Martin Retail Group Plc v Dormer [1995] UKEAT 316_92_2911

EAT
Martin Retail Group Plc v Dormer
[1995] UKEAT 316_92_2911 · 1995-11-29
MR JUSTICE KEENE : In this case the Appellant appeals against a decision of an Industrial Tribunal reached by a majority that the Respondent was an employee of the Appellant. The Chairman was in the dissenting minority.The essential background facts of the case are that the Appellant is the owner of a large number of retail outlets in this country. The Respondent became the manageress of a shop belonging to the Appellant on 13th February 1986, but at that time as an employee. In early 1989 she wished to move from her then shop at Inverness to a shop in Poole. At that stage it was made clear to her that if she did so, she would no longer be an employee but would become what was described at self-employed. She accepted that that would be the position, and the Industrial Tribunal recorded as fact that she believed when she signed the agreement, which is the subject matter of the dispute, that that was what was intended by both parties. From 16th July 1990 she was located at the shop at Poole under a written contract signed on 30th May 1990.The decision of the Industrial Tribunal turned entirely on the proper interpretation of that contract. That is clearly a matter of law, and therefore whether the interpretation arrived at by the majority of the Tribunal was correct or not, is a matter which falls fully within the remit of this Appeal Tribunal.This appeal was originally listed for hearing along with an appeal in the case of Duke v Martin Retail Group Reference EAT/647/92 on 16th December 1993. That made very good sense because both appeals were concerned with a contract in identical terms save for the identity of the individual contractors, the location of the shops in question and the dates on which the two contracts were entered into.The Appeal Tribunal observed that from the papers there would seem to be no distinguishing features between the two cases. However, the present appellant sought and obtained an adjournment of this appeal on 16th December 1993. Tucker J, giving the judgment of the Employment Appeal Tribunal granting the adjournment, said this:
" As we have already said at present we can see no distinguishing features between these two appeal. We shall hear argument in the Duke appeal now. It may be that that argument will extend over two days, we do not know, but we shall deliver our decision in the Duke appeal as soon as possible thereafter. We shall certainly not wait upon the outcome of the Martin Retails Group plc v. Mrs I Dormer appeal and we would expect, after delivering our decision in the Duke appeal, that the parties to the other appeal will take stock of the situation. If, subsequently, we find that another appeal is mounted on what we regard as very similar facts we would have to consider the position as to costs. We say no more about that, but it does seem to us that once the Duke appeal has been resolved then the parties in the other appeal ought to be able to reach agreement."
In the case of Duke the Employment Appeal Tribunal held that the Appellant was not an employee. It did so after a thorough consideration of the terms of the contract. We are not bound as such by that decision, but we have had regard to it since it would be regrettable if the situation arose where this Appeal Tribunal was giving conflicting decisions on what are to all intents and purposes the same facts.Since the decision in the case of Duke , attempts have been made to discover whether the Respondent or, as was relevant until very recently, the trustee in bankruptcy of Mrs Dormer, wished to resist the appeal and to proceed with the claim of unfair dismissal at the Industrial Tribunal. On 21st November 1995, solicitors acting for trustee in bankruptcy wrote to this Appeal Tribunal to say that they had been informed by the trustee today that he had been released from his position as trustee, and that therefore they had no locus standi to represent Mrs Dormer. Mrs Dormer herself does not appear today despite the fact that she has been written to by the Appeal Tribunal and attempts have also been made to contact her by telephone. We have to deal with this matter therefore in her absence.The decision in the case of Duke does enable us to be somewhat briefer than would otherwise have been necessary. The contract in this case contains in its first clause the following provision:
"1.The company hereby grants to the Contractor full right and licence as an independent contractor by herself/himself or her/his employees to operate and manage the Company's shop (hereinafter called `the Shop') situate at
3-4 Arndale Centre,

Poole, Dorset, BH15 1SP

such right and licence to commence on the 16th day of July 1990 ..."

Despite that provision whereby the contractor was identified as an independent contractor, the contract does set out a series of extremely tight controls over the operation of the shop. The Respondent is only to sell goods as supplied by the Appellant, and only at prices recommended or laid down by the Appellant.

(e) By clause 5 of the contract:

"5.All stock supplied to the Shop by the Company shall be and remain the property of the Company until sold and the Contractor shall have authority to sell the same on behalf of the Company but shall not at any time have any title therein."
The Respondent is to account for and pay over to the company or pay into the credit of the company's banking account as shall from time to time be nominated by the company whenever called upon so to do, all cash received in respect of the sale of goods or services provided on or from the shop or otherwise received or held on behalf of the company without any deduction unless authorised so to do by the company.

(q) By Schedule 1 again, paragraph (iii)(s):

"(s)The Contractor shall use and operate in accordance with Company rules and procedures such equipment as shall be supplied from time to time by the Company and shall not use other equipment except by express permission of the Company. Equipment supplied by the Company shall at all times remain the property of the Company."
There are also provisions requiring the Contractor to require his or her employees to wear overalls or other clothing or insignia which may be supplied from time to time by the company and preventing the use of other overalls or clothing or insignia unless the company, that is to say the Appellant, expressly permits it.These and other extensive controls over the running of the shop do substantially curtail the "full unfettered discretion in the running and the conduct of the business" which is provided for by Clause 6 of this agreement. However, there are also provisions which point away from the Respondent being an employee. There is no provision for wages or salary as such; she is to be paid on a commission basis on the turnover of the shop on top of a fixed amount of £4,755.00 per annum described as a "fixed commission": see Schedule 2 paragraph E. Therefore, the amount which she would ultimately receive would depend upon the shop's turnover and therefore in effect on her performance.The Respondent is not required to work between any set times or indeed to work any number of hours per week at all. Although there is a clause preventing the assignment or sub-contracting of the contract, as was pointed out in the Duke decision nothing prevents the Respondent employing someone to whom the duties of a manager may be delegated. Indeed the Respondent is expressly given the power as well as the duty to employ at her expense such persons as she thinks fit and on such terms as she thinks fit and be responsible for their wages, national insurance, holiday pay and similar matters. See Schedule 1 paragraph (iii)(a).The approach to be adopted in such cases to determining whether the contract creates the relationship of employer and employee is, in our view, correctly set out in the Duke decision. This Appeal Tribunal there cited Market Investigations Ltd v. Ministry of Social Security [1968] 2QB 173 , Lee Ting Sang v. Chung Chi-Keung and Another [1990] ICR 409 , and Hall v. Lorimer [1992] ICR 739 (upheld by the Court of Appeal in a decision which was then unreported, but which is now reported at [1994] ICR 218 ). In that last decision, the Court of Appeal approved a statement by Mummery J that in such cases it is necessary to stand back from the detail in order to make a considered appreciation of the whole picture. In so far as certain provisions of the contract may have a particular importance, the Appeal Tribunal in Duke made reference to the power to delegate performance of the running of the shop, citing the Privy Counsel decision in Australian Mutual Provident Society v. J Chaplin 18 A L R 385 where Lord Fraser of Tullybelton said at page 391:
"In the present case there appears to be nothing in the written agreement to prevent the Respondent from delegating the whole performance of his work to one or more sub-agents. In the opinion of their Lordships this power of unlimited delegation is almost conclusive against the contract of service."
We for our part find it difficult to see how someone who is not required to do any work personally under a contract can properly be described as an employee.Having considered the detailed terms of the agreement, this Tribunal in Duke concluded its judgment as follows:
" We have tried to stand back from the details of the present case and to assess what the overall position is. Our clear impression is that the relationship which was here genuinely intended to be created, and which was in reality created, was one of company and contractor - it was a contract for services, not a contract of service. The manager of this shop was self-employed - there was no contract of employment between the Appellant and the Respondents, and the Appellant was not their employee.
We have no doubt about this. But if we had felt that the parties relationship was ambiguous, we would have felt entitled to resolve the ambiguity by reference to the very agreement itself, into which 2 parties willingly entered, and which is not criticized as being a stratagem. That that would have been a proper approach for us to make, appears from the judgment of Lord Denning MR in Massey v. Crown Life Insurance [1978] ICR 590, at page 594."We respectfully agree with that overall conclusion, which, in our judgment, applies with equal force in the present case.We therefore conclude that this contract did not create the relationship of employer and employee, and that the Industrial Tribunal was wrong to hold that it did. This appeal is allowed. We see no purpose in remitting this matter to the Industrial Tribunal since the task is simply one of construing the agreement, and the appeal will therefore be allowed in terms which indicate that the Respondent is not an employee of the Appellant company.Since no order for costs is sought by the Appellant we give no consideration to that matter.