some involvement; and although nothing is clear, because the documents relevant to this period or most of them were spirited away at the time, such licence from the property companies to Orbital appears to have been in replacement for any previous licence that there had been by the property companies to the old companies.
11. Orbital was now to run the clubs, and, it seems, did so for a short time, and letters were sent out to the employees of the old companies, including the Applicants, informing them that the club was now to change its trading name from Ladies' Own to Female Fitness, and otherwise was to carry on as usual, and that their employment was to be transferred.
12. This was a patent attempt to avoid, or at any rate minimise, the liabilities of the old companies to Mr Ward's companies and in particular to MSL. MSL had, it seems, been funding the clubs by taking the membership subscriptions and compounding them, and paying a lump sum, in order to assist the running of the clubs, direct to the clubs. A large number of the members consequently had paid their subscriptions not to the clubs but to MSL. At any rate on the face of it, the communications by Orbital on behalf of the clubs with those members was an attempt to procure a breach of contract between the members and MSL.
13. The licence agreement of 25 August 2003 was expressed to commence on 26 August 2003. With understandable speed MSL instructed solicitors and issued proceedings in the Chancery Division and obtained a court order. The Order was granted by the Chancery Division on 31 August 2001. It restrained the members of the Ladies' Own group from disposing of, charging or in any other way dealing with any of their business assets or undertakings, and it restrained Orbital from disposing of, or charging, or agreeing to dispose of, or charge the business assets, or undertaking, or any part of the business assets or undertaking which had been acquired from the Ladies' Own group, including, of course, the licence which it had been granted.
14. So far as the clubs are concerned, it would appear that the entirety of the equipment in the clubs were the assets not of the old club-running companies but of the property companies, such that the licence which had been granted by the property companies to Orbital had licenced the use not only of the clubs but all of the equipment. It does not appear that the old club-running companies themselves had any other assets than the licence, which had, it seems, been terminated to make way for the fresh licence of 24 August to Orbital.
15. That court order did not in terms prevent Orbital from continuing to trade, and in particular by paragraph 3 of the Order it stated that it was not intended to prevent Orbital from trading in the ordinary course of its business as an operator of health and fitness clubs.
16. However, simultaneously with issuing proceedings, the MSL and the Wards procured, pursuant to the floating charge that it had over the assets over all the property companies and the old companies, thus including the club-owning companies, the appointment of Begbies Traynor, and in particular Mr Hood and Mr Davis, as receivers. The receivers were appointed on 5 September 2003. They immediately took steps to get in contact with the staff who had purportedly been running the clubs on behalf of Orbital, and sought to have meetings with the staff.
17. On 7 September the staff, having declined to attend meetings with the receivers, were attending a meeting at the offices of Orbital and that meeting itself was attended by representatives of the receivers. It was apparent that nothing further could be done so far as any agreement is concerned, and it seems that the staff, according to the report that was made by Begbies Traynor, was very hostile to the receivers' representative.
18. There was a hearing, the first return date of the injunction, in the Chancery Division on Monday 10 September. At that hearing a petition was presented, it is not clear whether it was lodged with the court but it was certainly given to the receivers, by the employees of the clubs, including all the Applicants, save of course Mrs Brereton who had resigned, and save for Mr Hoppe. That petition was not in evidence before the Tribunal, although it has been shown to us, produced from the receivers' files.
19. The Tribunal, without seeing the contents of the petition, but on the basis of knowing of its existence, said as follows, so far as the position of the employees is concerned:

"62 We find that Mr Candy-Wallis and Mr Dunne in general terms unequivocally gave their allegiance for a brief period of time to the new management and directorship of Orbital and worked for Orbital. Mr Hoppe, we find, as he demonstrated in a memorandum at the time, clearly stated that he was prepared to work for whichever company was the legal owner of the business, that he was confused and that he awaited clarification."

20. In response to a case made by the Respondents below, to which we shall return, that the Applicants, save for Mr Hoppe, objected to the transfer within Regulations 5 (4) (a) and 5 (4) (b) of the TUPE Regulations, the Tribunal made a finding in paragraph 66 which recorded that "the mood of the staff generally and the managers was unco-operative towards the receivers".
21. Notwithstanding that petition and no doubt inevitably in the light of the outstanding liabilities of the companies in receivership to MSL, the existence of the receivership itself and the difficulty of Orbital continuing to trade notwithstanding that the Order on its face permitted such trading, either the Order was continued after opposition or there was no opposition to its continuance: the precise events at court on that Monday, 10 September, are unclear.
22. On that day, no doubt immediately after the hearing in the Chancery Division, the receivers, on behalf of the property companies now in receivership, terminated the licence of 24 August 2003. That meant that Orbital no longer had the right or the power to run the clubs. The clubs were closed on that weekend (either the Friday or the Saturday, it is unclear which) and did not reopen during the week beginning 10 September.
23. The evidence that was given by the Mr Ward Jr. (Mr Ward Sr. did not give evidence in the Tribunal) was that the company, the LHFC, the Appellant, was taken off the shelf on 28 August 2003 and, as appears from paragraph 10 of his witness statement, it was, as he put it, formed to operate the health and fitness class formerly operated by Ladies' Own (UK), by which we understand him to mean taken off the shelf for that purpose. Mr Ward said as follows:

"At the time when the receivers terminated Orbital's licence on 10 September 2001 I requested any information available to them regarding the employees who worked at the relevant sites that were being transferred to LHFC."

He then refers, in paragraph 15 of his witness statement, to the fact that effectively LHFC took the transfer of the clubs and developed a whole new and different management structure.

24. That transfer to which Mr Ward referred occurred, in as far as the legalities are concerned, as evidenced by a fresh licence which was granted by the receivers on behalf of the property companies to LHFC on 21 September 2001 when, in effect, the operation of the clubs was legitimised. It also appears to have been on that day that the clubs were reopened, such that there had been a 10 or 11 day gap in the running of the clubs.
25. Recruitment exercises were carried out by and on behalf of LHFC, and no doubt a substantial number of the employees of the clubs were re-employed by LHFC; but not the Applicants. Leaving aside Mrs Brereton, the other four Applicants were not re-employed.
26. So far as Mr Candy-Wallis is concerned, there was evidence that on 13 September 2003 he, by telephone, spoke to Mr Ward Sr. and, in an account which the Tribunal accepted, he sought to persuade Mr Ward that he should be employed, or continue to be employed, with the clubs, and no doubt clearly because Mr Candy-Wallis was seen by Mr Ward to have been a ring leader in the opposition to the transfer, and indeed the creation and operation of Orbital, Mr Ward made it entirely clear that he would have no truck with him.
27. Mr Hoppe having sent a memorandum in which he made his position clear (to which we have referred) that he would work for whomever turned out to run the clubs, took no further steps, and it seems remained at home, on his case waiting to be told what to do. It is quite plain, of course, that he must have known what happened, namely that the clubs restarted on 21 September and operated under a new management structure without him.
28. Those are the facts. The Tribunal concluded that there was a transfer of undertaking from the First Respondent in receivership to the Appellant LHFC. In a very helpful Skeleton Argument put in by Mr Lo of Counsel on behalf of Mr Candy-Wallis we have been referred to important authorities underlying and supporting the decision of the Tribunal. The Tribunal itself refers in its Decision in paragraph 50 to only two authorities in terms, but it says it was referred to other authorities, without reciting them.
29. The case of Cheesman and Others v R Brewer Contracts Ltd [2001] IRLR 144 is relied upon by Mr Lo to support the fact that it is not fatal, and possibly not even relevant, that the trading may have been suspended or that there may have been a gap between the carrying on of the business by the transferor and the transferee. He refers to paragraph 11 (i), (iii) and (xii) of the judgment in Cheesman.
30. He refers also to the case that was referred to by the Employment Tribunal, Celtec Ltd v Astley & Others [2001] IRLR 788 for the proposition that assessment of a transfer is by reference not to legal and technical considerations of which the employee knows nothing, but to the actual state of affairs known to him. The transfer can be:

"…more in the nature of a process extending over a period of time than an event timed to take place only at a particular moment in time."

31. He referred also to Alamo Group (Europe) Ltd v Tucker [2003] IRLR 266 in support of the proposition that it is unnecessary for there to be any contractual relationship between transferor and transferee; and, of course, that may well be seen to be the case here.
32. The Tribunal reached alternative conclusions, on either or any of which it concluded that there was a transfer to LHFC. Its first conclusion was that there was no transfer to Orbital at all, on the basis that such transfer was, as it put it, a nullity, in the light of the fact that it occurred in breach of the contract which the transferring companies had with MSL.
33. That proposition, although forming part of the armoury of arguments which were used below by the various Applicants is not, in the event, supported before us today, not doubt not least in the light of the very powerful argument mustered by Mr Burns on behalf of the Appellant to seek to criticise it.
34. It appears to us clear that the fact that the transfer was or may be in breach of contract would not render it a nullity, if in fact it occurred. In fact what occurred was, it seems to us, perfectly lawful, although it may well be one rendering the transferor in breach of contract. The transaction amounted to an express or implied termination of the licence by the property companies to the old club-running companies, thus removing the apparent only asset of those old club-running companies; and then a grant of a fresh licence by the property companies to Orbital, which immediately took over running of the clubs with the benefit of the same staff, who appear to have known that they were answerable to Orbital, not only by virtue of the receipt of communications from Orbital, but by virtue of attending meetings with Orbital. It does not appear to us to be necessary or indeed arguable to say that there was never a transfer to Orbital.
35. The alternative finding by the Tribunal was that insofar as there was a transfer to Orbital there was a transfer back. That appears to us to be entirely correct.
36. In the course of its conclusions the Tribunal appear to have expressed views, particularly in paragraphs 55, 56 and 81, with which we cannot agree. The views that are there set out appear to show a misunderstanding of the role of insolvency practitioners, such as Begbies Traynor, in this field. In any event, we are told that the conclusions that were set out by the Tribunal were never the subject of examination by way of testing of the evidence or, in particular, testing of Counsel in the course of submissions, and were not put by the Tribunal as embryonic views to Counsel.
37. There are references in those paragraphs to a façade put forward that the receivers were acting totally independently and at arms length from the Ward family, and that the reality of the position was that as from 10 September at the very latest the de facto control passed into the hands of Mr Roy Ward. There are also references of an even more pejorative kind in paragraph 81 to a "deceptive and irresponsibly deceptive picture" painted by the receivers.
38. What occurred here, so far as we can see (and if there were to be findings of this kind they would need to have been much more fully evidenced and explored) was that, as is perfectly normal, the receivers were appointed by the chargees; once appointed they would inevitably receive communications from, and indeed give reports from time to time to, the debenture holder or chargee, who had appointed them; but they were acting thereafter as agent of the company. We cannot see anything unusual at all in the evidence, either as depicted and described by the Tribunal or in the documents that have been selected and put together for our consideration on this appeal.
39. In any event, any findings of this kind are entirely unnecessary in order to justify the conclusions to which the Tribunal came. On the evidence of Mr Ward alone (to which we have referred) his intention or plan was that a company (LHFC as it turns out) was set up to take over and run the clubs in a hopefully successful (we have not heard the result) effort to claw back some of the massive loss that MSL and its group had suffered as a result of its financial backing of these clubs. But what was occurring in the meanwhile, with the benefit of very reputable solicitors in place, was the very proper applications to the court to enjoin what appears to have been the clearest possible tortious conduct by those running the clubs, coupled with the perfectly proper exercise of powers under the charge, and perfectly proper decisions by the receivers as to what to do with the only seemingly available asset of the companies in receivership, namely the licence of the clubs, other of course than the assets of the property companies themselves.
40. But having said that those paragraphs are in our view both unjustified and unjustifiable and superfluous, the conclusion of the Tribunal is, in our judgment, entirely right. What occurred here was that the licence having been terminated on 10 September, the business was transferred back, in the sense that Orbital no longer had the right to operate it, and the receivers, on 21 September, formally licenced that business to LHFC; it had always been intended that LHFC would be the company to take the transfer of the licence, and thus, when the licence was terminated, LHFC, albeit not yet formally licenced to do so, immediately set in motion the task of recruiting staff to run the clubs, of carrying out the necessary administrative plans so that the clubs could, as they did, reopen on or about 21 September under the new management.
41. The very realistic acceptance by Mr Ward in his written statement that in effect LHFC took the transfer is in fact an acceptance of reality which in this case (and it is not always the case given the complexities of TUPE) is matched by the legal analysis. There is no need for a contractual relationship between the transferor (in this case Orbital) and the transferee (LHFC), and there was none in this case. But it is in our judgment plain, looked at from the point of view of this business (the club business), and these employees (those who were employed by the club at all material times) that there was initially a transfer from the Ladies' Own companies to Orbital; that transfer was effective for only a short time, until the licence was terminated; and there was then a transfer on or back from Orbital to LHFC.
42. In those circumstances, Mr Hoppe was, in our judgment, correctly found to have a right to remain in the employment of the transferee company.
43. So far as the other Applicants are concerned, Mrs Eastmond, Mr Candy-Wallis and Mr Dunne, they attended the hostile meeting on 7 September, in which they were plainly opposing the interference or involvement of the receivers, and, it seems, of Mr Ward lying behind the receivers. They signed the petition which was put before the court on 10 September. On 12 September there was, however, the attempt by Mr Candy-Wallis (there is no similar evidence in relation to Mrs Eastmond or Mr Dunne) to persuade Mr Ward after all to take him on, which was unsuccessful, as we have described.
44. The TUPE Regulations provide, at Regulation 5, for the effect of a relevant transfer on contracts of employment. By 5 (1) the following provision is made:

"Except where objection is made under paragraph 4A below, a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred, but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the transfer so employed and the transferee."

Paragraph (4A) (and indeed (4B)) provide as follows:

"(4A) Paragraphs (1) and (2) above shall not operate to transfer his contract of employment and the rights, powers, duties and liabilities under or in connection with it if the employee informs the transferor or the transferee that he objects to becoming employed by the transferee.

(4B) Where an employee so objects the transfer of the undertaking or part in which he is employed shall operate so as to terminate his contract of employment with the transferor but he shall not be treated, for any purpose, as having been dismissed by the transferor."

45. That was relied upon by the Appellant before the Tribunal in respect of all Applicants except Mr Hoppe. The Tribunal made the following findings in paragraphs 65 and 66 of its decision:

"65 In its full and helpful submissions, Mr Burns also submitted that, even if there were a transfer to or back to the Respondents who he represented, there was no transfer of the employment of any Applicant except Mr Hoppe who hedged his bets (because all Applicants supported the petition in the High Court organised by Mr Candy-Wallis, supporting Orbital and opposing the transfer). He relies on Regulation 5 (4) (a) and Regulation 5 (4) (b) of the TUPE Regulations.

66. Whilst we accept that in a general way the mood of the staff generally and the managers was unco-operative towards the receivers, we find that there cannot have been an "objection" which was binding in law since we find that without a doubt the reluctance of the staff to be associated with companies purportedly operated by the receiver and/or the Ward family was a completely uninformed objection. We have some sympathy for the position of the Ward family. We have considerable sympathy for the position of the majority of the staff. We have less sympathy for the position of Mr Candy-Wallis and Mr Dunne, who we believe were more senior and had the opportunity to have a more clear picture of the very irregular steps being taken during that critical period. We do not accept, however, in the case of any Applicant that there was an objection within the meaning of Regulation 5, either to defeat the operation of any transfer or to terminate any current contractual relationship."

46. There is no indication that the Tribunal considered the important decision of this Appeal Tribunal given by a panel chaired by Lord Johnston in Hay v George Hanson (Building Contractors) Ltd [1996] IRLR 427. None of the Counsel before us are able now to confirm one way or the other as to whether Hay was cited to the Tribunal; and of course, if it was not, then such omission by the Tribunal is entirely understandable.
47. The decision in Hay shows that the Tribunal erred in two respects. The first respect, in relation to which it would not have been necessary in any event to refer to Hay, is that neither in Hay, nor so far as Counsel before us are concerned, or this Tribunal is concerned, within any of our knowledge, is there any basis in law on which a requirement for informed objection arises. We have read the contents of the Regulation, and it appears to us clear that if there is an objection within the Regulation, the fact that it may be high-handed, ignorant, over-reactive or simply misconceived would not affect the position, although of course it might be that on analysis what occurred did not amount to an objection if someone in fact does not know what they are doing. But the conclusion of the Tribunal, if that is what it said, that there was an objection, but that it should be discounted because it was uninformed, cannot, in our judgment, be supported, and no Counsel before us has sought to support it.
48. Secondly, however, insofar as there was a finding that there was an objection, it is unclear, particularly given the lack of express citation of Hay, what the Tribunal had in mind when reaching its conclusion. The decision in Hay makes it plain that an objection must amount to a refusal. Lord Johnston, in his usual clear way, deals with this in paragraph 9 following of the decision in Hay:

"9 …Taken in general context, the word 'object' could reflect a state of mind short of refusal, and it goes without saying that there are all manner of means whereby information may be conveyed to the intended recipient…

10 Having said that, it seems to us that the scheme of this particular piece of legislation is clear, and does not require to be approached in any artificial or so-called purposive way. What is intended is to protect the right of an employee not to be transferred to another employer against his will, and it is 'against his will' that is the executive part of the process. We, therefore, construe the word 'object' as effectively meaning a refusal to accept the transfer and it is equally clear from reg. 5(4A) that that state of mind must be conveyed to either the transferor or transferee…

11 We would pause to reflect that if the withholding of consent is, as we think it is, a proper consideration, it should not be difficult in most cases to distinguish between such withholding of consent and mere expressions of concern or unwillingness, which may still be consistent with accepting the inevitable. Thus, to protest in advance of a transfer, which could be construed to be objecting, would not amount to an objection, in our opinion, in terms of the Regulations, unless it is translated into an actual refusal to consent to the transfer which, in turn, is communicated to the relevant person or persons, before the transfer takes place."

49. If the Tribunal was applying that test in the course of its decision, the workings of its reasoning are wholly unapparent, and it would appear to be more conclusory than analytical when it reaches the apparent conclusion that there was an objection. I say apparent conclusion because the Tribunal so quickly goes on to discount it, by reference to the lack of information.
50. We considered whether, within the well-known authorities which include Hellyer Brothers Ltd v MacLeod [1987] ICR 526 and O'Kelly v Trusthouse Forte Plc [1983] ICR 728, given the findings of fact by the Tribunal and the misdirection that in those circumstances it appears to have given itself, we could substitute our own conclusion in this regard. The findings of fact by the Tribunal, to which we have referred, centre on the presence at the meeting on 7 September proposing the involvement of the receivers, and the signature of the petition.
51. We would not, in our judgment, have been able to reach a conclusion on that evidence that a Tribunal below would inevitably find that there was an objection in the Hay sense. But we were questioned whether it might be possible for us to reach a conclusion which we could substitute that on the findings of fact by the Tribunal there would be sufficient for us to be able to substitute a finding that there was no objection sufficient to fall within Hay.
52. It was within that context that we sought to see whether the petition itself, which was not, it seems, in evidence before the Tribunal, could be found, not on the basis that it thereby became evidence before us, but on the basis that we could see what evidence might be placed before the Tribunal, if the matter were remitted to the Tribunal.
53. With the assistance of the receivers' office, a copy of the petition headed "Stop Moneywise Services", was put before this Tribunal. Suffice it to say that, having seen that petition, we can see that there must, at the very least, be an arguable case that Lord Johnston's proposition could be satisfied in relation to what amounts to an objection, on a remission, and that, having seen that petition, we are certainly unable to substitute any decision of our own to the contrary. Therefore we conclude that it is right that the issue of whether there was an objection within Regulation 5 (4) (a) and 5 (4) (b), operative such as to prevent recovery by Mrs Eastmond, Mr Candy-Wallis and Mr Dunne, should be remitted to the Employment Tribunal for a proper consideration in the light of the evidence, including the content of the petition; and it is common ground that it is sensible that this be done by the same Tribunal.
54. The only other matters that were live within this appeal did not relate to liability and therefore at this stage we can summarise the position as follows. The appeal by LHFC, so far as it was against the finding that there was no transfer to Orbital must succeed, but fails so far as there was challenge to there being a transfer back to LHFC. This leads therefore to success for Mr Hoppe, or at any rate to the finding of the Employment Tribunal in favour of Mr Hoppe being upheld, and subject to a decision on the question of objection, which is thus remitted to the Employment Tribunal, similarly so in relation to Mrs Eastmond, Mr Candy-Wallis and Mr Dunne.
55. The two issues that remain are as follows:

(1) On Mr Burns' appeal he has challenged the Decision of the Employment Tribunal so far as costs are concerned. The Employment Tribunal Rules very much limit the right of a party to recover costs. Rule 14 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001, Schedule 1 reads as follows:

"Where, in the opinion of the tribunal, a party has in bringing the proceedings, or a party or party's representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived, the tribunal shall consider making, and if it so decides, may make –

…"

an order for costs. So far as bringing the proceedings are concerned, that relates to an Applicant. The provision which can render a Respondent liable to an order for costs relates to the Respondent's conduct, or that of his representative, in conducting those proceedings. This is of course a very much more limited path than is available in the High Court and County Court.

56. The Tribunal set out its Decision on costs as follows:

"81 Miss Smith makes a persuasive case for costs on Mr Hoppe's behalf."

We interpose that this case was set out in the conclusion to her closing Skeleton Argument in paragraphs 23 to 25. It continues:

"We find that there is some substance in her argument. Whilst to a certain extent, as we have from time to time commented above, we can understand that Mr Roy Ward and his family felt they had been let down by the managers, we find that there has been a very guarded and restricted supply of information to former employees who were unpopular with the Ward family throughout the entire period. We find that letters written by the receivers by no means disclose the full and actual picture of what actually was taking place in that important August/September period and the very much earlier and much closer involvement of Mr Roy Ward and the companies under his control. The impression given by the correspondence emanating from the receivers clearly indicated a very much more arm's length and slow progression of the business through the various stages, not finally reaching the Ward family until December. We find that this was a deceptive and irresponsibly deceptive picture which was designed to put potential applicants off the scent and, in the case of Mr Hoppe, he did not deserve to be distracted in that kind of way.

82 On the other hand the case is by no means straightforward on any view of the facts and we find that there probably would have had to have been at least a one-day Tribunal hearing for any Tribunal to investigate these various claims. In the case of Mr Hoppe, he has perfectly understandably instructed solicitor and counsel and a considerable quantity of work has been carried out on his behalf. We assess the costs payable by the Sixth Respondent, who we find must have been the prime mover in the drafting and formulation of the letters issued by the receivers, [as] the sum of £4,500 on the basis that the Sixth Respondents unreasonably continued to contest the case to this extent."

At paragraph 83 the Tribunal deals with and rejects a claim for costs in favour of Mr Candy-Wallis and Mr Dunne.

57. Mr Burns submits, in relation to those findings, that the apparent conclusions the Tribunal reaches, particularly in relation to the alleged conduct of the receivers, are inappropriate, have not been adequately or at all put to any relevant witness or explored with Counsel as we have previously discussed above in a different context, and are in any event wholly irrelevant – irrelevant for four reasons: -

(1) that the conduct is that of the receivers, insofar as it is conduct at all, and, particularly given the absence of exploration of the position, it is wholly inappropriate to ascribe that conduct to LHFC, which was, in any event, neither the principal of the receivers nor their appointor.

(ii) given the limited ambit of the Tribunal Rules (to which we have referred), even if there were any conduct in 2001 which falls to be ascribed to LHFC, it cannot possibly be conduct, unreasonable or otherwise, of the proceedings.

(iii) following on from that, insofar as there can be consideration of conduct falling within Rule 14, being an unreasonable or otherwise manner of conducting of the proceedings, LHFC was only joined to the proceedings in March 2002, on receipt of the order of 30 January 2002, it served its Notice of Appearance in April, and it was ready and involved in the trial of the action on 23 May 2002. Any criticism that can or should be made in relation to the conduct of the proceedings can only post-date March. There is no such criticism made of LHFC in paragraphs 81 or 82, and indeed there is recognition in paragraph 82 of the fact that the proceedings were by no means straightforward.

(iv) Mr Burns further points out that, although the LHFC in the event lost on the aspect of transfer of undertaking, it succeeded so far as substantially minimising the quantum of the claims that were made against it, by reference to what it calls the Polkey arguments.

58. Miss Smith only seeks with a very limited degree of enthusiasm to support the arguments set out by the Tribunal, which were not, it seems, those which, at any rate in substance, she herself was putting forward in the Skeleton Argument, to which we have referred. The basis of the case which she put forward in her Skeleton Argument related to allegations of failure to disclose by LHFC.
59. In her Skeleton Argument before us she further particularises the case of failure to disclose, which she brings forward to support the finding made by the Tribunal. She sets out three matters which she says the Appellant and MSL failed to disclose, although, as she recognised in the course of argument, given that it is not against MSL that the costs orders were made, it can only be the Appellant's conduct which would be relevant. These matters are:

(1) whether any evidence was disclosed by Orbital in compliance with the High Court Order of 31 August 2001, as to the nature of any assets acquired by Orbital;

(2) the outcome of the hearing on 10 September 2001;

(3) the operating licence which was allegedly granted to LHFC by the receivers on 21 September 2001;

and she says that Mr Ward was cross-examined on the subject of this disclosure.

60. It does not at any rate to us appear very significant (if significant at all) that there was no disclosure in relation to the first two of those matters. So far as the third is concerned, Mr Burns has pointed out that in the relatively lengthy Notice of Appearance which LHFC put in, in April 2002, although the document itself was not disclosed, the fact of the grant of the licence by the receivers to it on 21 September 2001 was disclosed, and there could thus have been a request for disclosure of such document at any stage, and there was on his case neither such request nor certainly any such order.
61. Miss Smith, on her feet before us, asserted that she believed there had been at some stage such a request but she was unable to help as to whether that antedated or post-dated the joinder of LHFC to the proceedings.
62. The conclusion formed by the Tribunal relating to conduct by the receivers and/or MSL, said in some way to be conduct for which LHFC could be liable, and in any event far antedating the entry into the proceedings of LHFC, are, in our judgment, not matters on which this Tribunal could possibly have properly relied in making and order for costs.
63. But for Miss Smith's submission that there may be some other way of justifying some order for costs, we would simply have allowed Mr Burns' appeal in this regard. Mr Burns did not feel able to submit, given that part of his case is that the Tribunal did not give him the opportunity of adequately resisting an order for costs intended to be made on this basis, that Miss Smith should not be given the opportunity of putting forward such a case, particularly as she adumbrated it in her Skeleton Argument, as we have indicated.
64. We do not conclude that it is very likely that the Tribunal will be able to consider within Rule 14 that there was any conduct of LHFC of the proceedings that could fall within the Rule, but we do not discourage the making of any such application afresh to the Tribunal, given Miss Smith's very understandable desire to seek to minimise costs on her client's behalf in this action. Given in particular such a small amount at stake, she suggested that it may be that the application, if pursued, could be dealt with on paper by the same Employment Tribunal. Mr Burns did not oppose that suggestion but indicated, as was plainly right, and as we do, that the matter as to whether the Tribunal will entertain an application on paper, particularly in relation to costs which is not always an easy matter, would be left to the Tribunal itself to decide.
65. The last issue relates to the cross-appeal by Miss Smith on Mr Hoppe's behalf, in relation to quantum. The Tribunal's conclusion in this regard is at paragraph 78 of its judgment:

"Mr Hoppe. We find and declare that Mr Hoppe is entitled to his outstanding wages for the period of August through until 20 September on a net basis. In addition, he is entitled to one month's net salary thereafter in lieu of the month's notice to which he would have been entitled had he been, as we find, fairly dismissed with effect from 20 September for an organisational and economic reason. We do not accept that Mr Hoppe was entitled to guaranteed employment for six months and our construction of the agreement is that the reference to six months was solely for a "trial period"."

66. Miss Smith submits that Mr Hoppe should have been entitled to the entire duration of his contract by way of a claim in debt up to 1 November, which would have given him an extra 11 days, a sum of approximately £600, it seems, by way of differential between what the Tribunal has given him and what on her case he should have got. The dispute is therefore a very limited one indeed.
67. We have referred to the fact that Mr Hoppe, having made his position clear on or about 7 September that he did not mind by whom he was employed, then effectively disappeared from the scene. It is unclear as to whether there was any evidence at all as to what he did between 7 September and 1 November. The presentation on his behalf is that he was, rather as would someone on garden leave, waiting at home for instructions. It appears, on what we have been told, although there is no evidence before us, that Mr Burns does not contest Miss Smith's instructions that Mr Hoppe's telephone and fax lines and his PO box were closed down or terminated by LHFC at some stage during October, no doubt when they got round to it, and she submits that if the date when in that way some positive act was carried out by LHFC is taken as the test, then that would entitle her at least to the period up to 1 November, given her entitlement to one month's notice, or the expiry of her six month period.
68. She submits that there is no express finding by the Tribunal that the contract of employment of Mr Hoppe was terminated on 20 September. There is only, as she submits, a finding that the employment could have been fairly terminated on 20 September. In the absence of a finding that there was termination, she submits that that leaves unanswered her case that her client was entitled to regard himself as still employed, remaining at home doing nothing but waiting for instructions. On that basis she would submit that matters should be remitted back to the Tribunal for conclusion as to whether Mr Hoppe's employment was terminated on 20 September by the simple fact of his not being included in the clubs when they reopened, or whether he is entitled to have regarded himself as employed at least until the middle of October or so when his fax and telephone line were closed down. Such remission could then lead to an entitlement, one way or the other, of an extra £600.
69. We are entirely persuaded by Mr Burns that this is a wholly unrealistic submission. What occurred here is that Mr Hoppe knew perfectly well that his employment had come to an end. He had been employed by the companies in receivership. His employment was transferred to Orbital. He had been cognisant, although not a signatory, of the petition and of the proceedings and it was quite apparent that those proceedings having failed so far as Orbital is concerned, his employment by Orbital was at an end. He, in our judgment, must plainly have known that he was never employed by LHFC and never taken on with those who were transferred, insofar as they were, to LHFC; and that in circumstances such as this, even if sufficient in any other circumstances, to stay at home waiting for instructions was wholly inapt to ensure his continued employment as Regional Director.
70. In any event, albeit that the conclusion of the Tribunal in paragraph 78 is brief and concise, we are satisfied that it appreciated that it was addressing not only questions of unfair dismissal but questions of contractual entitlement, and it found that his employment was, and was entitled to be, terminated with effect from 20 September. The manner of that termination was not set out by the Tribunal, but it is plain that it was terminated by Mr Hoppe's non-inclusion in the team of those running the business as from 21 September 2002.
71. Therefore, either we are satisfied there was a finding, to which no challenge can be made, by the Tribunal, or, if it is not Meek compliant, then there is no conceivable purpose in a remission, because the inevitable conclusion of any Tribunal on remission would be that Mr Hoppe is entitled to no further salary than that which was awarded by the Tribunal.
72. In those circumstances we dismiss all the cross-appeals. Mr Hoppe's on quantum is dismissed for the reasons above and the other cross-appeals which were simply dealing with the fallback of success for LHFC on its appeal are not necessary to be pursued and consequently stand dismissed.
73. So far as remission is concerned, we have indicated that there will be remission on "objection", so far as all save Mr Hoppe is concerned. There is no need for remission in our judgment so far as the balance of Mr Hoppe's quantum is concerned, because we cannot conceive that there would be any difficulty in agreeing the figure to which he is entitled, which is the sum of the unpaid salary to 20 September plus one month's notice.
74. So far as the other Applicants are concerned, there have been, at the moment, somewhat unusually orders by the Employment Tribunal that that there be agreement it is to be hoped that there can be such agreement. If there cannot be then a decision as to what the quantum is in relation to those other Applicants can be dealt with by the same Tribunal, no doubt at the same time as it resolves the outstanding question of objection, because of course if the objection case succeeds so far as the Appellant is concerned, there would be no recovery by those Respondents in any event.