Sherifali (t/a Westgate Restaurant & Takeaway) v Tunay [1994] UKEAT 669_93_0905

EAT

Sherifali (t/a Westgate Restaurant & Takeaway) v Tunay

[1994] UKEAT 669_93_0905 · 1994-05-09

MR JUSTICE MORISON: By an Industrial Tribunal decision entered in the Register on July 7 1993, Mr Tunay was found to have been unfairly dismissed by his employer. The principle issue before the Tribunal was whether the employee was dismissed as he alleged, or simply walked out and refused to work with a new manager.

The events relate to a kebab restaurant owned by the employer, at which the employee was employed as kebab chef. During the hearing it emerged that there was some kind of tax fiddle being perpetrated and the IT had to consider whether the contract of employment was illegal so as to deprive them of jurisdiction to consider the claim further. They dealt with the matter in paragraphs 17 and 18 of their decision:

"If the applicant's contentions are correct then it does follow from the documents that he was being paid more than the respondent was declaring to the Inland Revenue and the DSS. The applicant told us in evidence that after some time he became concerned as to whether or not the respondent was paying the appropriate tax and National Insurance Contributions on his wages. He says that the custom and practice in the industry (which was not challenged) was that employees took their wages nett, and that it was up to the employers to pay under Schedule E the appropriate tax and NIC. Nobody can quarrel with that. However, the applicant became concerned about his NI contribution record and wrote to the DSS in Newcastle upon Tyne, and was referred to the local DSS office at Margate. Although he lost a letter in response, it seems that he was not satisfied that his NI contributions were being paid over by his employer. He told us that he simply did not know if he had paid his tax or not.

The picture we get of the applicant is that he was genuinely concerned about whether he was getting the benefit of his tax and NIC paid by the respondent. This is not a case in our unanimous view where the parties have colluded to defraud the Inland Revenue. The applicant is continuing still to take the matter up with the Inland Revenue after conclusion of this case. We find therefore that the applicant was not a party to or knew of the employer's illegality to the extent that he willingly took part in a fraud or an illegal mode of performance by the respondent of his contract of employment. He harboured a suspicion, he made enquiries which were not satisfactorily answered, and he continued and still continues to make enquiries. He was not knowingly a party to a deception on the revenue and we think that in these circumstances of his involvement, state of knowledge and the enquiries that he made, it would be unjust to deprive him of the relief which this tribunal can award. We have been guided by the dicta in Newland - v - Simons and Willow (Hairdressers) Ltd

[1981] IRLR 359

Having found in favour of the employee, the Industrial Tribunal awarded him £2,221.32. By Notice of Appeal dated August 16 1993, the employer seeks to challenge that decision solely on the grounds of the illegality point. This Employment Appeal Tribunal will only accept appeals if they demonstrate an arguable point of law. The question on this preliminary hearing is, therefore, whether having regard to the facts found by the Industrial Tribunal there is any arguable point of law.

The Industrial Tribunal specifically found as a fact that the employees took their wages nett, and that it was up to the employers to pay under Schedule E the appropriate tax and NIC. The applicant became concerned with his National Insurance contribution record, wrote to the Department of Social Security, was referred to the local office in Margate, and he was left, as a result of the way it was dealt with, in a position in which he simply did not know if this element of his liabilities were being paid by the employer or not. He was genuinely concerned, so the Tribunal found, as to whether he was getting the benefit of his tax and National Insurance contribution. This is not, as they found, a case where the parties had colluded to defraud the Inland Revenue. They found that the employee was not a party to or knew of the employers' illegality to the extent that he willingly took part in a fraud or an illegal mode of performance by the respondent of his contract of employment. He harboured a suspicion, he made enquiries which were not satisfactorily answered, and he was not knowingly a party to a deception on the Revenue, and they concluded thus:

" .... we think that in these circumstances of his involvement, state of knowledge and the enquiries that he made, it would be unjust to deprive him of the relief which this tribunal can award."

and they have referred themselves specifically to the case of Newland v Simons and Willow (Hairdressers) Ltd

[1981] IRLR 359

It seems to us that there is no arguable point in this case. This is not a case on the Industrial Tribunal's findings of a fiddle on the authorities perpetrated by the employer and connived at knowingly by the employee. On the contrary, the Industrial Tribunal have, as I have already indicated, found that the normal procedure was for the employer to take responsibility. It was the employee who suspected that it was not being done and he raised the matter with the relevant authority. He was left in a state of mind in which he simply did not know whether deductions were being made or not.

The Industrial Tribunal held that the case fell squarely within the principle enunciated by the Employment Appeal Tribunal in Newland . That was in our judgement a finding they were entitled to make on the evidence and according that there is no arguable point of law. In any event, it seems to us quite clear, that the Industrial Tribunal would also have been entitled to say that the ex turpi causa defence could not succeed on the facts of this case. Where as here, the employers' conduct in participating in an illegal contract is so reprehensible by comparison with that of the employee then it would be wrong to allow the employer to rely on it. For that proposition see Harvey Volume 1 paragraph 80-90, where they specifically refer to the dictum of Lord Justice Beldam in, I think, the Hewcastle case.

Accordingly, having considered all the papers and having listened to the argument of Counsel, which has been briefly and succinctly put, we are satisfied that there is no arguable point of law at all. We do not agree that the Tribunal failed to ask themselves the correct question. They directed themselves accurately as to what the law was and we do not consider that it is remotely arguable that the conclusion which they arrived at could be described as perverse. Accordingly, in our view this appeal must be dismissed and we dismiss it.

We think that this is a case in which we should exercise our jurisdiction under Rule 34(1) of our Employment Appeal Tribunal Rules 1993 because we do take the view that these proceedings were manifestingly hopeless and it was unreasonable for them to have been pursued. That said, so far as I am concerned, I incline to agree with Counsel that it does not follow in every case where a preliminary hearing has weeded out a case that costs will inevitably follow the event. Nor do I take the view that because it was just within the professional power of the lawyers to sign the documents that itself is a reason why costs should not be awarded.

Therefore, exercising our discretion solely by reference to the facts of this case we are inclined to and do, make an order for costs in favour of Mr Tunay and we should say that we also order that there should be legal aid taxation of his costs and we direct that the costs of Mr Tunay shall be assessed by the Taxing Officer under Rule 34(2).