MR J MINGELEY v MR A PENNOCK & MR F IVORY T/A AMBER CARS [2003] UKEAT 1170_02_0906

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2003] UKEAT 1170_02_0906Case No Appeal No. EAT/1170/02Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR J MINGELEYAPPELLANTMR A PENNOCK & MR F IVORY T/A AMBER CARSRESPONDENT
Before
His Honour Judge Peter Clark Mr P DawsonDate 9 June 2003
[1]APPEARANCES For the Appellant MS C O'DONNELL (Of Counsel) Instructed by: Harehills & Chapeltown Law Centre 263 Roundhay Road Leeds West Yorkshire LS8 4HS For the Respondent SIMON BULL (Of Counsel) Instructed by: Messrs George Warsi Solicitors 13 Wellington Road Dewsbury West Yorkshire WF13 1HF JUDGE PETER CLARK By an Originating Application dated 4 February 2002 the Applicant, Mr Mingeley, complained to the Leeds Employment Tribunal of racial discrimination by the Respondent taxi firm. He was a licensed taxi-driver. The nature of the complaint was that he, a black African, was treated less favourably than drivers of different ethnic origin employed by the Respondent in the allocation driving work, to his financial detriment.[2]A preliminary issue as to whether the Applicant was an employee within the definition contained in Section 78(1) Race Relations Act 1976 [RRA] came before an Employment Tribunal chaired by Mr C T Grazin on 5 September 2002, and by a decision with Extended Reasons promulgated on 17 September the Employment Tribunal found that the Applicant was not employed by the Respondent and dismissed his complaint. Against that decision the Applicant appealed by a Notice dated 24 October 2002. That Notice, settled by a member of the Law Centre who had represented him below, challenged the Employment Tribunal's finding that the Applicant was not employed by the Respondent within the meaning of Section 78(1) RRA. The appeal was considered on paper by Burton P and by an order dated 9 December 2002 the President directed that the appeal be set down for a full bilateral hearing.[3]On 9 April the Applicant's representative made application to amend the Notice of Appeal to add an alternative argument that if the Applicant was not an employee under Section 78(1), then the Respondent was an employment agency within the definition also set out in Section 78(1) and the Employment Tribunal had jurisdiction to consider the complaint under Section 14 RRA. That application is opposed by the Respondent, the point not having been taken below and we shall deal first with the amendment application. Amendment[4]The practice in the Employment Appeal Tribunal is now well established following the Court of Appeal guidance in Jones v Governing Body of Burdett Coutts School [1998] IRLR 521 and Glennie v Independent Magazines (UK) Ltd [1999] IRLR 719 . The Employment Appeal Tribunal will not permit a new point of law, even where it goes to the Employment Tribunal's jurisdiction, to be taken on appeal, unless the issue raised is a discrete one of pure or hard-edged law requiring no or no further factual enquiry, as Laws LJ put the matter in Glennie .[5]Ms O'Donnell, who did not appear below, submits that the new point does go to the Employment Tribunal's jurisdiction; it is plainly right and it can be determined without further findings of fact by the Employment Tribunal. She also points out that it was the Chairman, Mr Grazin, who at an earlier directions hearing had, of his own motion, identified the issue as to whether the Applicant was an employee, the point not having been taken by the Respondent in its original Notice of Appearance. He should, argues Ms O'Donnell, also have raised the employment agency point now sought to be taken in this appeal.[6]Mr Bull does not accept those propositions; in particular he points to the need for further and clearer fact-finding by the Employment Tribunal. For example, Section 78(1) RRA defines 'employment agency' as meaning:
"a person who, for profit or not, provides services for the purpose of finding employment for workers or supplying employers with workers."
[7]Had this point been taken before the Employment Tribunal it would have been necessary for the Employment Tribunal to find as fact whether the Respondent or the Applicant contracted with the passengers carried in the Applicant's vehicle. That issue of fact was not clearly resolved by this Employment Tribunal, because the issue was not before them. At paragraph 8 of their reasons the Employment Tribunal say:
"Although the Applicant contended that the individual passenger also contracted with the Respondent, we do not accept that was the case. In any event, it is beyond the scope of this decision to deal with the precise contractual arrangement between those two parties."
[8]Then again, at paragraph 15, the Employment Tribunal appear to be taking a contrary view when they refer to "customers of the Respondent".[9]Secondly he has taken us to the use of the word 'worker' in the Section 78(1) definition of employment agency. Strangely 'worker' is not defined in RRA, although 'contract worker' is (Section 7(1)). We have considered the definition of 'worker' in Section 230(3) Employment Rights Act 1996; repeated in Regulation 2 of the Working Time Regulations 1998 but differing from the definition contained in Section 296 of the Trade Union and Labour Relations (Consolidation) Act 1992. Accordingly the question as to whether the Applicant was a 'worker' for the purpose of Section 78(1) RRA involves a mixed question of fact and law. The meaning of worker there is not necessarily co-terminous with the extended meaning of employee in Section 78(1) (that is, wider than a person employed under a contract of service).[10]We accept Mr Bull's submission. Further fact-finding will be necessary. In these circumstances we are unable to say that this is an exceptional case in which it would be right to permit the Applicant to take this new point, particularly where he was professionally represented below, for the first time on appeal. We refused permission to amend to add this new ground of appeal, directing ourselves in accordance with the guidance given by Peter Gibson LJ in Miriki v Bar Council [2002] ICR 505 , paragraph 28.[11]However, we did allow the Applicant to amend his notice in the terms of the first draft amended ground of appeal which arose out of the original appeal against the Employment Tribunal's finding that the Applicant was not an employee within the meaning of the Act.[12]We turn then to the substance of the Appeal on the employee point. First, the Tribunal's findings of fact. The Facts[13]The Applicant worked as a private hire taxi driver under an agreement with the Respondent, described by the Employment Tribunal as a contract. Under that contract, which was not in writing, the principal terms were as follows: The Applicant would provide his own motor vehicle and he did so. His hours of work worked were a matter for him. He was required to obtain the relevant licence from Leeds City Council and on that licence the Respondent was shown as the vehicle operator. He was also required to have a standard driving licence and third party insurance. It was agreed that he would pay to the Respondent £75 per week for the use of their radio/computer system which allocated calls to drivers. He was provided with the necessary onboard technology. If he did not pay his weekly £75 his system would be disabled. He was not required to give notice to the Respondent if he took holidays or if he was sick. If he chose not to work on any one day that was a matter for him; it was of no concern to the Respondent. The Applicant kept all fares received from passengers. If he wished to use the substitute driver for his vehicle that person or the Applicant paid an additional weekly fee of £75 to the Respondent. The Applicant was required by the Respondent to wear a uniform which bore the Respondent's logo. The Respondent also operated a code of conduct for its drivers and if a complaint was received from a passenger the Respondent could investigate the complaint, hold a hearing and if appropriate order the driver to refund the fare to the customer. The Employment Tribunal Decision[14]By Section 78(1) RRA 'employment' means, for present purposes, 'employment under a contract of service … or a contract personally to execute any work or labour, and related expressions shall be construed accordingly.'[15]It is not contended that the Applicant was employed by the Respondent under a contract of service in this case.[16]In construing that definition in the context of the facts in the present case the Employment Tribunal considered the judgments in the Court of Appeal in Mirror Group Newspapers Limited v Gunning [1986] ICR 145. That case was concerned with the wider definition of employee, that is, a person employed under a contract personally to execute any work or labour. The Applicant's father held an agency for the wholesale distribution to retail newsagents of Sunday newspapers printed by MGN . The Female Applicant applied for the agency to be transferred to her on her father's retirement. She was refused and brought a complaint of sex discrimination before the Employment Tribunal.[17]In finding that the Applicant was not employed for the purposes of Section 78(1) Oliver LJ was of the opinion that what was here contemplated was a contract, the dominant purpose of which is the execution of personal work or labour. Here, the dominant purpose was simply the regular and efficient distribution of newspapers (151B).[18]Balcombe LJ stated the test in this way (156F):
"In my judgment, one has to look at the agreement as a whole, and provided that there is some obligation by one contracting party personally to execute any work or labour, one then has to decide whether that is the dominant purpose of the contract, or whether the contract is properly to be regarded in essence as a contract for the personal execution of work or labour, which seems to me to be the same thing in other words."
Sir David Cairns agreed with both judgements.[19]With that guidance in mind the Employment Tribunal found:(1) that there was a contract between the parties. That is not in dispute.(2) that under the contract there was no obligation on the Applicant to do any work, in the absence of any sanction if he chose not to(3) if there was an obligation, it was on the Applicant personally to execute the work or labour(4) the dominant purpose of the contract was not the execution of personal work or labour, it was the efficient provision of a private hire service to customers of the Respondent. In these circumstances the Applicant was not employed by the Respondent within the meaning of Section 78(1). The Appeal[20]In advancing the appeal Ms O'Donnell relies on the(1) & (3) findings of the Employment Tribunal set out above; she challenges(2) and (4) findings. The dominant purpose of the contract[21]Ms O'Donnell submits that the dominant purpose of the contract was that the Applicant personally drove the Respondent's customers. She seeks to distinguish the result in Gunning on the grounds that that case was concerned with a franchise agreement between 2 businesses to distribute newspapers. That operation was performed by staff employed by the distribution agent, although he and his daughter, the Applicant, helped out with the physical work. Here, the Applicant was a driver; his licence was retained by the Respondent; he was dependent on the Respondent for his work; the extended definition of employment in Section 78(1) was designed to protect those in a dependent position who were not employed under a contract of service.[22]On this part of the appeal we prefer the submission of Mr Bull, that the dominant purpose of this contract was the supply of services by the Respondent to the Applicant in return for a fixed fee, rather than a contract under which the Applicant agreed personally to execute any work or labour. Undoubtedly he did perform work or labour in driving his vehicle, but that was not the dominant purpose, applying the Court of Appeal guidance in Gunning .[23]As the Chairman pointed out in his reasons there is no authority directly on point. The closest we come, based on the researches of Counsel, is the unreported judgment of Browne-Wilkinson P in Mankoo v BSM Ltd (EAT 657/82. 4 March 1983 unreported) a decision which pre-dates that in Gunning .[24]There, BSM operated a system of franchise agreements whereby suitably qualified driving instructors, following a period of training, held a franchise to conduct driving lessons under the BSM banner. The standard form agreement was detailed and in writing.[25]The Applicant commenced a period of training but was rejected as unsuitable. He brought a complaint of unlawful racial discrimination.[26]On the question whether he fitted within the definition of employee under Section 78(1) RRA the Employment Tribunal held that he was not on the ground that he had not attained the status of franchisee.[27]That ground was not relied upon by the Respondent on appeal by the Applicant. The issue before the Employment Appeal Tribunal was whether, on completion of his training, he would, as a franchisee have been an employee for the purposes of RRA.[28]The Employment Appeal Tribunal held that he would be. It was found that there was to be implied a term of the standard franchise agreement that, when nominated, the franchisee would do the work unless unable to do so, and that was an implied contractual obligation personally to execute work or labour. Alternatively, looking at the substance of the transaction the substance of the matter was that BSM was providing itself and the franchisee with work and labour in the form of instructors to carry on the business of BSM on behalf of both parties. The franchisee was entering into a contract personally to execute work or labour under the franchise agreement for the joint benefit of both parties.[29]Whilst we see parallels between the present case and Mankoo we are bound by the Court of Appeal decision in Gunning , later in time, which focuses on the dominant purpose of the contract, a factor not considered by the Employment Appeal Tribunal in Mankoo . Applying the Gunning approach we are not convinced that Mankoo would have been decided in the same way today; if it was, that would owe more to its particular facts than any clear statement of principle. It does not alter our view that in the present case the dominant purpose of the contract was other than the provision of a service by the Respondent to the Applicant to enable him to ply his trade as a self-employed taxi driver. Mutuality of obligation[30]If we are wrong in our conclusion as to the dominant purpose of the contract between these parties, we turn to the second challenge to the Employment Tribunal's decision, the lack of mutuality of obligation.[31]Ms O'Donnell submits, by reference to the judgment of Lindsay P in C J O'Shea Construction Ltd v Bassi [1998] ICR 1130 , 1136H, a case concerned with whether the Applicant was a contract worker within the meaning of Section 7 RRA, that a contract which did not require the Respondent to give the Applicant any work at all would not of itself preclude that contract from being a contract personally to execute work or labour.[32]We note that passing reference in that judgment, but we accept Mr Bull's submission that, even although this is not a case raising the issue of a contract of service (cf Nethermere (St Neots) Ltd v Gardiner [1984] ICR 612) there must be some mutuality of obligation, the employer to provide work and the employee to do the work when offered, where the extended definition is relied upon. That arises as part of the general law of contract, as Mr Recorder Underhill QC pointed out in considering the wider definition of 'worker' for the purposes of the Working Time Regulations 1998 in Byrne Brothers (Formwork) Ltd v Baird [2002] IRLR 96 , paragraph 25. See also Balcombe LJ in Gunning . 156F.[33]On the facts of the present case there was, as the Employment Tribunal found, no requirement at all for the Applicant to accept any of the fares offered by the Respondent, that is to provide his work or labour to the Respondent. Thus on this basis also we uphold the Employment Tribunal's decision. Conclusion[34]If follows that we shall dismiss this appeal. The Employment Tribunal was entitled to conclude that the Applicant was not an employee of the Respondent within the meaning of Section 78(1) RRA and on that ground the complaint failed for lack of jurisdiction. Whether it would have been open to the Applicant to rely on Section 14 RRA, on the basis that the Respondent was an employment agency as defined in Section 78(1), remains moot, that point not having been determined in this appeal for the reasons given earlier.