United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR JOHN MacMILLAN (Solicitor) Messrs MacRoberts Solicitors 152 Bath Street Glasgow G2 4TB
For the Respondent	MRS JUNE MITCHELL (Representative)


 


SUMMARY

Default judgment found that claimant's claim of unfair dismissal succeeded. Employers subsequently barred from appearing at remedies hearing. Undertaking given by and on behalf of claimant regarding material to be put before tribunal at remedies hearing, on basis of which employers did not proceed with appeal against that bar, not obtempered, and tribunal proceeded to fix remedy in ignorance of it. When drawn to tribunal's attention, it issued a judgment deciding that its remedies decision would be subject to review on the basis that the material which had not been put before the tribunal at the remedies hearing was clearly of relevance, but refused to allow the employers to be represented at that hearing. Following the review hearing, the tribunal decided that the matter could not be reviewed. Appeal allowed: the tribunal's reasoning was not Meek compliant; further, the procedure explained in D and H Travel Ltd & Anr v Foster EAT0226/06 should have been followed. Order pronounced allowing the appeal, setting aside the tribunal's judgment award of compensation and remitting the question of remedy to a freshly constituted tribunal for a hearing on remedy in which the employers would be allowed to participate.

THE HONOURABLE LADY SMITH

INTRODUCTION

1. This case involves two appeals at the instance of the employers who were respondents before the tribunal. I propose to continue to refer to parties as claimant and respondent.
2. The first appeal is against a judgment of an Employment Tribunal sitting at Glasgow, Chairman Mr M W MacMillan, sitting alone, registered on 7 August 2006, which, after a hearing, awarded compensation to the claimant in the sum of £13,650. The second is an appeal against a judgment of the Employment Tribunal also sitting at Glasgow, Chairman Mr M W MacMillan, sitting alone, registered on 9 August 2007, which, after a hearing, decided that there was no ground for review of that earlier judgment awarding compensation.
3. The respondents were not permitted to appear or be represented at either hearing but were represented by Mr MacMillan, solicitor, before me. The claimant represented himself at the hearings and his wife represented him before this tribunal.

BACKGROUND

4. The respondents were originally a family business which supplied welding services to the railway industry. The business was incorporated on 15 January 2000. The claimant, his wife, their son and their ex-son in law were all directors of the company. The claimant's duties included carrying out welding work from time to time.
5. In short, by the beginning of 2004, there was a downturn in work. By the middle of 2004, the respondents were close to liquidation. Various ways of keeping the business viable were looked into and on 13 August 2004, ATA Group Plc purchased the entire shareholding of the respondents. ATA had certain subsidiaries which supplied services to the railway industry. ATA made the managing director of one of those subsidiaries, Mr McLaughlin, responsible for looking after the respondents' business. His initial task was to get as detailed a financial picture of the respondents as possible. By September 2004, he concluded that savings of £3,794 per week needed to be made. If nothing was done the company would be losing about £8,500 per week. Drastic measures were, in his view, required. His savings plan had as its first step removing the claimant and his wife as directors, which would save £1,000 per week. The overall plan was effectively to "mothball" the respondents, restricting costs including employee costs, to the bare minimum and to try and go on a sales drive.
6. It was against the above background that the claimant was made redundant on 11 October 2004. His wife's redundancy came into effect on 31 December 2004, she having appealed her dismissal.

Mrs Mitchell's Tribunal Claim

7. The claimant's wife claimed that she had been unfairly dismissed. There was a full hearing in her case in December 2004 before an Employment Tribunal sitting at Glasgow, Chairman Mr CS Watt. Its judgment was registered on 11 January 2006 and it found that the claimant was unfairly dismissed that although there was a genuine redundancy. As to the nature of the unfairness, at paragraphs 99 and 100 of that judgment, they concluded:

"99. The position really was not complicated at the beginning of October 2004. There were 6 of the Mitchell family who were working for Gem Weld (UK) Ltd. Four of these were Directors. Two of the employees Tracy Mitchell and Julie Mitchell were Mrs Mitchell's daughters who carried out HR work and health and safety work respectively. There were only 3 or 4 welders at shifts. The company was losing a massive £6,500 per week. Without going into too much detail about the proposals put forward by Mrs Mitchell in Production 101, these were really only scratching at the surface. It was suggested that the landlord could reduce the rent and that the provider of the van leases could reduce payments. This was only putting off the inevitable. The amounts were still due to be paid. It had become fairly obvious to ATA that the Network Rail contract was not going to be obtained in November 2004. ATA took the view that they had to, 'mothball' the company, restrict costs as much as possible and try to obtain work by means of a sales exercise. The Tribunal are satisfied that this was a very sensible financial and business decision which was taken by the board of ATA. The Tribunal consider that they cannot interfere with the decision properly taken by sensible management taking into account the dire financial situation that the first respondents were in. The Tribunal are satisfied that no matter how detailed or well meaning the consultation that could have taken place, this would not have made any difference to the decision to make Mrs Mitchell redundant. In fact, Mrs Mitchell was paid up to the end of the year 2004 by which time the second respondents had put approximately £250,000 into the ailing company….

100. The Tribunal , however , are satisfied that, if consultation had taken place then it would probably have meant that Mrs Mitchell would have been in work up to about 14 January 2005 and thus would have been entitled to another two week's wages …".

8. That tribunal also heard evidence and made findings in fact which were directly relevant to this claimant's position. At paragraph 41, they found:

"Mr McLaughlin and Mr Clive Chapman travelled up to Prestwick for a meeting on 4 October 2004 with the Directors of Gem Weld (UK) Ltd. … (They) had a meeting with both Mr Duncan Mitchell and Mrs June Mitchell. Mr Chapman advised Mr Duncan Mitchell that he was to be made redundant and given notice of redundancy but with the offer of a job as a welder. Mr Mitchell was not prepared to take the job as a welder."

The Claimant's claim

9. This respondents failed to respond timeously to this claimant's ET1. A request for review of that decision was made but refused. A default judgment was issued on 6 May 2005, finding:

"….that the claimant's complaint of (a) unfair dismissal succeeds and that the remedy to which the claimant is entitled will be determined at a further Hearing."

10. Review of the default judgment was sought. For reasons which are unclear, it was considered at a case management discussion on 2 June 2005, rather than at a hearing under rule 33(3) of the 2004 rules. The tribunal refused to review the default judgment and held that it should stand. With regard to that matter, paragraph 5 of the note of that case management hearing ends as follows:

"It followed therefore that a remedy hearing in Mr Mitchell's case should now be fixed at which the respondents would not be permitted to take part."

11. The respondents lodged an appeal (which passed the sift) against the decisions of the tribunal encapsulated in the case management discussion note and the appeal was fixed for 20 January 2006.
12. Nine days prior to the date for that appeal hearing, the judgment in Mrs Mitchell's claim, referred to above, was issued. Having considered it, the respondents determined that they were prepared to accept that the dismissals of both the claimant and Mrs Mitchell had been unfair on the basis that although there was a genuine redundancy, there was procedural unfairness involving lack of consultation. An approach was made to the solicitor acting for the claimant to see whether he would undertake to put the judgment in Mrs Mitchell's case before the tribunal at the remedies hearing in the claimant's case. That undertaking was given and on the basis of it, the appeal did not go ahead. By letter dated 23 April 2007, new solicitors acting for the claimant advised, regarding the question of whether or not such an undertaking was given:

"The Claimant confirms as does Mr Hoey, the Claimant's former representative, that there was indeed an agreement in respect of Mrs Mitchell's case to be produced at the Hearing of Mr Mitchell's case."

13. That did not, however, happen. The remedies hearing in the claimant's case went ahead without the tribunal even being advised that his wife had a claim let alone what findings had been made in it. That hearing resulted in the first of the two judgments appealed against in this appeal. At pages 2-3 of that judgment (7 August 2007), the tribunal finds:

"The claimant presented a somewhat mercurial figure, with a short attention span. He clearly had a sense of grievance about the events, and tended to wander off the subject under discussion in order to emphasise this grievance. It was clear to the tribunal chairman that he was not going to be able to give his evidence in any ordered fashion, so that in the absence of any prospect of cross-examination there was likely to be considerable confusion, bearing in mind the various relationships which we have explained. After only a few moments it was clear that the claimant drew no distinction between his duties as a director, as an employee, and as an investor. Notwithstanding the terms of his application, he was seeking restitution in all three capacities, which as the chairman explained, is well beyond the powers of the tribunal. Accordingly, the chairman determined that the matter should be dealt with by a series of questions from him to the claimant, with the claimant being given an opportunity to add any further comment at the close of his evidence …

…He says he was not offered suitable alternative employment within the company and in the absence of any contradictor from the respondents, this has to be the case in our deliberations."

14. At page 3 of the same, that tribunal also finds:

"The claimant tells us and we accept that he was dismissed by virtue of redundancy where there was no true redundancy."

15. The respondents applied for a review of that judgment on the basis that it was the outcome of a hearing at which the claimant had not obtempered the undertaking to which I have referred. The claimant had represented himself at that hearing. I note that the letter of 23 April 2007 to which I have referred shows that he subsequently advised his solicitor that he accepted that the undertaking had been given but no explanation has been tendered as to why he did not comply with it.
16. A hearing took place before the Employment Tribunal sitting at Glasgow, Chairman Mr M W J McMillan, on 22 May 2007, in response to the respondents' application for a review of the remedies hearing judgment. The judgment following that hearing (registered on 25 May 2007) referred to the undertaking and included the following:

"It was common ground that this undertaking had not been obtempered, for whatever reason. As result, the present chairman was not even aware of the existence of the proceedings at the instance of Mrs Mitchell. The decision in her case, which was produced at the hearing today, was clearly of relevance in the present proceedings. Much of the argument regarding procedure, consultation and alternative employment was common to both cases. There was a full consideration of the 'would a proper procedure have made any difference?' argument. None of this was canvassed by the claimant before the chairman at his own remedy hearing."

That tribunal was, accordingly, persuaded that the remedies decision should be subject to review. Its judgment was:

"… the decision of the tribunal dated 7^th August 2006 will be subject to review, and a hearing shall be appointed for that purpose."

17. At the hearing on 22 May 2007, Mr MacMillan sought to persuade the Chairman to permit the respondents to be represented at the next review hearing. He did so under reference to the case of D and H Travel & anr v Foster EAT 0226/06 where a respondent against whom a default judgment had been issued was nonetheless permitted to be heard at the remedies hearing. The Chairman rejected these respondents' application on the bases firstly that the procedural route followed in the D and H Travel case was "not open to this tribunal", secondly on the basis that the facts were different and thirdly on the basis that there was in D and H Travel no other way out of an impasse which would "clearly have led to a major injustice".
18. A review hearing followed, on 23 July 2007, at which the claimant represented himself and it resulted in the second judgment which is now appealed against. That judgment was in the following terms:

"The decision of the Tribunal is that there is no ground for review of the decision of 28 July 2006."

19. Eight short paragraphs follow, three of which are relevance for present purposes:

"5. This Tribunal considered the decision of the other Tribunal in detail in advance of the hearing. It goes over the company history in much more detail than we were able to adduce from the claimant. It then notes that the unfairness of the dismissal is accepted, and then deals with issues of compensation in the light of the submissions made by both representatives. Evidence was taken in detail about the tasks performed by Mrs Mitchell, and the extent to which there was genuine redundancy in her case. With the whole history before them, the Tribunal were able to assess the prospects of Mrs Mitchell continuing in her employment with the company, and also the efforts she made to minimise her loss.

6. There was little or no mention of Mr Mitchell in any of this; his circumstances were clearly rather different.

7. The Tribunal was therefore left in the situation where no findings in fact in Mrs Mitchell's case directly affected Mrs Mitchell. It would perhaps have been open to the Tribunal to cross-examine Mr Mitchell on the more detailed history of the company , but with the difficulty which we earlier experienced in taking evidence from Mrs Mitchell (as expressed in our decision of 28 July 2006) we felt that no useful purpose would be served. Effectively the tribunal would require to cross-examine the claimant on his own earlier evidence, now more than a year old. Potential unfairness was almost inevitable. Had the claimant been represented, the situation might have been different."

20. On the foregoing basis, the tribunal reached the view that it could not review the remedies decision. Curiously and perhaps prescient, it concludes with the comment:

"The case will now presumably proceed before the Employment Appeal Tribunal."

THE APPEALS

Submissions for the Respondents

21. In a clear and careful submission, Mr MacMillan submitted that the tribunal's reasoning in its judgment of 7 August 2007 was fundamentally flawed. No adequate reasons were given for refusing to review the earlier remedies decision and the judgment was itself a contradiction, given that the judgment of 25 May 2007 had determined that there should be a review. The tribunal required to have in mind that the task that had to be addressed was that of determining compensation under section 123 of the Employment Rights Act 1996 which provided that only such compensation as is just and equitable should be awarded. The result of the tribunal's approach was that no "just and equitable" compensation had been awarded in this case.
22. He submitted that in the particular circumstances, it was plain that a review of the remedies judgment was called for and, furthermore, that the respondents ought to have been permitted to be heard on the matter. There had been a clear agreement to bring the decision in the claimant's wife case to the attention of the remedies tribunal in the claimant's case but that had not been done. There had been a clear acceptance by the tribunal in May 2007 that the circumstances of the decision in his wife's case were relevant and germane. Further, the ultimate rejection of the review application was unreasoned and illogical.
23. Mr MacMillan referred, in support of his submissions, to the cases of Meek v City of Birmingham District Council [1987] IRLR 250, Balfour Beatty Power Networks Ltd and anr v Wilcox and ors [2007] IRLR 63, Burns v Royal Mail Group plc [2004] IRLR 425, Barke v Seetec Business Technology Centre Ltd [2005] IRLR 633 and the D and H Travel case. The review judgment was not "Meek compliant", these were not circumstances where a reference would be appropriate and it was evident from the D and H Travel case that it was not too late to allow the respondents to be heard.

Submissions for the Claimant

24. The claimant's wife made a number of factual statements which were at odds with the findings in fact in both hers and the claimant's case. She added that she did not see that there was anything that showed that the chairman had not seriously considered all the points put before him, that tribunal chairmen are experienced in the law and therefore cannot have got it wrong as often as the respondents suggested, that she and the claimant felt that the chairman had given a full reasoned judgment, that she had heard nothing that proved that there was an error of law and that the decisions made were consistent which showed that they were not in error. She added that there was a distinction to be drawn between her and the claimant because she was an administrator and he was a welder.
25. Regarding whether or not the respondents should be allowed to be heard on the matter of remedy she submitted that it would not be fair to allow that because they were 3½ years down the line now and they had spent so much money on lawyer's fees. Then she added that it was not fair or unfair; it was just the tribunal law that they could not appear. The claimant and she found it hard to swallow that the whole thing could start all over again.
26. Following the appeal hearing, Mr Mitchell wrote to this tribunal by letter dated 20 June 2008 which contained further submissions. It was copied to the respondents and they confirmed that they had no objection to them being taken into account. The points covered in the letter were as follows. Mr Mitchell cannot fund legal representation and felt inexperienced and overwhelmed by "hearing protocol". The arguments advanced by the respondents were the same as had been heard throughout the 3½ year history of the case. The response to his claim was late despite the respondents' response to his wife's claim having been intimated in time. Mr Douie had declined to consult a lawyer at the case management hearing, when the default decree was upheld. A subsequent appeal was dropped. When it came to the remedy hearing, he had not put forward the judgment in his wife's case because it had been "ruled out". He had asked for the maximum of £50,000 because he had had a breakdown on the day he was dismissed, at the age of 62 years. After review, the chairman concluded that his wife's case had no bearing on his. The letter finished:

"To sum up, the same arguments have been given over again and again and each Chairman has considered the merits and made a ruling, they surely can't all be wrong, therefore surely the Appeal cannot succeed."

Discussion and Decision

27. By way of preliminary observation, I would comment that the sense of grievance and anxiety over what happened to the claimant and his wife that was noted by the tribunal below was clear to me at the hearing before this tribunal and upon reading the letter of 20 June 2008 sent by Mr Mitchell. Involving, as it does, a family business, that is particularly sad and unfortunate but I have to recognise that that deep and evidently genuine upset cannot direct the answering of the question of whether or not the tribunal has erred in law.

1. The Judgments

28. I propose to deal firstly with the review judgment of 7 August 2007. It is striking that, as at 27 May 2007, not only did the tribunal hold that the remedies judgment would be subject to review but it did so on the basis that the decision in Mrs Mitchell's case was clearly of relevance. It clearly was of relevance. It made findings on the question of whether or not there had been a genuine redundancy in circumstances where Mrs Mitchell and the claimant were in the same position qua director and there were a multiplicity of findings about the company's perilous financial circumstances.
29. Further, very significantly, there were findings, at paragraph 41 of the judgment in Mrs Mitchell's case, about the claimant having been offered a post as a welder – a job which he had carried out as part of his regular work – but having refused it. And there were findings about the lack of appropriate consultation. Then, as the tribunal itself noticed at the May hearing, there was full consideration of the "would a proper procedure have made any difference?" issue. These were all matters which clearly called into question the claimant's assertions at the remedies hearing that there was no genuine redundancy and that he had not been offered suitable alternative employment, to say nothing of alerting the tribunal to the need to ask, in Mr Mitchell's case, if they were satisfied that the nature of the unfairness was procedural, what were the chances of his employment having continued if the procedures had not been flawed?
30. In these circumstances, it is surprising to say the least that the tribunal concluded that it could not review the remedies decision. In the face of such an overwhelming case for review, particularly clear and cogent reasons were called for if the tribunal decided not to do so. There are, however, no such reasons contained in the judgment of 9 August 2007. The reasoning appears to come down to saying that the chairman felt it would be difficult to question the claimant about these matters because of the difficulties he had experienced with his evidence at the remedies hearing. That simply will not do. It does not begin to address the issue of law which arose, namely whether the interests of justice required that the remedies decision be reviewed. To use the language of Meek, it does not show what questions the tribunal addressed its mind to and why it reached the conclusions that it did. The fact that it is going to be difficult to take evidence for the purposes of a review is not of itself a sufficient reason for refusing it. One then looks for other reasons for the refusal but there are none. It is somewhat ironic that the tribunal refer to the possibility of potential unfairness to the claimant if the review is granted but appears to give no thought to the potential unfairness to the respondents. The real question of law that arose remained unaddressed.
31. I am accordingly, satisfied that the appeal against the judgment of 9 August 2007 is well founded. That being so, it follows that the appeal against the earlier remedies judgment must also be well founded. In any event, it plainly cannot stand in circumstances where the claimant accepts that it was issued in ignorance of the judgment in his wife's case notwithstanding the undertaking that had been given that the tribunal's attention would be drawn to it.

2. The Respondents' Right to be Heard

32. In all the circumstances, I am satisfied that the respondents should be allowed to participate in the remedies hearing. I gratefully adopt the line of reasoning as to the appropriateness of such a course in circumstances such as the present and the procedural route which makes it competent to allow such participation that is to be found in the D and H Travel case, particularly at paragraphs 44, 45, 46, 56, 59, 60, 61, 62 and 65. It would be quite disproportionate to prevent the respondents from being heard at the remedies stage.
33. I have given careful consideration to the strong plea advanced by the claimant to the effect that matters should not be opened up again after such a passage of time. I do recognise that it is going to be difficult for him to countenance that happening. It does not, however, alter the position that, as a matter of law, the appeal is well founded.
34. In all these circumstances, the award of compensation to the claimant cannot stand. It will be set aside and there will require to be a remit for a fresh hearing on remedy. For the avoidance of doubt, the default judgment that the claimant was unfairly dismissed stands but the issues of (a) the nature of that unfairness, and (b) what award of compensation if any falls to be made under section 123 of the 1996 Act, will require to be determined.
35. As to the tribunal, I am satisfied that the remit should be to a freshly constituted tribunal. The issue of remedy has been before the same tribunal on three occasions and, for whatever reason, it has failed to address issues which should have been addressed, as I have discussed. In these circumstances, the respondents cannot reasonably be expected to have the requisite confidence if the matter goes back to the same tribunal once more. The remit will, accordingly, be to a fresh tribunal.

Disposal

36. I will, accordingly, pronounce an order upholding both these appeals, setting aside both judgments and remitting the question of remedy to a freshly constituted tribunal.