APPEARANCES
| For the Appellants |
MR THOMAS ROE
(of Counsel)
Messrs Grunfeld Davis & Co
Solicitors
18 Princeton Street
Red Lion Square
London
WC1R 4BB |
| For the Respondent |
MR EDWARD A BURDEN
(of Counsel)
Messrs Young & Lee
Solicitors
No. 6 The Wharf
Bridge Street
Birmingham
B1 2JS |
JUDGE REID QC: This is an appeal against the reserved decision of an Industrial Tribunal sitting at London (North) on the preliminary hearing of a claim by Ms Desir for unfair dismissal made against the respondent, Powdershire Ltd t/a Viksu Design.
- I should begin by saying that the tribunal is extremely grateful to both Counsel for the admirable way in which the arguments have been presented.
- The issue before the Industrial Tribunal on the preliminary hearing was whether or not the respondent and its predecessor had continuously employed the applicant for a period of two years or more prior to her dismissal on 30th October 1995. The unanimous decision of the tribunal was that she had been so continuously employed.
- The appeal against that decision is on two points and in each case the appellant, the respondent below, says that the decision of the tribunal was one to which no tribunal properly directing itself could have come. The decision was, in effect, irrational.
- I should begin by setting what is said in Stewart v Cleveland Guest (Engineering) Ltd [1994] IRLR 440 by Mummery J, as he then was, the then President of the Employment Appeal Tribunal, at page 443, paragraph 33:
"Whenever an appeal is based on the perversity ground, this Tribunal [EAT] must be extremely cautious not to conclude that the decision of the Industrial Tribunal is flawed because the Appeal Tribunal would have reached a different conclusion on the evidence or thinks that another Industrial Tribunal would have reached a different conclusion on the evidence. An appeal should not be allowed on this ground simply because the Employment Appeal Tribunal disagrees with the Industrial Tribunal as to the justice of the result, the merits of the case or the interpretation of the facts. This Tribunal should only interfere with the decision of the Industrial Tribunal where the conclusion of that Tribunal on the evidence before it is 'irrational', 'offends reason', 'is certainly wrong' or 'is very clearly wrong' or 'must be wrong' or 'is plainly wrong' or 'is not a permissible option' or 'is fundamentally wrong' or 'is outrageous' or 'makes absolutely no sense' or 'flies in the face of properly informed logic'. This variety of phraseology is taken from a number of well-known cases which describe the circumstances in which this Tribunal (and higher courts) having characterised perversity. The result is that it is rare or exceptional for an appeal to succeed on the grounds of perversity. …"
- The two points on which it is said that the Industrial Tribunal was perverse may be described as the 'starting date point' and the 'transfer point'.
- The starting date point is this: it is said that the tribunal could not properly have found that Ms Desir, the respondent before us, had discharged the burden of proving a starting date for her employment more than two years before the effective date of termination on 30th October 1995. It is said that, on the evidence and the tribunal's findings of primary fact, no reasonable tribunal could properly have found that she had discharged that burden of proof; and the basis on which that is said is that, when one looks at the findings of fact and one looks at the evidence which was available to the tribunal, there is no evidence which was accepted by the tribunal which would found such a decision.
- The finding of fact was that she started as an employee with what was subsequently held to be the predecessor of the appellant, Courtyard Designs Ltd, on 4th January 1993 as a design consultant. The finding breaks down into two parts. Firstly, that she was an employee and, secondly, as to the date of starting.
- Taking those two parts severally, as to whether she was an employee or not, it is the view of the tribunal that the Industrial Tribunal was entirely justified in holding that she was an employee. There was her own evidence that she was an employee; there was the material provided by Mr Chohan, who was a director of the respondent company, and there was also evidence from a fellow-employee, Mr Sukhu. All of those indicated that Ms Desir was an employee. It is true that there was paucity of appropriate written evidence to support that. It is true also that it appears that Courtyard did not make appropriate returns to the Inland Revenue or pay over tax deducted by way of PAYE or anything of that sort. But there was on the oral evidence before the tribunal an ample basis for their holding that the applicant before them was an employee.
- What then as to the start date? Ms Desir's oral evidence was that she commenced employment in December 1992. The way it was put in her witness statement was:
"I was employed under a verbal contract of employment as a Design Consultant in December 1992 by Courtyard Designs Ltd. In January 1993, I signed a written contract with the same employers and was employed by them until August/September 1994. …"
- There was also a document before the tribunal, which purported to be the written contract, to which she had referred. That document shows that the period of continuous employment beginning on 4th January 1993. The oddity about it is that it bears what purports to be the signature of a Ms Thakur as the signature of the employer, and that signature, to put it at its lowest, open to considerable doubt. The Industrial Tribunal, while referring to the unsatisfactory nature of the document and the evidence about it, made no findings one way or the other as to the genuineness of the document or as to the genuineness of the signature.
- The third piece of evidence relating to the start date of the applicant's contract was very meagre in that it consisted of Mr Sukhu's evidence to the effect that he had commenced employment in July 1992 and that Ms Desir had commenced her employment after that.
- It should be noted, however, that no alternative later date for employment was ever put. There was no suggestion that she had not commenced employment in December 1992 or January 1993, but at some specified later date. We appreciate that this might have been difficult for the appellants to have proved or to have had information about, but the fact of the matter was that at the end of day there was evidence indicating a start in December 1992 or January 1993 on which the tribunal could have acted. The tribunal picked 4th January 1993 as being the start date of employment. That, in our judgment, was something they were entitled to do. The difference between an engagement late in December 1992 and the start of work in the beginning of the New Year is small. In our judgment, whatever conclusion we might have come to as to the strength of the evidence, it cannot be said that the evidence was such that it was irrational or otherwise impermissible for the tribunal to come to the conclusion to which they did.
- It was suggest to us that in the light of the decision in Levy v Marrable and Co Ltd [1984] ICR 583 EAT, it was incumbent on the tribunal to make a finding in relation to this point. That case deals with the position where there is a significant issue of fact and as Sir John Waite said at page 587E:
"… the language must be sufficiently full and clear to make it possible for anyone to tell from a reading of the decision as a whole whether the members have believed the relevant witnesses or not. …"
- Here there was no direct issue of fact and it seems to us that where one has had evidence of a start at the turn of the year 1992/1993, one can derive from that finding enough as to the findings of fact by the tribunal and their acceptance or otherwise of the evidence given by Ms Desir as to when she started in her employment. It follows that although we would have been happier had matters been fully spelt out in the reasons, it cannot be said that the decision that the tribunal made was irrational on this point or was otherwise open to attack.
- The second point is the transfer point. The tribunal held that the business carried on by the appellant was in effect a continuation of the earlier business. Their findings expressed in their conclusions at paragraphs 15 and 16 are these:
"15 The Tribunal was satisfied that the Applicant had not been dismissed and had not resigned. Although her absence was not explained, as her employment continued it did not constitute a break in the continuity of her employment. She therefore had continuous employment.
16 The Tribunal also considered whether or not there had been a transfer of the business. The Tribunal noted that the business carried out at the premises was the same and also that the customers of Courtyard became the customers of the Respondent. Furthermore, the Respondent had employed two of the former four employees of the business, one employee having already resigned [Mr Sukhu] before the transfer occurred and the fourth employee being the Applicant."
The earlier part of that quotation, I should say, refers to the fact that Ms Desir had been holiday at the time when the appellants took over the premises which had previously been used by Courtyard, and that she did not come back for some weeks after the changeover had taken place.
- It is said in relation to this that there was no evidence on which a tribunal could properly have come to the conclusion that there was continuity of employment and that all that had happened here (and so the tribunal should have held) was that there was taking over of certain assets.
- The evidence which was before the tribunal on which they made their findings, started with discussion between the owners of Courtyard and Mr Chohan on behalf of what was to become the appellant, back in June 1994. He was at that time a supplier to the business and he was owed money. He evidently formed the view that the only way he could protect his interests was by seeking to acquire the assets and/or business of Courtyard.
- Thereafter, there was evidence that there was a meeting at which Mr Chohan told the then staff that he was taking over the business and urged them to continue in employment. He then, I say 'he' loosely because he used at least two different companies in doing this, purchased machinery belonging to Courtyard. He took an assignment of the lease of the premises occupied by Courtyard. He acquired goods and chattels used in Courtyard's business and thereafter, having taken possession of the premises in the latter part of August, and completed orders under existing contracts. He also, as it appeared from the documents before us, continued to use a description of the business being carried on which was the same as the business carried on by Courtyard, namely 'Embroidery to the Fashion & Leisure Trade'. He also took over two of the staff, as set out in the conclusions of the tribunal, and in due course employed Ms Desir.
- It was said that Mr Chohan's intention was not to take over the existing business but to create a new business and that what he did was inconsistent with taking over the old business because what he wanted to do was to build up a new business.
- It may very well be that Mr Chohan's intention was to create a new manufacturing business, but that is not inconsistent with his having taken over the old business and with the intention, no doubt, in due course of subsuming it into the new manufacturing business.
- The evidence which was before the tribunal was such, in our view, as would have entitled them to come to the conclusion that there was a taking over, a transfer of the old business, it is not for us to say whether or not we would have come to the same conclusion, but there was evidence on which the tribunal could have found, as they did. In Melon v Hector Powe Ltd [1981] ICR 43 HL, page 49C, Lord Fraser of Tullybelton, giving a speech with which the other four Law Lords concurred, said:
"My Lords, it is clear from the findings of the industrial tribunal that there were some factors pointing towards this transaction being a change of ownership of part of the appellants' business, and other factors pointing towards it being a mere change of ownership of particular assets. The decision between those two views was one of fact and degree for the industrial tribunal, as it must be in all, or almost all, such cases. …"
- In our judgment, those words are apposite to the present case. We bear in mind that later on in that speech Lord Fraser said:
"… It seems to me that the essential distinction between the transfer of a business, or part of a business, and a transfer of physical assets, is that in the former case the business is transferred as a going concern "so that the business remains the same business but in different hands" – if I may quote from Lord Denning MR in Lloyd v Brassey 2 QB 98, 107 in a passage quoted by the industrial tribunal – whereas in the latter case the assets are transferred to the new owner to be used in whatever business he chooses. Individual employees may continue to do the same work in the same environment and they may not appreciate that they are working in a different business, but that may be the true position on consideration of the whole circumstances. …"
Bearing that in mind, as we do, we take the view that the Industrial Tribunal asked itself a question which it was entitled to ask itself, it was a proper question, and the Industrial Tribunal answered it in a way in which it was entitled to answer to it.
- Taking everything into account, to paraphrase the passage at paragraph C1 [515] of Harvey on Industrial Relations and Employment Law, the tribunal had to ask itself:
"… is it fair to say that B has become the proprietor of the business in succession to A?"
The tribunal asked itself that question, and answered it in a way which we cannot say, looking at the totality of the evidence, was perverse or irrational or a method of answering to which a tribunal could not properly come.
- In those circumstances, we take the view that although it is unfortunate that the reasons of the tribunal were not more fully expressed, the decision is one which should be upheld. The appeal is therefore dismissed.
Application for leave to appeal
- It seems to us that this is not an appropriate case to grant leave to appeal to Court of Appeal. If you want leave to appeal you will have to ask elsewhere.
