Longden & Anor v Ferrari Ltd & Anor [1993] UKEAT 529_92_2211

EAT
Longden & Anor v Ferrari Ltd & Anor
[1993] UKEAT 529_92_2211 · 1993-11-22
T Owen B.A.

Solicitor

Brook House

32 The Street, Cherhill

Calne Wilts

SN11 8XR

For the Respondents (2nd) MR H JACKSON

(of Counsel)

Clifton Ingram

22 Broad Street

Wokingham

Berks RG11 1BA

The 1st Respondent not present nor represented.MR JUSTICE MUMMERY ... PRESIDENT) The main question raised by this appeal is whether, on the correct construction and application of the Transfer of Undertakings (Protection of Employment) Regulations 1981, the transfer of the undertaking of Ferrari Ltd (the first Respondent), acting by Administrative Receivers, to Kennedy International Ltd (the second Respondent) in the Spring of 1991 was "effected by a series of two or more transactions" within the meaning of Regulations 3(4) and 5(3).The point is of general and practical importance for those employed by a transferor in an undertaking transferred; for a transferor and, in cases where a transferor has fallen into financial difficulties, the receivers and managers, administrative receivers, administrators or liquidators appointed over the assets and undertaking of a transferor; and for a transferee of an undertaking.

The proceedings

The Industrial Tribunal, sitting at Bristol on 24th January and 27th May 1992, dismissed complaints of unfair dismissal brought by Mrs R E Longden and Mr J N Paisley against Kennedy.Both Applicants had been employees of Ferrari in its Hermes Cifer division which operated from two different premises. The Hermes side of the undertaking was based in Southwark and was concerned with the development of computer software and some manufacturing work. The Cifer side was based in a large factory at Melksham, in Wiltshire, and was concerned with the development, manufacture, sale and maintenance of computer terminals, software and spares. Mrs Longden and Mr Paisley were based at Melksham. Mrs Longden had worked for Ferrari since late September 1987. She was Director and General Manager of the Hermes Cifer division. Mr Paisley had worked for Ferrari since October 1977. He was an Operations Manager.Unfortunately, in the Spring of 1991 Ferrari fell into grave financial difficulties. On 7th March 1991 Mr Alan Lewis and Mr John Talbot, insolvency practitioners with Arthur Andersen & Co, were appointed joint Administrative Receivers of Ferrari by Lloyds Bank Plc pursuant to powers conferred by a debenture. The future of the Hermes Cifer division was, therefore, in serious doubt.The complaints to the Industrial Tribunal arose out of the circumstances in which Mrs Longden and Mr Paisley were dismissed on 28th March 1991 and in which the Receivers subsequently entered into a written Receivership Sale of Assets Agreement dated 10th April 1991 with Ferrari and Kennedy.The Industrial Tribunal accepted the contention of the Applicants that there was a transfer of an undertaking from Ferrari to Kennedy and rejected Kennedy's contention that there was simply a transfer of assets. That point is not appealed. The Tribunal held, however, that the claims for unfair dismissal failed for two reasons:-(1) Neither of the Applicants was employed by Ferrari "immediately before" the transfer of the undertaking. That transfer had been effected by the agreement of 10th April 1991.It was not effected by a series of two or more transactions ante-dating the dismissals of 28th March.(2) Neither of the Applicants should be treated as unfairly dismissed by Ferrari on 28th March 1991 before the relevant transfer, because neither the transfer nor a reason connected with it was the reason or principal reason for their dismissal within the meaning of Regulation 8(1), as interpreted and applied to Regulation 5 by the House of Lords in Litster v. Forth Dry Dock and Engineering Co Ltd (in Receivership) [1989] ICR 341 .The question on this appeal is whether the Industrial Tribunal erred in law on those two points.

The 1981 Regulations

The legal significance of the primary facts found by the Industrial Tribunal about the circumstances in which the Applicants were dismissed by Ferrari and the undertaking of Ferrari was transferred to Kennedy depends on the true construction of the relevant provisions of the 1981 Regulations (before they were amended by the Trade Union Reform and Employment Rights Act 1993). The relevant Regulations read as follows -Regulation 3 deals with relevant transfers.
"(1) Subject to the provisions of these Regulations, these Regulations apply to a transfer from one person to another of an undertaking situated immediately before the transfer in the United Kingdom or a part of one which is so situated.
(2) Subject as aforesaid, these Regulations so apply whether the transfer is effected by sale or by some other disposition or by operation of law....(4) It is hereby declared that a transfer of an undertaking or part of one may be effected by a series of two or more transactions between the same parties, but in determining whether or not such a series constitutes a single transfer regard shall be had to the extent to which the undertaking or part was controlled by the transferor and transferee respectively before the last transaction, to the lapse of time between each of the transactions, to the intention of the parties and to all the other circumstances."Regulation 5 deals with the effect of a relevant transfer on contracts of employment.
"(1) 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 person so employed and the transferee.
(2) Without prejudice to paragraph (1) above, on the completion of a relevant transfer -(a) all the transferor's rights, powers, duties and liabilities under or in connection with any such contract, shall be transferred by virtue of this Regulation to the transferee; and(b) anything done before the transfer is completed by or in relation to the transferor in respect of that contract or a person employed in that undertaking or part shall be deemed to have been done by or in relation to the transferee.(3) Any reference in paragraph (1) or (2) above to a person employed in an undertaking or part of one transferred by a relevant transfer is a reference to a person so employed immediately before the transfer, including, where the transfer is effected by a series of two or more transactions, a person so employed immediately before any of those transactions ."Regulation 8 deals with dismissal of an employee because of a relevant transfer.
"(1) Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of Part V of the 1978 Act and Articles 20 to 41 of the 1976 Order (Unfair Dismissal) as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal."
Although not directly relevant to the issues raised on this appeal it should be noted that Regulation 8(2) provides that -
"Where an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after a relevant transfer is the reason or principal reason for dismissing an employee - (a) paragraph (1) above shall not apply to his dismissal; but (b) without prejudice to the application of section 57(3) of the 1978 Act or Article 22(10) of the 1976 Order (test of fair dismissal), the dismissal shall for the purposes of section 57(1)(b) of that Act and Article 22(1)(b) of that Order (substantial reason for dismissal) be regarded as having been for a substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."
No submissions were made by either party on the provisions of Regulation 8(2).The arguments advanced on the appeal concentrated on the construction and application of Regulations 3(4) and 5(3) to the facts of this case. There were, however, some areas of common ground which should be stated before the detailed legal arguments and the facts are considered.(1) The 1981 Regulations were designed to give effect to the Council Directive 77/187/EEC of 14th February 1977. The purpose of the Directive was to provide, in the context of "transfers of undertakings, businesses or parts of businesses to other employers as a result of legal transfers or mergers," ... "for the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded."(2) Although the claims made by the Applicants are based on the Regulations and not on a claim of direct effect of any Article in the Directive, it is the duty of the court to give to the Regulations a construction which accords with the decisions of the European Court of Justice upon the corresponding provisions of the Directive, to which the Regulations were intended by Parliament to give effect. The process of construction may extend to the implication in the Regulations of words necessary to achieve that result. Thus, it was held by the House of Lords in the Litster case (supra) that Regulation 5(3) should be read as if there were inserted after the words "immediately before the transfer" the words "or would have been so employed if he had not been unfairly dismissed in the circumstances described in Regulation 8(1)": See [1989] ICR 341 at 371E-G.There are no Articles in the Directive and there are no decisions of the European Court of Justice which directly deal with the main question in this case namely, in what circumstances is the transfer of an undertaking effected by a series of two or more transactions?We wish to add some preliminary observations relevant to the construction of Regulations 3(4) and 5(3) which cannot be seriously disputed.(1) Those particular regulations have an evident anti-avoidance purpose. They should, where the words allow, be construed in a purposive manner in order to defeat ingenious devices and schemes designed to deprive employees in an undertaking of the protection which it is intended they should have in the context of a transfer.(2) The obvious case at which Regulations 3(4) and 5(3) are aimed is that of an attempt to disguise the fact that there is a transfer of an undertaking within the meaning of the Regulations and the Directive. The parties to the proposed transfer of an undertaking may, with professional advice, arrange for the transfer to be effected in a series of two or more transactions dealing with separate assets, none of which, taken individually, could be regarded as the transfer of an undertaking. A composite plan of sub-division or fragmentation of a transfer may be adopted for no sensible commercial purpose, other than to avoid the consequence of the application of Regulations enacted for the protection of employees. These Regulations direct the Tribunal to treat as a single transfer of an undertaking a transfer which is effected by such a series of transactions. Although these Regulations do not define a transfer, they direct a Tribunal to treat what might in form be a series of separate transactions as, in substance, a single transfer. In determining whether or not there is a single transfer the Tribunal is directed by Regulation 3(4) to look at all the circumstances, including the extent to which the undertaking or part was controlled by the transferor and transferee respectively before the last transaction, to the lapse of time between of the transactions and to the intention of the parties. Those are matters expressly set out in Regulation 3(4) as relevant to the question whether or not such a series of transactions constitutes a single transfer.(3) A similar approach is required in dealing with the related question in Regulation 5(3) whether a person is employed in an undertaking or part of one immediately before the transfer. In such cases the Tribunal must ask itself:-(a) Was the transfer effected by a series of two or more transactions? and, if so,(b) Was the person employed in the undertaking immediately before any of those transactions?In order to decide whether the Industrial Tribunal erred in law in this case it is necessary to summarise the facts found by it and the reasoning which led it to conclude that the Applicants' complaints should be dismissed.

The Facts

The relevant events took place in the period from 6th March 1991 to 10th April 1991 ie, between the appointment of the Administrative Receivers and the entering into the Receivership Sale of Assets Agreement. It was during that period, on 28th March, that Mrs Longden and Mr Paisley were dismissed by Ferrari without prior warning or consultation.The crucial question is whether anything happened during that period which the Industrial Tribunal, on a correct appreciation of the law, should have held to be a series of two or more transactions by which the transfer of the undertaking of Ferrari to Kennedy was effected. If the Industrial Tribunal should have come to such a conclusion, then it follows that it should also have asked itself whether Mrs Longden and Mr Paisley were employed in the undertaking of Ferrari immediately before any of those transactions?The Industrial Tribunal heard evidence from Mrs Longden and from Mr Welham, the managing director of Kennedy. For reasons which we shall explain later, it did not hear any oral evidence from the Administrative Receivers. There were also documents put before the Tribunal arranged in an agreed bundle of 60 pages for use on this appeal. It appears from the Tribunal's decision and the documents placed before the Tribunal that the relevant facts are as follows.Kennedy is a subsidiary of the Shugart Corporation of the USA. That company manufactures computer equipment. Kennedy acts as its sales and service arm in the United Kingdom.On 14th March 1991 Mr Welham contacted the Receivers with a view to investigating a possible purchase of some or all of Ferrari's undertaking or its assets. He visited the premises at Melksham, but not the premises in Southwark. The information he obtained was not enough to enable him to formulate a detailed proposal. After a visit to the United States to report to his superiors Mr Welham again made contact with the Receivers who were anxious to reach some conclusion about Ferrari's affairs. There had been negotiations with other possible purchasers.On 22nd March Kennedy made what was described as a "budgetary offer" in US dollars for the Hermes Cifer division. It does not appear from the Industrial Tribunal's decision or from the documents what is meant by a "budgetary offer" or what was the amount of it. It is, however, clear that no agreement was made for the transfer of the undertaking at that stage.On 26th March the Receivers' solicitors (Cameron Markby Hewitt) faxed to Kennedy's solicitors a letter headed "Subject to Contract" and attached a draft contract relating to the sale of certain assets of Ferrari.On 27th March Mr Welham was telephoned by a representative of the Receivers who informed him that Kennedy's offer had been accepted and that he should go to London that evening to sign the appropriate documentation. Mr Welham refused to do this. He pointed out that he had only made a "budgetary offer" based on assumptions that the papers he had seen were accurate and he declined to sign anything. He did not have sufficient information about Ferrari's business to enable Kennedy to conclude a binding agreement. The reaction of the Receivers' representative was that, as the Receivers were under pressure from the bank, they would "pull the plug" by closing down the whole undertaking, auctioning off the assets and dismissing all the staff.Mr Welham thought that it was crucial that Ferrari should continue to operate while further enquiries and negotiations were being conducted with the Receivers with a view to eventual purchase. Kennedy therefore agreed to pay the Receivers £4,000 to enable Ferrari to keep "ticking over" for another week.Also on 27th March, Mr Welham faxed to the Receivers a copy of a "Family Tree" of Ferrari's management staff with which he had been supplied earlier. On that copy Mr Welham and Mr Greenfield, a representative of the parent company from the USA, ringed the names of various individuals whom they thought it was essential to retain in employment pending further negotiations. The names of Mrs Longden and Mr Paisley were not ringed. On the following day the Receivers gave them notice of termination of their employment. It is not clear from the Tribunal's decision or from the documents put before the Tribunal that the Receivers dismissed on 28th March all those on the Family Tree whose names were not ringed or that there were retained all those whose names were ringed. An attempt was made to clarify the position during the hearing of the appeal. There were obvious difficulties in obtaining clear instructions at this late stage. It does, however, appear from a list in the agreed bundle of documents that the majority of the 49 employees in the Hermes Cifer division were dismissed on 28th March and the rest, with the exception of a Mr Wattam, on 10th April. Most of the latter group were re-engaged by Kennedy with changed job descriptions.The Easter weekend followed during which Kennedy made efforts to speak to various members of Ferrari's staff. Negotiations continued. In particular, it appears from a letter dated 5th April 1991 from Arthur Andersen & Co to Mr Greenfield of the Shugart Corporation, that it was agreed that the Receivers were prepared "in consideration of the payment in the sum of £20,000 to allow you exclusively a period ending at 5 p.m. on Wednesday 10th April 1991 to complete the sale to you of the Cifer/Hermes division on the following conditions". The conditions provided that the £20,000 would be immediately transferred into the client account of the Receivers' solicitors; that the deposit would be non-refundable in the event that a binding contract for the sale of the Cifer/Hermes business substantially in the form of the draft contract previously issued were not completed by 5 p.m. on Wednesday 10th April; that if the sale was completed before that time the sum of £20,000 would be deducted from the purchase price and that Mr Greenfield should confirm that he had received substantially all the information he required in order to complete the proposed acquisition of the Cifer/Hermes division for a total consideration of £172,000 plus VAT. The letter also confirmed that the Receivers had received the sum of £4,000 by way of contribution to payroll costs and it was confirmed that that sum would be applied towards the purchase price if contracts were completed between them.That letter is not referred to in the decision of the Industrial Tribunal, but it was agreed between counsel that that letter was before the Tribunal.The negotiations resulted in the Receivership Sale of Assets Agreement dated 10th April. After completion of the agreement Kennedy removed all the plant and equipment from the Hermes premises in London and Melksham. Stocks of components were taken to the USA and quantities of equipment to Kennedy's own premises at Reading. The Melksham factory was closed down. Some of Ferrari's staff, mainly consisting of those ringed by Kennedy on the Family Tree on 27th March, were re-engaged by Kennedy.

The Transfer Point

Having concluded that there was a transfer of an undertaking, the Industrial Tribunal considered the submission of the Applicants, who were represented at the hearing, that, although the agreement for the sale of Ferrari's undertaking was signed on 10th April, the actual transfer was effected by a series of transactions, the first of which was the payment by Kennedy of the sum of £4,000 on the evening of 27th March. The Tribunal rejected that submission stating that it was not satisfied that the payment of £4,000 by Kennedy was intended to be a down-payment on account of a binding agreement to purchase the undertaking. It accepted the evidence of Mr Welham that the payment was made to induce the Receivers to keep the Hermes/Cifer division going while negotiations were being pursued. The Tribunal thought that it was by no means clear when that money was paid that a binding contract would necessarily follow. The Tribunal commented that it was obvious that a great deal of negotiation and re-negotiation took place between 27th March and 10th April when the agreement was signed in its final form.It is clear from the Tribunal's reasoning on this point and from its acceptance of the arguments advanced on behalf of Kennedy that, in its view, the transfer was effected by the agreement signed on 10th April and that the transfer was not effected by a series of two or more transactions. In those circumstances it followed that, in the view of the Industrial Tribunal, the Applicants were not employed in the undertaking of Ferrari immediately before the transfer of the undertaking.In the view of this Tribunal, there was no error in law on the part of the Industrial Tribunal in its construction of the 1981 Regulations or in its application of them to the facts of that case. Mr Calland, on behalf of the Applicants submitted that, on a correct construction of the Regulations, the Tribunal should have held that the transfer was effected by a series of two or more transactions, the first of which was the sending out of the draft contract of sale on 26th March or the holding payment of £4,000 on 27th March. He submitted that by 27th March negotiations were well developed and that there had occurred at least two transactions by which the transfer of the undertaking was effected. The transfer took place over a period of time. The evidence showed that, during the period from 26th March onwards, control of the undertaking had to some extent passed from Ferrari to Kennedy by virtue of the £4,000 payment. It was intended by the Receivers and by Kennedy that there should be a transfer and only a short period of time elapsed between the transactions starting with the issue of the draft contract of sale on 26th March. In those circumstances the Tribunal should have held, applying the language of Regulations 3(4) and 5(3), that this was a case of a single transfer effected by a series of two or more transactions and that both Mrs Longden and Mr Paisley were employed in the undertaking of Ferrari immediately before the transaction in the form of the issuing of the contract on 26th March or before the transaction in the form of the £4,000 payment on 27th March.This Tribunal is unable to accept that submission as a correct construction of the Regulations. For the purposes of this argument it may be assumed in the Applicants' favour that the matters relied on on 26 and 27th March were a series of two transactions. The crucial question is whether the transfer of the undertaking was " effected by a series of two or more transactions". The Industrial Tribunal was correct in holding that the transfer of Ferrari's undertaking was effected by the agreement of 10th April and that it was not effected by a series of two or more transactions dating from 26th or 27th March. What happened on 26th March and 27th March and other dates before the agreement of 10th April was a succession of events which can be loosely described as causally linked to one another and to the ultimate conclusion of the Receivership Sale of Assets Agreement. It is not, however, sufficient for the purposes of Regulation 5(3) that there exists a series of two or more transactions linked in a chain of events. The language of the Regulations requires that the transfer of the undertaking is " effected" by a series of two or more transactions. The transactions of 26th and 27th March did not have that effect. The transfer was not "effected" by a series of two or more earlier transactions. It was effected by the single agreement of 10th April. This construction is consistent with the decision in Wheeler v. Patel [1987] ICR 631 at 636G that " where there is a contract for sale of a business followed some period later by completion of that contract, there is only one transaction". The transfer took place on completion.The Industrial Tribunal was correct in law in holding that neither Mrs Longden nor Mr Paisley was employed by Ferrari "immediately before" the transfer of Ferrari's undertaking to Kennedy. In brief, the transfer of Ferrari's undertaking to Kennedy was effected by a single transfer on 10th April 1991, not by a series of two or more transactions. Immediately before 10th April neither of the Applicants was in the employment of Ferrari. They had been dismissed on 28th March.

Reason for Dismissal Point

The second point on the appeal can be dealt with more briefly. It is common ground that the Industrial Tribunal, by reference to the provisions of Regulations 8 and 5, as interpreted in the Litster case, correctly asked the question whether the Applicants were dismissed because of the transfer or a reason connected with the transfer. The Tribunal concluded that neither the transfer nor a reason connected with the transfer was the reason or principal reason for the Applicants' dismissal on 28th March.On this point the Tribunal concluded, as a matter of fact, that the Receivers dismissed Ferrari's employees on 28th March because of financial constraints, and of pressure from the bank which had appointed them, and not because they had received any request or instruction from Kennedy. Although Kennedy had identified on 27th March on the marked Family Tree those employees who it was essential to retain, the Tribunal did not accept that that request necessarily carried with it a request that the other employees should be dismissed.On behalf of Mrs Longden and Mr Paisley Mr Calland made a number of criticisms of the way in which the Industrial Tribunal reached its decision on this point.(1) The Tribunal erred in its application of the principle in the Litster case that an employee is entitled to the protection of the Regulations where he would have been employed immediately before the transfer had he not been unfairly dismissed for a reason connected with the transfer.(2) The Tribunal's decision on this point was perverse for a number of reasons. Kennedy had made it plain to the Receivers before dismissal which employees Ferrari wanted to be retained in the undertaking. In the circumstances, this request must have had some bearing on the decision of the Receivers to dismiss Mrs Longden and Mr Paisley, along with others whose names were not ringed on the Family Tree. The Tribunal wrongly approached the matter on the basis that there had to be collusion between the transferor and the transferee. It did not follow from the absence of collusion that the transfer had nothing to do with the dismissal of the employees. Further, the Tribunal's finding that the Receivers dismissed the employees because of financial constraints and pressures is not supported by evidence. The day before the dismissal the Receivers had obtained £4,000 from Kennedy in order to keep the undertaking "ticking over" for a further week while negotiations continued between the Receivers and Kennedy. No evidence was given of pressure from the bank. The Tribunal failed to consider the insignificance of the savings that would be achieved by the dismissals in the context of the overall financial position of the undertaking; it had also failed to take into account the proximity of the dismissals to the completion of the transfer on 10th April. The Tribunal had failed to look at all the objective circumstances in which the dismissals occurred.(3) The Tribunal also erred in law in reaching its decision without hearing evidence from the Receivers. The decision on this point should be reversed or the case should be remitted to the Tribunal for further evidence.The majority of this Tribunal are unable to accept these submissions. The Industrial Tribunal correctly addressed itself to the point for decision as formulated in the Litster case. There was evidence before the Tribunal on which it could reasonably come to the conclusion that financial constraints and pressure from the bank were the reasons for the dismissal of employees on 28th March and that neither the transfer on 10th April nor a reason connected with the transfer was the reason or principal reason for the dismissals.The majority of this Tribunal agree that, if there were no countervailing evidence, the events which occurred between 27th March and 10th April 1991 would strongly indicate that the dismissals on 28th March were for a reason connected with the transfer. Kennedy is, however, able to point to evidence on which the Tribunal could make a finding that the dismissals were not for a reason connected with the transfer. Mr Welham gave evidence that he was unhappy at the dismissals on 28th March and had not wanted any dismissals to occur. It is true that no oral evidence was given by the Receivers themselves and no sworn evidence was given by any employee of the Receivers. It appears, however, from the decision of the Industrial Tribunal and the documents included in the agreed bundle that the representative of the Applicants at the hearing agreed to the Industrial Tribunal looking at documents on that point. The Industrial Tribunal states that its conclusions on this point are derived from those documents. The documents in question include a report by the Official Receiver containing a summary of the statement of affairs of Ferrari at 7th March 1991. It appears from that report that the cash in hand was only £4,671 and that the estimated total deficiency of Ferrari exceeded £16,700,000. According to paragraph 7 of the report the Receivers and managers appointed on 7th March 1991 continued trading only for two weeks. There were before the Industrial Tribunal letters from the Receivers' representative who dealt with the matter, Mr Greg Robertson, while he was a Manager in the London office. At the time when Kennedy's solicitors were attempting to obtain information in January 1992 Mr Robertson had gone to work in Sydney, Australia. Letters were obtained from him in which it was stated that the Receivers had retained the services of all employees at Melksham initially in order to attempt to sell the business as a going concern. The initial response was not encouraging for a going concern sale and the Receivers therefore found it necessary to rationalise costs in order to minimise the Receivers trading loss. He stated that, as part of this strategy, a number of employees were dismissed. He stated in another letter of 22nd January, in response to further inquiries from Kennedy's solicitors, that "The employees were dismissed in order to cut costs and minimise the Receivers trading loss". The decision records that the Industrial Tribunal also heard evidence from Mr Welham that he was told by the Receivers' representative on 27th March that the Receivers were under pressure from the bank to close down the whole undertaking, auction off the assets and dismiss all the staff.In the light of this evidence, it is not correct to submit, as the Applicants do, that the decision of the Tribunal on this point was made without evidence and perversely.We would add that it is, in general, desirable that in cases of this kind the best evidence available is brought by the parties before the Tribunal. It is a matter of concern that the representative of the Applicants did not apparently seek to obtain documents from the Receivers' files relevant to this issue or ask for any adjournment to do so, even though it appeared from Mr Robertson's letter of 22nd January that the information relevant to the dismissal "should be contained in the files at my London office". Further, the representative of the Applicants agreed to the letters from Mr Robertson being put before the Tribunal without, it appears, seeking an adjournment to obtain further documents or oral evidence. Although these matters give cause for concern about the manner in which the Applicants' case was conducted before the Industrial Tribunal, they are not, in the view of the majority, grounds for finding that the Industrial Tribunal reached a decision which was not, on the evidence before it, a permissible option.The view of the minority is that it is not possible to support the decision of the Tribunal on this point. The view of the minority is that the Industrial Tribunal erred in law in its application of the principle of Litster case for three reasons:(1) The Industrial Tribunal wrongly took into account an irrelevant consideration, namely Mr Welham's feelings of unhappiness at the dismissals which took place. In most cases of redundancy the employer is not happy about them and has not wanted them to occur. But the correct test is objective, not subjective.(2) The Industrial Tribunal erroneously conflated the context of the dismissals with the selection for dismissal. There was evidence that there were serious financial constraints, that the Receivers had to cut costs and that they had to make some staff redundant. In the view of the minority the Industrial Tribunal should have considered whether the dismissals of Mrs Longden and Mr Paisley, as opposed to other staff whose names were ringed on the "Family Tree", were for a reason connected with the transfer. The Industrial Tribunal should have made a finding of fact whether all those whose names were ringed on the "Family Tree" were retained and whether all those whose names were not ringed were dismissed. It erred in not doing so.(3) There is a public policy point. The purpose of the Regulations is to give protection to employees where there is a transfer. If receivers could successfully plead financial constraints, this could open up a potentially large loophole. The majority try to block this potential loophole by calling for "the best evidence" from Receivers. But this of itself does not sit easily with the public policy behind the formation of Industrial Tribunals. At that level there is no legal aid and the aim is to provide a cheap and informal remedy. However, if the view of the minorty is to prevail no such potential loophole would arise.For the reasons given above by this Tribunal, or the majority of it, the appeal is dismissed on both points.