CHAPMAN & OTHERS (Appellants) vs. GOONVEAN & ROSTOWRACK CHINA CLAY COMPANY LTD (Respondents) [1972] EW Misc 2

National Industrial Relations Court
[1972] EW Misc 2Case No 329/1972
Between
CHAPMAN & OTHERS (Appellants) vs. GOONVEAN & ROSTOWRACK CHINA CLAY COMPANY LTD (Respondents)
Before
Sir John DonaldsonM. Edwards (instructed by Pattinson & Brewer, London W.C.1) for the appellantsThe respondents were not represented.Date 9 November 1972
[1]The Hon. Sir John Donaldson: The judgment which I am about to deliver is the judgment of the Court.[2]This is an appeal from the unanimous decision of the industrial tribunal sitting in Truro that the seven appellants' claims for redundancy payments be refused.[3]The appellants all live in Port Isaac, on the north coast of Cornwall, and worked in the respondents' china clay works at St. Stephen, which is about 30 miles from Port Isaac. Prior to March of this year the appellants and three other men, making a party of ten in all, were taken to and from their work each day in a bus paid for by their employers. This service cost the employers £20 per week.[4]The respondents employed 220 men and at the beginning of the year they felt obliged to reduce their labour force by 12 men. The choice of the men to be dismissed was made in consultation with the union and included three of the Port Isaac party. This left the respondents with a party of seven to be carried to work in the bus at their expense and, whilst they were prepared to spend £1,000 a year to obtain the services of ten men, they considered that such expenditure was uneconomic in relation to a party of seven. They therefore notified the seven appellants that as from 24th March the bus would be withdrawn.[5]This left the appellants with a considerable problem, for there was no public transport which they could use for their journey to work. Two of them owned cars and the respondents suggested that the others might travel with them. However, the tribunal has found that the cars were old and unsuitable and that the insurers declined to give cover for passengers. In the circumstances the problem proved insoluble and the appellants gave notice to terminate their employment.[6]The first issue before the tribunal was whether the respondents' conduct in withdrawing the free bus service was such a breach of contract as entitled the appellants to treat themselves as having been dismissed by the respondents. It was decided by the tribunal in favour of the appellants and the respondents have not sought to challenge this conclusion. Indeed, they have not appeared on the hearing of the appeal.[7]The second issue was whether the appellants were dismissed by reason of redundancy and it was on this issue that they failed The relevant findings are in paragraph 13 of the reasons which reads as follows: - "The respondents employed 220 men. They required to dismiss 12 of them and the personnel officer entered into discussions with the shop stewards as to who those 12 should be. The names and records of all the employees were examined and 12 were selected on the basis of age and length of service. Nine of them were picked because they were already over age and due for retirement, or because of ill health: and that left 3. Those 3 were the employees with the shortest service and all happened to be men from Port Isaac. The names and the reasons for their selection were put up to Mr. Grose, the district officer of the union. Being satisfied that the men had been selected on this basis of age and length of servce and therefore in accordance with union principles, Mr. Grose agreed to these 12 men being dismissed. He did not then know that 3 of them came from Port Isaac. The company now found that the number of men travelling from Port Isaac was reduced to 7 and they did not consider it economic to run the bus at the cost of £20 a week to bring in 7 men. They decided, therefore, to stop running the bus in order to save £20 a week and that was their reason for the decision. When the 7 applicants said they could not get into work and left on 24th March, much to the regret of the respondents, they set about finding replacements, and Mr. Grose conceded that 7 replacements had in fact been engaged. In these circumstances, although the dismissals were a repercussion of the redundancy of the 3 Port Isaac men, the 7 applicants were not dismissed because the respondents' requirements for them to carry out work of the particular kind they were employed to do had ceased or diminished. The respondents required that they should continue to work for them, but they were not prepared to pay £20 a week for a bus to transport them to St. Stephen. We therefore find that the respondents have discharged the burden of proof which rests on them of satisfying us that the dismissals were not by reason of redundancy".[8]Mr. Marcus Edwards, of counsel, for the appellants, submits first that the tribunal attached insufficient significance to the fact that the seven men engaged to replace the appellants involved the respondents in less expenditure than did the appellants because no free bus service was needed. In so far as this point involves a question of law, it is bound up with Mr. Edwards' second submission. This is summarised in the notice of appeal as follows: - "(3) That the industrial tribunal should have addressed itself to the question: What in all the circumstances would have happened if the appellants had been retained upon the terms (as found by the industrial tribunal) of their contracts of employment {Dutton vs. C. H. Bailey Ltd. (1968) 3 I.T.R. 355 and Line & Another vs. C. E. White & Co. (1969) 4 I.T.R. 336)? "(4) That had the industrial tribunal addressed itself to the aforesaid question (bearing in mind the undisputed fact that the respondents had at the material time dismissed 12 other men by reason of a diminution of the respondents' business requirements), the industrial tribunal must have found that the answer was that the respondents' business would have become less competitive and, accordingly, their requirements for employees to carry out work of the kind done by the appellants would have further diminished".[9]Both Dutton vs. C. H. Bailey Ltd. [1] and Line & Another vs. C. E. White & Co. [2] were cases in which the employers sought to impose new terms of employment which would have saved them money. In each case the industrial tribunal found that the dismissal was wholly or mainly attributable to the desire for economy rather than redundancy. In each case the same Divisional Court (Lord Parker C.J., Melford Stevenson, J. and Bridge, J.) reluctantly remitted the matter to the industrial tribunal to reconsider its findings on the basis that "the proper approach is to say what in all the circumstances would have happened if these men had been retained on the old terms".[10]The relevant provisions of the Act are contained in sections 1(2) and 25(3) which are in the following terms: "1(2) For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to: - "(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased, or intends to cease, to carry on that business in the place where the employee was so employed, or "(b) the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where he was so employed, have ceased or diminished or are expected to cease or diminish". "25(3) In this Part of this Act 'cease' means cease either permanently or temporarily and from whatsoever cause, and 'diminish' has a corresponding meaning".[11]The decision in line & Another vs. C. E. White & Co. [3] followed that in Dutton vs. C. H. Bailey Ltd [4] and added nothing to it. It is, therefore, sufficient to consider Dutton's case. In seeking to impose the new terms of employment the employers had written that the new terms represented "the only conditions under which by providing a competitive service to our customers we can hope to provide employment and operate profitably and happily in the future". But the tribunal had found as a fact that "there was no evidence at all that . . . the employers had no work or had less work or expected to have less work for boiler-makers . . . We find that the reason for the employers' termination of the old contract is that they wished - wisely or unwisely - to impose or attempt to impose new terms upon their work force. It is not because of any existing or expected reduction in the need for boilermakers".[12]The leading judgment, with which both Melford Stevenson and Bridge J.J. agreed, was delivered by Lord Parker C.J. Having referred to the relevant statutory provisions as the tribunal's reasons he said [5] :
"In my judgment, however, the tribunal approached this in the wrong way. It seems to me that the proper approach is to say what in all the circumstances would have happened if these men had been retained on the old terms. To that there is only one answer as it seems to me, and that is that the requirements for boilermakers would diminish and possibly cease in that the employers would no longer be able, as they themselves said, to offer a competitive service. In other words, this was a case where, if instead of saying: unless you enter into new terms you will be dismissed, they at first dismissed these men and later on sought to negotiate new terms, it would then as it seems to me be perfectly clear that the dismissal was one on account of the expected diminution or cessation in the work for boilermakers. It is in my judgment nihil ad rem to look to the future and say what would have happened if this man had accepted these new terms. It may be then that the employers would have had so much work that they would even want more boilermakers. The test, as it seems to me, is what would have happened if termination of the contract had not been effected. "
Finally, I would like to say that I come to this decision with reluctance because it seems to me there should be every inducement to employers to make themselves more competitive, and every reason for employees to do away with their restrictive practices and the like. But as it seems to me those matters will arise at the second stage, namely on the basis that there has been a dismissal by reason of redundancy, when the terms of sub-section (3) and sub-section (4) of section 2 will fall to be considered to see whether, nevertheless the employee is not entitled to a redundancy payment. "I would allow this appeal and send this case back to the tribunal in default of agreement to ascertain the position under section 2 of the Act".[13]Decision of the Divisional Court are on any view of the greatest persuasive authority and we will not lightly differ from them. Dutton's case 1 seems to us to be directly in point in the present appeal and we have therefore considered whether there is any compelling reason why we should not take a similar course. If we did so, we should remit the appellants' claims to the tribunal with a direction that the proper approach is to say v/hat in all the circumstances would have happened if these men had been retained on terms that they would continue to be taken to work each day free of charge.[14]But is this right? Lord Parker in Dutton's case [6] held that if a business was becoming uncompetitive and the requirements of the business for employees to carry out work of a particular kind at the existing rates of pay had diminished or was expected to diminish, a redundancy situation had arisen, even if there was an increased requirement for such employees at a lower rate of pay. With the greatest respect to him and the other two judges who agreed with him, this seems to us to involve reading section l(2)(b) as "the fact that the requirements of that business for employees to carry out work of a particular kind on the existing terms and conditions of employment . " although the words [in italics] are neither expressed nor necessarily to be implied.[15]An employer may seek to negotiate new terms and conditions of employment in two quite different situations. In the first situation, the business is being forced to reduce its output of a particular product because of competition from a rival product made in a different way or of different materials. Thus, for example, the need for glass workers may be reduced by the competition from the plastics industry which involves different skills. The employer may be loath to disband his team of skilled glass workers and may seek to introduce a measure of work sharing or short time working at a reduced level of wages. In the second situation, the business can maintain its output provided that it can reduce costs to the point at which it is competitive with other manufacturers or importers of a similar product. Taking the same example, large imports of cheap foreign glass may render the British manufacturer's product uncompetitive unless he can achieve a reduction in all costs, including labour costs; but if costs were reduced, his need for glass workers would not only be maintained, but actually increase. The employer therefore seeks to reduce the cost per unit, including labour costs, but, if successful, expects to keep his existing labour force fully employed. The first is a redundancy situation, because the requirement for employees to carry out work of a particular kind, i.e. glass workers, has diminished. The second is not a redundancy situation, because this requirement has not diminished. Glass workers are still needed as much as before, but the employer cannot afford to pay as much per unit for their work Furthermore, the requirement remains even if the employees will not accept the proposed new terms and conditions. In each case, if employees are dismissed, it is for the employer to rebut the presumption of redundancy. But, as we have sought to show, the issue is not necessarily resolved by asking the question, "What in all the circumstances would have happened if these men had been retained on the old terms?" For the avoidance of doubt, we should make it clear that an employer does not rebut the presumption of redundancy by proving that he has work for all if only they would work at unrealistic wages.[16]In the present case there is no evidence whatever of any actual or expected reduction in the requirements of the business for employees to carry out work of the particular kind carried out by the appellants once the twelve had been dismissed. The accident that three of the twelve came from Port Isaac increased the cost per man of employing the remaining seven Port Isaac men and rendered their further employment uneconomic. But even if the cost per man had remained the same and the employers had come to the conclusion that Port Isaac labour was too expensive, there would, subject to the effect of Dutton's case 1 , have been no redundancy situation so long as there remained the same work for seven other less expensive men to do. There is no evidence that the loss of the benefit of free transport reduced the men's remuneration to an unrealistic level.[17]As we have said on more than one occasion, we are a court of law. As such, it is our duty to apply all the relevant law whether we agree with it or not. That law consists not only of Acts of Parliament but also of decisions of other courts on the meaning of those Acts insofar as those decisions are binding on this Court. For the reasons which we have already given, we respectfully disagree with the decision of the Divisional Court in Dutton's case [7] ; but if it is binding upon us and therefore forms part of the law which it is our duty to apply, we shall loyally apply it notwithstanding our disagreement. In Secretary of State for Employment vs. Atkins Auto Laundries Ltd. [8] it was unnecessary to decide whether we were bound by decisions of the Divisional Court, but we expressed some doubt as to whether we were. In the present appeal it is essential that we decide this issue but our decision is, of course, open to review by the Court of Appeal.[18]Before 1st December, 1971, when this court was created by the Industrial Relations Act, appeals from industrial tribunals in relation to claims under the Redundancy Payments Act, 1965 lay to the Queen's Bench Divisional Court in the case of decisions by tribunals sitting in England or Wales, and to the Inner House of the Court of Session in the case of tribunals sitting in Scotland. All industrial tribunals were bound by the same statute; but whereas the Scottish tribunals were bound by decisions of the Inner House of the Court of Session and not by decisions of the Queen's Bench Divisional Court or of the Court of Appeal, these being only of high persuasive authority, the position was reversed in relation to English and Welsh industrial tribunals which were bound by decisions of the Divisional Court and the Court of Appeal but not by those of the Inner House.[19]Since 1st December, 1971, all appeals, whether from Scottish, Welsh or English industrial tribunals, have been to this court, which is not part of either the High Court or the Court of Session but is a separate British court of comparable status. Appeals from this court lie to the Court of Appeal in the case of proceedings in England and Wales, and to the Inner House of the Court of Session in the case of proceedings in Scotland. Whether the proceedings of this court are in England, Wales or Scotland depends upon the convenience of the parties and is not affected by whether the decision appealed from was that of an English or Welsh or of a Scottish tribunal. For example, proceedings in a matter originating in Cumberland are being carried on in Glasgow at this time.[20]Bearing in mind the undivided character of this court's jurisdiction throughout Great Britain, the Industrial Relations Act might well have provided that appeals from this court would have been to a British Court of Industrial Appeals formed of Lords Justices and Judges of the Inner House of the Court of Session with a further appeal to the House of Lords. Whatever the reason for Parliament not adopting this course, we consider that wherever this court may be sitting it must be bound both by decisions of the Court of Appeal and by those of the Inner House just as it would if these two courts had formed a composite industrial appellate court. The problem of a conflict between their decisions can await the occurrence of such an event, but whatever course is then adopted must apply throughout Great Britain. But the proposition that the decisions of a part of the High Court having no equivalent in Scotland should also bind this court is very different. In the context of our appellate jurisdiction, we think that the Queen's Bench Divisional Court is to be regarded as a court of co-ordinate jurisdiction. There is no rule of statute or common law which requires such courts to follow each other's decisions (see The Vera Cruz (No. 2) per Sir William Brett, M.R. [9] ), although it is the practice to do so as a matter of judicial comity where both are parts of the same judicial system (see Palmer vs. Johnson per Sir William Brett, M.R. [10] ). Judicial comity certainly requires us to give most careful consideration to a decision of a Queen's Bench Divisional Court and we shall always do so, but we do not consider that it extends further than this. Accordingly, we have reached the conclusion that we are not bound by Dutton's case [11] and that, in the circumstances of this appeal, we should not follow it.[21]Although the point does not arise in the present appeal, it may be convenient to mention the problem of whether this court is to regard itself as bound by its own decisions. In so far as it is a court of first instance, no one would expect it to be so bound and it will not be. Decisions given on appeal under section 114 of the Act are in a different category. Subject to certain exceptions, the Court of Appeal regards itself as bound by its own decisions (see Young vs. Bristol Aeroplane Co. Ltd [12] ) and a somewhat similar approach is adopted by the Inner House of the Court of Session. The extent to which a court regards itself as bound by its own decisions is probably a matter of procedure and, under paragraph 18(4) of the Third Schedule to the Industrial Relations Act, 1971, this court has power to regulate its own procedure, subject only to the effect of any rules made by the Lord Chancellor pursuant to paragraph 18(2). However, the desirability of certainty would incline this court to treat itself as bound by its own decisions, but for two important countervailing considerations. The first is that this is a court which is concerned in part with a wholly new and developing system of law and many of the matters which come before it will be argued by those who have no legal training. It is therefore peculiarly liable to err in law. In the case of manifest error, it would be unfortunate if the parties to subsequent cases had to go to a higher court to obtain a correction and that until they did so this court should be bound to perpetuate its own error. The second, which may be related to the first, is that rule 68 of the Industrial Court Rules, 1971, made by the Lord Chancellor under paragraph 18(2) of the Third Schedule to the Act, has empowered this court to review its own decisions of its own motion in a number of circumstances including that "the interests of justice require such a review". It would, we think, be very odd that we should be bound by a decision which we could ourselves set aside, albeit at the very undesirable price of varying the settled rights of the parties to the earlier decision.[22]In our judgment, the interests of justice will best be served if this court retains a measure of flexibility. Whilst expressly disavowing any pretensions to the status of the House of Lords, we can think of no better way of stating the extent to which this court will treat itself as being bound by its own decisions than respectfully to adopt and adapt the words of the declaration delivered by Lord Gardiner, L.C. in 1966 [13] . Accordingly, we wish to say that this court regards the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules in the field of industrial relations. The court nevertheless recognises that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of industrial law. The court therefore, whilst treating its own former decisions as normally binding, will consider itself free to depart from them when it appears right to do so. In this connection the court will bear in mind the danger of disturbing retrospectively decisions which have formed the general basis of industrial relations agreements and practices.[23]Before concluding this judgment we should like to draw attention to a procedural matter which has caused some concern both to the tribunal and to this court. Six of the seven appellants claimed only under the Redundancy Payments Act. The seventh failed initially to make it clear whether his claim was under that Act or for unfair dismissal contrary to section 22 of the Industrial Relations Act, 1971. Subsequently he withdrew any claim for unfair dismissal. As the tribunal pointed out, cases can arise in which there is a real doubt as to whether the dismissal was on account of redundancy, was an unfair dismissal as defined in the 1971 Act, was both on account of redundancy and also unfair, or was a justifiable dismissal. In such circumstances the applicant should claim both for compensation for unfair dismissal and for a redundancy payment, leaving it to the tribunal to decide whether both or either is justified. The applicant will thereby avoid the injustice of, for example, pursuing a claim for a redundancy payment only to find that the tribunal regards the case as one of unfair dismissal and that he is out of time to make a complaint on this latter basis.[24]However, industrial tribunals, and this court, must and do recognise that many of those who appear before them are without the benefit of advice from lawyers, trade union officials or others who are familiar with the problems of redundancy payments and compensation for unfair dismissal. Furthermore, there is an additional complication in that it appears that some trade unions carry their opposition to the Industrial Relations Act, 1971 to the point of refusing assistance to those of their members who wish to claim compensation for unfair dismissal which involves relying upon the Act, whilst freely granting assistance to those who seek redundancy payments under the Redundancy Payments Act, 1965.[25]It is not for industrial tribunals or this court to approve or disapprove of any particular Act of Parliament or to give preference to one right created by Parliament in preference to another similarly created. On the other hand both have to take account of any circumstance which could lead to injustice and to do all in their power to prevent this result. Accordingly, if there is the slightest doubt whether an applicant's claim is or should be for a redundancy payment or for compensation for unfair dismissal, or for both (see section 24(5) of the 1971 Act), the applicant should be encouraged to put forward or maintain both such claims until all the facts are known. The adoption of this course will not usually increase the time or expense involved as all or most of the evidence will be common to both claims. Even when the full facts are known and a decision has been made as to the true basis of claim, if there is any chance of this court taking a different view on appeal, the claim which is considered inappropriate should be dismissed rather than withdrawn, thus allowing this Court to restore it if necessary. In all circumstances industrial tribunals should make the widest use of their powers to allow amendment of claims and to extend time limits in order to ensure that justice is done not only to the applicant, but to the respondent, who must always be granted any adjournment necessary to enable him to answer a new basis of claim which emerges at a late stage.[26]For the reasons which we have given, the appeals fail and will be dismissed. Appeal dismissed. Note 1 (1968) 3 IT.R. 355 [Back] Note 2 (1969) 4 I.T.R. 336 [Back] Note 3 (1969) 4 I.T.R. 336 [Back] Note 4 (1968) 3 I.T.R. 355 [Back] Note 5 (1968) 3 IT.R. at 357-8 [Back] Note 6 (1968) 3 I.T.R. 355 [Back] Note 7 (1968) 3 I.T.R. 355 [Back] Note 8 2(1972) 7 I.T.R. 59 at 64F; (1972) I.C R. 76 at 82. [Back] Note 9 (1884) 9 P.D. 96 at 98. [Back] Note 10 (1884) 13 QBD. 351 at 355. [Back] Note 11 (1968) 3 IT.R. 355. [Back] Note 12 (1944) KB 718 . [Back] Note 13 See (1966) 3 All E R 77 and (1966) 1 WLR. 1234 [Back]