Neal v Dean [1996] UKEAT 1364_95_2604

EAT
Neal v Dean
[1996] UKEAT 1364_95_2604 · 1996-04-26

JUDGE CLARK :

Mr Michael Neal has written to the appeal tribunal indicating that he wishes us to consider this case on the papers, and that we have done.It appears that Mr Neal is something of an entrepreneur in the Hull area. He operates a number of businesses, including a retail outlet known as "Mikes Bargains" at 124 Newland Avenue in Hull. He contends that that business is owned by a limited company, Mikes Bargains Limited, of which he is the managing director.Mark Dean, the applicant before the Industrial Tribunal was aged sixteen years in June 1995 when he saw an advertisement in a local newspaper for a shop assistant at Mikes Bargains. He responded to the advertisement and attended an interview at the store with Mr Neal in company with his father Bernard Dean.There was a dispute before the Industrial Tribunal, Chairman Mr R L L Williams, sitting alone at Hull on 10th November 1995, as to what was said at that interview. The Chairman found as a fact that Mr Neal agreed to employ young Mark Dean under a contract of employment providing for two weeks notice of termination. The Chairman also recorded agreement between the parties, as appeared on the pleadings, as to Mark's rate of pay, namely, £85 per week net.On 21st June 1995 he was summarily dismissed from the employment without any pay in lieu of notice. He brought a complaint of breach of contract for notice pay. He named two respondents in the alternative, Mr Neal himself, and Mikes Bargains Limited. Mr Neal contended that he did not employ Mark, it was his company, Mikes Bargains Limited, who did so.The Chairman considered that dispute and found as a fact that it was Mr Neal himself who was the employer, and awarded damages of £170 representing two weeks net pay against Mr Neal. He now appeals against that finding.Questions of fact are essentially for the tribunal. In our view there was evidence to support that finding, and at this preliminary hearing held to determine whether or not there is an arguable point of law raised by the appeal, we must dismiss the appeal now.We should add this. Since neither party appeared before us, we were unable to make enquiries about one matter which arises out of the originating application. In the statement of grounds of complaint it is said:
"Everything went well at the interview and Mr Neal said to our son Mark, I will tell you what, you are entitled to earn about £56.00 without Income Tax being stopped, so every week you will get your pay packet with just £56.00 shown on the front of it, but there will be £85.00 in it as we have just agreed. Mike Neal said "That is the way I have done it for several employees before.""
The law is clear. Where parties to a contract of employment have agreed that the contract will be performed in such a way as to result in a fraud on the revenue, that contract is illegal and cannot be relied upon for the purposes of making a claim for damages for breach of the contract.Accordingly, had this matter been further pursued on appeal, we should have required evidence about the way in which wages were paid, and had it emerged that tax which ought to have been deducted was not, by agreement between the parties, deducted, then two consequences would have followed. First, the applicant's claim based as it is on an illegal contract would have been dismissed. And of equal, if not greater significance, we should have referred the papers in this matter to the Inland Revenue to carry out such investigations as they thought fit into the tax affairs of Mr Neal and his companies with a view to taking any necessary action to recover all underpayments of tax, both in relation to this young employee and any others whose tax affairs emerged as being improperly dealt with.