Woodhouse & Anor v Sandringham Construction Ltd Substituted for Valentine & Co [1997] UKEAT 408_97_1107

EAT

Woodhouse & Anor v Sandringham Construction Ltd Substituted for Valentine & Co

[1997] UKEAT 408_97_1107 · 1997-07-11

MR JUSTICE KIRKWOOD : We have before us today the preliminary hearing in an appeal by Mr and Mrs Woodhouse from a decision of a Chairman of Industrial Tribunals sitting alone at Stratford on 20th January 1997. Extended reasons for the decision were sent to the parties on 3rd February 1997.

Mr and Mrs Woodhouse had each applied for redundancy payment and unpaid wages and unpaid holiday pay. All their applications were dismissed.

Mr and Mrs Woodhouse do not appear today and they have indicated that they would not because they are on holiday. They have, however, put their appeal in writing.

Mr Woodhouse had his own company, Sandringham Construction Ltd. He held 99 of 100 shares. His wife, Mrs Woodhouse, held the other one. Mr Woodhouse was managing director, his wife was the only other director. The company apparently had some employees, but we have no detail of that.

On 18th December 1995 the company ceased trading and went into receivership.

On 9th July 1996 Mrs Woodhouse and Mr Woodhouse each made application to the Industrial Tribunal. Each named as respondent, Valentine & Co, who were in fact the liquidators of the company.

In her Originating Application, Mrs Woodhouse gave as the period of her employment 1st May 1995 to 18th December 1995, that is seven and half months. You cannot make a redundancy claim unless you have been in the employment for two years, so the tribunal dismissed her claim. There was no appeal against that. There could not be.

A claim for unpaid wages and unpaid holiday pay has to be brought within three months. Mrs Woodhouse did not bring her claim for six and half months, she was well out of time, so the tribunal dismissed those claims as well.

Exactly the same applies to Mr Woodhouse's claims in respect of unpaid wages and holiday money.

In that regard, by letter on 10th March 1997, Mr Woodhouse asked the tribunal to review its decision. He said that they were not aware that the claims would not be presented by Valentine & Co until after the three month period had elapsed, hence the delay in their application.

On 14th March 1997, the tribunal replied to that letter saying that the Chairman had refused the application for a review as it had no reasonable prospect of success. The letter of 10th March had merely repeated points that were considered at the hearing.

If, which is not entirely clear to us, there is before us an appeal in respect of those matters it is dismissed because it is obviously a hopeless.

That leaves Mr Woodhouse's redundancy claim.

The Industrial Tribunal found that Mr Woodhouse was not an employee, so was not entitled to a payment. Before dealing with that, we should mention a couple of procedural matters. The first is that at the hearing the Industrial Tribunal struck out Valentine & Co, who had not in any event entered an appearance, as respondent and substituted Sandringham Construction Ltd. The Chairman said that had the correct respondent been named in the Originating Application, and the facts been before the tribunal, the Secretary of State would have been joined and he would have taken the point that Mr Woodhouse had not been an employee. Secondly, Mr and Mrs Woodhouse have not attended the hearing of the appeal. In writing to say that they are on holiday, they enclose a letter from their accountant who has advised them as a matter of law that Mr Woodhouse was an employee, and this is the basis of this appeal.

The advice contained in the letter of King & King dated 11th June 1997, which we treat as the argument on behalf of Mr Woodhouse, is advice primarily based on fiscal considerations, questions of definition for tax purposes, PAYE, National Insurance contributions and the like. A distinction is drawn between director's fees and remuneration. The accountant advises Mr Woodhouse that he was never in business on his own account as it was the company that was in business. He therefore had a contract of service. He also refers to a control test and then a definition of a full time working director.

But the law in fact looks more widely than that. In the decision of the Privy Council in Lee v Chung

[1990] IRLR 236

, Lord Griffiths said this:

"What then is the standard to apply? This has proved to be a most elusive question and despite a plethora of authorities the courts have not been able to devise a single test that will conclusively point to the distinction in all cases. There Lordships agree with the Court of Appeal when they said that the matter had never been better put than by Cooke J at pp.184 and 185 in Market Investigations v Minister of Social Security [1969] 2 QB 173:

'The fundamental test to be applied is this:

"Is the person who has engaged himself to perform these services performing them as a person in business on his own account?"

'If the answer to that question is "Yes", then the contract is a contract for services. If the answer in "No", then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be complied of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.'"

In 1994 in the Court of Appeal in the case of Hall v Lorimer

[1994] ICR 218

, which was in fact a case decided on tax statutes, the question was also considered. It suffices that I refer to the headnote:

"... there was no all-purpose test to determine whether a taxpayer derived his earnings from a series of contracts of service or was in business on his own account, though it might be useful to bear in mind the traditional contrast between a servant and an independent contractor, and many different aspects of his work had to be considered and their overall effect evaluated; ..."

That is the approach adopted in this case by the Chairman of the Industrial Tribunal. He properly looked at the reality of the situation. In his extended reasons at paragraph 8 he said:

"8 His [ Mr Woodhouse ] position in relation to redundancy claim must be looked at in its own right. He has told me that he owned 99 of the 100 shares in Sandringham Construction Limited. The other one share being owned by his wife. According to Mr Woodhouse he was the Managing Director. There were some employees who reported to him. He did not report to anyone and he tells me that the final decision rested with himself ultimately on all matters. That is to say he was under nobody's control. In my judgment he was not an employee of the Respondent Company and is therefore not entitled to make any claim for a redundancy payment."

In paragraph 10:

"10 ... the case is so clear and obvious to me on the evidence I have heard today, that I have come to the conclusion that Mr Woodhouse was not an employee of the Respondent Company and is therefore not entitled to make a claim for redundancy payment."

The Industrial Tribunal refused to review its decision in this respect, also by the letter of 14th March 1997 to which I have referred.

For our part we find no error of law by the Chairman and do not fault his approach. The findings of fact were open to him and are not susceptible to any challenge. The appeal will be dismissed.