(1) SUMUKAN (UK) LTD (2) SUMUKAN (BVI) LTD v MR B RAGHAVAN [2009] UKEAT 0087_09_1905

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2009] UKEAT 0087_09_1905Case No Appeal No. UKEAT/0087/09Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
(1) SUMUKAN (UK) LTD (2) SUMUKAN (BVI) LTDAPPELLANTMR B RAGHAVANRESPONDENT
Before
His Honour Judge HandDate 19 May 2009
[1]APPEARANCES For the Appellants MS J McNEILL QC (One of Her Majesty's Counsel) Messrs Dale Langley & Co Solicitors 60 Lombard Street London EC3V 9EA For the Respondent Written representations SUMMARY PRACTICE AND PROCEDURE: Perversity UNFAIR DISMISSAL: Compensation The judgment of the Employment Tribunal was not perverse notwithstanding the fact that two out of the three reasons advanced by the Employment Tribunal for regarding the evidence of the managing director of the first appellant as not reliable were unsound. The third reason was supported by evidence.[2]There was an error of law by the Employment Tribunal on the question of compensation by not crediting the sums actually received by the Respondent against the award of compensation wrong; this was so even if the point had not been argued below because it was obvious.[3]It was not an error, however, to fail to give credit in respect of benefits in kind where this had not been argued below; the point was not obvious.[4]The award of £500.00 costs was not adequately reasoned.[5]Counterclaims, which have previously been revoked, cannot be dismissed. HIS HONOUR JUDGE HAND QC(i) was the judgment of the Employment Tribunal and, in particular, paragraph 31 of the judgment, perverse?(ii) was the decision on compensation wrong because (a) sums actually received by the Claimant have not been credited by the Employment Tribunal against the overall amount of compensation and, (b) the benefit in kind of accommodation and food that was provided by Ms Jananayagam, who was an officer of Sumukan UK, was not so credited? (c) was the decision to award £500 costs without any reasoned basis? (d) was the decision to dismiss the counter claim wrong in law? "On 23 January 2007, both Respondents presented their counterclaims to the Tribunal. It was a document accepted by the Tribunal Vetting Officer. However, when the matter came before this Tribunal it was clear that the Respondents did not provide reasons for the late presentation of their counterclaims. As a result the acceptance of the counterclaims was revoked and this Tribunal ordered the Respondent to make an application for leave by 4 pm on 2 May 2007, giving reasons why the counterclaims should be accepted. No such application was made and the counterclaims were not pursued during the course of the hearing. Accordingly, the Tribunal dismissed both counterclaims." "The Counterclaims were revoked by the Tribunal. As the Tribunal was not provided with any reasons to explain the late presentation of the Counterclaims, the revocation stood. Reference to the Counterclaims being dismissed was an error on the Tribunal's part." "In 2001, the Asset Management Shop Ltd had a contract with the Commonwealth Secretariat to provide an IT consultancy to the Namibian government. The first phase was valued at around £15,000. Following conclusion of the contract it was anticipated that further contracts would follow, the revenue being in the region of £300,000 per annum mainly made up of software licensing fees. This was to be the second phase. It was with this prospect in mind that Ms Jananayagam applied for a work permit for the Claimant." Discussion of it occupies paragraphs 11.4 to 11.10. Part of paragraph 11.4 reads as follows:
"We find as fact that Ms Jananayagam then had a discussion with the Claimant about increasing the salary to be paid to him to £27,000. He agreed and the application was amended by way of an appeal by Ms Jananayagam. The salary element was, therefore, increased to that amount." "
We have already referred to the discussion between the Claimant and Ms Jananayagam prior to her letter of appeal about being paid a salary of £27k. In support of this finding of fact we rely on the Claimant's evidence that such a discussion took place and on the evidence given by Ms Jananayagam. She stated, in answer to questions put to her by the Tribunal, that she did not offer the Claimant work in the UK and that she had stated to him that he should not expect of a salary of £27k. Despite being assiduous in her drafting of documents, she did not have a record of her making such statements. We are of the view that the Respondents' failure to provide the internet conversations between the Claimant and Ms Jananayagam during the period, in November 2002, immediately prior to the Claimant's departure to the UK, damages their case because they were likely to cast some light on the discussions regarding his work and salary in the UK. We accept the Claimant's evidence that living on £300 per month in London, that being his equivalent Indian salary, was grossly inadequate hence his agreement to £27k." In that paragraph there is also reference to another topic that the Tribunal concentrated a lot of its judgment on, namely the "Yahoo! Chats". We shall need to return to those in due course. "During the course of the cross-examination of the Claimant by Ms Sethi, it was put to the Claimant that although Ms Jananayagam stated on the work permit that he would be paid £27k she had no intention of paying him that salary. The Tribunal pointed out to Ms Sethi that it was concerned that what was stated in the work permit application form appeared to have been misleading in that Work Permits UK believed that that salary would be paid. The Tribunal later adjourned for lunch. After the adjournment, Ms Sethi withdrew from the case stating that she was professionally embarrassed. She cited paragraphs 603(c) and 606 of the Bar Council's Code of Conduct." "on the Claimant's evidence that such a discussion took place and on the evidence given by Miss Jananayagam." The reference to reliance upon Ms Jananayagam appears to have been rather in the negative than the positive. However, paragraph 11.8 ends by the Tribunal accepting the Claimant's evidence that living on £300 per month in London was grossly inadequate, " hence his agreement to £27,000." . In other words, the Tribunal at that point appears to be accepting the Claimant's account in relation to the £27,000 on the basis not only that it did not accept Ms Jananayagam's account but also on the basis that his account was supported by the commonsense or domestic economics of it not being viable to live in London on the Indian salary. "In order to facilitate his return to the UK, Ms Jananayagam wrote a letter dated the 12 September 2003, addressed to 'Whom it may concern' confirming that he worked for Sumukan Limited (UK). It stated:
"Mr Balaji Ragahavan is currently employed as a senior software engineer with Sumukan Limited (formerly 'The Asset Management Shop Ltd', Company No: 3646017) and is returning to the UK on the company's business. We were previously issued a 24-month work permit for him in June 2002 and he will be travelling to the UK on that work permit/visa to resume his previous stay… ." "
The parties invited the Tribunal to consider the following issues:- (i) Was the Claimant a worker? (ii) Was he working under a contract of employment, whether express or implied? (iii) Was he employed by Sumukan Limited (UK)? (iv) Was he employed by Sumukan Limited (BVI)? (v) If employed, what was the salary agreed and what was paid?" "Ms Jananayagam's credibility was an issue. She had stated to Work Permits (UK) when she applied for a work permit that the Claimant was going to be paid £27,000 per annum and that he was going to be engaged in work on behalf of Sumukan Limited (UK). She said in evidence that she did not intend to pay that sum of money. Is she was prepared to mislead Work Permits (UK) (sic); had not complied with the Tribunal's order of the 8 June 2006 in respect of shareholdings and directorships (sic); and the relevant Yahoo! chats for November 2002 were not provided, then the Tribunal concluded that her credibility was in issue. Her evidence during the course of the hearing carried little weight." "Mrs Jananayagam who was present at the Case Management Discussion, do provide the Tribunal and the Claimant with the following information:- (a) details of who were the Shareholders, giving the extent of their shareholdings, of Sumukan (UK) Limited both as of 8 June 2006 and between the dates of 22 November 2002 and 4 June 2004 and further the identify of the Director(s) and Company Secretary for those aforementioned dates; (b) the like information in respect of Sumukan (BVI) Ltd. Such information to be provided on or before 30 June 2006." "If the Claimant was not an employee of Sumukan Limited (UK), she ought to have informed Work Permits (UK) of that fact and she did not." amounts to a criticism of Ms Jananayagam. But, Ms McNeill submits, paragraph 33 is not really connected to paragraph 31 at all and, like much of what the Tribunal has to say about the work permit, it translates things, which simply are not the responsibility of Ms Jananayagam, into obligations on her part to make disclosure. She was not under any obligation to tell Work Permits UK that the Claimant was not an employee of Sumukan UK, although we observe such was, of course, Ms Jananayagam's contention throughout. There was, however, submitted Ms McNeill, no reason why these matters needed to be articulated and given expression in the application form. new thinking. In particular, the last two sentences of paragraph 27 read:
"He entered the United Kingdom under a work permit applied for by Miss Jananayagam on behalf of Sumukan Limited (UK). He would not have left India for London to live on his Indian salary." the issue of compensation is dealt with in the following terms: "
Having regard to our judgment, the Claimant is entitled to be paid his salary at £27,000 per annum covering the times that he was working in the United Kingdom. A schedule of the Claimant's net losses was provided by the parties covering the three periods the Claimant worked in the United Kingdom. From 22 November 2002 to 18 May 2003 his net earnings should have been £10,691.52. For the period 13 September 2003 to 10 March 2003, his net earnings should have been £10,587.90. Finally, for the period 26 April 2004 to 4 June 2004 his net earnings should have been £3,288.00." "The Tribunal asked the parties to provide an agreed schedule of net losses. The schedule was provided and the net figures were taken into account in paragraph 36 of the Judgment." "From the Judge's notes of the evidence, it is not recorded that the Respondents were submitting that all benefits in kind, including board and lodgings, should be deducted in assessing the amount of unauthorised deductions to be paid to the Claimant." "Having regard to the parties' applications for costs the Tribunal concluded that the Respondents should pay costs in the sum of £500 for failing to comply with the order of the Tribunal dated 8 June 2006 in respect of disclosing information of the shareholding, directorships of both companies. The Respondents' application for costs is refused. The Tribunal having rules that Claimant was unable to attend the hearing in January 2007 as he was suffering and was recovering from typhoid fever."