Moses & Anor v Newman [1996] UKEAT 307_95_1901

EAT
Moses & Anor v Newman
[1996] UKEAT 307_95_1901 · 1996-01-19

JUDGE ALTMAN Q.C. :

This is an appeal from the decision of the Industrial Tribunal sitting at Ashford on 3rd January 1995 when a decision of unfair dismissal was recorded and an order for compensation totalling £4,948.67 was made.The appellant before us was the respondent before the tribunal and we shall refer to the parties as applicant and respondent as they appeared in the Industrial Tribunal.The background to this matter is that the applicant was employed as the matron of a nursing home for the elderly, operated by Quality Homes (Kent) Limited, which at the time of the proceedings was in receivership. The parties to the application were a Mr Maurice Moses and Paul Shipperlee who were the administrative receivers of the company at the time of the applicant's dismissal.The relevant facts as presented to the tribunal were drawn to their attention by a single letter written, so far as the respondents were concerned, on 18th November 1994 to the tribunal, in which one of the joint administrative receivers sought to explain their stance. They did not appear before the tribunal, which is a common practice in the case of receiverships and liquidations where the outcome is regarded at least by the receiver or liquidator or administrator as being inevitable. But the grounds set out in that letter which I can paraphrase, first of all asserted the appointment of the receivers on 6th September 1994 and enclosed the Deed of Appointment which indeed does show that position.The basis of the claim was contested and the reasons why were set out in four paragraphs and the matter was dealt with on the merits of the claim. In effect, Mr Shipperlee says, he appointed managing agents to take over the running of two homes operated by the company, and that the social worker for them took over the overall running. That the deputy of the applicant had taken over the applicant's role, but was now doing less work than the applicant had been doing. That the applicant's husband was the manager of a separate home. That work came to an end. It was asserted that the applicant's husband had himself said that they would leave together, but he was advised that the applicant's position no longer existed. That of course was very much a questionable matter. It clearly did exist and was being carried on by someone else so it appears.It was suggested that in any event, as it were as an alternative, the reason for dismissal was on economic grounds Mr Shipperlee was possibly concerned about the Transfer of Undertakings Regulations or was seeking to suggest that the reason for dismissal was some other substantial reason within the unfair dismissal legislation. He pointed out that payments for redundancy pay, pay in lieu of notice and holiday pay, were being dealt with at the time.The tribunal quite properly proceeded upon that assertion of the facts and heard evidence and upon those findings of facts came to a decision which, on the basis of the facts as presented to them, seemed to this tribunal to be unexceptionable. Had it not been for one matter the decision is unavailable to be criticised on any point of law which would have appealed to this tribunal.However, it has now been drawn to our attention that the tribunal did not have before it the provisions of Section 44(2) of the Insolvency Act 1986 . Section 44(1) provides:
"(1) The administrative receiver of a company - (a) is deemed to be the company's agent, unless and until the company goes into liquidation; (b) is personally liable on any contract entered into by him in the carrying out of his functions (except in so far as the contract otherwise provides) and on any contract of employment adopted by him in the carrying out of those functions; and (c) is entitled in respect of that liability to an indemnity out of the assets of the company.
(2) For the purposes of subsection (1)(b) the administrative receiver is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done within 14 days after his appointment."The Administrative Receivers were appointed on 6th September 1994. The applicant was dismissed on that date. So, it is quite clear that in so far as on the face of it the receivers momentarily adopted the contracts of employment so as to terminate them under those provisions, they did so without attracting any liability as provided for under the Act, because they did so within that 14 day period. Accordingly because they were joined as the respondents to the application, they could not be found liable in any respect whatsoever, and therefore had that been known to the Industrial Tribunal, or had the receivers drawn that provision to the attention of the Industrial Tribunal, they would inevitably have concluded that they had not adopted and could not be taken to have adopted the contract of employment and therefore they were not to be liable for it. It is quite clear that the tribunal was dealing with administrative receivers as individuals because at the end of their decision they joined one of them as a respondent. We would have thought that this is an area of the law with which the Administrative Receivers would have been very familiar, and with which the Industrial Tribunal could not expect to be seised without having it drawn to their attention,Accordingly the tribunal erred in law in making a finding against the respondents, not on the merits which cannot be criticised, but on the technical provision that they could not be found liable because they acted within that 14 day period of being appointed as joint administrative receivers.That judgment does not require any further ascertainment of facts, and therefore the tribunal allows the appeal by finding that the respondents were not properly joined, and are struck out of the proceedings and the finding that they unfairly dismissed the applicant is reversed. We have considered the desirability of simply amending the proceedings to name Quality Homes (Kent) Limited (in receivership) as the proper respondents to these proceedings and remitting it to the Industrial Tribunal for further hearing. The applicant has appeared here on her own today, representing herself and she had taken a day off work to do so. It is quite clear that there is no prospect of the applicant ever recovering any money from that company in receivership, and therefore there can be no purpose in any further hearing on the matter, the tribunal already having made a finding of fact in effect on the merits of the case, which can be of some reassurance to her in relation to what actually happened.Accordingly, we simply allow the appeal and substitute a finding that the respondents were not the employers of the applicant, and the application is dismissed on that ground.There are however three matters that we wish to deal with before leaving this appeal.If it be the case that very little explanation was ever given to the applicant at the time and it was quite clear to us, at least today, that the applicant really did not understand or believe the actions of the receivers, that seems to us to have been a great shame. When a receiver steps into the shoes of an employer, for however short a time, he adopts the responsibilities of an employer as refined over the years by the courts dealing with employment legislation. And in so far as it is consistent with his duties on behalf of the debenture holder or creditors of the company, he should take upon himself the responsibility of acting in accordance with the normally accepted industrial relations practices of employers. That is why he differs in so many ways from a liquidator. One of those duties ensures that employees understand, and are communicated with about, major changes, particularly affecting their contracts of employment and particularly those which bring employment to an end. It would not have taken very long, if it had been the case, for the reasons as were set out in the letter of 18th November 1994 to sit down and have a chat with the applicant and explain it to her the reasons and who knows what costs in the long run they would have saved for themselves and the debenture holders. We have not heard the evidence in this case, and we do not know the background, and that is why I prefaced my remarks conditionally by saying "if it be the case". But if so then perhaps, that at any rate, can be noted.The second matter that we wish to draw attention to is our puzzlement at the calculation of the money that has been paid to the applicant. Her date of birth was 12th November 1949. She began employment with the company on 28th December 1988, it came to an end on 6th September 1994. Accordingly she had five years continuous service during four of which it appears, that she should have been entitled to 1 1 / 2 weeks pay. She was only paid the redundancy calculation for three years at £205 per year so it appears. That is a matter which hopefully can be rectified, but the applicant will have to take her own steps to contact the redundancy office about that, and no doubt the receivers would assist her if necessary.Finally, it seems to us that we must consider the applicant's costs of coming here today. If only the very obvious provision of law to the receivers had been drawn to the attention of the Industrial Tribunal, who can in no way be blamed or criticised for failing to advert to it at the time, it would have been quite unnecessary for this matter to come to appeal because it would have been resolved, if not in writing, if not by the representative of ACAS even before the case came to the tribunal, at the very latest before the Industrial Tribunal. The power of the Employment Appeal Tribunal in relation to costs is governed by Rule 34 of the Employment Appeal Tribunal Rules 1993 and it provides:
"34.- (1) Where it appears to the Appeal Tribunal that any proceedings were unnecessary, ... or that there had been ... 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."
As that refers to any proceedings, we find that we can consider the proceedings before the Industrial Tribunal and we find that in the context of this case a large firm of practitioners dealing with insolvency, with two joint administrative receivers of considerable seniority taking the time to submit their reasons to the Industrial Tribunal, and then to come to the Employment Appeal Tribunal and ask for a point of law to be considered on their liability which could have been raised at the Industrial Tribunal level is to be categorised in the context of this whole case as unreasonable conduct. And accordingly, knowing and being gratified to hear that essentially the respondents are not seeking to avoid the payment of these costs in any event, we propose to make an order for costs of today, which have been thrown away simply because this matter was not resolved before the Industrial Tribunal. The respondent to this appeal has lost £54 in pay by coming today, she has had to pay travelling expenses of £34 we are told, and no doubt she has also incurred extra costs that she would not otherwise have incurred in subsistence. We order the appellants to pay to the respondent costs of £100 within seven days of the sealing of this judgment.