Secretary Of State For Employment v Davey [1994] UKEAT 155_94_1810

EAT
Secretary Of State For Employment v Davey
[1994] UKEAT 155_94_1810 · 1994-10-18

JUDGE HULL QC :

In this case Miss Davey applied to an Industrial Tribunal, her employers appearing to be in the everyday sense of the term "insolvent"; that is to say they were not paying their debts as they fell due and in particular they owed money to Miss Davey and she therefore asserted her rights under the Employment Protection (Consolidation) Act 1978. First of all she wanted a redundancy payment and there the condition precedent to that under section 106(1) is:
"Where an employee claims that his employer is liable to pay to him an employer's payment, and either - (a) that the employee has taken all reasonable steps (other than legal proceedings) to recover the payment from the employer and that the employer has refused or failed to pay it, or has paid part of it and has refused or failed to pay the balance, or (b) that the employer is insolvent and that the whole or part of the payment remains unpaid,
the employee may apply to the Secretary of State for a payment under this section."It appears that Miss Davey, and certainly this was the view of the Industrial Tribunal, complied with that because, leaving aside insolvency for a moment, it did appear that she had tried to get her redundancy pay but failed.However, under sections 122 and 127 there is power to apply for further payments only on the basis of the employer being insolvent and under section 127(1):
"For the purposes of sections 122-126, an employer shall be taken to be insolvent if, but only if, in England and Wales, -
[(a) he has been adjudged bankrupt [ that does not apply]... (b) he has died and his estate falls to be administered... [that does not apply] (c) where the employer is a company, a winding up order [or an administration order] is made [neither of those applies so far as we know] or a resolution for voluntary winding up is passed with respect to it, or a receiver or manager of its undertaking is duly appointed, or possession is taken, by or on behalf of the holders of any debentures secured by a floating charge, of any property of the company comprised in or subject to the charge ..."So far as the Industrial Tribunal to whom Miss Davey applied for these further payments was concerned the matter was far from clear, or appeared to be far from clear. The Secretary of State did not trouble to attend the Tribunal though of course he had notice of the hearing; he wrote them a letter in which he said he did not admit any material matters. There was before the Tribunal a letter from the Company signed by the managing director, saying:
"Due to the Company's inability to meet its financial obligations Receivers have been appointed over the property."
No doubt a skilled chancery lawyer or solicitor experienced in this field would say to himself - "Aha, I wonder whether this means what it appears to mean literally and that this is a receiver appointed merely over the property of the Company or some particular part or whether it is indeed a receiver appointed under a debenture over the undertaking." One must remember that it is of course written by a layman, presumably. A very acute Tribunal might say that; or they might say "this is a company in receivership", a convenient portmanteau, short expression.They also had from a well known firm of accountants, who were in fact the receivers, a copy of a letter dated 16 April, 1993, to Miss Davey, talking about applying to the Department of Employment for the "recovery payment". That was signed by Mr Hill, Joint Receiver of the "above property". That would, certainly, lead an experienced lawyer in this field to say - "Why is he signing himself like that, surely he should be the Receiver under a debenture or a Receiver of the Company or something of that sort?" That might cause some suspicion. However that may be the Tribunal, not receiving any further assistance from the Secretary of State or apparently from Miss Davey, with no legal submissions, found that she was entitled on the basis that the Company was insolvent. Well now it appears that that very likely was a mistake. We do not know whether the Company has since gone into liquidation. The Secretary of State certainly does not tell us so and he probably would know if it were. It does not appear that any Receiver has been appointed over the undertaking of the Company under a debenture or anything of that sort and the actual mortgage deed, or legal charge as it is, under which the Receivers are appointed is produced and it is plainly an ordinary mortgage deed which takes effect under the general law and in particular the Law of Property Act in which the particular part of the property of the Company, that is to say the garage itself, its real estate, is pledged and it is what appears to me to be a fairly usual type of transaction in which there is a tie in favour of the oil company and the oil company will supply petrol to at least a set amount and a loan on what appear to be very favourable terms is advanced and there is the usual power for the appointment of a receiver (imported by the statute of course) and so in fact the conditions of section 127 are not on the face of it observed. It was not a floating change at all. This evidence was not before the Industrial Tribunal; it could have been put in front of the Industrial Tribunal, it was not. A good deal of evidence about this could no doubt have been put in front of the Industrial Tribunal.It appears to us very doubtful whether it could be said that any error of law is shown by the decision itself but the fact is that it certainly appears now that the decision was wrong in the light of this deed which we are now shown. It seems to us quite inappropriate to proceed with an appeal on this basis. What has happened is that in the absence of the Secretary of State; in the absence too apparently of Miss Davey, the Tribunal has proceeded on apparently the wrong basis. Evidence was not before them which could have been before them. There has been what has often been called a procedural mishap; at least the Tribunal may take that view.We think the correct thing to do, not having finally concluded that this appeal discloses no point of law, but being inclined to that view, being certainly far from satisfied that there is any error of law disclosed by the Tribunal's findings, we think the right thing to do is to ask the Secretary of State to return to the Tribunal admitting he is very much out of time to ask for a review but asking them to consider these matters, of course telling them what we have said. We are reinforced in that view by what Mr Jay has told us, which is that the Secretary of State usually does take that course if the Tribunal produces an unfavourable result where he has not played a full part and something appears which shows that (in the view of the Secretary of State) they are quite wrong: he goes back to the Tribunal, which is the logical and proper thing to do, it seems to us. So we are simply going to make no Order today. We are simply going to adjourn this application to enable the Secretary of State to go to the Tribunal and lay what has been laid before us and any other available material before them. Of course it may very well be that the Tribunal will take the view, as indeed we are minded to do, that this is a very large storm in a rather small teacup and the amounts involved are very slight, there appears to be very little merit in the layman's sense in what is being said although a great deal of legal merit; but nonetheless it is up to the Industrial Tribunal. We would not presume to tell them how to exercise their discretion to enlarge time and to review their decision in the light of the new information which has come to light, so we simply adjourn this appeal and we want to thank Mr Jay for his very frank statement of the position as it now is.