Thornton (Receiver) v Johnson & Anor [1998] UKEAT 616_98_0110

EAT
Thornton (Receiver) v Johnson & Anor
[1998] UKEAT 616_98_0110 · 1998-10-01
MR JUSTICE MORISON (PRESIDENT) : This is an appeal against the Registrar's order contained in a letter of 24 July 1998. By her order she refused to exercise her discretion to extend time to Messrs Grant Thornton to appeal from a decision of an Industrial Tribunal.The dates relevant to this matter I will summarise. On 8 April 1994 Mr Griffiths and Mr Barnes of Grant Thornton were appointed Joint Administrative Receivers of Boss Trucks Ltd, whom I will call "Boss".On 21 April 1994 Mrs Johnson was dismissed. She had been employed for some time by Boss and her dismissal was effected by the Receivers. On 27 June she presented an Industrial Tribunal application alleging unfair dismissal and naming Grant Thornton as Respondent.The Tribunal wrote on 11 July 1994 to the Applicant and to Grant Thornton as follows:
"I am writing to inform you that your application for an industrial tribunal has been received within the allotted 3 month time limit.
I would also like to point out that your claim for unfair dismissal should be against the person or body that employed you, rather than the receivers that you have listed as respondents on your application form.I would therefore be grateful if you could reply to this letter and inform us of whether or not you would like your application form amended."The Applicant wrote in response on 12 July indicating to the Industrial Tribunal that she would like the Boss Company to be added as a Respondent, rather than substituted for Grant Thornton.On 13 July a Notice of Appearance was filed by Grant Thornton as follows:
"The respondent is incorrectly named. The application must be against the ex-employer, not the administrative receivers."
On 25 July the Industrial Tribunal wrote to the Applicant and copied their letter to Grant Thornton saying that they were prepared to amend the Originating Application as she had suggested. In other words, to add the company as the employers in addition to the claim against Grant Thornton.On 26 July Grant Thornton wrote to the Industrial Tribunal saying:
"I refer to the above application.
The application is resisted on the grounds that the receiver was obliged to make certain staff redundant for economic reasons. This was done in consultation with the management.If the applicant wishes to seek re-engagement, she should apply to the new company.The applicant has received a redundancy payment from the National Insurance Fund which would equate any basic award. If Mrs Johnson wishes to pursue the application it must be pointed out that an award for damages would rank unsecured with little or no prospect of future payment."On 27 July the Industrial Tribunal amended the IT1 adding as a party to the proceedings Boss and on the letter of 26 July, to which I have referred, the Tribunal wrote:
"Treat as notice of Appearance for both Respondents amended by order of Chairman 4 August 1994."
On 4 August 1994 the Industrial Tribunal wrote to the Applicant and to Grant Thornton saying that they were treating their letter of 26 July as the Notice of Appearance on behalf of both Respondents.On 8 August 1994 a Notice of Hearing was sent to the parties, that is to the Applicant and the Respondents, for a hearing which was due to take place on 9 September. However, subsequently that date had to be changed. On 15 August, in a letter which was sent to Grant Thornton and the Industrial Tribunal, Mrs Johnson, the Applicant, notified them that she would be represented at the hearing by her husband.When the case was adjourned from the original hearing dated 2 September, a further Notice of Hearing was sent to the parties on 9 September 1994 and the matter came on for hearing on 11 November 1994. The Respondents did not attend and the Industrial Tribunal's decision, given in summary reason form, was sent to the parties on 2 December and the unanimous decision of the Industrial Tribunal is recorded as follows:
"The unanimous decision of the Tribunal is that the applicant was unfairly dismissed and we award her compensation of £6,791.25, against both Respondents."
They in their short summary judgment were quite clear that the dismissal was unfair, that there was no proper procedure for consultation and that the criteria for selection appeared to be based upon the Applicant's personal finances, namely that she was married to somebody who was in stable employment and that the Applicant was accordingly unfairly dismissed.After that decision had been sent to all the parties including, of course, Grant Thornton, on 9 December 1994, Grant Thornton informed the Applicant that the award had been noted as an unsecured claim against the insolvent estate. They did not, in that letter, deal with the question as to their own liability.In 1997 the Applicant, some time in May that year, wrote to Grant Thornton as follows:
"I have recently been asked to produce the documentation concerning my case at the Industrial Tribunal in 1994. On perusing the documents I find that I have missed an important part of the decision handed down by the Tribunal - and, considering that you were sent copies of the decision, so have you.

The part of the decision I refer to is contained in the following paragraphs: "

And she refers to the paragraph which I have already referred to and she continues:
"In view of the contents of the two paragraphs quoted above, which you have seen previously and also seen now from the copy enclosed, I carried out a check with the clerk to the Tribunal. He informs me that the order for payment is still valid. I now formally request payment of the amount in full from you, Grant Thornton, Chartered Accountants. Although the decision was handed down in 1994, and you have failed to make payment even though so ordered, I will, at this time, not be claiming interest on the sum of £6,791.25, but do reserve the right to do so should the circumstances, in my opinion, become appropriate."
By letter dated 30 May 1997 Grant Thornton wrote back saying:
"As I previously advised you in my letter of 9 December 1994, your claim in the sum of £6,791.25 has been noted as unsecured, details of which will be passed to a liquidator, should one be appointed.
Please telephone [and then a name is given and a telephone number] if you wish to discuss the matter."That was followed by a letter of 7 August 1997 to Grant Thornton from the Applicant saying:
"I refer you once again to my letter, undated, and the enclosures therewith, to which your letter of 30/05/97 purports to be a reply.
I am aware, as are you of course, that you have chosen to ignore the points in my letter concerning the Tribunal decision and indeed you have ignored the actual decision. Just so that you are not able to say that the point has not been made with absolute clarity, I re-state the relevant part of the decision - that judgment was entered against Grant Thornton and Boss jointly."She then sets out the figures and calculates interest on the amount of the award:
"I request that the amount of £7,861.72 referred to above now be remitted to me by you, in accordance with the judgment of the Tribunal. Should you fail to acknowledge this letter and contents I will be passing copies of all relevant papers to the Chairman of the Industrial Tribunal in Bedford and informing the Tribunal of your failure to conform with their decision."
On 11 August 1997 Grant Thornton wrote back saying:
"I refer to your letter of 7 August and note your comments contained therein.
Your claim ranks unsecured against the insolvent estate and is not a liability of the administrative receivers or Grant Thornton."Again there was a telephone number and the name of the person if they wanted to discuss the matter further.What then happened is that the Applicant, together with her husband who was representing her interests, went to the County Court and obtained the appropriate order for payment of the monies due. The Industrial Tribunal is not a court of record and therefore, its awards are only enforceable after they have been registered with the County Court. Mr Johnson went down and obtained an order on 12 March and it was subsequently drawn up on 15 April 1998 and sent to Messrs Grant Thornton.On 14 May 1998 Grant Thornton applied to the County Court for a stay pending their appeal to the Employment Appeal Tribunal, which they advanced on 19 May 1998, which was the date when their Notice of Appeal was filed. Subsequently, Extended Reasons from the Tribunal were requested but, of course, by this stage it was far too late and the Tribunal refused.The appeal therefore came to the learned Registrar in Chambers to determine whether time should be extended and she refused to do so.In support of the appeal, Mr Roberts has very properly acknowledged the difficulties on the facts with which he is faced, but he says that this a case where time can be extended. He points out that, under Section 44 (1) (a) of the Insolvency Act, an Administrative Receiver is deemed to be the agent of the company and broadly speaking, for 14 days after appointment, he must decide whether to continue with the contracts of employment and adopt them as his own, in which case he will be personally liable in respect of them, or to terminate them on the company's behalf. He says that in this case the dismissal occurred within 14 days of the appointment of the Administrative Receivers and therefore, they cannot have assumed any liability in their own right to the Applicant.Secondly, he says in any event, Messrs Grant Thornton, the firm, are not responsible for the activities of two of their partners who are appointed to act as Administrative Receivers. They are holding a statutory office and their duties are owed only to the company which they have been appointed to administer and therefore, Grant Thornton cannot be held liable for what they do in that capacity. Thus, he says, that the Industrial Tribunal has manifestly erred in law in the conclusion which it arrived at. He says that that is linked to the apparently casual attitude which Messrs Grant Thornton appear to have adopted to the order of the Industrial Tribunal that was made in December, that they should make payment, and to the letters which were sent in 1997 by the Applicant to them seeking payment. He says that the position probably can be explained on the basis that Messrs Grant Thornton thought it inconceivable that there could be any liability in their firm and therefore did not act with any degree of promptness when they had an opportunity to do so.Although the merits of an appeal may be relevant and normally of very little weight, in this case this is a rare and exceptional case of the sort contemplated in the Abdelghafar decision, because it is a decision of a Tribunal which was plainly wrong and should be put right, without the need for further evidence or inquiry into the facts, and that it was something of an exceptional order in the sense that it was made by an Industrial Tribunal against an entity who was not the employer, and there would be no prejudice to the Applicant, he submitted, because they have not been kept out of any money because there was manifestly no legal entitlement to it in the first case and he draws attention to the fact that the Applicant herself apparently had not appreciated the significance of the Industrial Tribunal's decision until some time in 1997.For the Applicant, Mr Johnson has supplied a short and succinct skeleton argument. He says that when his wife wrote in May 1997 to Grant Thornton requesting payment, the Appellant had an opportunity of applying for leave to appeal out of time, but it chose not to do so. He says that he wrote again on 7 August requesting payment and again the Appellant, on receipt of the letter, had an opportunity for applying for leave to appeal out of time, but he chose not to do so. It was only after an order for payment of the sum due, plus interest, had been made that the Appellant chose to apply for leave to appeal, the delay being in the order of three and a half years.He goes on to say that the Appellant, in a letter dated 26 July 1994, which was treated by the Tribunal as its Notice of Appearance, gave as the only ground of resistance the fact that it was obliged to make certain staff redundant for economic reasons, but the grounds which Counsel rely upon showing that the Receivers were not liable, were not points which were drawn to the Industrial Tribunal's attention in the Notice of Appearance.My attention was drawn by both parties to the decision of United Arab Emirates v Abdelghafar [1995] ICR 65 . It is to that decision and its guidance that I now turn, but I indicate that I treat that decision as giving me guidance and as not binding my hands.It seems to me that the first investigation that the court should make on an appeal of this sort is to ask itself whether it has been given a full and honest explanation for the delay in this case. I am satisfied that what I have been told is honest, but I have to say that I am not satisfied that the information for the delay has been fully explained.I have been provided with an affidavit which was sworn this morning from the gentleman concerned with this administration. He refers to the letter from the Tribunal of 11 July 1994 and says, in effect, that he thought that that would be an end of the matter. But it does seem to me, on the facts as I have set them out, that that explanation is not, and cannot be regarded as, a full one.It is clear that there had been several communications after 11 July 1994 from the Industrial Tribunal and from the Applicant, which made it perfectly clear that Grant Thornton was a named Respondent against whom the Applicant would be seeking an award at the Tribunal hearing. Furthermore, it must have been apparent to Grant Thornton that the Industrial Tribunal were treating them as a party to the proceedings, hence the sending to them of the Notices of Hearing to which I have referred.Finally, when the Industrial Tribunal decision was sent to them, Grant Thornton must have recognised that, rightly or wrongly, the Industrial Tribunal had made an order requiring them and the company to pay the sum adjudged due of £6,000 odd pounds. They were prepared to treat that as though it was solely a judgment against the company. But when this was pointed out to them in May 1997 and again in August 1997, they did not seek at that stage to ask the Industrial Tribunal to review their decision. They could have done so both in 1994, as it seems to me, and again in 1997 when the point was drawn to their attention, but they failed to do so. In fact, they did nothing until they were chased for payment.It seems to me, in those circumstances, that the delay in this case, which is substantial, has not been fully or properly explained. Indeed, it seems to me that the obvious course for Grant Thornton to have taken shortly after 2 December 1994, would have been to have gone back to the Tribunal and said that there had been an obvious error of law.Accordingly, I start on the basis that I have not been provided with a full explanation for the delay. I take into account the submission made by Counsel that it would appear, at any rate at first sight, that the decision of the Industrial Tribunal against Grant Thornton may well have been wrong in law. But, weighing as I do the various factors which the court will take into account, namely the delay, the prejudice and any explanation that has been given, it does seem to me that the learned Registrar was correct in the exercise of her discretion in this case and I would similarly exercise my discretion against extending time.Although it can be said that there is no prejudice in the sense that if the legal submission is right there was no entitlement, it does seem to me that at least since 1997, when Grant Thornton were on notice that recovery was being sought from them, pursuant to the order of the Tribunal, it would be prejudicial to the Applicant if she was to be denied the fruits of that judgment after she became aware that she had such a judgment which was capable of being enforced against the firm of Accountants.This is not one of those rare and exceptional cases where the court will exercise its discretion. It seems to me that Grant Thornton have only themselves to blame. There was much they should have done, in my view, to have brought this matter before the court in a timeousway and it is a matter of regret that they failed to take legal advice earlier than they did.For these reasons the appeal will be dismissed.