MISS A C DENCH v FYNN & PARTNERS [1999] UKEAT 532_99_2409

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [1999] UKEAT 532_99_2409Case No Appeal No. EAT/532/99Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MISS A C DENCHAPPELLANTFYNN & PARTNERSRESPONDENT
Before
His Honour Judge J HicksDate 24 September 1999
[1]APPEARANCES For the Appellant MS S ROBERTSON (of Counsel) Appearing under the Employment Law Appeal Advice Scheme JUDGE J HICKS QC : Miss Dench, the Appellant, was employed by the Respondents, Fynn & Partners, who are Solicitors, she herself being a qualified Solicitor, until she was dismissed. The issues before us do not involve any consideration of the history down to the date on which, having applied to the Industrial Tribunal (now the Employment Tribunal) for compensation for unfair dismissal she obtained a favourable decision on liability, that is to say a finding that she had been unfairly dismissed, because the question we have to consider is one solely concerned with interest on her compensation.[2]To anticipate what we must go into in more detail later, there is provision by the Industrial Tribunals (Interest) Order of 1990 for the payment of interest on compensation. Without prejudging any of the detailed issues we have to address the broad scheme is that interest is to run from a date on which a sum payable is specified or ascertainable.[3]The decision of the Industrial Tribunal in Miss Dench's favour was reached on 29 November 1996, but when dealing with the question of compensation the Tribunal did not specify any sum. It dealt in paragraph 17 of its Extended Reasons with a question in dispute as to the period over which compensation should be assessed and it dealt in paragraph 18 with a question, also in dispute, as to whether there should be compensation for loss under a profit-related pay scheme in addition to the basic salary.[4]The Tribunal found in paragraph 17 that the period should be from the effective date of dismissal to the date on which Miss Dench commenced her next employment with another firm of Solicitors called Druitts, which was quite shortly after her dismissal, notwithstanding that she later left that job and had a further period of unemployment. It found on the profit-related pay scheme point that the scheme had not been brought into operation, because it had not been registered with the Inland Revenue as was required, and that therefore she was not entitled to any compensation under that head.[5]The Tribunal left the detailed computation of the amount of compensation to the parties to agree, and presumably to go back to the Industrial Tribunal if agreement was not reached. In the event neither of those things happened at that stage, because Miss Dench appealed to the Employment Appeal Tribunal on both of the issues which I have briefly summarised, that is to say the period over which compensation should be assessed and whether it should include profit-related pay.[6]The Employment Appeal Tribunal on 26 February 1997 ordered, at a preliminary hearing, that the appeal go to a full hearing limited solely to the profit-related pay issue, and therefore in effect dismissed the appeal so far as it related to the period of assessment. Miss Dench appealed that dismissal to the Court of Appeal which, by order dated 9 June 1998, allowed the appeal, set aside the order of the Employment Appeal Tribunal and remitted the matter to the Industrial Tribunal (and I quote):
"… for the correct period for which the appellant should be compensated to be considered to be heard by a different constitution."
[7]Nothing is there said about the profit-related pay point or about the computation of the compensation once the issues of principles had been decided, but it was presumably implicit that the re-hearing before the Industrial Tribunal would have to deal with those matters and, as we understand it, it did. There was a full remedies hearing on 19 August 1998 and the decision entered on 17 September 1998 was, to summarise, that Miss Dench's full entitlement to compensation would be well over the statutory cap, which for this purpose then prevailed, of £11,000, and that that was therefore the compensation.[8]Both parties applied for a review of the decision. The employer's application was dismissed. The burden of Miss Dench's application for a review was that interest should run from the date of the original hearing of 1996 and that issue is the issue to which, for the most part, the review decision now appealed to us is directed. The setting for this appeal therefore is that background and it is necessary to consider now, in more detail, the terms of the relevant Order and the way in which the Employment Tribunal, in its review decision, resolved the issue before it.[9]Article 2 of the 1990 Order is an interpretation Article and by Clause (1) a number of terms are defined. The ones that need to be mentioned are as follows, and they are all prefaced by the words "In this Order, except in so far as the context otherwise requires":
"appellate court" means the Employment Appeal Tribunal, the High Court, the Court of Appeal, the Court of Session or the House of Lords as the case may be; "relevant decision" is a phrase which is defined as meaning "in relation to a tribunal any award or other determination of the tribunal by virtue of which one party to proceedings before the tribunal is required to pay a sum of money, excluding a sum representing costs or expenses, to another party to those proceedings" and, finally, "tribunal" means in England and Wales "an industrial tribunal [etc]"
. This was an English case. So the word "tribunal" is confined to the tribunal of first instance.[10]Finally, the phrase "appellate court" includes any of the tribunals or courts which may deal with appeals at different levels from the tribunal of first instance and the phrase "a relevant decision" means a decision of a tribunal as distinct from an appellate court and contains the requirement that the award or determination must be one by virtue of which one party is required to pay a sum of money to another.[11]Clause 2 of Article 2 (still part of the interpretation clause) provides that "For the purposes of this Order a sum of money is required to be paid by one party to proceedings to another such party if, and only if, an amount of money required to be so paid is –(a) specified in an award or determination of a tribunal or, as the case may be, in an order or decision of an appellate court; or(b) otherwise ascertainable solely by reference to the terms of such an award or determination or, as the case may be, solely by reference to the terms of such an order or decision" Then there is a proviso which is of no materiality to the point before us. We interpose that Clause 2 of Article 2 is independent of Clause 1 in the sense that it provides a definition of when a sum of money is "required to be paid" which applies for the purposes of the Order as a whole and not simply for the purposes of deciding what is a relevant decision.[12]Article 3, Clause 1, is in substance the principal, possibly the only, substantive provision of the Order which actually requires interest to be paid. It reads:
"Subject to paragraphs (2) and (3) of this Article … [which is of no materiality] and to Article 11 below [which deals with variations on appeal] where the whole or any part of a sum of money payable by virtue of a relevant decision of a tribunal remains unpaid on the calculation day the sum of money remaining unpaid on the calculation day shall carry interest at the stipulated rate of interest from the calculation day."
I interpose that "calculation day" and "stipulated rate of interest" are defined and, of course, are relevant when it comes to the actual computation but are of no materiality to the point before us.[13]So Article 3(1) provides that, subject to all the relevant interpretation provisions:
"money payable by virtue of a relevant decision [that is to say the decision of a tribunal of first instance] … shall carry interest."
Article 6 is headed "Decisions on remission to a tribunal" and provides:
"Where an appellate court remits a matter to a tribunal for re-assessment of the sum of money which would have been payable by virtue of a previous relevant decision or by virtue of an order of another appellate court, the relevant decision day shall be the decision day of that previous relevant decision or the day on which the other appellate court promulgated its order, as the case may be."
The effect of that is clearly simply to back-date the relevant decision day after a remission for re-assessment, but clearly Article 6 does not come into operation unless either there has already been a sum of money payable by virtue of a previous relevant decision, or there is a sum of money payable by virtue of an order of another appellate court.[14]Article 7 deals with "Appeals from relevant decisions" and has not been relied upon either before the Employment Tribunal or before us, but its existence explains the title of 8, which is "Other appeals", and which provides in paragraph (1):
"This Article applies in relation to any order made by an appellate court on an appeal from a determination of any issue by a tribunal which is not a relevant decision or on any further appeal arising from such a determination, where the effect of the order [that is to say, the order of the appellate court] is that for the first time in relation to that issue one party to the proceedings is required to pay a sum of money, other than a sum representing costs or expenses, to another party to the proceedings."
[15]We comment that "required to pay a sum of money" is the very phrase which is defined and interpreted in Article 2, paragraph (2), and therefore that interpretation applies to Article 8 equally as to Article 3. Paragraph (2) of Article 8 provides that, "Where this Article applies in relation to an order, [and paragraph 1 has explained when it is to apply] Articles 3 and 4 above shall apply to the sum of money payable by virtue of the order as if it was a sum of money payable by virtue of a relevant decision and as if the day on which the appellate court promulgated the order was the relevant decision day"[16]The effect of that clearly is that where there has not been a relevant decision, that is to say a decision carrying interest under Article 3, but the decision of the appellate court for the first time requires the payment of a sum of money, you test whether there is such a requirement by Article 2, paragraph (2), and if it does so require then by, as it were, referred legislation back to Article 3 interest becomes payable as if the decision, which was not a relevant decision, were a relevant decision dated with the date of the appellate court's order.[17]Article 9 provides that:
"Where, on an appeal from an order in relation to which Article 8 applies or on a further appeal arising from such an order, an appellate court makes an order which confirms or varies the sum of money which would have been payable by virtue of the order in relation to which Article 8 applies if there had been no appeal, the day to be treated as the relevant decision day shall be the day on which the order in relation to which Article 8 applies was promulgated."
Those are the relevant statutory provisions in the sense of the provisions of the statutory instrument.[18]The Employment Tribunal in its review decision, having summarised the history, states that having read the whole of the Order it had come to the conclusion that the sole issue was whether the Applicant could bring the case within the wording of Article 2, paragraph (2), and the terms of that paragraph, so far as I have already quoted them, are set out. It is perhaps a slightly odd way of putting things to ask whether the Applicant could bring the case within the wording of what is not, after all, a substantive provision at all but an interpretation provision, but nevertheless the thrust of the Employment Tribunal's approach was in our view correct, because that interpretation provision applied to substantive Articles which provide for the payment of interest and in each case it was, in our judgment, necessary to ask whether there was an award, determination or order requiring a sum of money to be paid by one party to proceedings to another, and that phrase had to be interpreted in accordance with that interpretation Article.[19]The Employment Tribunal quoted parts of the decision of October 1996 and accepted that the period for compensation was clearly identifiable, as they say, that is to say 16 September 1995 until the date of the Applicant's commencement with Druitts and we add, although the Employment Tribunal does not, that the date of the Applicant's commencement with Druitts was itself, as Ms Robertson has pointed out to us, stated on the face of the 1996 decision, albeit in a different paragraph, 11. So the period was, as the Employment Tribunal accepted and as we accept, ascertainable. The Tribunal goes on to say, however:
"13. … What we find however to be the insurmountable problem in this case is quite simply that we cannot accept that the rate of pay and related benefits are ascertainable [and they quote] 'solely by reference to the terms of such an award or determination or … solely by reference to the terms of such an Order or decision…'."
[20]As Ms Robertson has helpfully argued before us, the question we have to decide is quite simply whether it is arguable, because this is a preliminary hearing, that the Tribunal was wrong in law in that respect. The Notice of Appeal takes the point that the Employment Tribunal does not deal with Articles 6, 8 and 9 but solely with Article 2, paragraph (2), but in truth in the way the argument has developed before us it does remain the crucial point how Article 2, paragraph (2), is to be interpreted and that is the point to which Ms Robertson has chiefly directed her submissions, although we shall deal briefly with the other Articles in so far as they raise separate points.[21]Ms Robertson accepts, and we believe necessarily so, that on a literal or indeed ordinary construction of Article 2, paragraph (2), there was not, by the decision and order in October 1996 or indeed by the Employment Appeal Tribunal order of 26 February 1997 or by the Court of Appeal order in 1998, a sum of money specified, or indeed a sum of money ascertainable, solely by reference to the terms of the award, determination or order for the very reason that the Employment Tribunal gives, namely that although the period was ascertainable the rate of compensation was not.[22]Ms Robertson submits that the Order should be given a broader purposive construction and, in particular, that it is proper to take into account what appears not only on the face of the decision and order themselves, but what appears from the Originating Application of the Applicant which states "Basic wage to be £16,000 per annum" and claims that she was also entitled to profit related pay, and the Notice of Appearance by the Respondent which states her basic wage or salary as being £16,000. Therefore, says Ms Robertson (and since, as we understand her argument to be, the original Industrial Tribunal had rejected the profit related pay) £16,000 per annum is the rate at which compensation should be calculated. We say "at which it should be calculated". More accurately, of course, one would have to say (and this is important) the starting point for such a calculation, because it is not as we understand it in dispute that compensation is based on net rather than gross pay, so that tax would have to be deducted, and the decision of the Industrial Tribunal, although it rejects the profit-related pay scheme claim, contemplates that there would have to be taken into account matters such as bonuses and other benefits.[23]In our view therefore for this appeal to be arguable two hurdles would have to be jumped. The first is that one would have to look outside the very words of the Tribunal's decision to take into account the £16,000. We are inclined to think that even that goes beyond what is allowed by the true construction of the Order, because the words "solely by reference to the terms of such an award or determination" are very strong, but we might if that were the only hurdle have come to the conclusion that, despite our difficulty in accepting it, it is a matter which should be further argued. There is however the second, and in our judgment insurmountable, hurdle that even if one can look beyond the strict confines of the order and reasoned decision of the Employment Tribunal the rate simply is not without more information calculable, because a basic salary of £16,000 without knowledge of the rate of deduction of tax and of what, if any, additions should be made for bonuses and benefits is not in the terms of the Order "ascertainable".[24]We have therefore come to the conclusion that so far as the review decision of the Employment Tribunal turned on the true construction of Article 2, paragraph (2), there was no error of law and no arguable error of law.[25]We can deal briefly with the references to the other Articles. Article 6 effectively deals with two cases. The first is where there is a remission for re-assessment of a sum of money which is payable by virtue of a previous relevant decision. That plainly stands or falls with the point we have already been discussing, because if there is no previous relevant decision then that limb of Article 6 cannot apply.[26]But the second limb of Article 6 deals with the case where an appellate court remits a matter to a Tribunal for re-assessment of a sum of money which would have been payable by virtue of an order of another appellate court. So the question is here, as we understand it, is whether arguably the remission by the Court of Appeal was a remission for re-assessment of a sum of money which would have been payable by virtue of the order of the Employment Appeal Tribunal of 26 February 1997.[27]It seems to us absolutely plain that the order of the Employment Appeal Tribunal of 26 February 1997 was not an order under which a sum of money was payable. It simply sent forward one of the disputed matters for a full hearing and rejected the appeal on the other disputed matter, but did not itself either specify any sum or contain material from which a sum of money could be ascertained.[28]Article 8 is the other Article relied upon by Miss Dench, who herself developed some submissions on this point. As she perfectly correctly says it is alternative to Article 3 in the sense that it arises and arises only when there is no relevant decision of the Tribunal of first instance and it applies, to quote again "in relation to any order made by an appellate court on an appeal from such a decision" (that is a non-relevant decision) "or any further appeal". So one needs to look both at the decision of the Employment Appeal Tribunal and at that of the Court of Appeal to see whether they come within the scope of this Article, but the governing criterion is this, and I quote again "where the effect of the order" (that is to say, the order of the appellate court) "is that for the first time in relation to that issue" (that is the issue raised on appeal) "one party to the proceedings is required to pay a sum of money other than a sum representing costs or expenses to another party".[29]So Article 8 directly and explicitly incorporates, by the reference to the requirement to pay a sum of money, the same interpretation as is applied by Article 2, paragraph (2), and applying that test it is, in our view, unarguably plain that neither the Employment Appeal Tribunal decision of 26 February 1997 nor the Court of Appeal decision of 9 June 1998 had the effect that "for the first time one party to the proceedings was required to pay a sum of money to another". It is quite plain that no such requirement could arise until the re-assessment had taken place following the Court of Appeal decision.[30]The result is that we have come to the conclusion that there is no arguable ground of appeal and that the appeal must therefore be dismissed.[31]There is a cross-appeal by the Respondents, who are not represented and who effectively object that the Employment Tribunal should not have allowed Miss Dench's request for a review. It seems likely that in the circumstances that is a wholly academic question, but nevertheless we shall deal with it. In our view that is a totally hopeless cross-appeal. It was in our judgment perfectly within the discretion of the Employment Tribunal to accede to the Appellant's request for a review and we see no error of law whatsoever in their decision to do so.[32]Before leaving this case we wish to observe that, although both the Employment Tribunal and we ourselves have (and we believe inevitably) been obliged to address these issues as essentially matters of construction of a statutory instrument, we do perfectly understand that the end result is that Miss Dench, who was found in 1996 to be entitled to compensation, and who has been kept out of receipt of any money until the final resolution of the matter by the remedies hearing in August 1998 and indeed until that decision was entered on 17 September 1998, will receive no compensation by way of interest for being out of that money for that period. We do not see how that fact, of which we fully understand the merits, can affect the question which was before the Employment Tribunal and which is before us.[33]There are two ways (there may be more, but there are at least two ways) in which the matter could in future be redressed. One is that the statutory framework could deal with the situation where liability has been established, but compensation has not been assessed, by some form of relation back. The other is that within the framework of the present provisions Applicants properly advised in future (and we are not blaming anybody for not seeing what is perhaps more visible by hindsight) will no doubt take steps to ensure before embarking upon a series of possibly lengthy appellate processes that a sum of money has been specified or ascertained as, quite understandably, was not done in this case.