Hannam v Harwill Engineering Services Ltd [1995] UKEAT 479_95_1910

EAT

Hannam v Harwill Engineering Services Ltd

[1995] UKEAT 479_95_1910 · 1995-10-19

JUDGE HICKS Q.C. :

The appellant, Mrs Hannam, was the general manager of the respondent company Harwill Engineering Services Ltd. That may sound rather grand, but in fact Harwill Engineering Services Ltd had effectively consisted of a Mr Gosling who at the relevant time had recently died, and his widow Mrs Gosling was the remaining sole director with no personal engineering qualifications to carry on the company's business, and having wound up her husband's estate she was faced with the decision as to what to do.

The appellant, Mrs Hannam, was by then the only employee of the company. The engineering expertise that was necessary to carry on its business at all, was supplied by a Mr Coombe, who was on a self-employed contract.

The Tribunal heard evidence from Mrs Gosling that having considered the matter and taken accountancy advice, and having had the experience of trying to run the company for the twelve months following her husband's death Mrs Gosling found it clear in May 1994 that the company was not trading properly, was in some financial difficulties, and could not continue to trade. She also told the Tribunal that she informed Mrs Hannam of that fact in May 1994, and the applicant did not appear to be very surprised and did not try persuade her to continue the business. That is in the part of the Tribunal's reasons which is setting out the evidence, but it seems plain from their conclusions that they substantially accepted that evidence of Mrs Gosling. On 8th June 1994 she wrote to the applicant confirming that the applicant would cease employment with the company due to the closure of business on Friday, 29th July 1994.

Mrs Hannam was by that letter effectively dismissed, and the dismissal did take effect on 29th July 1994, and she applied to the Industrial Tribunal for compensation on the basis that that was unfair dismissal.

The Tribunal found that it was a dismissal for redundancy, and in the circumstances fair.

The appellant appeals against that decision.

The Notice of Appeal states as the first ground that the decision was incorrect in law because the Tribunal failed to apply the correct test of exception to the requirement for discussion with the individual employee prior to dismissal. The Notice of Appeal goes on to contend that:

"the correct test for having such discussion is that it is required in all situations unless the employer takes a conscious and reasonable decision that it will serve no purpose."

But that ground, and certainly the sentence which I have just read, has been withdrawn by Mr Smith on behalf of the appellant, so we need not consider it further. The reason he has withdrawn it is because of the decision of the Court of Appeal in Duffy v Yeoman & Partners Ltd .

However, the Notice of Appeal goes on to say:

"As a result of the aforementioned failure the Tribunal also failed:-"

and then two sub-grounds are given, (a) and (b). Since those sub-grounds are advanced as consequential upon the main ground (1) it seems to us that one can probably simply say that they fall with it. However, we have heard from Mr Smith on those grounds as if they were separate grounds and we therefore deal with them on that basis, although, as I have said, we are rather inclined to the view that they do not really arise.

The first of those sub-grounds is that the Tribunal failed:

(a) to consider adequately or at all the evidence that there was reason to believe the Applicant could, during such a discussion [ that is a discussion between Mrs Gosling and her ] have demonstrated that the business could be continued and that the decision is, therefore, perverse;"

There are really a number of answers to this, but I think it is sufficient in the circumstances to mention two. The first is that, on the face of it, that is an allegation of perversity, and the test for perversity as a ground for allowing an appeal from the Industrial Tribunal is a very stiff one. It requires showing in circumstances which have been put into many different forms of words, that it was a decision which no Tribunal properly directing itself could have reached, or that it was, as it sometimes has been said, "irrational" or "bizarre", and we reject that entirely. The Tribunal's decision is one, in our view, which a reasonable Tribunal could have reached, and we see no arguable ground that it is perverse. But secondly, and more specifically, this allegation in our view betrays a fundamental error on the part of the appellant's argument, in failing to distinguish between the decision as to the conduct or cessation of a business which gives rise to a redundancy situation, and the decision to render a particular employee redundant. Mr Smith's argument quite plainly and explicitly is that there must be consultation before the first of those decisions, and on our understanding that is simply an error of law. The persons responsible for conducting a business are entitled to take a decision, for instance as in this case, to close it. That is not one about which they are obliged to engage in prior consultation with the employees. If that decision results in what is commonly called a redundancy situation, as the Tribunal found this decision did, and indeed it was an inevitable conclusion, then there must be consultation in normal circumstances because in the normal circumstances there may be a range of choices as to who is made redundant in consequence of a reduction of business, and there may be a range of possibilities even if a business is completely closed down, where a number of employees are concerned. But in the circumstances of this case, the inevitable result of a decision to close the business was that Mrs Hannam would be redundant, and it is in that situation that the Tribunal had to consider whether the decision to terminate her employment was unfair by reason of lack of further consultation, or rather consultation at that further stage, and we think it is that error which vitiates the appellant's argument on this point.

The fact of the matter was that, following the announcement in May 1994 that Mrs Gosling considered that she would have to close down the business, the Tribunal find as a fact that between then and the formal notification on 8th June 1994 Mrs Hannam did not seek to challenge the decision or to persuade Mrs Gosling that some other course was possible. That was a fact which the Tribunal were perfectly entitled to take into account in considering whether, despite the absence of formal consultation at that stage, the decision to dismiss was fair.

The second sub-ground under (1) that Mr Smith seeks to argue is that the Tribunal failed to take note that no evidence was presented to suggest that the employer had considered the issue of possible discussion of the situation that the applicant, and that again is alleged to be perversity. It does not seem to us at all plausible to suggest that the Tribunal failed to take account of the fact that Mrs Gosling had not initiated or considered initiating further consultation at that point; that is the very ground which they are covering in their findings on the point, and we see no arguable ground under that head.

Ground 2 of the Notice of Appeal is one which Mr Smith mentioned at the end of his argument and fairly briefly. It amounts to two allegations of inconsistency between different parts of the Tribunal's reasons and it is, in our view, quite clear that this falls within that area in which the Court of Appeal has emphasised that it is not the function of this Tribunal to go through the reasons of Industrial Tribunals with a `fine tooth comb' to find some verbal infelicity or apparent inconsistency, if such matters do not go to substance of the reasons, and we are quite clear that the matters mentioned under this ground in the Notice of Appeal fall within that category and that there is therefore no arguable ground of appeal in that head.

Finally, a different point is raised in Ground 3, that there were errors of procedure during the hearing, and those are two. The first is that when Mrs Gosling was being cross-examined by the applicant's representative, who was Mr Smith, she burst into tears and consequently the cross-examination was stopped prematurely, apart from one further question. It appears that what happened when Mrs Gosling burst into tears was that although Mr Smith sought to ask further questions, as it were, without any adjournment, the Chairman was, not unnaturally, unwilling to allow that to continue with Mrs Gosling in the state that she was in. Mr Smith accepts that he did not press the matter by asking that there be a suitable adjournment and that he be allowed to continue the cross-examination after that. That was a decision for him; it was a perfectly understandable decision in the circumstances but it does not amount in any way to irregularity on the part of the Tribunal.

The second ground under this head is that he was prevented from asking his own witness Mrs Hannam a series of questions regarding her new firm. This is a matter which we have not mentioned so far in this judgment, so it is necessary to refer briefly to it as found by the Tribunal. The Tribunal deal with it in paragraph 18 of their reasons. They find:

"... that clearly there was little to do in July 1994 pending the actual closure of the business, and following the notification of redundancy given on the 8 June 1994. Clearly the work of the applicant as General Manager of a viable company had virtually ceased or at least substantially dismissed by that time and the applicant must have realised that the situation was quite inevitable for some considerable time, as she had been virtually in charge of finance and running the Company generally. Furthermore the evidence of the applicant that she had seen fit to start her own company which was incorporated in June 1994 and must have been considered for some three or four weeks at least before that, seems to indicate that the applicant was well aware of the situation that the respondent were going to cease trading and she had been informed by Mrs Gosling."

Now that is the only way in which the Tribunal use the fact that Mrs Hannam had started up her own company, and they are clearly using it as relevant only to the question of what light it cast on how far or to what extent Mrs Hannam was already aware during the period of weeks or months running up to May, June and July 1994, that the closure of the company was likely or indeed inevitable.

In those circumstances it seems to us that the Tribunal may well have taken the view that that being the only way in which they regarded this company formation as relevant, there was no point in occupying further time in hearing evidence about it. It may be that in the way that aspect had been dealt with by Mrs Gosling in her evidence there had been the possibility that the circumstances in which this company was formed might have been thought to imply some criticism of the applicant Mrs Hannam, but if the Tribunal was clearly of a mind not to follow that line, and not to find any imputation against Mrs Hannam's character (as they clearly were, because they found not such imputation whatsoever) then it seems to us that they were perfectly entitled, in the conduct of their own proceedings, not to occupy unnecessary time in a matter which was not going to be relevant to their conclusions, and on which certainly they were not minded to and did not reach any conclusion adverse to the appellant. We see nothing therefore in that ground of appeal showing any irregularity in the conduct of the hearing.

For those reasons we find that none of the grounds still pursued in the Notice of Appeal is arguable, and we must therefore dismiss the appeal at this stage.