Baymark Ltd v Latta & Ors [1994] UKEAT 799_93_1810

EAT
Baymark Ltd v Latta & Ors
[1994] UKEAT 799_93_1810 · 1994-10-18
MR JUSTICE MUMMERY (PRESIDENT) : This is an Appeal against the decision of the Industrial Tribunal held at Leicester on 9 and 22 June 1993.For reasons notified on 8 September 1993, the unanimous decision of the Tribunal was that it had jurisdiction to hear applications made by former employees of a company called Exporama International Limited under the Wages Act [1986] . The Tribunal also decided that there had been a transfer of the undertaking of Exporama International Limited to a company called Baymark Limited on 17 June 1992 and that all of the individual applicants who had been employees of Exporama, were dismissed on 18 June 1992.The Tribunal held that Baymark was liable by reason of the Transfer of Undertakings (Protection of Employment) Regulations [1981] . Exporama International Limited and the third Respondent the Secretary of State for Employment, were dismissed from the case. The Tribunal set out the amounts which it ordered Baymark to pay to the individual named applicants, specifying in each case the sum of money which was to be paid as a redundancy payment and the sum of money which was to be paid under the Wages Act [1986] . Baymark was dissatisfied with the decision and appealed by a Notice of Appeal dated 4 October 1993.On the hearing of the Appeal, Mr Ray represented Baymark and Mr Dixon represented some of the applicants who are Respondents to the Appeal. No-one has represented Exporama. Mr Brennan has appeared for the Secretary of State, who was dismissed from the proceedings by the Industrial Tribunal.This Tribunal only has jurisdiction to determine an appeal on a point of law. The burden was therefore on Mr Ray for Baymark to satisfy us that the decision of the Industrial Tribunal was flawed by legal error in the form of the misinterpretation, or misapplication of the relevant law to the facts of the case.The Tribunal made clear findings of fact about the relevant events. Those findings of fact are not appealable.The facts found by the Tribunal were that Exporama International Limited, a company run by Mr Bianchi, found itself in financial difficulties in late May and early June 1992. Mr Bianchi was himself a major creditor of Exporama. Mr Bianchi was advised by an accountant to contact the well-known firm of Messrs Cork Gully, who, among other things, are experts in liquidation. Mr Bianchi made attempts, as a liquidation was in prospect, to sell the business of Exporama as a going concern. He made contact on June 13 1992 with Mr Bayliss, who owns Baymark. There had been previous dealings between Exporama and Baymark to whom Exporama was an important supplier.On 14 June an oral agreement was made by which the undertaking of Exporama would be purchased by Baymark for £25,000.00. Some higher bids were made in the region of £50,000.00 from another quarter. There was another meeting on 17 June when the deal orally agreed between Mr Bianchi and Mr Bayliss was renegotiated. An agreement was signed in a standard form for the sale of the business, faxed to Mr Bianchi by his solicitors.The Tribunal found as a fact in paragraph 11 of the decision that the goodwill, stocks and other assets, including computer-based computer tapes, were all transferred under the written agreement from Exporama to Baymark. The Tribunal stated that no employees were transferred; it is important to note that that statement was made in the context of the written agreement which was signed. The Tribunal then asked "Did Mr Bayliss intend Baymark to carry on the business of Exporama?" Clearly he did, because he made a point in the agreement of purchasing the international licences; he paid good money for them. He would not have done that merely to hang them up on his wall. He was doing that because he wanted to conduct a business with them. The Tribunal, not surprisingly, decided that there was a transfer of the undertaking of Exporama to Baymark on 17 June within the meaning of Transfer of Undertakings (Protection of Employment) Regulations [1981] .The same day, Mr Bayliss started moving stuff to his factory premises in Derbyshire, assisted by Exporama employees. On the next day, 18 June, the employees were handed forms which were signed as being the last day of their work. The Tribunal found that the employees were dismissed on that day. The Tribunal dealt with this aspect of the case in paragraph 10 of the decision where they said, having referred to the activities of the employees on the previous day in assisting Mr Bayliss in loading up items into the van, the next day the employees were handed forms which they all signed dating it that day, indicating their last day of work was the 18th. They were dismissed during that day, either at about lunchtime, or at the latest about 5.00 in the evening. That finding of fact was made in respect of all the applicants, although a number of factual disputes appeared from the Originating Applications and the Notices of Appearance in relation to employees, such as Mr Peach. The Tribunal, in its findings of fact on the evidence, drew no distinction between any of the employees; they were all regarded as dismissed on the 18 June.On that aspect of the case, we have been asked by Mr Ray for Baymark to take note of a letter written by Cork Gully who came to act in the liquidation of Exporama; that letter is dated 20 April 1993, was written by Cork Gully to the Department of Employment Redundancy Payment Office and stated:
"... that the employees were dismissed on 18 June 1992 but they were advised of the termination of their employment by the management of the company not by me. The reason I believe this to be the date of dismissal is because that this is the date I issued the employee's with IP forms, at the request of Mr A R Bianchi and, it is also the date that the employees are claiming for arrears of pay to..."
The letter stated that the reasons for dismissals could not be confirmed; that would have to be clarified by Mr Bianchi. I mention that, because one point taken by Mr Ray was that these employees did not become employees of Baymark and Baymark cannot be under any liability in respect of their dismissal. The dismissal was effected, Mr Ray says, by Cork Gully acting on the instructions of Mr Bianchi who was the controller of Exporama's affairs.That brings us to the issues before the Tribunal and whether there has been any error of law in the way that they have been decided. Mr Ray has pointed out that in the Originating Applications, which are in common form in the relief sought, each applicant sought salary in lieu of notice, redundancy payments, unpaid wages and accrued holiday pay.The Tribunal had to deal with four categories of payment; salary in lieu of notice, redundancy payment, accrued holiday pay and unpaid salary. The first point made by Mr Ray was that the Tribunal had made an error of law in wrongly proceeding to deal with the claims on which it made orders against Baymark under the Wages Act [1986] . They do not refer in the decision to the provisions of the Employment Protection (Consolidation) Act [1978] . There are numerous references throughout the decision, which Mr Ray has taken through us in detail, to the Wages Act . He points out quite rightly that there is no jurisdiction under the Wages Act to make orders for redundancy payments and, therefore, he says the Tribunal was legally mistaken in thinking that it had jurisdiction to deal with all the claims under the Wages Act . This point is fallaceous because it is clear from reading the decision as a whole that the Tribunal was fully aware of the difference in jurisdiction between redundancy payments and Wages Act claims. The Tribunal dealt with redundancy payments in its decision relating to transfers of undertakings. The Tribunal found as a fact that there was a transfer of an undertaking. Mr Ray did not dispute that and could not dispute that on the hearing of this Appeal. What he did try to dispute was whether the effect of the transfer of an undertaking was to transfer to Baymark the liability to make redundancy payments and other payments. He took the point that the written agreement had not referred to the transfer of employees. He concentrated on the fact that no dismissal was made by Baymark. This part of Mr Ray's argument is also misconceived. There was no error of law on the part of the Tribunal in regarding the liability of the employer for dismissal as transferred to Baymark. That is a question of law which follows from the application of paragraph 5 of the Transfer of Undertakings (Protection of Employment) Regulations [1981] to the finding that there was a transfer of an undertaking. The position was that, on the making of the transfer on 17 June, these applicants became employees of Baymark and Baymark became liable for all the liabilities of the employer, including redundancy payments.The purpose of Mr Ray's argument was to show that there was no transfer of that liability, that that remained the liability of Exporama, that Exporama was insolvent and that, therefore, the liability to make redundancy payments fell upon the Secretary of State. The liability to make further payments in relation to arrears of pay, holiday pay and so on, also fell upon the Secretary of State under Section 122 of the 1978 Act. The liability for redundancy payments was covered under the earlier provisions of Section 106 and 108. All these arguments are misconceived, because there was a transfer of an undertaking. The position was that, although Exporama was insolvent, it was not liable in respect of the dismissal, because it was no longer the employer at the date of dismissal. Baymark was the employer at the date of dismissal. Baymark was not at the relevant time and is not, so far as we are aware, insolvent. Therefore none of the provisions of the 1978 Act, which are dependant upon the insolvency of the employer, apply to the case.Mr Ray made a number of other points; as regards the Wages Act , it is clearly right that the Tribunal made the awards it did of accrued holiday pay under the Wages Act . They were aware that they were doing this as payment separate from redundancy payments; that is clear from a number of passages in the decision. We rely particularly on the statement on page 2 of the decision of the names of the employees and the amounts which they are to be paid separately broken down into redundancy payments and Wages Act payments. The Tribunal was right in stating that, as regards salary in lieu of notice, it could not deal with those either under the Wages Act or under any other legislation. Those were matters for which, if the individuals wish to take action, a County Court would be the appropriate forum.Mr Ray made some more detailed criticisms of the decision; we can deal with those very briefly. There were two of them. The first was that the Tribunal had acted an error of law because it had failed to follow the terms of an earlier Interlocutory Order made by the chairman on 14 April 1993. That Order required the cases to be listed for hearing at the same day, so that all the issues could be dealt with. A Witness Order was made for the attendance of Mrs Baddily from Cork Gully. An Order was made listing all the matters for hearing on 9 June at Pennine House, Leicester at 10.00am.The only respect in which Mr Ray can contend that the Tribunal did not follow the procedure, which was explained by the chairman at that hearing, was that evidence was not given by all of the individual applicants in relation to their claims. What happened was that in response to the Witness Order made on the application of Baymark, the Cork Gully employee produced a schedule, showing the various sums broken down into headings for the various employees for wages, accrued holiday pay, payment in lieu and redundancy payments. The question whether that record should be accepted as evidence or not, without oral evidence and cross-questioning of the individual applicants, was dealt with in paragraph 13 of the decision where the Tribunal said:
"... 13 We then go the facts of the matter of what is owing. We are told by Mr Dixon, who appears for most of the applicants, that the figures that he has prepared are figures that have been taken from Messrs Cork Gully's record of wages of the Exporama employees. Mr Bayliss through his representative [that was Mr Ray at the Industrial Tribunal] wanted evidence and have the evidence in writing to be able to cross-question on the actual amounts paid or not. Well those figures we are told by Mr Bayliss's own witness, an accountant from Cork Gully are based on their records. Copies of which are made available for many months. We proceeded on the basis that the documents were accurate..."
In our view, there was no error of law in the Tribunal deciding to proceed to find the amounts owing on the basis of the evidence produced in the Cork Gully schedule. The Tribunal explained the reason why they proceeded on that evidence and did not think it necessary to accede to Mr Ray's application to have individual evidence from the applicants, so that they could be cross-examined. The main point made by the Tribunal was that the document containing the figures had been available for many months. The implication in that is that there had been ample opportunity to Baymark to query any of figures. In our view, the Tribunal was entitled to make the awards on the basis of those figures.The other point made by Mr Ray was that there was a mis-direction in law by the Tribunal in only considering the liability of Baymark to make these payments. He has referred us to a decision of the Employment Appeal Tribunal in March of this year in the case of Allan & Others v. Stirling District Council [1994] ICR, pp 434. That was a decision that could not have been referred to the Industrial Tribunal when it dealt with these cases, because it had not been decided. In that case, in the context of a pre-transfer dismissal, it was held that on the true construction of Regulation 5(2) of the Transfer of Undertakings (Protection of Employment) Regulations [1981] :
"... It would not be right to regard regulation 5(2) as transferring to the transferee responsibility for a dismissal carried out entirely by the transferor and taking effect before, or simultaneously with, the transfer, to the exclusion of any liability on the transferor .."
There might be circumstances in which the employee could claim for the dismissal, not only against the transferee, but also against the transferor. That case does not assist Mr Ray. In this case, the dismissals took place after the transfer. Nothing decided in the case of Allan v. Stirling District Council exculpates the transferee from liability; it merely identifies certain circumstances in which, in addition to the transferee, an employee may be able to make a claim against the transferor.There was, therefore, no error of law on the part of the Tribunal in its failure to consider whether Exporama was under any liability in respect of these dismissals.Mr Ray has made it clear to us in his submissions that he does not appeal against the decision in paragraph 1 of the Tribunal's Full Reasons that the proceedings could be brought, although the three month's time limit had expired. The Tribunal came to the conclusion that it was not in the circumstances reasonably practicable for the applicants to bring the application within the three months' limit. The fact was that they had been assured that the matter was being processed in the normal way; they had been lulled into a false sense of security and it was only after the expiration of the three months' limit that the Secretary of State notified the refusal to make the payment on the basis that there had been a transfer of undertaking. There is no appeal against that; it would be difficult to conceive how there could be an appeal on a point of law, since questions of reasonable practicability are questions of fact.For all those reasons, we have reached the conclusion that Mr Ray has not demonstrated to us any error of law on the part of the Tribunal. It was a simple case. The Tribunal found there was a transfer of an undertaking; having found that, all the legal consequences followed from the application of the Transfer of Undertakings Regulations . The most elementary of those consequences was that the liabilities of an employer passed to Baymark. Baymark would be liable, not only to make the redundancy payments, but also to meet any other liabilities as an employer that could be entertained by the Industrial Tribunal, including accrued holiday pay and unpaid wages under the Wages Act [1986] . The Tribunal's decision was correct and the Appeal will therefore be dismissed.After the judgment dismissing the Appeal, we heard an application made by Mr Dixon on behalf of the employees who are Respondents to this Appeal. He made an application under Rule 34 of the Employment Appeal Tribunal Rules [1993] which provides:
"... (1) Where it appears to the Appeal Tribunal that any proceedings were unnecessary, improper, or vexatious or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings the Tribunal may order the party at fault to pay any other party the whole or such part as it thinks fit of the costs or expenses incurred by that other party in connection with the proceedings..."
Mr Dixon, in support of his application, pointed to the fact that this Appeal had been unsuccessful on all grounds, that his clients had only been awarded modest amounts and, that they had not received this money which had been outstanding for two years. Mr Ray for Baymark opposed it, submitting that there were confusing parts of the decision which meant that there were reasonable grounds for bringing this case to the Appeal Tribunal, even though it was ultimately unsuccessful.We have considered the arguments in the light of the reasons given for our decision. In our view, we should make an order for costs. There was unreasonable conduct in bringing this Appeal, not just because it has failed. In our view, it never stood any prospect of succeeding. Once Mr Ray had conceded for Baymark that there had been a transfer of an undertaking on 17 June 1992, all the consequences against which he was arguing followed as a matter of law. We have already made it clear that there was no mistake by the Tribunal in the interpretation of the legislation under which it was proceeding to hear the case. When read as a whole, the Tribunal was clearly correct on all material matters. There were never any reasonable grounds for challenging their decision.In those circumstances, it was unreasonable to bring the Appeal; we exercise our discretion to order Baymark to pay the costs of the Respondent employees. We direct that those costs be assessed by the taxing officer.We have not got figures in front of us, so it will have to go to the taxing officer. But that does not preclude the parties from reaching an agreement about what those costs would be, rather than incur further costs by arguing about what the costs are. It is a matter that may be agreed, but, in default of agreement, the taxing officer will be the person who assesses the amount.