MERRILL LYNCH EUROPE PLC v MRS HAZEL ABBOTT [2000] UKEAT 1462_99_2803

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2000] EAT 1462_99_2803

Case No Appeal No. EAT/1462/99 & PA/153/00

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MERRILL LYNCH EUROPE PLCAPPELLANT

MRS HAZEL ABBOTTRESPONDENT

Before

Mr Justice Burton Mr D A C Lambert Miss A Mackie

Date 28 March 2000

[1]APPEARANCES For the Appellants MR HUMPHRIES (Solicitor) Messrs Linklaters & Alliance Solicitors One Silk Street London EC2Y 8HQ For the Respondent MR SPELLER (of Counsel) Messrs Holden & Co Solicitors Liberty Buildings 32-33 Robertson Street The American Ground Hastings East Sussex TN34 1HT MR JUSTICE BURTON : This morning comes about in a somewhat convoluted way. There was a hearing before an Employment Tribunal sitting at London (North) on 27th and 28th September and 12th October 1999 between the Applicant, Mrs Abbott and the Respondent, Merrill Lynch Europe PLC in which Mrs Abbott was claiming that she had been unfairly dismissed when made redundant by the Respondent, that she suffered from a disability within the meaning of section 1 of the Disability Discrimination Act 1995 , namely what is now known as PSI, and that she was entitled to claim in breach of contract against the Respondent in respect of the permanent health insurance arrangements of the Respondent.

[2]It is apparent that the Tribunal was unable to conclude its deliberations on evidence because there was not before the Tribunal sufficient evidence or, indeed, anything other than some documentary evidence, relating to what steps could and should have been taken during the further consultation period of eight weeks after redundancy. I quote as follows from paragraphs 30 and 31 of the Tribunal decision:

"30 It is impossible for us at this stage to determine what difference, if any, the further consultation period of eight weeks would have made. It may be that work of a nature not involving keyboard work could have been found for Mrs Abbott although Mrs Abbott herself appeared to be doubtful on this point. 31 We adjourn this matter to a date to be agreed for evidence to be produced regarding work available at the time at Merrill Lynch that did not involve keyboard work to be identified."

[3]Notwithstanding not having concluded its deliberations in that regard and consequently such that the Tribunal would have to be reconvened for further evidence, the Employment Tribunal rendered certain decisions. It stated as follows:

"(1) Mrs Abbott is suffering from a disability within the meaning of section 1 of the Disability Discrimination Act 1995. (2) Mrs Abbott's job was redundant within the meaning of section 139(b)(ii) of the Employment Rights Act 1996. She was dismissed by reason of redundancy. (3) Mrs Abbott was unfairly dismissed by reason of redundancy. (4) The Tribunal requires to hear further evidence as to work available to Mrs Abbott if the consultation period had been extended by a further eight weeks. The Tribunal will consider whether work could have been found to accommodate her disability. (5) The parties are to agree a settlement figure or apply within the next four weeks for a hearing as to remedy. (6) The complaint in respect of breach of contract fails. (7) Judgment was reserved."

[4]The Respondent put in, within the 42-day period for appeal, an appeal against that finding. The complaint that the Respondent put forward, in very short form, arose out of the fact that the Tribunal in the course of its decision and its extended reasons, made no mention and/or took no account of evidence which was adduced, and a case which was made, by the Respondent before the Tribunal, on the basis of an assertion that the Applicant, Mrs Abbott, had already made a decision to return to live in Hastings from Dartford, which was where she and husband had lived previously while she and indeed he had been working for the Respondent, and that, as the Respondent asserted, she would not, in any event, have returned from sick leave to work for Merrill Lynch in London in any job. They complain, therefore, that the failure to take into account that evidence was an important flaw in the apparent conclusion by the Tribunal that there had been unfair dismissal by reason of redundancy.

[5]The Applicant, Mrs Abbott, did not put in with the 42-day time limit her own Notice of Appeal. What she did was put in a Respondent's PHD Form , as it is called. The PHD is referred to in the EAT Guidance Notes issued in 1997. There is an Appellant's PHD and a Respondent's PHD. That provides certain information to the Court prior to the holding of a preliminary hearing. The Guidance Notes read as follows:

"4. Respondent's cross-appeal : Experience show that cross-appeals are rarely presented. In the normal course of events, a respondent to an appeal, who has been successful in the industrial tribunal, will simply wish to persuade the EAT to uphold the decision for the same reasons which led the industrial tribunal to reach their conclusions. There are, however, two types of cross-appeal. (1) The first is where the respondent wishes to challenge a part of the decision of the industrial tribunal, but only if the appeal is allowed to go to a full hearing. In such a case, the respondent may include the cross-appeal in his answer. (2) The second is where the respondent wishes to challenge a part of the decision, whatever the outcome of the appeal. This latter type of cross-appeal will be treated as the same way as an appeal. Accordingly, the respondent must send to the EAT an answer and cross-appeal, when returning the PHD form. Failure to do so may deprive the respondent of the right to pursue the cross-appeal. This type of cross-appeal will be listed for hearing at the PHD, and the respondent, who will be entitled to appear, will be required to satisfy the EAT that it is reasonably arguable that the industrial tribunal erred in law in their decision in the respects alleged in the cross-appeal. The EAT may permit the cross-appeal to be argued at a full hearing, or dismiss the whole or part of it at the PHD."

I interpolate to say, thus effectively there would be a double-headed preliminary hearing at which there would be consideration of the strength both of the appeal and of such, if one might so call it, category (2) cross-appeal.

[6]At paragraph 5 of the Guidance Notes there is the following direction:

"5. To enable the EAT to make appropriate directions, appellants and respondents are required to complete a PHD form within 14 days of the date when it is sent to them. Failure to complete the form within time may lead to that party be denied the opportunity of presenting or resisting an appeal or cross-appeal, and being ordered to pay costs."

[7]The status of the Guidance Notes is unclear. It does not appear that they are the subject or the creature of a statutory instrument or, in fact, that they could lead to any automatic dismissal of a document or a process which does not comply with its terms, but it is extremely likely that an Employment Appeal Tribunal, a Registrar or a Judge on appeal from the Registrar, in considering time limits, will take note of any failure to comply with such guidance notes.

[8]Attached to the Guidance Notes are forms of Appellant's PHD form and Respondent's PHD form. In the latter there is a paragraph 2:

"Answer and Cross Appeal The Respondent wishes to file a Cross Appeal: Yes No If 'Yes', the respondent would wish to pursue the cross-appeal even if the appeal id dismissed: Yes No If the answer to both questions is 'Yes', an answer and cross-appeal must be served on the EAT within 14 days of the date of the letter accompanying this form. Otherwise, any cross-appeal must be served on the EAT with the respondent's answer."

That guidance complies with the Guidance Notes and enables the office immediately to see whether the respondent is planning a cross-appeal at all, and if so, whether it is a category (1) cross-appeal, which would stand or fall with the outcome of the preliminary hearing so far as the appeal is concerned and is likely to be simply what one might call the flip-side of that appeal, or a category (2) cross-appeal which is one which could stand as an independent appeal but which would not have been got in within the original 42 days, for example, if the respondent would not in fact have appealed if the appellant was not going to, but, now he has, the respondent has been flushed into action and would wish its cross-appeal to continue even if the appeal was not permitted to survive the preliminary hearing.

[9]The forms which have been used, at any rate in this case, and we understand possibly in all cases, for the PHD do not comply with that prescribed form attached to the 1997 Guidance Notes. They leave out the question eliciting the answer as to the nature of the cross-appeal. We have not been able to find that this results from any positive decision. We consider that, although the Guidance Notes are only intended for guidance, if they are to exist, the use of this particular kind of form is extremely valuable, because it will result, as there has been by coincidence today, and in my experience by coincidence also within the last two or three weeks, of just the kind of double-headed preliminary hearing which can lead to a sensible result. First of all it can be a saving in costs, if there is one preliminary hearing rather than two; secondly, it can avoid any misunderstanding such as appears to have occurred in this case; and, thirdly, it may lead to different results, because there can be situations in which, if both preliminary hearings are heard together, a different result could ensue from one in which two preliminary hearings are held separately, either as to leading to their both being dismissed or both being pursued, when they might, if considered separately not have a fair or sensible or cost effective outcome.

[10]The result then, in this case, is that the Respondent was not sent the form which I have referred to, but sent the standard form that is apparently in use, simply inviting the Respondent to indicate whether it was pursuing a cross-appeal, without indicating what category of cross-appeal. In those circumstances, the Respondent did not appreciate that there was any need to put in a cross-appeal in advance before the preliminary hearing, and indeed, it appears that they were assured that they did not need so to do. Nevertheless, they issued a document which called an "Application for Directions by the Applicant", that was treated by the office as a cross-appeal. In circumstances, which I now do not need enter into, it was contended that that document which was to stand as a cross-appeal was out of time, certainly out of time if it was intended to stand as an independent appeal. The Registrar made an order declining to extend time for the issuing of that appeal within the relatively strict principles of United Arab Emirates v Abdelghafar

[1995] ICR 65

by an order dated 9th March 2000.

[11]Today is the preliminary hearing of Merrill Lynch's appeal, and of Mrs Abbott's appeal against the Registrar's order of 9th March 2000.

[12]In her application for directions and/or her application for an extension of time, the nature of Mrs Abbott's appeal was indicated in very broad terms. I mention only two matters, because there has been further oral submission today, from which it has become clear precisely what Mrs Abbott's case is. First, in paragraph 4 of her application for leave to appeal out of time, Counsel on her behalf states as follows:

"It is said on her behalf that the adjournment by the ET went not merely to the question of remedy or compensation but to liability itself. In short, it is still not been determined whether or not Mrs A was fairly dismissed by reason of redundancy. …"

Secondly, the substance of Mrs Abbott's case was indicated to be a complaint about the way in which the Tribunal dealt with her claim in respect of the PHI (Permanent Health Insurance) policy. As I have indicated the Tribunal dismissed her claim for breach of contract. This was on the basis that it arrived at the conclusion, contrary to the submissions made on Mrs Abbott's behalf, that the obligation of Merrill Lynch was restricted to providing, as a collateral benefit of Mrs Abbott's employment, a permanent health insurance with an insurer. The case that Mrs Abbott made below before the Tribunal was, by reference to Villella v MFI Furniture Centres

[1999] IRLR 468

, that the Respondent itself was under an obligation to make permanent health insurance payments direct to the employee, whether or not there existed an outside insurance. The Tribunal concluded on a construction of the contract of employment that that submission was unfounded. The terms of the contract of employment, which incorporated a description of a long-term disability plan as contained in Merrill Lynch's handbook, were as follows:

"An income of 60% of your Plan Salary over the year ending on the last day you worked (subject to maximum benefit as specified by the insurer). Your benefit will increase during payment by 5% per annum or the increase in the RPI, if less. The benefit will become payable after you have been continuously absent for six months through illness or injury and will continue to be paid throughout on-going incapacity until the earlier of:- (a) Recovery), (b) Normal Retirement Age, or (c) Death. The insurer will require evidence of your state of health in some cases. Also, any claim under this Plan is subject to the insurer's admittance of the claim based on medical evidence."

On a construction of that contract, the Tribunal concluded that there was no contract by the employer to provide the benefit itself, but only to make available such a policy provided by an insurer, on which Mrs Abbott would be entitled to make claim if she could prove qualification on medical and other grounds. Hence, the Tribunal dismissed her claim for breach of contract.

[13]Mrs Abbott asserts that the Tribunal misinterpreted the terms of the insurance in a number of ways. First of all the Tribunal took no account of the fact that she might have been able to establish entitlement to claim under the policy, which required an absence from work for a period of 26 weeks, if account were to be taken of the eight weeks consultation period which the Tribunal found should have been operated and if, although this is clearly a big if , notwithstanding the termination of her contract for redundancy, any attention should be paid to the notice period which would otherwise follow from a termination of the contract on notice. Secondly, Mr Speller has submitted on Mrs Abbott's behalf, that the Tribunal misread or at any rate paid sufficient account to the precise definition of incapacity in the Sun Life of Canada Group Permanent Health Insurance General Terms & Conditions, which were in fact the relevant terms of the insurer whose policy was the result of the collateral benefit under the contract of employment, which read as follows "totally unable by reason of illness or injury to follow the member's own occupation and not following any other" and he contends that the Tribunal, when it concluded that it was unlikely in any event that Mrs Abbott would qualify for such policy, even if it were in place, had misread "not following any other" to mean "unable to follow any other", and he submits that a different test would be appropriate, although he accepts that it is not a matter which is to be left entirely to the question as to whether in fact Mrs Abbott chooses or not to take on any other employment if she would be fit to do so.

[14]The problem, it seems to us, that Mr Speller faced is that as the only contract claim which appears to have been run before the Tribunal was that which depended on the Villella point, it is understandable that the Tribunal should have concluded that they were only giving obiter remarks about the employee's possibility of claim under the policy, having dismissed the basic claim; because, at least expressly, no other way of putting the breach of contract was run before them, to which I shall return in due course.

[15]The whole question of PHI was the subject of a very broadly drawn proposed Notice of Appeal which would clearly have had to have been fully clarified in due course if the matter had proceeded by way of an appeal.

[16]On coming before us today, strictly, the preliminary hearing was before the three members of the tribunal and the appeal against the Registrar's order was before me, sitting alone, but we have all heard both applications.

[17]It appeared clear immediately that not only was the ground of appeal set out by Merrill Lynch, as the only ground of its appeal, intimately tied up with the question of the outstanding evidence before the Tribunal, but that it was clear from Mr Speller's own notice, from which I have quoted, on Mrs Abbott's behalf of paragraph 4, that Mrs Abbott was herself accepting and asserting that, as it was put, it had still not been determined whether or not she was fairly dismissed by reason of redundancy. Whereas, of course, as I have already read, the Tribunal had, on the face of it, indeed reached such a decision.

[18]We are of the view that they were wrong to reach the conclusion that they did when, on any basis, the evidence was still outstanding, as set out in paragraphs 30-31. By the consent of both parties, we quash paragraph 3 of the decision of the Tribunal. That does not indicate, certainly, on the part of the this Tribunal or, indeed, as we understand it, on the part of either of the parties, any unhappiness with the findings of fact by the Tribunal to date, but simply indicates that, given that the Tribunal had not finished its job, and it is to be hoped will now be able to be reconvened in order to do so, the evidence that was still outstanding was, it is accepted, relevant on the very issue which the Tribunal had purported to decide. The Tribunal purported to conclude that "Mrs Abbott was unfairly dismissed by reason of redundancy" by virtue of its conclusion that there was failure to consult. Effectively another eight weeks consultation should have been taken, but, on the face of its own conclusion, the question has been reserved as to what consultation should have been carried out and, indeed, whether it would have made any difference. We conclude that it would be open to the Tribunal, after hearing the further evidence, which would not only include what jobs there might have been available at the time, which could have been put to Mrs Abbott, and for which she would have been suitable or which she would have been able to perform; but also the issue, at that stage, which Merrill Lynch complain was not taken into account in the published decision to date, would inevitably arise for consideration, namely, whether even if there had been any such jobs, the subject matter of the consultation period, Mrs Abbott would in fact have taken any of them by virtue of Merrill Lynch's case that she was in any event not planning to take any further job with them, because of her move back to Hastings. It is at that stage, it appears to us, that that issue arises, and therefore on the one hand it is not a matter of criticism of the Employment Tribunal that it did not consider the matter in the course of the factual analysis that it did carry out, but on the other hand it is a necessary part of their consideration yet to come, which only emphasises the fact that they should not have considered their task to be at an end such that they could reach the conclusion that they did, when the evidence was not yet at an end. And so there are therefore three possibilities, when they have considered all this further evidence:(1) They will conclude that there was an unfair dismissal by reason of redundancy having, by then, considered all the evidence.

(2) If they conclude that the consultation period would not have made any difference, either because Mrs Abbott would not have in fact taken any job she had been offered, or, alternatively, that there were no such jobs available in any event, then it may be that the Tribunal will conclude that there was not an unfair dismissal.

(3) For the same reasons and on the basis of the same evidence, it may be that the Tribunal would conclude that there was an unfair dismissal by reason of redundancy but that no loss has been suffered. It appears to us that all three decisions would be and should be open to the Tribunal, but only after the consideration of the further evidence in the case, including the subject of Merrill Lynch's appeal.

[19]In those circumstances, both parties agree that, rather than the appeal proceeding to an Employment Appeal Tribunal, it should be accepted that the present Employment Tribunal, having not yet finished its task, should now do so, taking that additional point into account at the proper place in its consideration, such that an appeal would not be necessary, and a far more sensible course would be in any event that the adjourned hearing before the Tribunal continue, without the unnecessary burden of a prejudged decision.

[20]That left the question of Mr Speller's appeal on behalf of Mrs Abbott and proposed cross-appeal. Had it been necessary for me to extend the time for a cross-appeal, I would be likely to have done so, given the extreme uncertainties arising out of the problem with the Respondent's PHD forms, to which I have referred, and also in this particular case apparent misunderstandings between those advising Mrs Abbott and staff at the Employment Appeal Tribunal. But given that there is agreement between the parties, I have not had to take any such course. In any event, Merrill Lynch's appeal is not now proceeding.

[21]The parties have consequently agreed, additionally to the setting aside of paragraph (3) of the decision, to which I have referred, which copes with Merrill Lynch's problem, to a clarification and variation, so far as necessary, of paragraph (6) of the decision. That simply stated:

"The complaint in respect of breach of contract fails."

There is no intention by Mrs Abbott or those advising her, and indeed now no opportunity, to seek a reconsideration of the basic finding by the Tribunal on contract to which I have referred above. However, what is to be permitted by consent, and we so order, is that the alternative claim, which either was not articulated or, if articulated, was certainly not dealt with in terms before the Tribunal, and should now proceed, that the collateral benefit was not adequately dealt with by the employer – I put that in general terms specifically so as to give leeway to those advising Mrs Abbott to put the matter in the way they choose – should be allowed to proceed. What Mr Speller says, and I certainly have in mind, is that the nature of the allegation will be that, given the existence of the collateral benefit, given the reference in the handbook to the existence of the policy as a term of the contract, that Merrill Lynch were under implied terms to take reasonable steps to ensure its validity and/or its continued existence by giving such notices and/or making such appropriate claims as might arise. The case would be by Mrs Abbott that there was a breach of such implied term or terms, as a result of which Mrs Abbott has suffered loss, namely her inability to claim against the insurer under the policy.

[22]That, of course, is not a case which is accepted by Merrill Lynch, but they are content that it should be further explored at the adjourned hearing. The issues will plainly be:(1) What was the precise nature of the obligation of Merrill Lynch?

(2) Was Merrill Lynch in breach of that obligation, taking into account any duty to disclose that it owed towards the insurer, Sun Life of Canada?

(3) Whether, if there was an obligation which was breached by Merrill Lynch, any and if so what loss was suffered, taking into account: (a) the question of 26 week entitlement period; and (b) the medical requirement to which I have referred. Merrill Lynch will be asserting that in any event Mrs Abbott would not have qualified for cover on either ground and of course Mrs Abbott will be seeking to persuade the Tribunal to the contrary.

[23]In those circumstances, there will be no order on either of the two applications before us, the appeal against the Registrar's order and the appeal itself, save that, the decision (3) of the Employment Tribunal will be quashed, decision (6) will be varied so as to permit the pursuance before the Tribunal of the contract claim, which I have indicated, and the case be remitted to the same Employment Tribunal, for it to continue to hear the case and reach eventual conclusions, both in respect of the evidence indicated by the Tribunal in paragraphs 30 and 31 and by me in the course of this judgment, and of course any other evidence which either wishes to have considered on the still outstanding issues of unfair dismissal and breach of an implied term.