BAILII Citation Number:  [2001]  EWHC 548 (QB)
Case No: 00/TLQ/1498
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 19 October 2001

B e f o r e :

THE HONOURABLE MR JUSTICE ELIAS
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	HOWARD HAGEN & 440 OTHERS		Claimant	
	- and -		
	ICI CHEMICALS & POLYMERS LTD
KVAERNER ENGINEERING
SERVICE LIMITED
KVAERNER OIL AND GAS LIMITED
KVAERNER CLEVELAND BRIDGE LIMITED	1ST Defendant
2nd Defendant 

3rd Defendant
4th Defendant  	

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Mr. Antonio Bueno Q.C., Mr. Oliver Hyams & Mr Paul Mitchell
 (instructed by Eversheds for the Claimants)
Miss. Cherie Booth Q.C.,  Mr. Andrew Stafford Q.C. 
& Mr. Andrew Simmons Q.C.
 (instructed by Hammond Sudards Edge for the 1st Defendant)
Mr. Andrew Hillier & Mr. Stephen Wilson
(instructed by Beachcroft Wansbroughs) for the 2nd 3rd & 4th Defendants) 
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JUDGMENT

Mr Justice Elias

A.  Introduction.
1.	Imperial Chemical Industries is a household name.   By the 1980s its business had diversified and it was active in a very wide number of fields, including the manufacture of chemicals, paints, pharmaceuticals and various other products.   A significant part of its operations was based in Teesside, where by the end of that decade it had some thirty business areas operating out of three sites at Billingham, Wilton and North Tees.   These were collectively known as the “Teesside Operations”.
2.	When its activities were at their most expansive, ICI was using in its various activities a broad range of plant and equipment, much of which was very sophisticated and complex.   It required a skilled and experienced workforce to maintain, repair and renew this equipment.   By the 1990s this workforce had come under the centralised control of a body known as the Central Engineering Resource.   It employed around 2000 workers.   In fact many of these workers were employed permanently in specific business areas, whilst others moved across sites or worked in the workshops at Wilton.   The former were known as the “Resident Engineering Group” but they were organisationally part of Central Engineering even although permanently based in a business unit.   Central Engineering had its own buildings and equipment, and its own financial and managerial structure.
3.	However, in 1991 a decision was made to devolve the engineers in the Resident Engineering Group back into the particular business areas where they were operating.   This covered about half of the then staff of Central Engineering.   This involved a change of management control for those workers.   Those not in the business area teams remained within the auspices of Central Engineering.   Individuals from Central Engineering would still thereafter be temporarily assigned from time to time to the production or business areas, for example to cover for absences or holidays, but they remained under the control of Central Engineering.   Legally, their employer was ICI Chemicals and Polymers Ltd., a subsidiary of ICI.   I shall hereafter refer to that company, the first defendant, as “ICI”.
4.	Essentially engineering work was considered to fall within three levels.   Level one was the basic maintenance carried out at plant level.   Level two involved more complicated work, usually involving planning and requiring multi-skilled working, but where the work could more effectively be carried out by a geographically based team.   Level three involved the more specialist work, such as major overhauls, which could not conveniently be carried out locally and would be required only intermittently.   Central Engineering was responsible for the level three work, although the division of labour between the levels was not rigidly adhered to and Central Engineering staff would also do work at other levels.   Nonetheless, it is broadly true to say that Central Engineering consisted of the more specialised and skilled workers.   They were based at the Wilton and Billingham sites only and not at North Tees.   Although similarly placed engineering workers at each site were employed on the same terms and conditions of employment, there were at the two sites different working practices in force, arising in part from the different interpretation given at the two localities to collective agreements. 
5.	It has been common ground in this case that there was a significant diminution in the work available to Central Engineering in the early 1990s.   This was in part due to the divestment and closure of some of ICI’s businesses on the Teesside sites, and partly for other reasons.   I will discuss the reasons more fully below.   However, the reduction in the work was matched by a diminution in the available workforce; in 1993 alone the workforce was reduced from 800 to a little under 500 workers.
6.	By mid 1992 the future of the Central Engineering had become a matter of some moment within ICI; it was perceived to be expensive and without any long-term future.   A number of options were considered in relation to its future.   Suffice it to say that in the event Central Engineering was transferred as a going concern to the Second Defendant, Redpath Engineering Services (hereinafter RES), at the end of August 1994.   At that time that company was under the control of the Trafalgar House Group.   That Group was acquired in April 1996 by Kvaerner Redpath group.   RES successfully became known as Kvaerner Engineering Services Ltd, and it transferred its business to the third defendant, Kvaerner Oil and Gas Limited, on the 1 January 1999.   (In fact at the time of transfer RES was acting as the agent of a company which has now become the fourth defendant –hence the presence of that company in these proceedings.   However, it is common ground that I can treat the second defendant as the relevant party for establishing any liability, and that I need say no more in this judgment about either the third or fourth defendants.)
7.	The claimants in this action comprise 439 employees who were originally employed in the Central Engineering Resource but were then transferred with the business to RES.   (The number of employees originally transferred was 462, but not all chose to participate in this action, and a small number who originally did have since dropped out of the proceedings.)   It is common ground that the transfer of their employment contracts was effected pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 1981 (hereinafter “TUPE”.)   The claimants allege that they were only persuaded to agree to the transfer because of certain promises given and representations made to them both by ICI and by RES.   They say that the representations were in fact false and that as a consequence they were misled by the two defendants and have suffered loss.   I consider later in this judgment the precise way in which their claims have been framed as a matter of law. 
8.	I have not heard evidence from all 439 claimants; nine employees were chosen as representative cases.   They were selected with the intention that they should between them cover the full range of issues likely to arise in the action.   Strictly the decision in these nine cases does not automatically determine the remaining cases, but it is anticipated that it will result in sufficient findings of fact and determinations of law to ensure that those cases can then be disposed of by agreement. 

B.   The Background 
9.	There were a number of particular features of the employment at ICI at the time of transfer which need to be explained in order to set the context in which the alleged promises and misrepresentations were made. 
10.	Employment in ICI was highly prized.   The wages were not always as good as those paid by some of the competitors, but the fringe benefits, and in particular the pensions, were generous and generally much better than existed elsewhere on Teesside for engineers.   Moreover, ICI had a reputation for conferring security of employment; once on board, employment was generally seen to be for life thereafter if the employee wished to stay and performed efficiently and responsibly.   Not surprisingly, therefore, it was not unusual for employees to give up higher salaries elsewhere in order to accept employment with ICI. 
11.	There are certain more specific aspects of industrial relations at ICI which have featured sigificantly in this case and require particular consideration.   In relation to these matters there was no material conflict of evidence.

The security of employment agreement.
12.	The provision of security of employment has long been an established feature of ICI’s employment strategy.   Indeed, it was accepted by a number of ICI witnesses that it could be fairly described as a lynchpin of the company’s industrial relations’ strategy.   In January 1975 the company’s Personnel Department issued a document which it described as the company’s “Security of Employment Statement”.   This was then supplemented in 1990 by a document which set out detailed guidelines and examples of good practice.
13.	The 1975 Statement begins: 
“It is one of the primary objectives of the Company to provide secure long-term employment for all employees who have established a satisfactory record of performance.”

It also states that “company policy is based on the belief that enforced redundancy is to be avoided in the future planning of the business”.   The policy makes it clear that whilst there is no guarantee that there will not be compulsory redundancies, the aim is to reduce them to the absolute minimum.   They should, where possible, be avoided by redeployment and relocation (which may involve staff being willing to be retrained) or by early retirement or voluntary severance.   It is, however, pertinent to note that in certain circumstances it is envisaged that the alternative employment sought for staff may be employment outside the company altogether.   The guidelines emphasise the need for full and timely consultation with all staff affected by job rationalisation. 
14.	There are statutory procedures for consultation with employee representatives before redundancies can be effected, and as the guidelines make clear, they are to operate against that backdrop.   However, these guidelines go further than the strict legal obligations, not least in being directed to the need to keep each individual affected fully informed of any proposed course of action.   As the ICI management who gave evidence readily accepted, the statement and the guidelines issued pursuant to it gave considerable comfort to the staff, albeit falling short of a guarantee of continued employment. 
15.	There is no doubt that one of the consequences of this policy was that compulsory redundancies were extremely rare.   Indeed, there was some dispute about whether there had been any at all, apart from apprentices who were not taken on because of lack of places for a skilled craftsman.   Mr. Anderson, who was the general manager of the Teesside Operations at the time of transfer, said that there had been some, for example among the fertiliser sales force, but he accepted that they had been implemented in a very gradual way.   In any event, the evidence makes it plain that compulsory severance was very much a last resort when other avenues had been thoroughly explored and found inappropriate for one reason or another.   That is the context in which the representations in this case must be analysed.
16.	In June 1991 the holding company, apparently when under threat from a takeover, specifically wrote to each of its employees to inform them that the company’s severance scheme was thereafter to be incorporated into the contracts of employment.   That scheme had in practice been operating for some time and it gave severance compensation well above the statutory requirements.   In that letter the company confirmed that it would continue to apply the principles and procedures in the Security of Employment Statement, but it is relevant to note that nothing was said about any part of that Statement being incorporated into the individual worker’s contract of employment.

The 1991 Staff Agreement. 
17.	In the early 1990s there was a significant downturn in the economy.   This caused the company to look carefully at cost cutting exercises.   There were two problems in particular which the company perceived to be affecting its competitiveness.   The first was that it was still subject to demarcation rules, which led to inflexibility; more workers were required for a job than, in management’s view, ought to have been necessary.   The second was the significant use of overtime in many ICI plants.   There was, as Mr. Anderson described it, a culture of overtime at Teesside which in management’s view had led to some staff working inefficiently during normal working hours in order to generate remunerative overtime payments.   The 1991 Staff agreement was designed to enable management to address both these issues.   It was a national agreement negotiated between management and the recognised trade unions and applied only to weekly paid staff (thereby excluding all levels of management from supervisor upwards.)   It was an enabling agreement, providing very wide parameters within which further agreements could be made at local level.   These were described as “local working arrangements” (“LWAs”.)   The aim of the 1991 agreement was to improve the skills of staff, by providing necessary training where necessary, and thereby to improve their flexibility and productivity, and to ensure that the benefits were at least in part reflected in improved pay for staff.   It was also to provide the framework for dealing with the overtime problem. 
18.	The 1991 agreement itself makes no reference to any specific pay increase, nor to the fact that any pay increases must be self-financing, nor to the obligation for a local agreement to deal with the elimination of overtime.   But together with the agreement, the parties issued a Joint Statement setting out the principles which it recommended as the basis for negotiating LWAs.   These included the following: 
(i) there should be a 14% increase in basic salaries paid in  three stages, 6% and then 4% and 4% over a two year period from the date of the implementation of the LWA; 
(ii) there should be opportunities for continuing education and training; 
(iii) salaries should be paid monthly rather than weekly; 
(iv) hours of work would be reduced to 1633 per year (an average of 36 hours per week) and that any agreement should seek to ensure “the best utilisation of time with minimal recourse to overtime working”.
The Joint Statement did not state that the agreement should be self-financing, but it did say that an objective was to optimise the continuing efficiency of the Company’s operations, and the company has asserted that this meant that the benefits must exceed the costs.   It is clear that the trade unions recognised that this was one of the basic premises underlying the agreement. 
19.	In relation to Central Engineering, there was a draft local agreement which was designed (as it stated) to build on the national agreement and place it in the specific engineering context.   In fact this proposed agreement itself was also only a framework agreement in that it envisaged yet further negotiations on a plant basis to give effect to its principles.   Part 2 of the  draft agreement set out the basic principles, Part 3 set out practices and Part 4 a “Programme for Change”.   In essence the agreement reflected the principles set out in the Joint Statement.   It expressly provided that benefits should exceed costs.   This meant, as the draft agreement stated, that “each change will be directed towards making our operations more effective and towards reducing costs”, although adding that it did not mean that the cheapest solution would always necessarily be adopted.  The agreement also envisaged basic annual working hours of 1633, equating to a 36 hour week.   The intention was that there should be 100 hours per year within that 1633 hours which would be what was called “benefit time”; this would be time in respect of which the employees would not be specifically rostered so that they could be called upon by the employers if needed.   However, if in fact these hours were not required, they would not be worked at all although the staff would of course be paid for them.   It would only be if that 100 hours were exceeded in the course of the year that overtime would be paid.   Accordingly, one of the attractions for the employees was that in practice they might be paid for benefit hours which in the event they did not have to work.   The potential disadvantage, on the other hand, was that for some of the workers, overtime pay constituted a significant element in their salary, and that would no longer be true (or at least not to the same extent) once an LWA had been reached and implemented.
20.	The actual implementation of this agreement still depended upon an LWA being agreed.   These were to be determined at local level between local union officials and management, the idea being that they could determine what improvements in flexibility and productivity were necessary to justify the pay increase.   In fact the draft agreement was never accepted by the staff and so no LWA was ever made in respect of the staff at Central Engineering.   LWAs were, however, subsequently agreed in relation to all other weekly paid staff working in the Teesside Operations. 

Consultation and trade union relationships.
21.	ICI recognised trade unions for collective bargaining purposes for its weekly paid staff.   However, it also put considerable weight upon consultation directly with the workforce.   Information was communicated at Teesside through what was known as the “Cascade system”, a method whereby information was passed down from senior management to shop floor and back again, with additional information being provided as it went down through the management layers.   In fact in connection with Project Windsor there were frequently mass meetings of groups of staff which were not in accordance with the more formal cascade system.   This went hand in hand with consultation and negotiation with the trade unions.   That was plainly an important element of the industrial relations arrangements; and insofar as information was given to the full time officials, it was plainly reasonable for management of both ICI and RES to assume that it would in due course be communicated to staff.   Moreover, as Mr. Hagen, one of the lead claimants, realistically recognised, communication would be not only to the union members but also to other employees in the groups for which the unions were responsible.   I have no doubt at all that as far as Project Windsor was concerned, any material information passed to union officials or other groups of workers would quickly (if not always accurately) filter generally through the grapevine to all affected staff. 
22.	At the time of the transfer there were statutory obligations to consult recognised trade unions about certain matters connected with the transfer.   This was a consequence of the fact that it was a TUPE transfer.   No doubt some of the union consultation was in accordance with this duty, but interestingly there seems to have been no specific reference in any of the ICI documents I have seen to the communications having been made in order to comply with the TUPE obligations.   This is not to say that there was any failure by ICI in this regard, and no complaint of failure to consult has been made.   But it does suggest that ICI and the unions always assumed that its normal consultations fully complied with its legal obligations and indeed went beyond them.   Moreover, the consultations carried out directly with the employees clearly went beyond any legal duties imposed on the company, since that duty related at the time only to consulting recognised trade unions.
23.	There has been some argument before me as to whether the employees relied upon what they were told by the management or by their union officials.   I think that the answer is that they relied upon both, but for the most part I am satisfied that they relied principally upon what they were told by management.   In fact there seems to have been some hostility between this particular group of employees and the full time officials (which perhaps explains an otherwise surprising feature of this case, namely that no full time union official gave evidence), and this may have reinforced their reliance on what management said.   However, any hostility was not, I think, obvious to ICI management at the time.   Even so, in my view it is plain beyond doubt that the employees did put considerable weight by what they were told by management, albeit that it was not the only information that weighed with them, and that management knew this.   There was considerable evidence that in general the workforce had a high regard for both Mr. Booth and Mr. Ritchie, the two ICI managers who were most involved in keeping them informed about management’s intentions and the effects of the transfer.

Managerial style and non-productive time.
24.	The management style at ICI appears to have been relatively relaxed. Mr.Leonard, one of the claimants, was quite critical of aspects of it; he thought that management were insufficiently rigorous about enforcing the rules on absenteeism and such matters.   It is not disputed that the result was that the problem of absenteeism and what was termed “diverted time” was significant.   The latter refers to time when the employees are at work but not actually working because, for example, they are at meetings or being trained or travelling.   In the period leading up to the transfer, the combined effect of absenteeism and diverted time was 30% of working time, although Mr. Booth said (and the RES witnesses accepted) that this was higher than normal because of loss of morale resulting from the proposed transfer, which increased the levels of sickness absence, and the number of meetings relating to Project Windsor.   Nonetheless, it is clear that RES’ management did anticipate that real benefits could be achieved by reducing these non-productive elements of the working day.   (They were losing only some 10% of working time as a result of these combined factors.)
25.	The combined effect of these various features was that the staff felt secure and comfortable working for ICI and there was a considerable reluctance – indeed for many a real hostility – to accepting the prospect of Central Engineering being transferred.   Most of them did not want to leave the protection of ICI.   As might have been expected, therefore, the evidence from all quarters made it plain that Project Windsor was a matter of the greatest moment to the staff affected.   It was a burning issue directly affecting the staff in a most profound way.   They were keenly interested in the twists and turns of the negotiations, and paid the closest attention to what management and the unions were telling them.   They had to be persuaded that the transfer was in their best interests, and that required some selling. 

C.   The transfer agreement. 
26.	The decision to divest Central Engineering as a unit was taken sometime in early 1993.   A prospectus was issued in April of that year.   Some twenty eight companies initially expressed an interest.   They were reduced to a shortlist of three: RES, Motherwell Bridge and Fluor Daniels.   Each of these three submitted an indicative bid with detailed business plans.   Prior to this, each had also had a number of meetings with ICI management.   On 26 October 1993, ICI confidentially told RES that it was the preferred bidder and thereafter detailed negotiations were conducted in earnest with them.   A Memorandum of Understanding was signed on the 15 November 1993, and the staff were told that RES was the preferred bidder on the following day.   At that time it was hoped that the agreement could come into force on  January 1, 1994.   However, the subsequent negotiations took a lot longer than anticipated.   A major area of dispute needing resolution was the pensions arrangements.   In particular, there was much haggling over the sum which ICI had to pay to RES to meet the cost of the accrued pension rights which were being transferred from ICI to RES.   At one stage it seemed that the failure to resolve this matter could scupper the whole agreement, but finally an accommodation between the parties was reached at a very senior management level.
27.	The transfer was finally effected to RES pursuant to an agreement entered into on the 4 August 1994 and taking effect on the 29 August.   The agreement is very lengthy.   I will merely summarise its principal terms insofar as they are relevant to this case: 
RES were to 
(a) provide the services required by ICI at the sites requested by ICI and at competitive prices;
(b) take all the designated employees and offer to continue their contracts on the same terms and conditions of employment; (this was an obligation imposed by TUPE in any event); 
(c) provide pension benefits in accordance with the provisions of schedule 15 of the agreement.   (Although the contract did not say so in terms, the aim was to ensure that the RES pension scheme was broadly comparable with the ICI scheme, and the particular scheme was adopted only after both the company actuaries and an actuary instructed by the trade unions had all formed the view that the schemes could properly be described as broadly comparable.)
In return, ICI promised to:
(a) take maintenance services from RES for at least 5 years;
(b) provide a guaranteed level of work for the five year period or, in the event that the work was not provided, provide a sum of money equivalent to the amount that would have been paid if it had; the work was to be sufficient to keep the transferred workers fully employed for the first three years, and thereafter was to provide 60% of their work for the subsequent two years; 
(c) the contract was what has been referred to as an “evergreen contract”.   That simply meant that it continued automatically at the end of the five years unless and until either party chose to terminate it by giving one year’s notice, which notice could not be given before the end of the fourth year;
(d) provide a sum of £2.7 million over the first two years of the contract; 
(e) pay £2.4 million over 5 years to establish a fund partially to offset the potential severance liability of RES; 
(f) provide a capital sum sufficient to cover the accrued pensions benefits of the transferring employees on a fully funded basis; the relevant sum was finally agreed to be in the region of £26 million;
(g) settle the accrued holiday pay of the transferring employees; 
(h) give at least 12 months’ notice to RES of any change to the contract.  (The intention of this was to protect RES against any liabilities that might otherwise arise if they had to dismiss workers at short notice and make payments in lieu of notice.)

D   The Implications of the TUPE Regulations
28.	It was common ground that the transfer was such that it was caught by TUPE. It is not necessary for me to give a detailed analysis of those regulations.   For practical purposes, and at the risk of some oversimplification, their effect can, so far as is relevant to this case, be summarised as follows: 
(1) All the employees employed at the time of transfer in the business transferred automatically transfer to the transferee, unless they positively elect not to transfer (reg. 5.)
(2) Those employees transferred are thereafter entitled to the same contractual terms and conditions of employment as they had with their original employer.   The only exception to this is pensions; they do not automatically transfer where the employees’ pension rights are found in an occupational pensions’ scheme.   Non-contractual benefits do not transfer, even if they have been enjoyed relatively regularly in practice. (Regs. 5(1) and 7.)
(3) The responsibility for all the liabilities under or in connection with the contract will pass on completion of the transfer to the transferee. (Reg. 5(2).)   This does not, however, include those relating to occupational pension schemes, which rights are not transferred. 
(4) There are certain obligations to give information to, and to consult with, recognised trade unions or other representatives of the work force. This is a duty imposed upon both the transferor and the transferee, each in relation to his own workforces. (Regs. 10 and 11.)   I deal with the detail of this duty more fully below.
(5) Collective agreements are transferred and take effect between the transferee and the unions as they had done between the transferor and the union. (Reg. (6).) (In fact there is a presumption in English law that collective agreements are not legally enforceable, and accordingly there is some debate as to the significance of this provision.)
(6) If a transferred employee chooses not to accept employment with the transferee, he is entitled to turn it down.   However, he is not then entitled to any severance payment from the transferor, nor to any compensation of any kind from the transferee.   For practical purposes, the effect is as if he had simply lawfully resigned. (Regs. 5(4A) and (4B).)	
29.	One of the issues I have to determine in this case is whether, assuming that ICI is liable for the misrepresentations as alleged, its liability in law then transferred to RES.   This depends upon whether the liabilities can be said to arise under or in connection with the contract. I deal with this point below (see paras. 329ff.)

E.   The Nature of the Claims in Outline.
30.	There is a master statement of claim and there are separate statements of claim for each of the eight lead claimants.   It is the master statement of claim that sets out the basic causes of action advanced by the claimants.   The specific losses alleged to have been suffered by each individual lead claimant are then set out in individual supplementary statements of claim.   The basis of the claim is that prior to the transfer of the business from ICI to RES there were various representations made which proved to be untrue.   Separate claims are made against the first and second defendants respectively.   I shall deal with the claims against each in turn. 

Claims against ICI. 
31.	These claims fall into three categories.   First, it is alleged that the conduct of the first defendant in making these representations constituted breaches of certain implied terms of the contracts of employment as well as of the Security of Employment Statement, which is said to have been incorporated as an express term of the employment contracts.
32.	Second, it is said that the representations were negligently made and that they caused the claimants voluntarily to agree to give up their employment with ICI and to enter into the contracts with RES.   I should emphasise that there has been no action in deceit i.e. it is not and has never been alleged that the defendants deliberately misled the claimants (no doubt for the very good reason that such allegations should not be made lightly and would have been quite impossible to sustain.)   Nor is there a claim under section 2 of the Misrepresentation Act 1967.   Such a claim could not have been pursued against the first defendants since the section applies only to representations which induce someone to enter into a contract made by the other party to the contract.   The first defendants do not fall into that category.   Accordingly, the claim is simply for negligent misrepresentation at common law.
33.	Third, it is alleged that these representations constituted independent and what are sometimes called “collateral” warranties, that is, that they amounted to contractual promises for which the consideration was each claimant entering into the contract with RES.

Claims against RES.
34.	Although the precise representations are different to those alleged against the first defendant, there are similar causes of action in respect of breach of warranty and negligent misrepresentations.   Again there is no allegation of deceit, nor any claim under section 2 of the Misrepresentation Act.   As to the latter, the claimants took the view that since TUPE continues existing contracts in force, no representation from RES could be said to have caused the claimants to enter into a contract.   Since the claimants had no contract of employment with RES when the contract was made, there was plainly no room for the claim that the circumstances in which the representations were made gave rise to breaches of any subsisting contract. 

F   The Representations Relied Upon: A Summary.
The Representations by ICI.
35.	Before considering these different causes of action in more detail, it is necessary for me to summarise the nature of the representations relied upon.   They are very extensive and relate to the period from the time in about June 1992, when the idea of transferring the staff was first mooted, until the transfer agreement was concluded over two years later on the 29 August 1994.   In all some 71 alleged misrepresentations have been relied upon.   It would burden an already over lengthy judgment to set them all out fully.   They can usefully be summarised under the following categories, which I think fairly reflect the matters still being relied upon by the claimants by the end of the case.   It is alleged that the following representations were negligently made:
1. The claimants’ best interests would be served by their transferring to a third party. 
2. There was a shrinking workload with under recovery of costs, and that accordingly if there were no transfer, there would be wholesale and (absent volunteers) compulsory job losses. 
3. The staff transferring would have greater security of employment with RES than if they remained with ICI and, more specifically, that their employment was guaranteed for at least 5 years. 
4. The claimants would be employed by the transferee on terms comparable to those on which they were employed by the first defendant at the time of transfer. 
5. RES would be obliged, pursuant to a 1991 Staff Agreement, to enter into an agreement to provide for flexible working with most of the claimants, and that this would result in a pay increase of 14% over 3 years for the staff affected.   It was allegedly further represented that in addition to this benefit, the relevant staff would continue to be paid the full rate for overtime in the same way as they were being paid at ICI;
6. The pensions on offer from RES were broadly similar to the pensions provided by the ICI scheme.  (It is alleged that at different times the language used was that the pension benefits would be “equivalent”, “no less favourable”, “comparable” and that the transferring staff would be “materially no worse off”.)   In addition, it is alleged that there were representations up to the time of transfer to the effect that the value of the pension rights of the claimants would be within a half a percent of the value which they enjoyed as members of the ICI scheme, and that this coloured the claimants’ views about the extent to which their pensions would be “broadly comparable”.
7. Two managers with significant influence with certain of the claimants were allowed by ICI to represent that they were being transferred in precisely the same way as other staff whereas in fact they had received early retirement payments from ICI. 

The representations by RES.
36.	The allegations against RES are that they, through their officers and employees, made the following representations, which could not have been made by someone taking reasonable care:
1.   There were no plans to make any of the claimants redundant and neither was there any intention to change terms and conditions of employment after the transfer.
2.   RES accepted that they had undertaken to honour the 1991 Staff Agreement, and as such were stating that they considered themselves bound to enter into negotiations in good faith to seek to reach an agreement on flexible working in accordance with that agreement. If made, any such agreement would give the workers a pay increase amounting to at least 14%.
3.   The terms of the pension scheme operated by RES after the transfer would be in accordance with a booklet given to all workers, called “Time to Decide”; and that the booklet was in certain respects misleading in failing to state certain relevant information.
4.   The state pension supplement would be paid under the RES pension scheme in the same way as it had been in the ICI scheme.
5.   RES management staff had been present at a meeting when a representative of ICI had said that the benefits under the RES pension scheme would be within a half a percent of their value under the ICI scheme, and that by failing to correct that statement, RES must be taken to have accepted it and to be treated as though they had made it themselves.
37.	In relation to many of these matters, it is accepted that the statements relied upon were indeed made, if not in quite the terms relied upon, in substantially similar terms.   This is true in relation to the first defendants in respect of the representations referred to in paragraphs 1,2,4, and 7.   In relation to the alleged representation in 3, ICI alleges that it did not indicate that employment would be guaranteed for five years but did represent that it believed that the structure of the agreement it had reached with RES meant that in practice there would be a strong commercial disincentive to staff being dismissed within that period.   As to 5, they submit that they did not say that RES was obliged to enter into the flexible working agreement but rather that RES would continue to negotiate for the purpose of implementing the agreement; and that they were not stating that RES would give both 14% and permit overtime although it was at one time thought that this was likely to be the outcome of the RES negotiations on the proposed LWA.   In relation to the alleged representation in 6, ICI accepts that it did represent that the pension schemes would be broadly comparable, but not the individual worker’s pension benefits; and it submits that although initially employees were indeed told that the overall value of the schemes would be within half a percent, it had become clear before the time of transfer that neither the schemes nor the benefits for individuals would be within half a percent. 
38.	In relation to each of the admitted representations, the first defendant says that they were made in the honest and reasonable belief that they were true. 
39.	RES similarly accepts that statements were made along the lines referred to in paragraphs 1 2, and 3, save that in relation to paragraph 2 it was only ever agreeing to continue negotiations with the unions about the flexible working agreement.   It denies that the statements referred to in 4 or 5 were ever made, Further, it submits that even if a statement to the effect of that referred to in paragraph 5 were made, it did not bind RES and furthermore it was clear, taking the statements overall, that the only representation being made was that the two schemes were broadly comparable. 
40.	Again, in relation to the admitted statements, RES submits that they were made honestly and in the reasonable belief that they were true.
41.	I will return to consider the evidence in relation to these matters below. 

The nature of the alleged representations.
42.	It is relevant to note that the representations are a mixture of representations of fact, opinion and intention.   Indeed, in relation to representations directed at what ICI represented that RES were proposing to do (such as enter into an LWA and permit overtime to continue), the representation relates to what a third party intends to do.   I discuss at paragraph 96-102 the extent to which matters of opinion and intention can give rise to liability for negligent misstatement.

G.  Three unusual features of the case.
43.	There are three atypical features of this case.   First, as I have already indicated, ICI was under an obligation to give certain information to the recognised trade unions by virtue of the fact that the TUPE regulations applied.   These regulations required that recognised unions should be consulted with a view to reaching agreement about any measures that it was envisaged would be taken in respect of the employees affected by the transfer.  (The regulation has since been amended so that consultation may need to take place with representatives of the workforce even in the absence of recognised unions.   But that is not material in this context.)   In the course of that consultation, certain information had to be provided to those representatives.   The information to be provided included such matters as when it was envisaged the transfer would take place, the legal, social and economic effects of the transfer and any proposed measures to be taken.   In addition the transferor has to provide information about the measures which the transferee (i.e. in this case RES) is proposing to take in the future.   RES, as the transferee, is required to provide that information to ICI, as the transferor, to enable that information to be provided by ICI to its trade unions.   As I have already said, there has been no complaint that these obligations were not complied with.   But the significance of these provisions is that at least some of the information actually provided could not have been withheld from the employees’ representatives even if ICI had wished to withhold it. 
44.	The second feature is that the decision whether or not to transfer was ultimately a matter for ICI to determine.   The unions had to be consulted about certain matters, but they had no legal veto on the decision.   However, the decision to transfer has profound implications for the workforce.   As I have indicated, once the decision to transfer is taken, there is an automatic transfer of the staff employed in the business transferred unless they choose not to transfer.   But if they make that decision not to go, they are not entitled to insist on continuing their employment with ICI, nor are they entitled to any severance pay from ICI or any other compensation.   The effect is as though they had lawfully resigned from their employment with ICI.   They are without employment or compensation.   In practice, therefore, this is not an option which staff are remotely likely to take, as a number of claimants frankly accepted in the evidence before me.   Few employees will choose to render themselves voluntarily unemployed. 
45.	The significance of this point is that it goes to the question whether there was ever any reliance upon the representations.  As I indicate later in this judgment, unless there is reliance, no loss flows from any misrepresentations there may have been.   Ms Booth Q.C., counsel for ICI, has submitted that it is wholly unrealistic for any of the complainants to say that they were induced to transfer as a result of the representations made to them.   She submits that it is plain that what caused them to accept the transfer was the fact that if they did not, then they would be without a job or any severance pay.   The brutal economic reality was that they would have had to accept the job on offer from RES whatever representations about the position had been made.   The notion that there was any free choice in play is, she says, quite false.
46.	The response of Mr. Bueno Q.C., counsel for the claimants, to this is that if the true position had been identified to them, the claimants as a body would have strongly opposed the transfer and their opposition would in fact have been sufficient to prevent the transfer taking effect.  
47.	This highlights the third unusual feature of this case.   It is plain that no individual could, acting alone, have resisted the transfer and remained with ICI.    ICI could not have afforded to make any exceptions and retain those people who wanted to stay with them, not at least if they were considered important to the well being of the business, because that would have been the significant majority of the workforce.   They would not have then have been able to transfer a viable business.   If the odd individual had refused to go, their employment with ICI would have come to an end in the manner I have described.   Accordingly, such a person would have been financially much worse off than he would by transferring to RES.   However, a collective opposition to the transfer could have had a quite different result and could have scuppered the whole proposal. 
48.	It is plain from the evidence of virtually all the ICI management that they fully accepted that without employee support the transfer would not go ahead.   Nor did Dr. Tomlinson want to take over a reluctant and hostile workforce, as he made plain in his evidence.   Ms Booth sought to say that it was union support that was required and not that of the men.   She submitted that once the unions were in favour of the transfer, there was no realistic possibility of the workforce effectively defeating it.    I do not accept that that is a remotely fair reading of the evidence.   Virtually all the ICI witnesses said in terms that the consent of the workforce was fundamental to the deal.   Had they meant the trade unions, they would have said so.   In any event I think it highly likely that if there had been substantial opposition to the transfer from the workforce, the unions would ultimately have accepted the concerns of the workers and withdrawn their support for the transfer. 
49.	This third factor has implications for the legal analysis in this case.   If one simply focuses on the position of each individual claimant, without regard to what other claimants might have done, then I consider that it is unrealistic for such an individual to say that he would not have entered into the contract with RES but for the misrepresentations.   He would not have been in a position to resist it.   But if one focuses instead on the group of staff transferred, then it seems to me that it is in principle wholly realistic to say that if they had not as a body been satisfied about the reasons for the transfer and the terms on offer, they would as a body have sought to resist the transfer, and their resistance would in all likelihood have been successful. 
50.	However, on this analysis, if any claimant is going to succeed, he must show both that he relied upon such representations as are shown to be false and negligently made, and that they were of sufficient significance to have caused the employees as a group to agree to a transfer which, had they not been misled, they would have sought to resist.   

H.   The Applicable Principles of Law.
51.	 I now consider the nature of the various claims made against the defendants, and whether they are in principle sustainable in the particular circumstances of the case.   Even where they are, there are a number of areas where other related legal issues have been in dispute between the parties.   I shall deal with all the legal arguments in this section.

(1)The implied terms arising out of the employment contract.
52.	I turn to consider the allegation made against the first defendants that by their negligent misstatements they are in breach of their contracts of employment.   The claimants now rely upon three implied terms of which the third relates only to an alleged duty to give information relating to pensions.   The other two implied duties are closely related and I will consider them together.   Finally, the claimants also allege that the Security of Employment Statement had become incorporated by continuous usage as a term of the employment contract and that the term was infringed in this case.   I will deal with these arguments in turn and consider whether they do in fact constitute terms of the contract as alleged.

(a)  The duty not to undermine trust and confidence/to act fairly and in good faith.
53.	The claimants rely upon two closely interrelated implied terms which have been framed as follows: 
“The first defendant was at all times under an obligation not, without reasonable and proper cause, to act in such a way as would be likely to destroy or seriously damage the relationship of trust and confidence existing between it and …its employees”; and “the First defendant would at all times deal with the Plaintiffs and each of them fairly and in good faith”.

54.   	ICI admits the existence of the first implied term not to undermine trust and confidence.   They could hardly do otherwise given that it was recognised as a term of the contract of employment by the House of Lords in Malik v BCCI [1998] A.C.20.   Furthermore, as Lord Steyn stated in that case (p.45E to G), it is not necessary for the employer actively to want to undermine trust and confidence; the motives of the employer are irrelevant when determining whether or not there is a breach.   It is enough that, objectively viewed, the employer’s conduct has the effect of destroying or seriously damaging trust and confidence. 
55.	Ms. Booth accepts (subject to an argument that I address below) that it is in principle possible for even negligent conduct to constitute a breach of this implied term, but she submits that it would have to be a rare case, coming close to recklessness, before that term could be engaged.   I accept that submission.   Lord Steyn emphasised in Malik that in order to constitute a breach of this term, the conduct had at least seriously to undermine trust and confidence.   It seems to me that the negligent conduct would have to demonstrate a real and unacceptable disregard for the interests of the employee before this term could successfully be invoked.   It would have to be the kind of conduct that would justify the employee treating it as a repudiatory breach.   As Lord Nicholls said in the Malik case (p.35A):
“The implied obligation is no more than one particular aspect of the portmanteau, general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract implicitly envisages.”

56.   	Plainly individual acts of negligence will not in the ordinary way constitute a breach of this duty.   They will not undermine the confidence necessary to sustain the employment relationship, and I do not think that anyone would suggest that they should.   Indeed, it would be highly detrimental to employees if any act of negligence could be equated with a repudiatory breach of the duty of trust and confidence so as to justify lawful termination of the contract.  
57. 	Ms. Booth denies the existence of the alternative implied term, at least if it is intended to widen the trust and confidence duty.   I find no difficulty in accepting the alternative formulation.   Indeed, it has long been recognised that employees owe a duty of good faith to the employer, and that duty must surely be mutual.   However, I accept that in this context at least it does not add anything to the duty of trust and confidence.   This conclusion is supported by authority.   In Malik Lord Steyn said that in its application to employees, the concept of trust and confidence “adds little to the employee’s implied obligations to serve his employer loyally” (p.46C.)   In the later case of Johnson v Unisys [2001] 2 WLR 1076 (a case I consider in more detail later in this judgment), Lord Steyn considered that the implied duty of trust and confidence could properly be described as “the implied obligation of good faith”, as Sir Nicolas Browne-Wilkinson VC, as he then was, had analysed it in Imperial Group Pension Trust Ltd. v Imperial Tobacco Ltd. [1991] 1 WLR 589.   He thought it could also be described as the employer’s duty of fair dealing. (p.1088 )   These words echo similar sentiments he had expressed in the Court of Appeal in Newns v British Airways [1992] IRLR 575 at 578.   In the Johnson case Lord Hoffman expressed the view that it would in principle be more appropriate to refer to the duty as being one to act fairly and in good faith rather than not to undermine trust and confidence where, as in that case, complaint was made about the manner of the dismissal itself.   But he also thought that it was not a matter of practical significance.   In the course of his judgment, his Lordship gave his reasons for so concluding as follows: 
“[the duty of trust and confidence] is concerned with preserving the continuing relationship which should subsist between employer and employee.   So it does not seem altogether appropriate for use in connection with the way that relationship is terminated.   If one is looking for an implied term, I think a more elegant solution is McLachlin J’s implication of a separate term that the power of dismissal will be exercised fairly and in good faith.   But the result would be the same as that for which Mr Johnson contends by invoking the implied term of trust and confidence.   As I have said, I think it would be possible to reach such a conclusion without contradicting the express term that the employer is entitled to dismiss without cause.”

58.	It seems, therefore, that the alternative duty relied upon by the claimants adds nothing of substance to the duty of trust and confidence.   I would not, however, rule out the possibility that there may be circumstances when a duty to act fairly could arise which could be broken by, for example, an unfair or procedurally defective exercise of discretion falling short of conduct which would properly be described as seriously damaging the trust and confidence in the employment relationship.   It seems to me that the concept of fairness (which arguably in that context has a different connotation to the concept of fair dealing) is not always inextricably linked with good faith.   Accordingly, whereas any serious undermining of good faith will always be repudiatory conduct, it seems to me that not all acts of unfairness will necessarily be so.   But it is not necessary to explore that possibility further in this case.   The allegations here are of a failure to take reasonable care before making certain statements.   It is not in my judgment legitimate to equate acts of negligence with acts of unfairness; these are quite different concepts and to permit them to be used interchangeably is to confuse the two concepts to the detriment of both, and to obfuscate a proper analysis of the applicable principles.   If the claims here are to succeed, in my view it can only be because the acts of negligence can be said at the very least seriously to damage the trust and confidence in the employment relationship, and that is so whether the duty is described in Malik terms or as a duty to act fairly and in good faith.

	(b)  The duty to take reasonable care
59.	The curious feature of both the implied terms actually relied upon by the claimants is that neither directly engages the basic complaint in this case, namely that the first defendant failed to take reasonable care in the information and advice it provided to its staff.   Ms. Booth relies upon the lack of any such contractual duty to support the proposition that no duty of care in tort arises either.   But the fact that no contractual duty to take reasonable care is pleaded does not mean that it does not arise, and it is incumbent upon me to address that question, albeit relatively briefly. 
60.	The obligation on an employer to take reasonable care for the health and safety of his employees - that is, for his physical well-being – has long been a duty imposed on the employer, not only in tort but also as an implied term of the contract of employment: see e.g. Lister v Romford Ice and Cold Storage Co. [1958]A.C.555 and Matthews v Kuwait Bechtel Corporation [1959] 2Q.B.57.   Similarly, there is no doubt that an employer owes a duty of care to his employee in providing him with a reference, and if the employee suffers loss because the reference is negligently compiled or given, he will have a claim in tort: see Spring v Guardian Royal Exchange [1995] 2 AC 296.   In addition, however, in that case three of their Lordships, Lords Goff, Slynn and Woolf, held that the duty to take reasonable care in the provision of a reference was also an implied term of the contract of employment (or, as in that case, the contract for services.)   In the course of his judgment, Lord Woolf said this (at p. 353G), after having made reference to the case of Scally v Southern Health and Social Services Board [1992] 1 AC 294 (which I consider below):

“As I understand Scally, it recognises that, just as in the earlier authorities the courts were prepared to imply by necessary implication a term imposing a duty on an employer to exercise due care for the physical wellbeing of his employees, so in the appropriate circumstances would the court imply a like duty as to his economic wellbeing, the duty as to his economic well being giving rise to an action for damages if it is breached.
Here, it is also possible to specify circumstances which would enable a term to be implied.   The circumstances are: (i) The existence of a contract of employment or for services.   (ii) The fact that the contract relates to an engagement of a class where it is the normal practice to require a reference from a previous employer before employment is offered.   (iii) The fact that the employee cannot be expected to enter into that class of employment except on the basis that his employer will, on the request of another prospective employer made not later than a reasonable time after the termination of a former employment, provide a full and frank reference as to the employee.
This being the nature of the engagement, it is necessary to imply a term into the contract that the employer would, during the continuance of the engagement or within a reasonable time thereafter, provide a reference at the request of a prospective employer which was based on facts revealed after making those reasonable careful enquires which, in the circumstances a reasonable employer would make.”
 
61.	Lord Slynn also commented that there had been changes in the employer-employee relationship “with far greater duties imposed on the employer than in the past…to care for the physical, financial and even psychological welfare of the employees.”(p.335B.)
62.	In my view a similar term could be implied here to that adopted by Lord Woolf.   I am reluctant to formulate a precise term since I have heard no argument as to how it should be framed.   Suffice it to say that I would imply a duty to take reasonable care in making statements, at least in the following circumstances: where the employer is proposing that his employees transfer their employment; where the transfer will impact upon the future economic interests of the employees (as it almost always will); where the transfer will be unlikely to take place if a significant body of the employees object; where the employer has access to certain information unavailable to the employees; and where he knows that his information or advice will carry considerable weight with the employees.
63.	It is not seriously disputed –and in my judgment it is plain from the evidence- that those conditions are engaged here, at least in respect of some of the information given.   I would therefore have considered it appropriate in the circumstances to imply an obligation that ICI should take reasonable care before giving such information, and any failure to do so would be a breach of the contract of employment.   This is, however, subject to the argument which I address below, in which it is said that no contractual duty became engaged in relation to any allegedly negligent statements in the particular circumstances of this case.   Two reasons are advanced for this.   First, it is said that the employers here were involved in collective discussions with the workforce and it was never intended that the communications should be seen as part of the relationship with the employees individually.   Second, it is submitted that the statutory duty to consult over TUPE should preclude both any contractual or tortious duty arising in this case.   I shall consider these arguments in connection with the common law duty in tort since they are advanced to defeat a claim arising under that head also.

(c)  The implied duty relating to pensions. 
64.	The implied duty relied upon here is as follows: 
“The first defendant would at all reasonable times take all reasonable steps to ensure that the plaintiffs were made aware of the true position in regard to their pension rights and to all other benefits and entitlements under their contract of employment.”
In fact it is only alleged that this duty was breached in respect of a failure to give information in respect of pension rights, and accordingly I will consider the term in that context.   This alleged duty is unlike the duty to take reasonable care because it purports to impose a positive obligation on the employer to give information to the employees, not simply to choose to take care over such information as he does give. 
65.	The claimants rely upon the Scally case, referred to above, as the basis for imposing this term.   In that case the facts were unusual.   Employees of the appellant Board were required to make contributions to a statutory superannuation scheme pursuant to contracts negotiated by representatives of the employees’ professional associations and trade unions.   If the employee had joined the Board too late to complete 40 years service, he had the right to purchase “added years” to make up the full 40 years’ contribution.   However, the right had to be exercised only within one year of the regulations coming into force, or of an employee joining the Board, whichever was the later.   Thereafter it was available but only on less favourable terms.   Four doctors failed to take advantage of these provisions, being unaware of their rights.   They successfully contended that in failing to notify them of their rights the employers were in breach of an implied term of the contract of employment which required them to inform the employees of the right.   Lord Bridge, with whose judgment the other Lords concurred, analysed the existence of the term in the following way ([1992] 1A.C. 294 at 306G): 
“Will the law then imply a term in the contract of employment imposing such an obligation on the employer?   The implications cannot, of course, be justified as necessary to give business efficacy to the contract of employment as a whole.   I think there is force in the submission that, since the employee’s entitlement to enhance his pension rights by the purchase of added years is of no effect unless he is aware of it and since he cannot be expected to become aware of it unless it is drawn to his attention, it is necessary to imply an obligation on the employer to bring it to his attention to render efficacious the very benefit which the contractual right to purchase added years was intended to confer.   But this may be stretching the doctrine of implication for the sake of business efficacy beyond its proper reach.
A clear distinction is drawn in the speeches of Viscount Simonds in Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555 and Lord Wilberforce in Liverpool City Council v Irwin [1997] AC 239 between the search for an implied term necessary to give business efficacy to a particular contract and the search, based on wider considerations, for a term which the law will imply as a necessary incident of a definable category of contractual relationship.   If any implication is appropriate here, it is, I think, of this latter type.   Carswell J. accepted the submission that any formulation of an implied term of this kind which would be effective to sustain the plaintiffs’ claims in this case must necessarily be too wide in its ambit to be acceptable as of general application.   I believe however that this difficulty is surmounted if the category of contractual relationship in which the implication will arise is defined with sufficient precision.   I would define it as the relationship of employer and employee where the following circumstances obtain:   (1) the terms of the contract of employment have not been negotiated with the individual employee but result from negotiation with a representative body or are otherwise incorporated by reference;   (2) a particular term of the contract makes available to the employee a valuable right contingent upon action being taken by him to avail himself of its benefit;   (3) the employee cannot, in all the circumstances, reasonably be expected to be aware of the term unless it is drawn to his attention.   I fully appreciate that the criterion to justify an implication of this kind is necessity, not reasonableness.   But I take the view that it is not merely reasonable, but necessary, in the circumstances postulated, to imply an obligation on the employer to take reasonable steps to bring the term of the contract in question to the employee’s attention, so that he may be in a position to enjoy its benefit.   Accordingly I would hold that there was an implied term in each of the plaintiff’s contracts of employment of which the boards were in each case in breach.”

66.	His Lordship also commented that the position might be quite different where the pension rights available to the employee were not part of his contract of employment but arose out of a separate contract between the employee and an insurance company or the trustees of the pension scheme. (p.306E.)
67.	It is to be noted that this term is very carefully framed and depends upon, in particular, the fact that the employee could not reasonably be expected to be aware of this term at all without it being brought to his attention.
68.	In my view there is no justification for applying Scally here so as to impose a general duty to make employees aware of their pension rights (or indeed the other terms and conditions of their employment.)   Scally cannot  be read as a general authority requiring an employer to give information about pension terms.   There are in my view three factors which make the Scally principle inapplicable to the facts of this case.   First, it is not and could not be alleged that the employees have not been informed of their pension rights with ICI, far less can it be said that they could only reasonably be expected to know about them if informed by ICI.   Second, the complaint is that the employees have not been fully informed about the precise nature of the benefits accorded by RES’s pension scheme; it is difficult to imagine that there could be a contractual duty requiring an employer to give information about the pension scheme of another employer, absent at least some very exceptional circumstances.   Third, the pension benefits in this case did not in any event arise under the contract but rather were conferred under a separate trust deed.    In my judgment, for those reasons in particular, it cannot conceivably be said that there is a duty to be derived from the principles in Scally which obliges ICI to provide that information. 
69.	The claimants have also argued that the obligation to provide the information arises from the general trust and confidence obligation.   If there were such a duty, it is surprising that Scally itself was not decided on that basis.   In my judgment this argument also fails: to accede to it would involve a wholly unjustified extension of that duty.   Moreover, a similar argument was run unsuccessfully in Eyett v University of Nottingham [1999] IRLR 87.   An employee asked for information about his pension if he retired on 31 July 1994.   He was accurately given that information, and did in fact retire on that day.   However, he would have been better off if he had delayed his retirement by a day until 1 August.   He was not told this and alleged that the employers had acted in breach of the implied duty of trust and confidence.  Hart J. rejected his claim.   After distinguishing the Scally claim (which in any event was not relied upon) he said this:
“In the final analysis, the question for determination comes down to this: does the implied term include a positive obligation to warn an employee who is proposing to exercise important rights in connection with his contract of employment that the way in which he is proposing to exercise them may not be financially the most advantageous way in the circumstances?   Expressed in these terms, it can be seen that the recognition of such a duty has potentially far reaching consequences for the employment relationship.   A degree of caution is therefore required. 
In my judgment a proper caution requires the court to examine how such a positive obligation would cohere with other default obligations implied by the law in the employment context.   The answer is “Not well”.    In the specific area of giving advice to employees in connection with their pension rights, the furthest the courts have gone in recognising such a default obligation appears to have been in Scally itself….”

After considering Scally, he said this: 
“It is, as I have said, rightly conceded that Scally provides no support for the complainant.   He undoubtedly knew of the existence of his early-retirement rights.   He was also able, pace the ombudsman, to have worked out for himself how best to avail himself of those rights by carefully studying the information set out in the explanatory booklet.   There is no suggestion that he ever asked for advice as to whether the choice he was making was a suitable one, nor, as I have already indicated, was there any finding that the university knew that he was making a decision under the influence of any mistake.
The fact that Scally provides no support for the complainant’s contention in my judgment tends to subvert, rather than assist, the proposition that the implied term of mutual trust and confidence includes within it a positive obligation to give advice of the kind which is now asserted.”

70.	In my view these comments are equally applicable here.   Indeed, there is the additional problem in this case to which I have referred; namely that the claimants are not even alleging that the employer was obliged to give them information about his own scheme, but someone else’s.    Moreover, the claimants had access to the RES scheme and were being told by that company about the scheme; there is no evidence at all that they were prevented from obtaining as much information about the scheme as they wished.   Further, the unions to which the employees belonged were even taking their own independent advice about it.   It would be a very dramatic extension of the implied duty of trust and confidence to apply the term so as to require ICI to provide information about RES’ pension rights in these circumstances.   Of course, the employer has a duty not falsely to misrepresent the rights conferred under the RES scheme, and to ensure that any statements he chooses to make are communicated after taking reasonable care.   But that is quite different to requiring him to give information.
71.	In Outram v Academic Plastics [2000] IRLR499, the Court of Appeal confirmed that there is no general duty on an employer to give advice to employees about their pensions either in contract or in tort.   Indeed, the Court held, relying upon some observations of Lord Bridge in Scally at p.524, that either the duty had to be inherent in the contractual relationship or it could not arise at all; there was no room for deriving a duty in tort if none existed in contract.
72.	Accordingly, in my judgment the only implied terms relied upon in this case which constitute implied terms in law of the contract of employment are the terms relating to the duty of trust and confidence and the closely related, if not identical, duty to act fairly and in good faith.   However, whether negligent conduct by the employer would, even if substantiated, amount to a breach of either of these terms is a more difficult issue.   It will depend upon the nature and scope of the breaches, if any.   I consider that question later in this judgment.

(d) Custom and practice and the Security of Employment Statement.
73.	The claimants also rely in this case upon a further term in the contract.   They submit that the Security of Employment Statement has been incorporated into the contract of employment.   The basis on which it is said to be incorporated is that it is an important feature of ICI’s industrial relations’ policy which has been followed regularly since 1975; that consequently it has become custom and practice to apply it; and that as such it has become incorporated into the contract of employment.   The claimants rely upon the decision of the Employment Appeal Tribunal in Quinn v Calder Industrial Materials Ltd. [1996] IRLR 126.   In that case the question was whether a policy unilaterally adopted by management to pay enhanced redundancy terms was enforceable.   The EAT held on the facts that it was not, and in so doing commented on the range of factors that would be relevant to determine whether a policy should be implied as a term of the contract or not.   They included a requirement that the policy should have been drawn to the attention of the employees and applied without exception for a substantial period.   These will be factors which may, depending on the particular circumstances, support the inference that the employer intended the contract to have contractual effect. Ultimately, however, the issue is whether the practice justifies the inference that the employer intended to be contractually bound, as Quinn recognised. 
74.	Ms. Booth advances a number of reasons why such an inference cannot properly be reached here.   First, the Agreement is expressed to be a statement of policy, which is not the same as contract. (It is perhaps relevant to note that the 1990 guidance also emphasises the importance of the spirit rather than the letter of the agreement.)   Second, the language of the Statement is not the language of legal obligation but rather of broad principles.   Third, when ICI gave contractual effect to the severance terms in June 1991, it did not at the same time seek to give the same effect to the Statement; this was plainly no oversight since there was reference in the letter to the Statement.   Fourth, the fact that ICI has regularly applied it is entirely consistent with the company considering it to be good industrial relations’ practice to do so and does not justify the inference that it has done so because it considers itself contractually bound: see Young v Canadian Northern Railways [1931] A.C.83 
75.	In my judgment these factors all point against drawing the inference sought by the claimants.   Indeed, I would add that certain of the provisions seek to impose duties on the employees which they have not been asked to undertake nor agreed to comply with e.g. to look for jobs elsewhere and attend interviews in a positive spirit.   I doubt whether the employers would have accepted or should be deemed to have accepted that they would be contractually bound by elements of the Statement applying to them unless the employees were likewise to be bound by those parts pertaining to them, yet I do not see how the employees could be taken to have agreed to become bound without their agreement.   I do not, therefore, accept that the 1975 Statement was incorporated into the individual contracts of employment. 

(2)  The claim in tort: negligent misrepresentation.
76.	As I have indicated, the duty to take reasonable care over the representations made is invoked as a duty owed by both the first and second defendants.

The elements of the tort.
77.	In order to make good this claim, the claimants accept that the onus is on them to prove:
(1) that the first and second defendant did owe them a duty of care;
(2) that there was a breach of that duty i.e. the representations were in fact false and could not have been made by someone exercising reasonable care;
(3) that they relied upon those representations and thereby suffered loss; and
(4) that the loss suffered was of a kind falling within the scope of the duty.
78.	In this case the first defendants deny that any of these elements have been satisfied save for accepting that there may have been some reliance on some of the statements made.   They deny that any duty of care arose; they submit that in any case there was no breach of the duty; and they contend that even if there were, it did not cause the claimants any loss.   On the question of loss, they submit that either the claimants would have entered into the contract with RES in any event; or even if they had not, they would have been financially worse off if they had refused the employment and sought to remain with the first defendant.  
79.	The second defendants, by contrast, accept that they were under a duty to take care but only to ensure the accuracy of the information given.   They also deny that there has been a breach of that duty or, if there has, that any loss has resulted.
80.	I will consider each of these elements separately, indicating where the arguments of the two defendants diverge.

(a)  Is there a duty of care?
81.	Does a duty of care arise in this case?   In general the courts show some reluctance to impose a duty of care in circumstances where the claimant alleges economic loss flowing from a negligent misstatement or advice.   The well-known case of Hedley Byrne v Heller & Partners [1964] A.C.465 first established that there could in principle be liability for economic loss from statements negligently made, and subsequent cases have sought to identify the circumstances where such a liability might arise.   In Hedley Byrne itself Lord Devlin held that the duty applied in cases where there was a contract or a relationship equivalent to contract (p.528-529.)   Lord Morris considered that it would arise where the defendant had special skills which he was making available to another who was relying upon those skills (p.502.)   This concept of special skills should be widely construed.  In Spring v Guardian Assurance, a case I have already considered, four of their Lordships held that the duty of care arose in tort where the employer was giving a reference.   Lord Goff observed that the “special skill” to which Lord Morris made reference in Hedley Byrne was to be understood “in a broad sense” and would include special knowledge ([1995] 2 A.C. 296 at 318G-H.)
82.	In Caparo Industries v Dickman [1990] 2 A.C.605, Lord Oliver summarised the guidance to be derived from Hedley Byrne as follows (p.638C-E): 
“What can be deduced from the Hedley Byrne case, therefore, is that the necessary relationship between the maker of a statement or giver of advice (“the adviser”) and the recipient who acts in reliance upon it (“the advisee”) may typically be held to exist where (1) the advice is required for a purpose, whether particularly specified or generally described, which is made known, either actually or inferentially, to the adviser at the time when the advice is given; (2) the adviser knows, either actually or inferentially, that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose; (3) it is known either actually or inferentially, that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent inquiry, and (4) it is so acted upon by the advisee to his detriment.   That is not, of course, to suggest that these conditions are either conclusive or exclusive, but merely that the actual decision in the case does not warrant any broader propositions.”

Later he added that any duty of care only arises where 
“the adviser knows or ought to know that [the statement or advice] will be relied upon by a particular person or class of persons in connection with that transaction” (p.641)

83.	These passages were cited and relied upon by Neill LJ in McNaughten v Hicks Anderson & Co. [1991] 2 QB 113,124 and 126.   In addition to the factors referred to by Lord Oliver, Neill LJ also stressed that in determining whether there was a duty of care, it was also relevant to focus upon the state of knowledge of the adviser, including such knowledge as would be reasonably attributed to him; and whether the advisee would be expected to use his own judgment or take independent advice.   These are among the factors to be weighed in consideration in order to determine whether, objectively viewed, the defendant can be said to have assumed a responsibility in law for the statements he has made.   As Lord Steyn said in Williams v Natural Life Ltd. [1998] 1 W.L.R. 830 at 835D: 
“The touchstone of liability is not the state of mind of the defendant.  An objective test means that the primary focus must be on things said or done by the defendant or on his behalf in dealings with the plaintiff.   Obviously, the impact of what a defendant says or does must be judged in the light of the relevant contextual scene.”
	
Was a duty owed by the first defendants?
84.	Applying these principles to the particular facts of this case, in my judgment the first defendant was under a duty to take reasonable care in giving information.   They had assumed a responsibility in law for the information they chose to provide.   I say this for the following reasons (which in large part mirror those for imposing the duty in contract.)
85.	First, there can in my view be no doubt that the first defendant knew and intended that the statements made should be drawn to the attention of the employees.   Indeed, many of the statements relied upon by the claimants were made directly to them by representatives of the first defendant, and many of those that were not were made to the claimants’ trade union representatives in circumstances where it was plain that they would or might be communicated to the affected staff.   Second, it is also plain – and this was not disputed by any of the first defendant’s witnesses - that the statements were made at least in part for the purpose of seeking to encourage the staff to join RES by making statements intended to give them reassurance about their future with that company.   Third, the class of employees affected was limited and was clearly identifiable i.e. those employed in the business to be transferred.   Fourth, the first defendant was in a particularly good position to know the veracity of the information and opinions it was expressing, given its status as a party to the negotiations.   It had access to information which the employees did not have, in particular knowledge as to its future plans as well as the precise terms of the transfer agreement itself.   Fifth, it was known that the special information which ICI had and which was being imparted to the claimants would be relied upon by them.   Finally, ICI itself had a material interest in the transfer going ahead since it wished to retain contact with a source of valuable and skilled labour.   
86.	In my judgment imposing the duty on the first defendants in this case does not extend the current principles in any way and indeed falls well within the parameters of the decision in Spring. 

Just, fair and reasonable
87.	However, it is generally accepted that in order for a duty of care to apply, it should be just, fair and reasonable to impose it.   This is generally so whatever the nature of the damage sustained by the claimant: see the observations of Lord Steyn in Marc Rich & Co. v Bishop Rock Marine Co. [1996] 1 A.C. 211 at p.235D –236A.  (In the earlier decision of Henderson v Merrett Syndicates [1995] 2 A.C.145 at 181C-D, Lord Goff had expressed the view, obiter, that these were not relevant factors to consider in Hedley Byrne cases once an assumption of responsibility had been objectively established in relation to the provision of services, but he considered it was relevant where allegedly negligent misstatements were concerned.)  Ms. Booth has submitted that there are reasons of policy in this case why no tort duty should be imposed logically, it seems to me that they are best considered as reasons why it would not be just, fair or equitable to impose the duty. These arguments fall under three heads, although two of these arguments are also relied upon as reasons why there should be no duty arising in either contract or tort.

Three policy arguments against imposing the duty.
88.	The first argument is solely directed towards identifying a reason why there can be no liability in tort.   Ms. Booth submits that, as Lord Bridge commented in Scally, “if a duty of the kind in question was not inherent in the contractual relationship, I do not see how it could possibly be derived from the tort of negligence.” (p.303A.)   Ms. Booth says likewise here; there is no contractual duty and accordingly it would be wrong to find one in tort.   Mr. Bueno submits that Lord Bridge’s observations apply only where it is in essence being alleged that it is the nature of the relationship created by the contract which gives rise to the duty, and that the observations are not relevant where the duty arises independently of the relationship.   I accept that submission, but I do not think it helps Mr. Bueno since in my judgment it is only because of the nature of the relationship created by the contract that it can be said that any duty to take reasonable care arises.   However, since I have found that there is a contractual duty to take care arising under the contract of employment, albeit one that is not pleaded, the premise of Ms. Booth’s argument falls away and the conclusion cannot follow.
89.	The other two arguments are advanced to counter the claim that there is a duty arising either in contract or in tort.   The first of these arguments is that the nature of the consultation here is essentially collective, being to the body of the workforce as a group, and that as a matter of policy it would be wrong to imply any duties owed to individuals from this collective act.  Ms. Booth contends that the law should steer clear of seeking to regulate these areas which are better left to be determined by the cut and thrust of industrial relations negotiations and discussions.    I categorically reject this sweeping policy submission.   The law does not now adopt a policy of abstention in the field of labour relations, if it ever truly did.    I recognise, as I have already said, that the collective feature of this case is important, and in particular when determining what is likely to have occurred had the information or advice been different.   But I do not accept that this fact precludes the employers from owing a duty to the individuals to whom the information was supplied.   By making it available to those individuals, they were intending to influence them both individually and colletively.   Nor in this context do I accept Ms. Booth’s submission that by imposing a duty of care, I would to any material extent be discouraging employers from consulting with their staff over proposals affecting their future.
90.	The final argument is that there is a statutory duty to provide information and to consult over a TUPE transfer, with its own statutory procedures and remedies, and that in the circumstances the court should recognise that Parliament could not have intended that these procedures and remedies should be subverted by virtually identical common law claims. 
91.	For this part of their argument, ICI rely upon the decision of the House of Lords in Johnson v Unisys [2001] 2 WLR 1076.   In that case an employee who had been summarily dismissed successfully took proceedings for unfair dismissal, but then after they were determined sought to sue for wrongful dismissal.   He claimed that because of the manner of his dismissal he had suffered a mental breakdown and was unable to work.   The basis of his case was that he had been dismissed in breach of the duty of trust and confidence.   The judge struck out his claim as disclosing no cause of action, and the Court of Appeal upheld that decision.   Their Lordships, by a majority, (Lord Steyn dissenting) dismissed the employee’s appeal.   As I have already indicated, their Lordships accepted that in principle it would be open to the courts to imply a term that the power of dismissal should be exercised fairly and in good faith.   However, a majority of their Lordships (Lords Bingham, Nicholls, Hoffman and Millett) held that it would undermine the statutory framework of unfair dismissal protection for the common law to be developed in that way.   In particular, it would enable procedures to be taken in the ordinary courts rather than the specialist employment tribunals, and would permit recovery of compensation beyond the maximum stipulated by Parliament.   Lord Hoffman put the matter as follows (para. 54): 
“My Lords, this statutory system for dealing with unfair dismissals was set up by Parliament to deal with the recognised deficiencies of the law as it stood at the time of Malloch v Aberdeen Corporation [1971] 1 WLR 1581.   The remedy adopted by Parliament was not to build upon the common law by creating a statutory implied term that the power of dismissal should be exercised fairly or in good faith, leaving the courts to give a remedy on general principles of contractual damages.  Instead, it set up an entirely new system outside the ordinary courts, with tribunals staffed by a majority of lay members.  Many of the new rules, such as the exclusion of certain classes of employees and the limit on the amount of the compensatory award, were not based upon any principle which it would have been open to the courts to apply.  They were based upon policy and represented an attempt to balance fairness to employees against the general economic interests of the community.”

He later summarised his conclusion (para. 58):
“For the judiciary to construct a general common law remedy for unfair circumstances attending dismissal would be to go contrary to the evident intention of Parliament that there should be such a remedy but that it should be limited in application and extent.”

92.	Ms. Booth submits that there is an exact parallel in this case.   There is a statutory duty for the employer to give information to recognised trade unions or, in their absence, employee representatives; and there are procedures provided for enforcing that duty in the employment tribunals, with maximum compensation provided where there is a failure to comply.   Ms. Booth submits that these provisions would cover a case where the employer failed to give accurate information negligently; it would be akin to a failure to provide the information. 
93.	Even assuming that Ms. Booth is correct on that point (and I express no view as I have heard no detailed argument on the point), I do not accept this submission.   In Johnson all the matters of which Mr. Johnson complained were within the jurisdiction of the tribunal.   Here, that is not so.   First, the duty is owed not to any individual but to the recognised union or employee representative; I would be very reluctant to conclude that this statutory collective duty prevented a duty being owed to individuals where the employer had taken it upon himself to provide information for consideration by them.   As Mr. Bueno says, this is not a case like Johnson where the claimants are seeking to have a second bite of the cherry having already had the substance of their complaint heard in the tribunal.   Second, the scope of the information to be provided pursuant to the statutory provisions is limited and would not cover all the information volunteered in this case.   Third, the statutory duty arises where there is already a proposal to transfer; in this case the purpose was at least in part to ensure that the employees were content to transfer and if they were not, there would be no transfer.   They were not being given information about a decision already taken.   Finally, even if the statutory provisions do provide a remedy where the employer fails through negligence to provide accurate information, the complaint is not then directed at the negligent statement and the effect it has caused.   Rather the focus is on the fact that the employer has provided no information (since negligent information is the equivalent of no information.)   In other words, the statute gives a remedy for failing to provide information which the employer would not, absent the statute, be obliged to give at all.   It does not provide a remedy where the substance of the complaint is that loss has been suffered by individuals as a consequence of information being negligently provided, whether voluntarily or pursuant to statute.
94.	Accordingly, I reject Ms Booth’s submissions on these points and I find that they do not in principle prevent a duty arising, in both contract and tort, to take care in the provision of the relevant information.

Reliance and the duty of care.
95.	I should, however, at this stage note that by finding that there is in principle a duty of care arising in the circumstances of this case, it does not follow that there will be liability in respect of each element of false information negligently provided.   It may not be reasonable for the claimants to rely upon each piece of information to the same degree.   In those circumstances it may be said that in relation to such information there is, objectively viewed, no assumption of responsibility and therefore no duty arises.   In Hedley Byrne itself the fact that the representor knew or ought to have known that the information was reasonably being relied upon was an important element in creating what would, absent a disclaimer, have been a duty of care: see e.g. the judgment of Lord Reid, [1964] A.C.465 at 486.   Alternatively, the analysis can be that the absence of reasonable reliance breaks the chain of causation.   Either way, no liability results.   I shall consider the question of unreasonable reliance in the latter context as an element in establishing causation.

Was a duty owed by the Second Defendants?
96.	Does the duty of care also apply to RES?     Mr. Hillier, counsel for RES, accepts that there is a duty of care, but he submits that the duty is merely to take reasonable care to ensure that any information given or statement made is accurate.   As Mr. Hillier points out, this leads to a distinction between facts on the one hand and opinions and intentions on the other.   This is because where the statements relied upon are statements of intention or opinion, they will be accurate if the party making them genuinely believes them to be true at the time they are made.   However unjustified or foolish an opinion, and however unrealistic it may be to believe that an intention can be implemented, they are nonetheless accurate statements of the state of someone’s mind if they are genuinely held.   Accordingly, on this analysis the duty to take reasonable care only applies to representations of fact.   If a statement of fact is false through want of care, Mr. Hillier accepts that in principle RES could be liable.   In relation to statements of intention and opinion, the duty on his analysis amounts to no more than a duty not to deceive.   There may be liability in fraud but not negligence. 
97.	Mr. Hillier submits that a prospective employee relies upon his prospective employer to be truthful but he is not entitled to rely upon anything more than that.   He asks rhetorically whether it can be right, for example, to examine an employer’s business plans to see if the opinions expressed by the employer can be justified.
98.	I do not find this rigid distinction between fact on the one hand and, opinion and intention on the other a convincing one.   Nor is the distinction between fact and opinion at least consistent with authority.   
99.	In Esso Petroleum v Mardon [1976] 1Q.B.801 at 820 (a case I consider further later in this judgment), Lord Denning said this: 
“It seems to me that Hedley Byrne v Heller & Partners [1964] A.C.465, properly understood, covers this particular proposition: if a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another –be it advice, information or opinion- with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct and that the advice information or opinion is reliable.”

100.	Similarly, the giving of references, as in Spring, will often involve the expression of opinion but is subject to the Hedley Byrne principles.   There is an implied representation that an opinion is reliable and it is that representation which may be false if the opinion is not reasonably held.
101.	It follows that once it is conceded that there is a duty to take care in respect of facts, there is no reason in principle why that obligation should not apply equally to expressions of opinion at least.   I think that by the end of his submissions Mr. Hillier was effectively conceding that opinions could in principle be treated in the same way as facts, but that both were in a different category to intentions.
102.	As to intentions, it is true that counsel were not able to show me any authority where statements of intention have been the subject of a Hedley Byrne complaint, but in some cases at least I see no reason in principle why they should not be.   In my view there will be circumstances where it will be possible to infer that a statement of intention carries with it a further implied representation that the intention is at least capable of being fulfilled.   That is a statement of fact.   So, for example, if I take a meal in a restaurant, I am impliedly representing not only that I will pay for the meal, but also that I am able to do so: see D.P.P v Ray [1974] A.C.370.   If that implied representation is not one which a reasonable person could make in the circumstances, then I see no reason in principle why, in that exceptional case, there should not be liability if the other elements of the tort are satisfied.
103.	However, there will of course be no liability if there are reasonable grounds for believing that it could be fulfilled, even if in the event it was not.   In most cases no doubt it is likely to be very difficult to show that there is no proper basis for making statements of future intention.   Furthermore, it will also be more difficult in practice for a claimant to show that he relied on a statement of intention in a manner causing him loss since there is always the risk that the intention will not in the event be implemented for a whole host of reasons, even where it was capable of being fulfilled when made.   I consider this point more fully at para. 131.   But in my judgment whilst this poses a very real –no doubt often an insuperable- difficulty that a claimant will face in establishing liability, it does not justify denying the possibility of a successful action as a matter of principle in every case.

(b)  Was there a breach?
104.	There are two relevant questions here.   The first is whether the representations were made as alleged.   The second is, assuming that they were made, whether they were negligently made.   The answer to each of those questions depends upon an analysis of the evidence.   I return to that below.

(c)  Did the loss result from the breach?
105.	Reliance is not always a precondition of Hedley Byrne liability (see e.g. White v Jones [1995] 2 A.C.207.)   But it is common ground that it is so in the circumstances of this case.   It is only because the claimants allege that they relied and acted upon the representations made that they suffered loss.   Reliance is therefore the way in which the claimants are able to establish causation.   However, it is not enough for the claimants to have relied upon any negligent statements: in addition, it is necessary for that reliance to be reasonable.   This is plain from a passage from Lord Steyn’s judgment in Williams v Natural Life Health Foods [1998] 1 WLR 830.   In that case the question was whether a company director was liable for the negligent representations of the company.  The House of Lords held not.  In giving a speech with which Lords Goff, Hoffman, Clyde and Hutton agreed, Lord Steyn said this (p.836F-837B): 
“That brings me to reliance by the plaintiff upon the assumption of personal responsibility.  If reliance is not proved, it is not established that the assumption of personal responsibility had causative effect…… The test is not simply reliance in fact.   The test is whether the plaintiff could reasonably rely on the assumption of responsibility by the person who performed the services on behalf of the company.”
	
On this analysis, the concept of reliance determines the question of causation. 
106.	Unfortunately, the authorities are not always at one on precisely what reliance involves.   This is in part because the concept is employed in a variety of different contexts where its significance might reasonably vary.  For example, it seems clear that the nature of the reliance necessary to establish a claim in fraud is different to that required where damages are claimed for negligence.   Accordingly, if the same concept of reliance is to be used in negligence as in other contexts, it may be necessary to require additional conditions to be met before liability is imposed.
107.	Three concepts of reliance can usefully be distinguished from the case law, and they provide very different tests for determining whether the loss flows from the breach.   
108.	The concept most favourable to a claimant is one which attaches liability if the false representation was one of the factors relied upon by the claimant.   Mr. Bueno adopted this approach in claiming that causation is established if the claimants can show that they relied upon the information in the sense that they were substantially induced not to oppose the transfer as a result of the representations made.   He relied on a passage of Bowen LJ in Edgington v Fitzmaurice (1885) 29 Ch.459 at 483 where the judge said that it was enough for fraud that the claimant’s mind “was disturbed by the misstatement of the defendants, and such disturbance was in part the cause of what he did”.   To like effect, Fry LJ said that it matters not that there are two inducements, provided the false statement actually influenced the claimant.   Although that was a fraud case, there are statements to similar effect in the decision of the Court of Appeal in JEB Fastenings v Marks Bloom and Co. [1983] 1 WLR583, an action for negligent misstatement.   In that case the plaintiffs sued a firm of accountants for negligence in the preparation of the accounts of a company which they subsequently acquired.   The plaintiffs alleged that they had relied upon the accounts in determining to buy the company.   Woolf J at first instance held that the plaintiffs had relied upon the accounts to the extent that they were encouraged by them to enter into the transaction, but he concluded that they had suffered no loss since they would have entered into the transaction even if the accounts had been accurate.   The Court of Appeal (Sir Sebag Shaw, Stephenson and Donaldson LJJ), considered that the judge had been inconsistent to find that there had been reliance and yet no loss.   Stephenson LJ commented as follows (p.589b):
“But, as long as the representation plays a real and substantial part, though not by itself a decisive part, in inducing a plaintiff to act, it is a cause of his loss and he relies on it, no matter how strong or how many are the other matters which play their part in inducing him to act…And it is only because the judge complicated the matter by introducing what would have encouraged for what did induce and so finding reliance where no true reliance was, that he has given counsel for the plaintiffs any real ground for appealing his judgment…”

On this analysis it is not necessary for the claimant to show that he would have acted differently had there been no negligent representation: real and substantial influence is enough to establish a cause of loss and therefore a right to damages, (although it was not in fact established on the facts of that case.)  For reasons I develop below, I do not consider that this is the proper test of causation in Hedley Byrne cases, although it is the approach adopted in fraud cases: see the decision of the House of Lords in Smith New Court Securities Ltd. v Scrimgeour Vickers (Asset Management) Ltd. [1997] A.C.254.
109.	Sometimes, however, the concept of reliance is more narrowly defined.    For example, in a passage of Millett LJ’s judgment in the case of Bristol and West Building Society v Mothew [1998] Ch.1 which I reproduce below at para.114, he defines reliance as being established where the claimant “would not have acted as he did if he had not been given such advice or information”.   This is the “but for” test of causation.   To establish reliance, the claimant must show not simply that the representation made constituted a real and substantial influence, but that he has acted differently as a result of the information or advice than he would otherwise have done. 
110.	However, the parties do not agree that this is the appropriate test to apply when assessing causation.  The alternative formulations of the appropriate test are these: in determining whether loss has been suffered, is it enough for the court simply to ask whether the representation has caused the claimant to enter into the transaction in question in the sense that he would not have done so if nothing had been said?   Or should the court go further and ask what would have happened if a correct (in the sense of non-negligent) representation had been made?   Mr. Bueno and Ms. Booth both submit that the former question is all that need be posed.   In effect they submit that it is enough that the claimant relied upon the representation in the sense in which that term was used by Millett LJ in the Mothew case.   What would have occurred had the correct representation been made is irrelevant. 	
111.	By contrast, Mr. Hillier for RES submits that a claimant cannot establish loss unless he can show that he would have acted differently had the correct information been provided.   If he would have acted the same way, then there is no loss.
112.	Support for the former position is found in the decision of the Court of Appeal in Downs v Chappel [1997] 1 WLR426.   In that case the plaintiff bought a bookshop as a result of representations by the vendor about turnover and profit, which figures were verified as being correct by the second defendants, a firm of accountants.   The vendors were sued in deceit and the accountants for negligent misrepresentation.   The judge found on the issue of breach against both defendants and found that the plaintiff would not have entered into the contract if the information had not been given.  However, he went on to hold that the plaintiffs would have entered into the transaction even if the correct figures had been given.   Accordingly, he held that there was no loss caused by either of the defendants.   Hobhouse LJ, with whose judgment Roch and Butler Sloss LJJ concurred, upheld the plaintiff’s appeal.   He held that in the claim for negligent misstatement advanced in that case, as in a claim for deceit, it was not legitimate to ask whether the contract would have been entered into even if the correct representations had been made.   He took the view that in negligent misstatement, as in deceit, a plaintiff who establishes that he has relied upon a statement is entitled to the losses flowing there from.   
113.	Admittedly, this judgment was cast in general terms, but it is important to bear in mind the factual context in which the judgment was given.   In the Downs case the accountants were not in a position to provide any information at the time they purported to verify the figures.   As Hobhouse LJ said: 
“the only answer that the second defendants could have properly given was that they did not know.   It was wrong both factually and legally for the judge to create the hypothesis that the second defendant could and would have given the plaintiffs accurate figures so as to give them an accurate basis upon which to decide whether to make a contract with Mr. Chappell.” 

In other words, this was one of those relatively rare cases when it is not possible to provide correct information at all.   In my judgment, for reasons I give below, this is crucial to understanding the scope of that decision. 
114.	The effect of the Downs decision was considered by the Court of Appeal in the later case of Bristol and West Building Society v Mothew [1998] Ch.1. to which I have already made reference.  In that case a solicitor wrongly advised the Building Society that his client, to whom the Society lent money under a mortgage to purchase a house, had not borrowed from anyone else.   Subsequently the clients defaulted on the mortgage and the Building Society enforced the security.   However, they suffered a loss and sought to make the solicitor liable for the whole of the loss alleging breach of contract, negligence and breach of fiduciary duty.   The Court of Appeal held that the solicitor was liable for giving negligent advice but not for breach of fiduciary duty.   In the course of his judgment Millett LJ. stated that he considered the court to be bound by the ruling of the Court of Appeal in Downs v Chappell.   His analysis of the effect of that decision, when considered in the light of the established legal authorities, was as follows: 
“In considering the issue of causation in an action for negligence brought by a client against his solicitor it appears from Downs v Chappell that it is necessary to distinguish between two different kinds of case.
Where a client sues his solicitor for having negligently failed to give him proper advice, he must show what advice should have been given and (on a balance of probabilities) that if such advice had been given he would not have entered into the relevant transaction or would not have entered into it on the terms he did.   The same applies where the client’s complaint is that the solicitor failed in his duty to give him material information.   In Skyes v Midland Bank Executor and Trustee Co Ltd [1971] 1 Q.B. 113, which was concerned with a failure to give proper advice, the plaintiff was unable to establish this and his claim to damages for negligence failed.   In Mortgage Express Ltd v Bowerman & Partners [1996] 2 All E.R. 836, which was concerned with a failure to convey information, the plaintiff was able to establish that if it had been given the information it would have withdrawn from the transaction and its claim succeeded.
Where, however, a client sues his solicitor for having negligently given him incorrect advice or for having negligently given him incorrect information, the position appears to be different.   In such a case it is sufficient for the plaintiff to prove that he relied on the advice or information, that is to say, that he would not have acted as he did if he had not been given such advice or information.   It is not necessary for him to prove that he would not have acted as he did if he had been given the proper advice or the correct information.   This was the position in Downs v Chappell [1997] W.L.R. 426.”

115.	According to this analysis, the Court in Downs was seeking to lay down general principles for bad advice.   The judgment leads to a distinction between cases where no advice is given and those where bad advice is given.   In the former, it is necessary for the claimant to show that he would have acted differently had the correct advice been given; in the latter, it is necessary for him merely to show that he acted differently than he would have done had no advice been given.   It is difficult to see much logic in such an arbitrary distinction, but plainly if I am bound by it, I must follow it.
116.	The question arises whether I am indeed bound by it.   In my judgment I am not.   I do not consider that on a proper analysis either of the other two judges in the Court of Appeal adopted the same reasoning as Millett LJ.   Otton LJ, in the course of a short judgment, referred to the fact that the issue of liability was being sent back for further consideration by the judge, and said this: 
“The judge may find as a fact that there was no reliance or that the plaintiff would have behaved in the same or substantially the same manner if he had been given accurate information; in either event the negligence had no causative potency.” 

117.	Plainly this is at odds with the analysis of Millett LJ precisely because it requires a consideration of what would have happened had the correct information been given.  
118.     Staughton LJ considered the effect of Downs v Chappell in the following way: 
“The Court of Appeal in the Banque Bruxelles case began with a reference to the well known principle that damages should be as nearly as possible the sum which would put the plaintiff in the position in which he would have been if he had not been injured.   That would lead to two possible answers in the present case.   (1) If there had been no report from Mr. Mothew to the building society, the money would not have been lent; the society would still have their £59,000.   There would have been no transaction, a phrase which I use not as a label for anything but as a description of the act.   (2) If Mr. Mothew had provided an accurate report to the building society, then they might have been content to proceed on the terms previously proposed, or, they might have made a revised offer, or they might have proceeded as in (1) above.   There is a triable issue as to that.   Left to myself, I would have ruled that (2) was the appropriate situation for the judge to consider in assessing the damages.
But I have to acknowledge that Hobhouse LJ in Downs v Chappell [1997] 1 W.L.R. 426, with the agreement of Butler-Sloss and Roch L.JJ., preferred method (1), both for fraudulent misrepresentation and for negligence.
Lord Hoffmann, in Banque Bruxelles case [1997] A.C. 191, 211, as it seems to me, considered that either method was the wrong place to begin:
“Before one can consider the principle on which one should calculate the damages to which a plaintiff is entitled as compensation for loss, it is necessary to decide for what kind of loss he is entitled to compensation.”

I do not think that he was treating Downs as binding law; in any event, he was not satisfied that it could be relied upon in view of the Banque Bruxelles decision.   Accordingly, I do not treat the observations of Millett LJ on the Downs decision as binding upon me.
119.	Hobhouse LJ in turn commented upon the decision in the Mothew case in Swindle v Harrison [1997] 4 All E R 705.   I need not rehearse the facts of that case, which related to a claim for breach of fiduciary duty.   In the course of his judgment, Hobhouse LJ made the following observations on the Mothew decision: 
“In conclusion, I would add a footnote about the statement in Bristol and West Building Society v Mothew (t/a Stapley & Co) [1996] All ER 698 at 705-706, [1997] 2 WLR 436 at 443 that Downs v Chappell [1996] 3 All ER 344, [1997] 1 WLR 426 was authority for the proposition, and bound them to hold, that it was sufficient to succeed in the tort of negligence for a plaintiff to prove that the defendant had made a negligent misrepresentation on which he, the plaintiff, had relied and that it was irrelevant what representation the defendant would have made if he had been careful.   This was not in fact the decision in Downs v Chappell.   In that case, the negligent accountant had purported to verify figures for a business at a time when he had no basis to confirm any figures at all (see [1996] 3 All ER 344 at 349, [1997] WLR 426 at 431.)   The accurate figures were then unknown and the accountant should have said so.   If he had said so, the plaintiff would not have purchased the business.   The figures used by the judge were not produced for at least another 16 months, by which time the plaintiff had long since bought the business and become committed to the losses which formed the subject matter of the action.    The court in Downs v Chappell reversed the judge on this point because he had based his decision on the later, irrelevant, figures (see [1996] 3 All ER 344 at 351-352, [1997] 1 WLR 426 at 433.)”

120.	In my view this supports the view that the Downs decision should be read in the context of its particular facts.   Plainly, Hobhouse LJ was not intending in Downs to lay down a universal rule about how to assess damages in cases of negligent advice, and in my view his judgment does not have to be read as though he did.
121.	Finally, even if, contrary to the views I have expressed, I would otherwise be bound by the observations of Millett LJ in the Mothew case as to the effect of the Downs decision, in my view they can no longer stand in the light of the subsequent decision of the House of Lords in Nykredit Plc v Edward Erdman Ltd. [1997] 1 WLR 1627.   In that case their Lordships had to consider the question of interest on the damages which arose in the Banque Bruxelles case, which I consider more fully below. This involved answering the question when loss was sustained.   In the course of giving judgment, Lord Nicholls said this: 
“When, then, does the lender first sustain measurable, relevant loss?   The first step in answering this question is to identify the relevant measure of loss.  It is axiomatic that in assessing loss caused by the defendant’s negligence the basic measure is the comparison between (a) what the plaintiff’s position would have been if the defendant had fulfilled his duty of care and (b) the plaintiff’s actual position.   Frequently, but not always, the plaintiff would not have entered into the relevant transaction had the defendant fulfilled his duty of care and advised the plaintiff, for instance, of the true value of the property.   When this is so, a professional negligence claim calls for a comparison between the plaintiff’s position had he not entered into the transaction in question and his position under the transaction.   That is the basic comparison.   Thus, typically in the case of negligent valuation of an intended loan security, the basic comparison called for is between (a) the amount of money lent by the plaintiff, which he would still have had in the absence of the loan transaction, plus interest at a proper rate, and (b) the value of the rights acquired, namely the borrower’s covenant and the true value of the overvalued property. (emphasis added.)

122.	In my judgment the underlined sentences make it clear that there is only recoverable loss where the claimant does something as a result of the representation that he would not have done had the defendant given the correct advice or information. 
123.	Lord Hoffman agreed and in a short judgment added this (p.1638E):
“…In order to establish a cause of action in negligence [the claimant] must show that his loss is attributable to the overvaluation , that is, that he is worse off than he would have been if it had been correct.”. (emphasis added.)

124.	Neither the Downs nor the Mothew case were cited to their Lordships, nor were they referred to by them.   But in my judgment, it is not possible to give the Downs decision the effect which Millett LJ did in the Mothew case consistently with the judgments in that case.
125.	I would therefore summarise the position as follows.   The basic principle when assessing damages is to put the claimant “in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation” (see Lord Blackburn in Livingstone v Raywards Coal Co (1880) 5 App.Cas. 25 at 39.)   The potential difficulty with negligent misstatement is that the defendant can avoid committing the tort in one of two ways.   Either he can give no information at all; or he can give information which is not negligent.   Ms. Booth submits that one should assess loss by assuming that no information at all would have been given unless there was a specific legal duty to give information, such as a contractual duty as in Banques Bruxelles.   I do not accept that.   It seems to me that at the very least when the claimant is looking to the defendant to provide information and the latter has agreed to do so, it is unrealistic to say that it should be assumed, when assessing loss, that no information would have been given.   If a surgeon negligently carries out an operation, the damages are assessed by asking what would have happened had he carried the operation out properly, not by asking what would have befallen the patient had he been left to fester.   This is so even where there is no specific duty to carry out the operation.   Sometimes, as in Downs v Chappel, the only proper answer that the defendant could properly give to someone seeking information is that no information can be given, because it is not available, or at least not to the defendant.   It is only in those exceptional circumstances that it is appropriate to ask whether the plaintiff would have entered into the transaction even if the information had not been forthcoming at all rather than asking what would have happened if the information had been correct.   That would then reflect what the defendant should have done to avoid committing the tort. 
126.	Whichever principle is applied, it may sometimes be the case that if no tort had been committed, the defendant would not have entered into the transaction.   The defendant would then be liable for the consequences of the plaintiff entering into the transaction, subject however to the loss falling within the scope of the duty of care.   However, in other cases the evidence may show that the probability is that the parties would have entered into some different transaction rather than no transaction at all.   Plainly that will give rise to a different quantum of liability, but as Lord Hoffman observed in the Banques Bruxelles case (p.218G), this is not a distinction of principle warranting a difference in the legal treatment of the two situations.
127.	In this case I am satisfied that on the assumption that there were negligent statements, the proper approach in assessing loss is to ask what would have happened had the correct information or advice been given.   It is not suggested that this is like Downs where it can be said that the only proper approach by the employer would have been to give no information at all.   Of course, the loss recoverable on that basis must in addition be of a kind falling within the scope of the duty of care. 

Two further features about the concept of reliance. 
128.	There are two particular additional features relating to the concept of reliance which the defendants seek to emphasise in this case.   First, not every representation that has some bearing upon a decision can be said to have been relied upon, however widely that concept is construed.   This point was lucidly made by Donaldson LJ, as he then was, in the JEB Fastenings case.   He also held that it was clear from the judge’s findings in that case that he had found no causal connection between the false information and the losses incurred.   He distinguished different meanings which may be given to the concept of reliance as follows: 
“In real life, decisions are made on the basis of a complex of assumptions of fact.    Some of these may be fundamental to the validity of the decision.   ‘But for’ that assumption, the decision would not have been made.   Others may be important factors in reaching the decision and collectively, but not individually, fundamental to its validity.   Yet others may be subsidiary factors which support or encourage the taking of the decision.   If these latter assumptions are falsified in the event, whether individually or collectively, this will be a cause of disappointment to the decision-taker, but will not effect the essential validity of his decision in the sense that if the truth had been known or suspected before the decision was taken, the same decision would still have been made.

129.	This dictum was followed by Rix J. in Avon Insurance v Swire Fraser [2000]1All ER Comm.573…
130. 	This analysis suggests that representations whose effect is merely to confirm or perhaps encourage the wisdom of a course of action already determined will not give rise to liability; such succour as they give the representee will not constitute reliance for the purposes of this tort. 
131.	The second feature relating to reliance is that it must be subject to particularly careful analysis where the representation relates to future intentions.   By definition the claimant is always complaining in circumstances where the intention has not been carried into effect.   It is only because of that fact that the claimant can allege that the representation made was false.   The difficulty facing many, if not most, claimants, is that their real complaint is that the intention was not carried out.   But absent some contractual undertaking to do so, there never was a representation that it would be.   The point is succinctly made in Spencer Bower on Actionable Misrepresentation, 4th. Edition, para.17: 
“What the representee is generally found to complain of is the failure to carry out the intention, which shows that what really induced him to alter his position was his belief that the intention would be carried out. In other words, he relied upon the statement as if it were a promise, not as a representation. His belief that the representor had a present intention to act according to his statement would not have influenced him unless he had also believed that the intention would be carried out.”

	Mr. Hillier understandably places heavy reliance on that passage in connection with the alleged liability of his clients.
132.	I will consider whether on the facts there was reasonable reliance in the circumstances of this case after I have analysed the evidence relating to the representations made. 

(d)  Was the loss of a kind falling within the scope of the duty?
133.	Even if a claimant can show that he has relied upon a representation, and would not have entered into a transaction if the correct information had been given, it does not follow that the defendant will be liable for the whole of the loss resulting from the transaction having been entered into.   Some damages suffered will be considered to be too remote, because they do not fall within the scope of the duty of  care.   This is clear  from the decision of the House of Lords in South Australia Asset Management v York Montagu Ltd. [1997]A.C.191.   (This is sometimes called the Banques Bruxelles case, because that was the name of the plaintiff in the Court of Appeal.)  In that case the House had to determine the liability of a valuer who had negligently valued property offered as security for a loan, giving it a value greater than its true value.   As a consequence, the lender lent money which he would not have done had he appreciated the true value of the security.   However, his loss was exacerbated by the fact that the property market fell after the date of valuation.   The question before their Lordships was whether the defendant was liable for all the loss resulting from the transaction, including the loss suffered from the collapse in property values.   A unanimous Court of Appeal had held that he was.   The court concluded that the negligence was the cause of the whole loss since but for the negligence, the plaintiff would not have entered into the transaction at all.   But the House of Lords unanimously upheld the defendant’s appeal.   They held that the defendant was not liable for all the consequences of the transaction.   Lord Hoffman, in whose judgment the rest of their Lordships concurred, analysed the applicable principles in the following way: 
“A plaintiff who sues for breach of a duty imposed by the law (whether in contract or tort or under statute) must do more than prove that the defendant has failed to comply.   He must show that the duty was owed to him and that it was a duty in respect of the kind of loss which he has suffered.   Both of these requirements are illustrated in Caparo Industries Plc v Dickman [1990] 2 AC 605.   The auditors’ failure to use reasonable care in auditing the company’s statutory accounts was a breach of their duty of care.   But they were not liable to an outside take-over bidder because the duty was not owed to him.   Nor were they liable to shareholders who had bought more shares in reliance on the accounts because, although they were owed a duty of care, it was in their capacity as members of the company and not in the capacity (which they share4d with everyone else) of potential buyers of its shares.   Accordingly, the duty which they were owed was not in respect of loss which they might suffer by buying its shares.   As Lord Bridge of Harwich said, at p. 627:
“It is never sufficient to ask simply whether A owes B a duty of care.   It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless.”
In the present case, there is no dispute that the duty was owed to the lenders.   The real question in this case is the kind of loss in respect of which the duty was owed.
How is the scope of the duty determined?   In the case of statutory duty, the question is answered by deducing the purpose of the duty from the language and context of the statute:  Gorris v Scott (1874) L.R. 9 Ex. 125.  In the case of tort, it will similarly depend upon the purpose of the rule imposing the duty.   Most of the judgments in the Caparo case are occupied in examining the Companies Act 1985 to ascertain the purpose of the auditor’s duty to take care that the statutory accounts comply with the Act.  In the case of an implied contractual duty, the nature and extent of the liability is defined by the term which the law implies.   As in the case of any implied term, the process is one of construction of the agreement as a whole in its commercial setting.   The contractual duty to provide a valuation and the known purpose of that valuation compel the conclusion that the contract includes a duty of care.   The scope of the duty, in the sense of the consequences for which the valuer is responsible, is that which the law regards as best giving effect to the express obligations assumed by the valuer: neither cutting them down so that the lender obtains less than he was reasonably entitled to expect, nor extending them so as to impose on the valuer a liability greater than he could reasonably have thought he was undertaking”

134.	His Lordship then gave reasons for rejecting the Court of Appeal’s conclusion that the defendant should be liable for the whole of the loss on the grounds that the transaction would not have occurred had the proper advice been given.   He then continued on this as follows (p.214 ): 
“….[A] person under a duty to take reasonable care to provide information on which someone else will decide upon a course of action is, if negligent, not generally regarded as responsible for all the consequences of that course of action.   He is responsible only for the consequences of the information being wrong.   A duty of care which imposes upon the informant responsibility for losses which would have occurred even if the information which he gave had been correct is not in my view fair and reasonable as between the parties.   It is therefore inappropriate either as an implied term of a contract or as a tortious duty arising from the relationship between them.”

135.	His Lordship then drew a distinction between the consequences of giving advice and giving information in the following terms: 

“The principle thus stated distinguishes between a duty to provide information for the purpose of enabling someone else to decide upon a course of action and a duty to advise someone as to what course of action he should take. If the duty is to advise whether or not a course of action should be taken, the adviser must take reasonable care to consider all the potential consequences of that course of action.   If he is negligent, he will therefore be responsible for all the foreseeable loss which is a consequence of that course of action having been taken. If his duty is only to supply information, he must take reasonable care to ensure that the information is correct and, if he is negligent, will be responsible for all the foreseeable consequences of the information being wrong.”

136.	Accordingly, in relation to the alleged negligent representations in this case, it is necessary to ask first whether they constitute advice or mere information, and second, if the latter, whether the damage suffered by any particular claimant is of a kind falling within the scope of the duty. 
137.	The claimants submit that in this case they were given advice.    They put the point in two ways.   First, there was a specific representation to the claimants that it would be in their interests to transfer.   Second, and in any event, they allege that taken in the round, the thrust of the information was inevitably to lead the claimants to transfer; that was both its purpose and effect and should be treated as advice. 
138.	I accept that the specific representation that it was in the employees’ interests to transfer did indeed constitute advice.   However, for reasons I develop later in this judgment, I do not think that it was reasonable for the claimants to act upon that advice.   Accordingly I do not accept that there was a legal duty to take care when giving this particular advice; alternatively, the advice was not reasonably relied upon and therefore did not as a matter of law cause the loss.
139.	As to the alternative way in which the claimants put their case, I accept that in principle it is right to look at the effect of the representations in the round.   This is indeed in accordance with well established principle.   In Spencer Bower on Actionable Misrepresentation, 4th. Edition para. 123, the authors say this: 
“in the case of a complex representation comprising connected statements in one document or conversation, or in a number of documents or conversations, what must be considered is the effect on the representee of all the statements and not the effect of any particular one in isolation.
	It may be right to say, as Ms. Booth does, that the giving of no amount of information can turn it into advice.   However, in my judgment the distinction between information and advice is not, and was not intended to be, set in stone.   It is important to bear in mind that the purpose of Lord Hoffman’s distinction, or so it seems to me at least, is to help to determine the circumstances when there may be liability for the full consequences of a course of action being taken and not merely for information being wrong.   But I do not read the judgment as intending to lay down definitive rules about that.   In my view where a party makes a series of representations which are negligent and which, taken together, would in fact cause a reasonable person to adopt a particular course of action, then it is tantamount to advice and the representee ought to be liable for all the consequences of that action being taken.   It is quite artificial in those circumstances to treat the strands of information separately, as if each were subject to its own individualised duty of care.
140.	However, this analysis is premised on the effect of a number of misstatements taken together.   It does not prevent the representations also being treated in isolation if their collective effect is not as I have described.    This is a matter of importance in this case if only some of the alleged statements were negligently made.   If some aspects of the information are misleading, but they do not of themselves effectively determine the decision to be made, then the misleading statements must be considered just as separate pieces of information, constituting merely a part of the overall material on which the decision to transfer or not must be based.   Accordingly, following the Banques Bruxelles case, if the claimants succeed on this limited basis, the question will arise whether the loss suffered is of a kind covered by the duty undertaken.   Even if the information was in fact decisive in bringing about the transfer, ICI would not be liable for all the consequences of that.
141.	The position is, however, different in relation to the second defendant.   Mr. Bueno has realistically accepted that the information they provided to the employees even when considered together could not be described as advice about whether or not to transfer, nor was it tantamount to advice.   He accepts that RES would not be liable for the whole consequences of the decision to transfer, even if all the alleged representations made by them were negligent.   Accordingly, it is necessary simply to focus on the consequences of any information being wrong.

(3)  Breach of warranty.
142.	Finally, I turn to consider the breach of warranty claims.  These involve the assertion by the claimants that the representations made by the first defendants amounted to contractual promises by them.   It has however been made clear by Mr. Bueno that he is not saying that the defendants guaranteed the accuracy of any particular fact; the allegation is simply that in making the statements complained of, the defendants warranted that they were exercising reasonable skill and care.  
143.	The claimants pray in aid the decision of the Court of Appeal in Esso Petroleum v Mardon [1976] Q.B.801.   In that case the plaintiff became a tenant of a petrol filling station having relied heavily upon the defendant’s estimate of the likely throughput.   In fact that estimate proved to be seriously exaggerated and the plaintiff suffered considerable losses.   The Court held that the defendants had warranted that the forecast had been made with reasonable care and skill.   As I have indicated, the court also found that there was a coextensive liability in tort, but emphasised that the damages are the same in either case.   (In fact, for reasons I develop below, the tort claim may sometimes be more favourable.)  Put in this way, this ground adds nothing to the tort complaint, and in view of my conclusion that the defendants were under a duty to take reasonable care, it is not necessary to deal with this aspect of the claim in any detail.   
144.	The distinction between mere representations and warranties is not always easy to identify.   However, the difficulty lies not so much in stating the principle as applying it to the circumstances of any particular case.   The essential question is simply whether the parties intended that the statements should have contractual effect, that intention being objectively determined from the totality of the evidence: see the classic statement of the applicable principles by Lord Moulton in Heilbut, Symons & Co v Buckleton [1913] AC 30 at 50 to51.   Moreover, the implication of a contract is not one which the courts should readily make.   As Bingham LJ, as he was, said in Blackpool Aero Club v Blackpool Borough Council [1990] 1 WLR 1195 at 1202: 
“I readily accept that contracts are not to be lightly implied. Having examined what the parties said and did, the court must be able to conclude with confidence both that the parties intended to create contractual relations and that the agreement was to the effect contended for.”

145.	In my judgment it is inappropriate to imply a contract here in respect of either of these defendants.   As to the first defendant, if I am correct in my conclusion that ICI owes a contractual duty of care in any event under the employment contract, there is no justification for implying this additional contractual duty arising independently of that contract.    Conversely, if I am wrong about the duty arising under the employment contract, I see no justification for inferring a contractual warranty if the contractual duty cannot be spelt out as a term of the contractual relationship already existing between the parties.   It is, after all, the relationship of employer and employee which is fundamental to the creation of this collateral contract asserted by the claimants.
146.	As to the second defendants, the position is obviously different since there is no pre-existing contract in place.   However, it is relevant to bear in mind the nature of the representations relied upon.   The most significant do not relate to facts as such, but rather to statements of intention.   In the Esso case, to which I have referred, Ormrod LJ commented (at page 826) that a statement of fact would be more likely to be intended to have contractual effect than a statement of opinion.   A fortiori, it is even more difficult to infer contractual effect where statements of intention are involved.   In my judgment, in this case it would be artificial in the extreme to infer that when stating what their intentions were in respect of making redundancies, altering terms and conditions, or entering into an LWA, RES were contractually warranting that there were grounds on which it could properly hold that effect could be given to those intentions.   It is true that the alleged misrepresentations relating to pensions are misrepresentations of fact, but even there it is not in my view possible to infer that RES was intending to warrant that the pensions were in fact any different to those provided by the relevant pension scheme.   If there were misrepresentations, that would involve an inaccurate description of the employees’ proposed rights, but it would not be legitimate to infer an intention to alter those rights which everyone knew were to be regulated by the agreed pensions’ scheme.   I accept the argument of Mr. Hillier that Esso v Mardon was a very different case.   There the forecast of the throughput of the filling station was of major importance to the plaintiff, it was a specific matter on which it is plain that Mr. Mardon was going to put very considerable weight, and it was not conflicting with any proposed term of the contract. 
147.	Accordingly, in my judgment it cannot be said that, viewed objectively, RES can be said to have undertaken to warrant that their statements were made after taking reasonable care.   Either they are liable in tort or not at all.   However, ICI could be liable in both.

	Claims in contract and tort.
148.	I should add that it is now well established that the fact that the claimants have a concurrent claim in contract does not preclude them also pursuing a claim in tort, unless the terms of the contract have expressly or by implication excluded the tortious claim.   This principle was confirmed by the House of Lords in Henderson v Merritt Syndicates Ltd [1995] 2 A.C.145, adopting the reasoning of Oliver J., as he then was, in Midland Bank Trust Co. v Hett, Stubbs and Kemp [1979] Ch.384.   Lord Goff, in whose speech the rest of their Lordships concurred, summarised the position as follows (p.193H to 194B):
“…the common law is not antipathetic to concurrent liability, and …there is no sound basis for a rule which automatically restricts the claimant to either a tortious or contractual remedy. The result may be untidy; but, given that the tortious duty is imposed by the general law, and the contractual duty is imposed by the will of the parties, I do not find it objectionable that the claimant may be entitled to take advantage of the remedy which is most advantageous to him subject only to ascertaining whether the tortious duty is so inconsistent with the applicable contract that, in accordance with ordinary principle, the parties must be taken to have agreed that the tortious remedy is to be limited or excluded.”

149.	It is not contended that there is in this case any contractual exclusion of the tortious claim.   Accordingly I see no bar to the tort claim being invoked.   Indeed, for reasons I am about to consider I consider that in the particular circumstances of this case, damages are more restricted in the contract claim than in tort.   In those circumstances it would be unjust to deny the claimants their right to sue in tort.

Contractual damages: a restricting principle.
150.	In general, as the Esso decision makes clear, the damages will be calculated in the same way where the essence of the complaint is failure to take reasonable care, whether the action is framed in tort or contract.  In this case the duty of care has not been pleaded in contract, although there is the independent contractual claim based on breach of the duty of trust and confidence.   However, there is in my view an additional problem with the claim for contractual damages in a case of this kind where the loss claimed presupposes the continuing existence of the original contractual relationship (because it is based on the premise that the contract with ICI would have continued.)   This is so whichever particular contractual term is relied upon.  This is because such claims are subject to a doctrine of contract law which does not apply to the claim for breach of the duty of care in tort.  
151.	The usual rule in contract is that damages will be assessed on the assumption that the defendant would perform the contract in a way most favourable to himself.   The point was put succinctly by Scrutton LJ in Abrahams v Herbert Reach Ltd. [1922] 1K.B.477 at 482 when he said: 
“I have always understood that the Court assesses damages on the basis that “if the contract could have been performed by the performance of the alternative least beneficial to the plaintiff, the measure of damages would be regulated by the loss occasioned by non-performance of that alternative”: Deverill v Burnell L.R. 8 C.P.475, 481 per Bovil CJ. The simple reason for this is that a defendant is not liable in damages for not doing that which he is not bound to do.”

152.	The only qualification to this principle is that the alternative method must be one which is reasonable in all the circumstances: see Paula Lee Ltd. v Robert Zehil & Co. Ltd. [1983] 2 All E R 390 and a more recent decision from Australia, TCN Channel 9 v Haydeen Enterprises(1989)16NSWLR 130, specifically relied upon by Mr. Bueno.
153.	In the context of wrongful dismissal the effect of this principle is that in a normal case the employer is entitled to say that his damages should be limited to the notice period because he could have lawfully terminated the contract on notice in any event. In Lavarack v Woods of Colchester [1967] 1 Q.B.278, Diplock LJ expressed the position as follows (p.294C to D): 
“The law is concerned with legal obligations only and the law of contract only with legal obligations created by mutual agreement between contractors –not with expectations, however reasonable, of one contractor that the other will do something that he has assumed no legal obligation to do. And so if the contract is broken or wrongly repudiated, the first task of the assessor of damages is to estimate as best he can what the plaintiff would have gained in money or money’s worth if the defendant had fulfilled his legal obligations and had done no more.”	
	However, the judge added this proviso:
“..one must not assume that [the defendant] will cut off his nose to spite his face and so control these events as to reduce his legal obligations to the plaintiff by incurring greater losses in other respects.”

154.	On this analysis, unless the proviso is applicable so as to make it inappropriate to assume that the contracts would have been terminated on notice, this principle is applicable here.   True it is that the claim is not one for wrongful dismissal as such, but nevertheless the damages are claimed on the premise that the employer would have done something he was not legally obliged to do, namely retained the employees in employment beyond the notice period. .  If it is to be assumed that he would have terminated the contract on notice, or even after allowing for an additional period to comply with the statutory obligations to consult over redundancies, there is plainly no loss for any of these claimants.   They all remained in employment with RES for the duration of such period, indeed for far longer than that period, and on essentially the same terms. 
155.	Of course, as the case of Malik v BCCI [1998] A.C 20 shows, the claim for breach of the employment contract is not necessarily limited to damages for that period.   In that case it was foreseeable that damages could result from the stigma which the employees suffered from having been employed in a business which was being conducted dishonestly, and the employees were entitled to such losses as they could establish flowed from that breach.   This included damages for the loss resulting from the difficulty of obtaining future employment.   But the fact that the employer could have terminated the contract lawfully on notice did not affect the damages claim in that case at all.   It had no bearing on the calculation of future loss; indeed, the claims were based on the premise that the contract with BCCI had come to an end.   By contrast, in this case the claimants are seeking, at least in respect of part of their claim, to compare the consequences of the breach with what would have happened had they remained with ICI.   I do not think that they can, consistent with the principle in Lavarack, calculate their contractual loss on the premise that their contracts would have continued with ICI beyond the notice period (possibly extended by any statutory consultation period over redundancies.)   This is so even if the likelihood is that in fact they would have remained in employment with ICI. 
156.	Mr. Bueno did not dispute the application of the principle but submitted that this was indeed one of those exceptional cases where the proviso applied.   He said that it would have been quite unrealistic for ICI to have dismissed all the staff.   That would have been, in Diplock LJ’s words, cutting off their nose to spite their face.   They would have needed to retain the claimants in order to have access to the range of skills needed in the business.   I reject that submission.   One of the options which ICI had been considering was the termination of employment of all the staff, in which case the required skills would have been obtained from outside contractors.   It was not in the event the preferred option, but nor could it be said to have been an unrealistic or unreasonable one, or one which would have been plainly more burdensome than retaining the employees, given the losses being sustained within Central Engineering.

Application of the principle to tort.
157.	Mr. Hillier for RES has submitted that the same principle should apply in respect of the tort claim as in contract.   He says that the claimants are alleging that they were induced to give up their employment rights with ICI, and that those rights are limited to the right to be employed for the notice period.   I reject this submission.   There is no authority which would support the application of this contractual principle where the cause of action is in tort.   Moreover, the submission is inconsistent with cases where the courts have assessed damages for negligence causing personal injury which leads to loss of employment.   In such cases, it is necessary to look at the loss of the benefits to the employee for the period during which the court considers that he would in fact have been employed (whether by his employer or some third party), and not simply the loss during the notice period. 
158.	Accordingly, in my judgment where the cause of action is in tort for negligent misstatement, the court must look at what loss the claimant has suffered as a consequence of the negligent misrepresentation.   The court will not act on the assumption that the employer would have performed his contract in a manner most favourable to himself; rather it will have to assess what would have happened in fact if there had been no negligence.
159.	It is perhaps unattractive that in this particular context there should be different rules depending upon whether the cause of action is framed in contract or tort when the essential nature of the complaint is one and the same.   But it is a consequence of the wrong being committed in the course of a continuing relationship.   For the purposes of liability in contract it will generally be assumed that the contract would have been lawfully terminated, if that would have been to the benefit of the defendant, but that assumption does not apply in respect of the tortious claim. 

Conclusion on the causes of action available.
160.	It follows that in my judgment the claimants have a cause of action in tort against both defendants, and against ICI there is a possible claim in contract.   However, given that the contractual term relied upon is the duty of trust and confidence, it will be very difficult in practice to establish the breach where the conduct relied upon is negligence.   Furthermore, any damages will be limited insofar as they assume that the employment with ICI would have continued had no misrepresentations been made.

I.   The evidence.

Preliminary observations.

161.	I have heard extensive evidence in this case. In fact, as the case progressed it became clear that there were relatively few disagreements of primary fact; the case has turned more on the reasonableness of statements and observations which were admittedly made.
162.	I heard from all the main actors from ICI who were involved in this transfer.   I was impressed by the basic integrity of all these witnesses.   In particular, Mr. Anderson, who was the general manager of the Teesside Operations at the relevant time, was an extremely impressive witness.   He was not involved in the detailed negotiations with RES, but was ultimately responsible for the decision to sell off Central Engineering.   I found him to be a man of conspicuous ability and integrity.   He was actively involved in many bodies concerned with the well-being of Teesside, and I have no doubt that he had a genuine and real concern to do the best he could for the staff, consistent with his obligations to ICI.   Similarly, Mr. Dicken, who was at the material time the Engineering Manager at Teesside and reported to Mr. Anderson, was a good witness who was also involved in bodies designed to advance the commercial interests of Teesside. 
163.	The two individuals who had most direct communication with the staff were Mr. Paul Booth, the Teesside Sites Engineering manager, and Mr. George Ritchie, who was a senior manager at the Wilton site answerable to Mr. Booth.   Many of the representations relied upon by the claimants were made by these two men. There was plenty of evidence that they were generally highly respected by the staff of Central Engineering.   I have no doubt that they were proud of their staff and genuinely wished to do the best they could for them.   But they were also strongly committed to the transfer, and the issue is whether that might on occasions have caused them to provide some of the information in a more favourable light than was justified, as Mr. Bueno alleges.   Other witnesses who gave evidence were less involved in the communications with staff, although some had been closely involved in the transfer discussions.   I am wholly satisfied that they all gave their evidence frankly and truthfully. 
164.	There were fewer witnesses called by RES.   Their principal witnesses were Dr. Tomlinson, who was the Managing Director of RES at the material time, and Mr. John Shooter, the Human Resources Director.   They were both very good witnesses.   I have no doubt were doing their best to assist the court. 
165.	I have heard from all the lead claimants and numerous other witnesses for the claimants.   The four principal witnesses were Mr. Hagen, Mr. Serplus, Mr. Leonard and Mr. Burton.  Mr. Hagen and Mr. Leonard had been supervisors at the time of transfer.   Mr. Serplus was a shop steward who had kept detailed minutes of various meetings which he had attended.  (Other shop stewards had also kept minutes but unfortunately, although understandably, they had for a variety of reasons been lost or destroyed by the time of the hearing.) Mr. Burton had been involved in the management team, taking responsibility especially for negotiating the LWA for Central Engineering.   I found them all to be impressive and articulate witnesses.   They sought to the best of their ability to recount events as they could recall them.   I do not doubt that they genuinely felt betrayed by ICI.   Events did not turn out as they had been led to believe, although that of course does not by itself establish their case.
166.	However, there are a number of features which should be taken into consideration when assessing the accuracy of the evidence of the employees in particular.   As with all the witnesses, they are having to recall events which occurred between seven and nine years ago.   Inevitably this makes it very difficult to remember precisely what was said, and the opportunity for confusing different meetings is especially great, particularly since there were over the period a very significant number of meetings.   These problems have been exacerbated as far as the claimants are concerned by two additional factors.   First, I have no doubt that throughout the period leading up to the transfer, there was virtually continuous formal and informal discussion between the affected employees.   During these discussions conversations were reported and impressions obtained which I am satisfied would not wholly have reflected what was actually said.   At this distance of time it is often difficult to distinguish what was said by management from what was reported to have been said.   Second, I have no doubt that on some occasions a clear message was simply misunderstood by some of the staff.   Mr. Booth recounted how in February 1993 he addressed a mass meeting, summarising the problems facing Central Engineering and outlining possible ways forward.   He had arranged for some managers to be present and to find out from workers leaving the meeting what they thought they had been told.   He says he was depressed to discover that a number of the employees had left with a wholly false understanding of what he had been trying to say.   Similar misunderstandings were apparent from the evidence given before me.   A number of employees have said that they were under the impression that pension rights in RES would be the “mirror image” of the ICI pension scheme, by which they understood it to be identical in every way.   In my view it is inconceivable that they could have got that impression from a fair interpretation of what they had been told by ICI management.   
167.	Finally, much of the information which was acquired by the claimants for the purposes of preparing this case seems to have been through the use of a questionnaire. I can readily appreciate that it is difficult with so many potential claimants dispersed throughout Teesside and beyond to take statements from people individually.   But one consequence of this may have been to provide something of a steer to the witnesses.   For example, a number of witnesses said in their witness statements that Dr. Tomlinson had made comments at a particular meeting when he had not even been there.   I wholly acquit these witnesses of deliberately trying to mislead the court, but I do not believe that they could have all been mistaken about this from their own independent recollections.   It is easy to see how they may have assumed that a statement or observation of which they have some vague recollection must have happened at a particular time or at a particular meeting because that is what other employees were saying, and they have no reason to disbelieve them. 
168.	I now turn to consider the evidence in respect of each of the alleged misrepresentation.   In fact the case as advanced by Mr. Bueno in his closing submissions was in certain respects different to the case as originally pleaded.   Moreover, the case was opened on the basis that the defendants had deliberately misled the claimants in certain of the representations made, this notwithstanding the fact that the case was not pleaded in fraud.   Any allegation of dishonesty or deliberate wrongdoing was no longer being pursued by the end of the trial.   In my judgment Mr. Bueno was absolutely right not to pursue it.   Having heard the witnesses of both ICI and RES, it is in my view impossible to say that there was some kind of conspiracy designed to mislead the Central Engineering Staff.   The general and genuine concern of the ICI witnesses for the staff was palpable.   There is a document which sets out the objectives of Project Windsor, and which Mr. Vaughan, one of the ICI managers, said was the touchstone by which the success of the project was assessed.   It had been drafted at an early stage by Mr.Booth.   Progress would from time to time be monitored against these objectives.   It was a purely internal document and not for public consumption.   Two of the objectives were as follows: 
“Employment opportunities are maximised for current central engineering employees affected by the change.
Affected employees are treated and perceive themselves to have been treated with consideration and respect.”

169.	There is in my judgment no justification whatsoever for doubting the genuineness of that document.   Indeed, as a trail of management witnesses said, the “people issue”, by which was meant securing satisfactory terms of transfer for the staff, was central to the whole deal.   In a memorandum Mr. Earnshaw, the commercial manager for Project Windsor, placed it first in the list of objectives.   Mr. Vaughan and Mr. Earnshaw also gave evidence that it was the failure by another competitor, Fluor Danielss, to give satisfactory guarantees concerning the position of the staff which was the principal reason leading to the rejection of their bid.   Insofar as this case rests on a picture of a cynical and manipulative management deliberately selling staff a package which was plainly contrary to the best interests of the employees themselves, I categorically and unequivocally reject it.   It fails to begin to measure up to the evidence.   I believe that some of the claimants do genuinely interpret the events in that way, but that is in my judgment an unjustified construction put on events by those who, with hindsight, seek some explanation for the fact that their employment with RES has not turned out to be as fulfilling or secure as they anticipated or would have wished.   As I indicate below, I think that there were occasions when some ICI managers were more upbeat about the transfer than was strictly warranted, but that complaint falls well short of a cynical conspiracy to deceive the staff.
170.	In this context I should refer to a document which became known as the “Vaughan Report”. It was entitled “The Out-Sourcing of Teesside Engineering”.   Great emphasis was placed on this document in Mr. Bueno’s opening, and it also featured, although much less prominently, in his closing submissions.   This was a document put together by Mr. Vaughan some months after the transfer.  He was a member of ICI’s commercial team dealing with the transfer, but he had no direct contact with the staff.   He was apparently asked to produce a paper by a senior official in the Treasury as an aid to certain major companies who were interested in the possibility of outsourcing some of their operations.   He emphasised that it was a personal report, put together after the event.   However, Mr. Booth in his evidence broadly accepted the observations made in the document, and I accept Mr. Bueno’s submission that it reflects the way in which management approached the transfer.   The document clearly suggests that there was a carefully designed strategy which sought to maximise the likelihood of the staff accepting the necessity to transfer.   For example, it states that the main emphasis should be placed on the preservation of jobs, and that the full-time union officials were seen as pivotal to influencing the weekly staff to accept the transfer.   It also referred to the fact that the recent history of the plant had led to what was termed a “creative tension” which could be manipulated to effect the changes sought.  
171.	In my opinion even allowing for some after the event rationalisation of the process of transfer, this document does show that there was a more consciously directed attempt to bring about the transfer than the staff might have appreciated.   It certainly makes it plain that management saw the need to “sell” the deal to the workforce and, like all good salesmen, wanted to focus on the factors conducive to the sale.   But I do not accept that it demonstrates an intention to deceive the staff and to bring about a transfer which management in fact believed to be against the interests of the staff.   Indeed, it repeated the need for the outsourcing to constitute a “win-win-win situation for ICI, the new company, and the transferring groups”.   This supports the claim of the management that they genuinely did see the transfer as being beneficial for the workforce.   The fact that they took some pains to plan to achieve the outcome they were seeking does indicate a desire to manipulate events, but it is not incompatible with a genuine belief in the benefits to the employees of the proposed transfer.

Principles to apply in analysing the representations.
172.	When analysing the representations made and determining the potential liability to which they might give rise, it is important to bear in mind certain principles (which were not, as I understand it, disputed): 
(a) Representations must not be taken in isolation but must be construed in context. 
(b) The question is what is being represented at the time of transfer (or more accurately, very shortly before that time when the decision whether or not to go along with the transfer was taken by the claimants.) In so far as statements were made at an earlier date but were later corrected, they will have become spent.
(c) However, in circumstances where a representation is being corrected or revoked, it is important for it to be made in unambiguously clear terms to those to whom the original representation was made that it is no longer accurate or being relied upon: see Arnison v Smith(1889)41 Ch D 348 (C.A.);
(d) In determining whether a representation is true or not, it is necessary to focus on the substance of the complaint and to ask whether the representation is substantially true.   In Avon Insurance v Swire Fraser [2000] 1 All E R (Comm)573 at 579 f to g, Rix J. said this:
“….a representation may be true without being entirely correct, provided it is substantially correct and the difference between what is represented and what is actually correct would not have been likely to induce a reasonable person in the position of the claimants to enter into the contracts.”

I respectfully adopt that analysis.
(e) If a representation is untrue, it is no answer to a claim for liability that the claimant could with reasonable diligence have discovered that the representation was untrue: Redgrave v Hurd (1881) 20 Ch D 1. (That case involved the tort of deceit, but the same principles must be applicable where a negligent statement is made; the fact that the claimant has the opportunity to discover that the statement was wrong or negligently made will not relieve the defendant of liability.)

Were negligent representations made as alleged?
173.	I now turn to consider the particular representations on which the claimants rely, taking each separately.   I shall consider first the representations against ICI, following the headings I have set out in paragraph 35 above.   I shall, however, leave until last the representation that it was in the best interests of the staff to transfer, since that is the overall advice which follows from the information provided.   I shall consider both whether the representations were made and, if they were, whether there were reasonable grounds for making them.

That if there was no transfer, there would be wholesale job losses.
174.	There is no doubt that this is one of the major areas where the claimants feel that they were badly misled.   It is not disputed that there were various statements made to the claimants that the transfer was the best way to secure and maximise jobs for the staff; and that if it did not take place, half of the staff would be made redundant and there would be a gradual reduction in the number of staff thereafter.   This was referred to by management as the “death by a thousand cuts” scenario.   Issue is taken in a number of instances about whether these statements were made specifically on the occasions when they were alleged to have been made, or by the person alleged to have said them.   However, given the admission that the statements were in substance made by senior management staff, it is not necessary to resolve those matters.
175.	Mr. Anderson gave extensive evidence on this issue.   He was of the view that there would have been a significant reduction in the engineering work available to Central Engineering if there had been no transfer.   This was for three reasons in particular.   First, he said that it had been ICI’s basic strategy from the mid 1980s onwards to change the direction of ICI from being a major producer of bulk commodity chemicals into a low volume, high added value speciality producer.   It was partly in anticipation of this change, and to facilitate it, that the chemicals division of ICI was, in 1987, converted into ICI Chemicals and Polymers Ltd. (which is the company formally employing these claimants.)   This strategy involved the divestment of businesses which did not meet the desired profile.   Mr. Anderson was aware of this longer term strategy but was not able to reveal this to the employees.   Even his close managerial subordinates did not have the same knowledge of this policy, although they appear to have had some wind of it.   Mr. Anderson was of the view that the result would inevitably be a severe diminution in the businesses within ICI who would be needing the services of Central Engineering.    
176.	There is some objective evidence to support this aspect of Mr. Anderson’s analysis.   First, there is the undisputed fact that there had been a not insignificant divestment of ICI business even before the transfer of Central Engineering.   In all there were some 47 sales of businesses or stakes in businesses in ICI between the beginning of 1988 and the transfer.   As Mr. Bueno rightly points out, many of these sales were not at Teesside and furthermore few of them impinged directly upon the work available for Central Engineering.   However, some did.   For example, the sale of the nylon business to Dupont in 1993 and of the polypropylene business in early 1994 occurred prior to the transfer of Central Engineering and involved the loss of over 1000 staff at the Wilton site to the control of other employers.   This was approaching 20% of the total complement of staff at that time. (In the Dupont sale ICI obtained an acrylics business in return, but that was based in the United States and therefore provided no alternative work for Central Engineering.)   In addition there was the closure of certain plants around this time, such as the ammonia plant, as well as some limited contracting out of services.   These changes inevitably affected the potential demand for Central Engineering’s services. 
177.	Furthermore, the volume of these transactions carried out by ICI generally in my view lends considerable support to Mr. Anderson’s evidence that it was the strategy of ICI to concentrate on a core specialist area of business.   This is further supported by the fact that there were in the five years after the transfer a further 46 transactions.   Mr. Anderson said that he was aware that ICI intended to sell the bulk petrochemical business.   That sale was effected to Huntsman in July 1999, following protracted negotiations.   Mr.Anderson said that they had been actively seeking to divest the business for a number of years and in fact there had been earlier discussions about a sale to potential purchasers.   However, this was also confidential information which he was not at liberty to tell the workforce.   In the period leading up to the transfer, he did in fact believe that ICI would retain a presence on Teesside, and it has since reduced more dramatically than even he had envisaged.    By the end of the millennium, ICI in Teesside was employing only a few hundred staff in all in its remaining business units, having employed some 6,500 only ten years earlier. 
178.	In my judgment these events post transfer vindicate Mr. Anderson’s belief at the time that there was no future for Central Engineering if it remained solely within ICI.   Moreover, the relatively rapid disengagement of ICI on Teesside justifies Mr. Anderson’s observation that if there had been no transfer of Central Engineering, it is fanciful to believe that the staff would still be there now.   There would simply be no work for them to do.   The best they could have hoped for was to have been taken into particular businesses and transferred with whichever business they had joined on its subsequent sale to a third party.
179.	The second reason given by Mr. Anderson for his belief that the work of Central Engineering was diminishing was this.   In around 1992, ICI adopted a philosophy of decentralisation, which gave greater autonomy to the business units.   They were required to operate as separate profit centres and were judged on their performance.   In Mr. Anderson’s words, this meant that he no longer had “ownership” of the work done by Central Engineering.   He could no longer call the tune about when the business areas could have the services of Central Engineering; indeed, he could not even require them to use the services of Central Engineering at all.   The business areas had been given the power to choose their own engineering support provider and they were exercising that power.   In the graphic phrase of Mr. Griffiths, a former supervisor at ICI (who was not one of the claimants), they were developing “hairy chests”.   This had significant implications for Central Engineering.   They would ask for work to be done at a time suitable for them, whereas in the past Central Engineering itself was able to choose to do the work when it had the necessary staff available.   This change in the climate was very significant for this reason.   The work came in peaks and troughs; it was not economical to carry sufficient staff for the peaks, since that would mean that many staff would be sitting idle for much of the time.   However, to some extent that problem could at least be mitigated when Central Engineering controlled the work.   It was then possible to smooth out the work and keep the staff relatively fully employed.   This was no longer possible when the business areas called the tune.   If Central Engineering did not have the resources available to do the work when the business area wanted it done, the business area would frequently hire an outside contractor to do the job.   It was not willing to wait until Central Engineering could provide the service.   According to some witnesses, some of the business areas were at times positively hostile to Central Engineering, although it appears that this was not universally true.   Mr. Muir, who was responsible for placing work Central Engineering work at Billingham, said that he found the business areas generally sympathetic to the plight of Central Engineering.   They would try to some extent to get the work done as and when it suited Central Engineering, but often they were not able to be sufficiently accommodating.   But whether they were sending work elsewhere in sorrow or in anger, the upshot was that the work available to Central Engineering was diminishing.
180.	Nor were the business areas restricted to obtaining outside work only when Central Engineering was unable to take it on.   They could in any event choose to have engineering work done by outside contractors.   This they sometimes did because the labour costs of the staff meant that Central Engineering was not competitive with other local engineering services; accordingly it was often cheaper for services to be obtained elsewhere.   So even when Central Engineering was in a position to do the work, the business areas might choose to go elsewhere in order to operate more efficiently.   (This appears to have been less of a problem at Billingham than Wilton.   This is because, according to Mr. Muir, there was a system in place that the union representatives had to be satisfied that the work could not be done internally before it could be given to external contractors.   That, however, seemed to have lost much of its significance at Wilton but it remained in force at Billingham until Mr. Muir himself suspended it sometime in the summer of 1993.)   According to Mr. Booth, more work was lost because of Central Engineering’s inability to give a flexible response than by its inability to match the cost of external contractors, but both factors played a part in the increasing use of such contractors.
181.	The problems of Central Engineering were compounded by the fact that there had been a deep recession causing very real problems to the chemical industry. Indeed, the chairman of the company reported that ICI Chemicals and Polymers Ltd would have been insolvent had it been in a stand-alone position.
182.	The result of these changes was that there was a significant deterioration in the fortunes of Central Engineering.   The prediction in 1992 was that it would suffer a loss in the region of £8.4million in the following year.    In the event the actual losses were less than this, partly because of the reduction in the complement of staff, but they were still unacceptably high to ICI. 
183.	Mr. Anderson said that it was in this context that ICI resolved that divestment was the best option.   It kept together a skilled workforce, a centre of excellence, available for ICI; but at the same time it provided some security of employment for the workforce.   Mr. Anderson did not accept that the question was simply one of cost-cutting; he said that he had no doubt of the fact that the diminishing workload made redundancies inevitable 
184.	The claimants have strongly challenged management’s contention that the loss of work and mass redundancies were inevitable, and that the transfer was in the staff’s best interests.   They have put forward a number of factors which they say render this analysis unsustainable. 
185.	First, they say that there was much more work available for the staff than management were representing.   There were a number of elements to this contention.   It was alleged that the business units required work which would have readily kept the diminished Central Engineering workforce busy.
186.	Furthermore, immediately after the transfer the claimants say that they were inundated with work which was part of the guaranteed workload.    If that work could be given to them as RES employees, then why could it not be given to them when they were at Central Engineering?   Moreover, they say that there was a deliberate policy of withholding work from them in the period leading up to the transfer for the purpose of giving them all the impression that there was no work available and that the spectre of compulsory redundancies was no idle threat.
187.	Second, they submit that in any event it was perfectly possible for ICI to have dealt with the diminution of work in precisely the same way as they generally did, and indeed had done in respect of a reduction in Central Engineering in 1993 (from about 800 to 480), namely by redeployment, early retirement and voluntary severance.   
188.	Third, they submitted that in any event the problems of the diminishing workload could have been solved by ICI being willing to enter into an LWA.   That would have made the workforce more competitive and, if the provisions relating to time had been agreed, would also have improved Central Engineering’s ability to provide a flexible and more rapid response to anyone seeking to use their services. 
189.	Finally, the claimants say that the decision to divest the bulk chemical business was not taken until some time after the transfer and therefore could not have weighed with Mr. Anderson at the relevant time. 
190.	These were important elements in the claimants’ case, and I will consider them in more detail.
191.	There is no doubt, as Mr. Serplus said in his evidence, that there was a significant use made of external contractors, and that they were often on the ICI sites even when the Central Engineering workforce were idle.   This was not disputed by the ICI witnesses.   It was, however, an inevitable consequence of the business units exercising their own autonomy.   Moreover, it is hardly surprising that if Central Engineering cannot do a contract for a business unit because its staff are involved on other work, and an outside contractor is engaged, that contractor’s staff may still be on site completing a job at a time when Central Engineering staff become available.   It may very well be, as Mr. Anderson and others accepted, that at the time leading up to the transfer there was overall enough work for Central Engineering to do if they could require the business units to give them all the work available.   (How long that would have remained the position, given the subsequent divestments, is however a moot point.)   But the fact is that it was simply not within the control of Central Engineering management to demand the work given the policy - which had been taken at a higher level – to give the business units their head.   In my view it was not at all misleading for management to say that the work for Central Engineering was diminishing if the engineering work available was not work that it could secure for the employees.   It was entirely irrelevant that a different company policy could have increased the available work.   It was not within the gift of management at Central Engineering to change the policy and demand the work, and it would have been cruelly misleading for it to have represented that it could.
192.	As to the withholding of work, Mr. Burton, Mr. Griffiths and Mr. Tyerman, each of whom was a member of the management team answerable to Mr. Ritchie, gave evidence to the effect that Mr Ritchie had deliberately created troughs and peaks in the work being provided to Central Engineering in order to give the impression to staff that they would not have sufficient work to keep them employed if they were to stay with ICI.   Both Mr. Burton and Mr. Tyerman said that this had happened also on earlier occasion when the construction task force was closed down.   Both Mr. Booth and Mr Ritchie accepted that in the period leading up to the transfer – (over some six or so months, although the claimants say that the period was longer) – they did indeed hold work back from Central Engineering which could have been done by the workforce at that time.   Their reasons for doing this was that they wanted Project Windsor to be a success and they wanted to ensure that immediately after the transfer there would be work available which could count against the workload guarantee.   Mr. Booth says that he would have told anyone who had asked him both that he had taken this step and why.   It may be that he would, but I am satisfied that he did not want to volunteer the information unless it was necessary to do so. 
193.	I think that it was highly unfortunate that the workers were not told that part of the lack of work was due to the fact that they were deliberately being kept relatively idle, and the reasons why that was done.   In my judgment the failure to explain what was happening and why has contributed in no small measure to the suspicions harboured by the claimants about the company’s motives.   But having carefully assessed the explanations given by Mr.. Booth and Mr. Ritchie, I do not accept that the principal purpose was to give the impression that there was no work to do.   At the same time I strongly suspect that they were not unhappy that a side effect of this policy was to reinforce in the minds of the claimants the belief that the transfer was in their interests and was the best way to secure their jobs.  But in any event, even if I am wrong about that and the principal intention was to give the impression that in the absence of the transfer, redundancies would be the order of the day, that would not have rendered misleading the view held by management that there were no long term prospects for the workforce as a whole within Central Engineering.   On that assumption, management would by their conduct have impliedly been representing that the immediate situation facing the workforce was bleaker than was in fact the case.   To that extent they would be seeking by deceitful means to reinforce a message about the long-term future which they thought was in substance true.   But that would not prevent the opinion itself from being both genuinely held, and on reasonable grounds.
194.	It is also common ground that after the transfer there was a considerable amount of work for the transferred staff to do.   Much of this came from either ICI businesses or those like Dupont which had been recently divested by ICI. Mr. Bueno suggested that since that work was provided after the transfer, there was no reason why it could not have been provided beforehand.   In effect he was suggesting that it was unrealistic to accept that Mr. Anderson could not have secured that work from the business areas for Central Engineering.   If the work could be acquired for RES as part of the workload guarantee, why then, he submits, could it not have done the same for the benefit of Central Engineering? Mr Anderson to my mind gave a convincing answer to this question.   He said that a competitor would be willing to give work to an outside engineering contractor like RES but would not give the same work to a competitor, ICI.   They would naturally and no doubt perfectly correctly fear that in any case of conflict between their needs and those of ICI, the interests of the latter would prevail.   This would not be so if an outside contractor were doing their work, whether or not it consisted of ex-ICI employees.    Furthermore, the business areas were prepared to agree for a limited period to give undertakings to provide work as part of the work guarantee, but that was on the basis that it would be a long term and final solution to the Central Engineering problem.   In my view these explanations ring true and support management’s view that they could secure for RES guaranteed work that they would not have been able to secure for themselves.
195.	Finally, the claimants deny that there was a strategy in place at the time of the transfer to divest the bulk chemical business, as Mr. Anderson had contended. They say that this strategy only arose after the transfer.   I was shown various comments in the annual reports of ICI which, it was alleged, showed this to be the case.   I will not go through them all.   Suffice it to say that I do not accept that they are at all inconsistent with the evidence given by Mr. Anderson.   True it is that there were not statements in the 1980s saying in terms that the bulk chemical business was up for sale, but I accept Mr. Anderson’s evidence that there would be a need for some confidentiality over long term strategy lest the company was seen to be too keen to sell parts of its business. Indeed, Mr. Anderson said that there had been possible sales of the bulk petrochemicals business in the offing even before the business was sold to Huntsman, a U.S.A. company, in 1999. 
196.	The claimants also allege that if LWA had been introduced that would have solved the problems of Central Engineering.   In my view management were fully entitled to take the view that it would not.   First, it was not clear that the crucial agreement on hours could be achieved.   This had proved to be a major stumbling block, and its resolution at that time seemed a long way off, as Mr. Muir indicated in his evidence.    Second, it would not have remedied the problem of loss of workload arising from the divestment of the businesses, and there would inevitably have come a point when it would have made no sense at all to maintain a distinct engineering workforce.   Third, whilst it would no doubt have gone a significant way to ensuring that the business areas would not have gone to an outside contractor for reasons of cost, it must be highly likely that they would still have done so where Central Engineering was unable to do the work at the time of the business area’s choosing. As Mr. Booth said, and I accept, LWA was important in making Central Engineering more competitive, but it would not fully have addressed the problem of lack of flexibility.   In his view, that could only be resolved within a larger engineering business which ICI itself could not provide (at least, not unless it were willing to set up a separate engineering business doing work for third parties, which it was not.)
197.	Finally, I turn to consider one of the most important arguments advanced by Mr. Bueno, namely that ICI could have dealt with these matters by their tried and tested methods, that is by redeployment, voluntary severance and voluntary early retirement.   Mr. Bueno understandably puts considerable weight on the fact that there has historically been virtually no compulsory redundancies.   The Security of Employment Statement has in practice always been followed and has either led to the assimilation of staff in other parts of ICI or to their leaving voluntarily.   He submits that it was wholly unrealistic to believe that any different approach would be adopted in this case.   Moreover, he supports the argument that there would have been jobs available by pointing out that from June 1995 the workforce at Central Engineering were not permitted to take voluntary severance or voluntary early retirement, and that from September of that year they were “red-ringed” i.e. prevented from applying for jobs elsewhere in other business areas.   He submits that this shows that there was still room for further reduction of the workforce and that active steps had to be taken to discourage that. 
198.	Mr. Anderson and other management witnesses have strongly disputed this analysis.   It was, according to Mr. Anderson, quite unreal to believe that it would have been possible to retain the workforce in ICI, notwithstanding the Security of Employment Agreement.   That agreement had to take effect in the harsher environment now facing ICI.   He accepted that the traditional ways of avoiding compulsory redundancies, namely by redeployment and voluntary severance, would deal with some of the staff affected, but by no means all of them.   There were simply not going to be the jobs available to secure redeployment for the staff concerned as had occurred in the past, and accordingly he believed that redundancies, both voluntary and ultimately compulsory, if there were insufficient volunteers, would have been inevitable.
199.	Mr. Muir gave evidence which lends considerable support to this view. He was the strategic planner based at Billingham.   As such, he was responsible for allocating Central Engineering work at that site.   He was asked in about May 1993 to reduce the number of Central Engineering staff at Billingham as much as he could.   In fact the trade unions had specifically asked that the Central Engineering workforce should be reduced before transfer.   He carried out a trawl of vacancies both in ICI businesses and those which had been sold off by ICI. His evidence shows that there were few vacancies and, moreover, there were also people from the business units who were applying for such vacancies as there were.   He said that it was extremely difficult to place staff, and of course that difficulty would inevitably have become greater as more vacancies were filled.   Both he and Mr. Booth made two points in addition to those made by Mr. Anderson as to why any significant redeployment would have been impossible.   First, the business units were introducing LWA which had improved productivity and left them potentially over manned.   Accordingly they did not want to accept further staff to replace those leaving.   They were themselves seeking to reduce staff. Second, the main way of dealing with the protection of jobs in line with the Security of Employment Statement had been by way of individuals taking voluntary early retirement.   However, the reduction of the engineering workforce that had taken place over the years had resulted in relatively few over 50s still employed and willing to take this option. 
200.	The red-ringing does not in my view undermine the substance of this evidence. The purpose of red-ringing was to ensure that there was a sufficiently stable and cohesive team to ensure that the balance of skills would be transferred.   It is true that Mr. Booth was concerned about any further haemorrhaging from the remaining workforce.   But that is a far cry from believing that they could be placed elsewhere if potentially half the workforce  - some 235 employees - came directly onto the market.   No doubt some of them would have benefited by the tried and tested methods as Mr. Bueno contends.   But I do not believe that the evidence supports the view that many would have done.   Mr. Bueno relies on history, but it is of little predictive value at the best of times, and particularly when the old values and assumptions no longer hold sway.

There would be greater security of employment with RES and more specifically a guarantee of five years’ employment.
	
201.	Another strong grievance ventilated by the claimants is that they were told by ICI that they would have greater security of employment with RES than they had with ICI, and in particular that they would in any event have at least five years’ guaranteed employment.   The claimants say that they understood this to mean that they would not be made compulsorily redundant within that period.   In fact there were apparently 50 made compulsorily redundant within the five year period, of whom only two were before the three year period (when work was fully guaranteed) had passed. 
202.	I will first consider the submission that it was negligent for the ICI management to suggest that the claimants would have more secure employment with RES than with ICI.   It is accepted that this is indeed what was regularly said to the employees, and management believed it.   In part this opinion was based on the perception that the prospects of secure employment with ICI were poor.   I have already considered the justification for that belief. But the other element in the equation was the belief that RES did offer real prospects of secure employment. The claimants say that it was unreasonable for the ICI management to hold this view. 
203.	There are three ways in particular in which it is said that ICI ought to have appreciated that RES could not expect to be a successful business and therefore could not provide the security of employment for the staff which had been represented to them.   First, it is alleged that the RES documents demonstrated that without changing terms and conditions (which ICI said would not happen) it would not be possible for RES to be competitive and to avoid making redundancies.   The other two factors are in substance relied upon to reinforce this conclusion.   As to the second, it is submitted that the subsidy of £2.7 million paid over the first two years was the only basis on which the business was initially made competitive and that it was unrealistic to believe that it would remain competitive thereafter.   Third, the claimants allege that the fact that ICI paid a total of some £2.4 million in  respect of severance liability shows that they must have taken the view that there was going to be such a liability.   It is said that overall, given these considerations, it was always unrealistic to believe that the business would be viable.   In view of these considerations, the claimants say that ICI ought to have recognised that there was a far greater risk of redundancies on a large scale than ICI was prepared to admit, and that they could not responsibly say to the workforce that they were more secure with RES.
204.	I will consider these three elements.   As to the first, RES produced a detailed business plan setting out in some detail how it envisaged becoming a stable and successful business.   I consider that in more detail when analysing the complaints against RES itself. It is sufficient in relation to the position of ICI to say that in my judgment it cannot possibly be said that it was unreasonable for ICI to take the view that it was a sustainable plan.   It is true that the success of the business depended upon RES achieving a growth in market share, and making other efficiency savings.   But there was, I am satisfied, real optimism that it could be achieved.   Plainly, ICI was guaranteeing no one a permanent job, but they were entitled, in my view, to take the view that the prospects appeared bleaker if the staff remained than if they transferred. 
205.	The second point is the subsidy.   It is not disputed that nothing was said to the workforce about the subsidy.   Both Mr. Booth and Mr. Hughes accepted that it was recognised fairly early on in the negotiations that some subsidy would be required to ensure that RES was competitive from the start.   As Mr. Hughes said, it was important in order to ensure in particular that the non-ICI companies received a good and competitive service from day one.   Mr. Bueno submitted that it was misleading for ICI not to have disclosed the existence of the subsidy to the workforce.   This is not a complaint which has been advanced in the proceedings themselves, and I do not understand Mr. Bueno to be asserting that there was some legal obligation on ICI to make this document available.  (Mr. Booth said that it was not revealed for confidentiality reasons.)   Mr. Bueno does, however, say that it was a vital factor which, when taken with other matters, showed that the representation that RES would provide stable employment was an irresponsibly exaggerated opinion.   Mr. Booth’s evidence was to the effect that the subsidy was simply a way of seeking to secure for the company, and for the long term benefit of employees, the competitiveness of the company.   It was not a factor which management saw as undermining the long term prospects of the business; indeed, it helped to secure them. 
206.	What then of the fact that there was a sum of money made to RES which was expressly referable to the severance liability?   Both Mr. Booth and Mr. Hughes gave evidence that they did not in fact believe that there was a real likelihood of redundancies occurring; plainly there is in any business a risk that it might, but it was not what they anticipated.   In fact the total severance liability at the time of transfer was in the order of £8 million and they paid £2.3.million.   Both Mr. Booth and Mr. Hughes strongly submitted that the starting point in the negotiations with RES was zero, precisely because they thought that the safeguards put in place provided a basis for a flourishing business.   In the end they paid the money simply as part of the overall commercial negotiations, not because they considered that redundancies were a probability.   Mr. Bueno challenged this.   He submitted that there was plainly always a probability that redundancies would occur, and that this must have been obvious to ICI.   He referred in particular to a letter dated 15 October 1993 from RES to ICI which said this: 
“….we also recognise that that the provision of the workload guarantee by ICI gives as good an assurance as is possible that there will be gainful employment for part of the workforce.”

207.	Mr. Bueno submitted that the reference to part of the workforce must have meant that RES envisaged that there would have to be redundancies for the remaining part.    I do not accept that.   A little earlier in that letter the author says this:
“We are not planning for nor do we anticipate making any of the transferred Windsor employees redundant.”

I agree with Mr. Hughes that the reference to part of the workforce was simply to that part who were transferring from ICI.   The workload guarantee and the security of employment which it was in part designed to secure did not extend to other RES employees.
208.	In my judgment the documentation bears out the evidence of the ICI witnesses that the £2.4 million was simply part of an overall commercial negotiation where RES were wishing to transfer the potential risk of possible redundancies to ICI. Of course, in this part of their negotiations it made sense for RES to play up this risk in order to obtain as much as possible from ICI, but even so they were saying that they did not anticipate redundancies.   In fact they were still bearing the lion’s share of the risk even after the payment from ICI.   This itself, in my opinion, supports the view that RES could not have anticipated redundancies to any significant degree. 
209.	I should add that the evidence of the RES witnesses bears out in large part what the ICI witnesses said about these matters.   Mr. Tomlinson said that he did not anticipate redundancies occurring but had to recognise in the commercial negotiations that there was a risk that they could.   As he put it in evidence “you do not bet the ranch”. The potential severance liability was a very large sum of money, and although he assessed the risk of redundancies as being “exceptionally low”, nonetheless it was something that had to be evaluated. 
210.	In conclusion on this point, I am satisfied that all the management witnesses who dealt with this issue (Messrs. Anderson, Booth, Russell Hughes and Vaughan) all thought – and I am satisfied genuinely thought - that there was no reason why the business of RES should not establish itself and prove successful.   The financial assistance and the workload guarantees were important to make it competitive and to create the springboard for long term success, but they were not seen to be crucial in the longer term.    It was accepted that it would be necessary for RES to develop the business and to improve the productivity of the staff but the view was taken that this could be achieved.    RES had provided quite a detailed and sophisticated business model indicating how they thought they could become successful, and ICI were satisfied that the model was a realistic one.    Moreover, it was very much in ICI’s interests that it should succeed; the centre of excellence would cease to be available to them if it did not.   Bearing in mind the concerns that the management had about the long term prospects with ICI, I am wholly satisfied that their belief that there was greater security with RES was one they could reasonably adopt on the evidence before them. 
211.	I turn to consider the more specific allegation that ICI represented to the employees that they would have five years guaranteed employment.
212.	 In respect of this particular aspect of the case, it is accepted by the claimants that none of the documents issued by either ICI nor RES actually stated that there would be a five-year guarantee of employment.   This was an objective which the full time union officials sought from ICI, but they were unable to secure it.   At a meeting with the full time officials Mr. Booth is reported to have said in terms that
“..if in years 4 and 5 of the contract, RES was unable to obtain work to keep all employed, severance would be on current basis.”

If the employees had really understood that they were being guaranteed five years employment, they would have sought confirmation from RES of that fact and would have sought to have that right unambiguously reflected in their contracts of employment.   In fact, when the matter was raised with Dr. Tomlinson in September 1993, he conspicuously refused to give a guarantee, stating that the best guarantee was a commitment to grow a long-term viable business.   It is not in fact alleged that RES ever did give this guarantee but the significance of this remark is that any statement from ICI to the effect that there was such a guarantee would have conflicted with the message coming from RES, and again one would have expected the claimants to seek confirmation. 
213.	What ICI consistently said was that they were providing a guaranteed workload for five years.  (Strictly it was a financial guarantee but could be set off by the provision of an appropriate workload.)   Initially the precise terms of that guarantee were not known, but it became clear before the transfer what the nature of the guarantee was.   It required ICI to provide 100% work for all the transferred employees for three years, or to make payments in their stead.   In years 4 and 5 it involved providing 60% of the workload or pay in lieu.   Mr. Booth said in evidence that the guarantee was linked to the continued employment of ICI staff specifically as a result of certain observations made by one of the shop stewards.
214.	There was, however, a particular feature of the agreement to which Mr Hagen initially drew attention and which made the agreement less secure from the workers’ point of view than might otherwise have been the case.   This was the fact that the agreement determines the work to be provided by reference to the staff employed at the beginning of the year.   So if, for example, RES has the full complement of staff employed at the beginning of year 5, it will still receive the full guarantee even if it dismisses some of the transferred staff during the course of that year.   The workload is directly related to the employment of the transferred staff, but not at all points during a particular year.   Accordingly, there is nothing in the agreement itself which discourages redundancies in the final year.
215.	However, the position is different in relation to redundancies effected during earlier years; again there would be no adverse effect for RES for the year in question but RES would suffer from the fact that the workload would be reduced for subsequent years since the number of staff employed at the beginning of those subsequent years, which is the factor dictating the workload, would have diminished. 
216.	I very much doubt whether anyone ever said that there was a guarantee of employment as such; certainly there is no evidence that they did so at any of the formal meetings.   Indeed, a number of the claimants accepted in terms that there had not been any such formal guarantee.  
217.	However, what Mr. Booth and Mr. Ritchie do accept is that they did say on a number of occasions that the guarantee of the workload, coupled with the high cost of making the transferred staff redundant, meant that it would be commercially imprudent for RES to effect redundancies within the five year period.   Mr. Ritchie, for example, accepts that he referred to the fact that there would be a “double whammy” if RES were to make staff redundant the reducing workload and the severance costs.   Indeed, Mr. Serplus alleged that it had been expressed more stridently than that.   He put it this way in his evidence:
“We were told that [redundancies] would be a ridiculous situation. Obviously there would have been the doomsday scenario, Armageddon as it were.”

Plainly this does not reflect the comment Mr. Booth made to the full-time officials and to which I have referred above.   Furthermore, as I have said, it was reasonable for management to assume that information given to full time officials would be communicated to the workforce.
218.	I do, however, accept that the impression given to a significant number of the workforce was that they would be secure for five years.   Mr. Shooter of RES said that he realised after the transfer that many did believe that.   To what extent that was a reasonable construction to put on what they were told is difficult to say.   I suspect that at certain times management may well have expressed their opinions in a forceful way and given the impression that the risks of redundancy in the first five years were so small as to be negligible, albeit that I am sure that they never did guarantee five years’ employment. 
219.	Were these statements negligent in all the circumstances?   I have heard the evidence of Mr. Booth on this matter and I am satisfied that he genuinely did not expect RES to make anyone redundant in the first five years.   He believed that he had secured an environment that would be likely to protect their jobs for five years.   As far as the commercial realities are concerned, it seems to me that it was certainly reasonable to take the view that it would be unlikely that there would be redundancies in the first four years; not only was RES being subsidised to the tune of 60% of the costs, but in addition the cost of the severance pay was significantly higher for ex-ICI employees than for RES’ own staff.   Accordingly it was reasonable to assume that the transferred staff would be retained at least until year 4.  The position was not however quite the same for year 5.   The commercial imperative was not as strong because of the way the agreement fixed the work to be guaranteed by reference to the staff in post at the beginning of the year.   I have the impression that neither Mr. Booth nor Mr. Ritchie fully appreciated this potential effect of the agreement in year 5.   It may be that in part because of this, they did on occasions give a more upbeat impression of the likelihood of continuing employment over the first five years than was strictly justified.   However, even if this were so, I am satisfied that this was not sufficient to render their opinions negligent.   Even considering the cost of redundancies alone, it was in general cheaper to dismiss other RES staff before selecting the ex-ICI staff.   In addition, I am satisfied that the ICI management did believe that RES would pick up extra work and would need to retain the staff they had accepted from ICI. 
220.	Management was expressing an opinion about its own perception of the likely effect of the workload guarantees and the severance costs on any decision to make staff redundant.   They were effectively predicting what they would do if they were managing RES.   In my judgment they clearly had a proper factual basis for the opinions they expressed, even though in the event they turned out to be over-optimistic.   I think it likely that on occasions the sales pitch was too high and they expressed themselves in over-enthusiastic terms about the extent of the protection that they perceived was being provided to the transferring staff.   But bearing in mind that the question is whether the substance of the representation was made without negligence, I consider that it was.
 
 RES would employ the staff on comparable terms and conditions.
221.	 In essence the claimants say that it was wholly unrealistic for ICI to represent that the transferred employees would be employed on the same terms and conditions and that there would be no changes to terms and conditions.   It is accepted that representations to this effect were made.   There are three preliminary points that need to be made about this particular representation.   First, as a matter of law, TUPE transferred the staff on the same terms and conditions.   Second, it was plain to everyone that there may well be changes to terms and conditions effected through entering into an LWA; indeed, it is one of the claimants’ complaints that this was not properly done.   Third, it would be wholly unrealistic to suggest that ICI was representing that there could never be agreed changes; if the employees voluntarily agreed to changes, plainly no one was saying that RES would refuse to implement them (provided, at least, they were not prevented from doing so as a result of TUPE.)   Accordingly, the scope of the representation was presumably that RES would not seek to impose changes not truly voluntarily agreed, such as under threat of redundancies.   Accordingly, this allegation is linked to that relating to security of employment.    The claimants say that cost savings had to be made, either by severance or by cutting terms and conditions. 
222.	The claimants rely upon two documents in particular to justify the assertion that ICI always recognised that RES would have to change terms and conditions and that it was accordingly misleading and irresponsible to represent to the contrary. One was an RES note dated 24 September 1993 of their impressions of meetings between representatives of RES and ICI in which note the following is recorded: 
“Whilst they will not state it publicly, [ICI] clearly expect us to renegotiate Terms and Conditions including the peripheral pension conditions, pretty quickly, and there was some indication that ICI may contribute financially in this regard.”

Mr. Hughes, who was at the relevant meetings as an ICI representative, denies that this note accurately reflects ICI’s thinking.   He said that at least from the time it was recognised that TUPE applied, it was always central to this transfer that terms and conditions should be maintained, and there was no reason to believe that RES would fail to do this.   Mr. Vaughan, who was also involved in the negotiations, gave evidence to the like effect.
223.	The second document was a confidential memorandum from Mr. Booth and Mr. Hughes to Mr. Brogden, the Chief Executive of ICI Chemicals and Polymers. In that memorandum it is suggested that RES might want to alter terms and conditions after the transfer in order to bring them into line with their own existing terms.   Mr. Hughes gave evidence that he envisaged that this would occur by agreement; he was not suggesting, nor did he believe, that RES would seek to achieve changes by attempted unlawful variations of the contract.   I found Mr. Hughes to be a plain and honest witness; I have no doubt that he was telling the court the situation as he perceived it to be. 
224.	The substance of this complaint has to be that ICI failed to take reasonable care when believing the assurances that RES gave that RES would comply with their legal obligations and honour the employees’ terms and conditions of employment.   There is in my view no warrant for this allegation.   In fact it is not alleged in this case that any terms and conditions have been unlawfully changed.   (There were, it seems, one or two occasions when RES was threatening to alter certain minor benefits which it did not consider to be contractual, but it did not in the event do so, and has not sought to alter rights agreed to be contractual save by consent.)   It is true that in the last year the possibility of terms being changed to head off redundancies has been actively mooted by RES, but it is now 7 years since the transfer.   It hardly bears on the question whether ICI acted responsibly when it made the comments that it did.
225.	I should also add – although this is no longer being contended - that I am certain that there was no hidden agenda, concealed from the employees, in which management believed that they were transferring the men to a company which was bound to sell the employees down the river once the transfer had occurred. 

The 1991 Staff Agreement would be implemented together with overtime.
226.	Again there is no doubt that ICI did say that RES had accepted that they were bound to negotiate in accordance with the 1991 Staff Agreement.   Indeed, the collective agreement transferred pursuant to TUPE and moreover it was a term of the transfer agreement that it would “seek to implement material aspects of the 1991 Staff Agreement …on a self-financing basis.”
227.	It is alleged that it ought to have been plain to ICI that RES was never going to be able to enter into an agreement which could provide the 14% increases which the agreement envisaged. I do not accept that.   In my view it is quite unrealistic to assert that it was unreasonable for ICI to assume that RES were at least in principle in a position at least to enter into LWA negotiations in good faith and with the intention of achieving its objectives.   ICI was here not even recounting its own intentions, but what it believed RES’ intentions to be based on what RES had undertaken contractually to do.   Absent some cogent evidence of bad faith, that cannot in my view be unreasonable.
228.	The further allegation is made that it was represented to the workforce that RES would enter into both an LWA, giving 14% pay increase, but that in addition RES would permit overtime to continue as with ICI.  In other words, it was being said that the stumbling block in the negotiations with ICI would not cause difficulties with RES because they would not want to impose the annualised hours with the corresponding elimination of overtime.   The evidence about this is not altogether consistent.   Curiously, this does not appear in the schedule of 71 representations, but Mr. Ritchie who is alleged to have made a statement to this effect on a number of occasions, strongly denied having done so.   However, Mr. Booth accepted in cross-examination that it was an important element in selling the terms to the men that they would receive the LWA increases plus overtime. 
229.	I think it likely that at some stage the workforce did obtain the impression that RES would not want to agree any changes in working hours.   There appears to have been an assumption, which I strongly suspect management shared, that it would not be beneficial for overtime opportunities to be denied to its workforce by a contractor.   (I consider the reasons for this below when analysing the position of RES.)   But whatever the position at earlier stages, there were clearly doubts raised about RES’ intentions in this regard shortly before the transfer.   At a meeting between certain of ICI management and the shop stewards on the 27 June 1994 there was a discussion about RES’ approach to working time.   The minutes are as follows: 
“Representatives raised concerns about moving forward with the process, in the main, it centred on how RES would tackle the effective use of working time issue.   In addition, they stated a need to have a presence of RES at the communication sessions to make an input “some hints on where RES want LWA and ideas on working time”.   It was evident that an expectation had been put into the representatives’ minds on the subject, but the situation was clarified by the Chairman that RES had not indicated to ICI any views or ideas on the working time issue.   The representatives were clearly surprised by this response since they felt “off the record” comments and hints had been made to them very recently on how RES were considering the issue”.

230.	In my judgment it must by this time have become clear that the “off the record” comments, which it seems were to the effect that RES would not want the working time arrangements, could no longer be relied upon.   There is no evidence that any later representations were made about RES’ intentions in this regard.   Accordingly, in my judgment, any potentially misleading comments as to RES’ intentions had been overtaken by this formal statement of their position.
231.	In any event, in my view it would be quite unrealistic for the claimants to rely upon what ICI were telling them about RES’ intentions in this regard when they could confirm the position with RES itself.   ICI could not be said to be assuming any responsibility for how RES was going to conduct the negotiations.   

The pension rights with RES would be broadly similar and more specifically within one half a percent.
232.	There are essentially two matters in respect of the pensions.   First, it is said that ICI promised that the benefits to individuals would be broadly similar under the RES scheme to those which were payable under the ICI scheme, although that was not in fact the case.   More particularly, it was said that there had been a specific representation made on a number of occasions that there was no more than a half a percent difference between the benefits payable under the two schemes and that also was untrue.
233.	There is no dispute but that ICI did from the very beginning of the negotiations say that they were seeking to secure pensions which were broadly comparable to those which the relevant staff had with ICI.   Different phrases were used at different times; for example it is accepted that management used such phrases as “equivalent”, or “not materially different”, or “no less favourable”, or “comparable”, but they were intended to mean the same thing, and the evidence from the claimants was that they treated these terms as interchangeable.   Most of the employees who gave evidence fully understood that there would not be a mirror image scheme – in other words the pensions were never going to be identical - but it was expected that they would be broadly comparable.  (There were a few witnesses who thought that they were being promised a mirror-image scheme, but it is plain that by the time the transfer took effect, and having been given information about the scheme which showed beyond doubt that it was not identical to the ICI scheme, this can only be construed as a gross misunderstanding of what they had been told.)
234.	The actual representations made did not make any clear distinction between RES providing an equivalent pension scheme, and providing equivalent or broadly comparable pension benefits for individuals. I have no doubt that this is because virtually none of the parties concerned were conscious that there was this distinction.    It seems to have been assumed that any difference in the schemes taken as a whole would broadly reflect the difference for individual benefits arising under the scheme.   The claimants say, reasonably enough, that they were interested in their own particular situations and were not really concerned about the benefits of the schemes when taken in the round.   They assumed that the representations referred to the benefits they would receive.   I accept their evidence when they say that they assumed that their own pensions would be broadly comparable taking one scheme with another.  Plainly, this was not the same as identical.   But I do believe that they would have been surprised to be told that (even if only exceptionally) some of them could be as much as 5% or more worse off in some situations under the new scheme.
235.	Ms. Booth submits that the key issue is not how the words were understood by the claimants but how they were understood by ICI itself.  That would no doubt be true if the claim were in fraud, but I do not accept that it is the test where the question is whether there has been negligent misrepresentation.   In that context the test is how the words would be reasonably understood by the person to whom they are addressed: see e.g. Akerheim v De Mare [1959] A.C.789.   But even if Ms. Booth were right, I do not think it would assist her.   There is no doubt that the management themselves did not until the very late stages appreciate that there was a distinction between the schemes being equivalent and the pension benefits for individuals being equivalent.   Mr. Booth frankly admitted that he had assumed until shortly before the transfer that if the schemes were within, say, 1% of each other, then the benefits to individuals would be likewise.   In effect, therefore, he was under the impression that in making statements about the schemes, he was at the same time identifying the benefits available to individuals.   In the circumstances it is hardly surprising that the employees were under the same impression. 
236.	What then would that impression be?   In my view it would be that their pension benefits would be broadly comparable, and that phrase would derive its meaning in turn from the other expressions being used interchangeably with it.   Such phrases as “equivalent” and “not less favourable” would certainly suggest that any detriment would be within a very narrow band.   This impression would have been reinforced, in my view, by the fact that it is accepted by management that throughout much of 1993 the employees were told that “broadly comparable” and related expressions meant that the benefits were within one half a percent.   Mr. Booth himself had given that impression in answering a direct query on the point.   He explained that he had discovered that in the Dupont merger that took place in 1993, the pensions were within this percentage, and he gave this as an example to the employees of what was meant by broadly comparable.   His intention was to show that the pensions would be close and not significantly different to those at ICI; he was not intending to bind himself to that figure, but he accepted that thereafter, and until told something different, employees could reasonably have assumed that broadly comparable had this very restricted meaning. 
237.	There is a dispute about whether Mr. Ritchie repeated the reference to half a percent sometime in the summer of 1994, shortly before the transfer.   This was one of the most fiercely disputed factual issues.   There are two manuscript notes of a meeting with representatives of monthly paid staff on the 3 June 1994, one from Mr. Hagen, and another from another claimant, Mr. Corkain, which refer in terms to half a percent.   However, there are also manuscript notes relating to a similar meeting held for weekly paid staff that same afternoon, and there is no reference there to half a percent.   A number of the claimants say that they recall Mr. Ritchie using this term into 1994.   Mr. Griffiths who had been a manager answerable to Mr. Ritchie and was not one of the claimants (in fact he did not transfer), was adamant that the phrase had been used throughout.  He had been led to understand that this was what he should say to the workers when he was dealing with this issue.  It was clear from his evidence that he took considerable care to ensure that his witness statement was accurate, and I believe he was taking similar care in the answers he gave under cross-examination.   Mr. Leonard also gave a graphic description of the occasion when he recalls Mr. Ritchie saying this. 
238.	A number of the witnesses also said that Mr. Ritchie repeated the phrase at meetings on the 25 and 26 July when he was present with a number of RES representatives, although many complainants who were also at the meetings do not recall this.   The purpose of those meetings was for RES to address the staff.   There were in fact four meetings in total over the two days.   None of the RES witnesses who attended those meetings could recall Mr. Ritchie saying this; and I am satisfied that if Ms. Ellis, the pensions officer from RES had heard it, she would have sought to correct it.   Furthermore, a Questions and Answers document which detailed questions raised at these meetings made no reference to any question raising the issue of half a percent but does make reference to one featuring the figure of 1%.   None of the notes made by the claimants of these meetings refers to half a percent.   Furthermore, as I have already said, there is no doubt that many of the claimants have, quite understandably after this length of time, confused particular meetings, and I think it likely that they have done so in relation to these meetings.   (Many of them thought Dr. Tomlinson was present at these meetings on the 25 and 26 July when in fact it is now accepted that he was not.)   On the balance of probabilities I find that the statement was not made at any of these particular meetings.
239.	However, in the light of all the evidence I think that it is more likely than not that Mr. Ritchie did on occasions shortly before the transfer refer to pensions being within half a percent.   But ultimately I do not think it is a matter of great moment whether he did or not.   Ms. Booth has said that the references in the notes of Mr. Hagen and Mr. Corkain to half a percent were consistent with them hearing “broadly comparable” and equating that in their minds with half a percent.   Even assuming that is right, it strongly suggests that the references to half a percent which had been made in the previous year were still understood to be management’s view of what the phrase “broadly comparable” meant, and it continued to colour the expectations of the employees.   It was incumbent on management to ensure that this false impression was not left in the minds of the employees.
240.	However, it is correct to say that there was further information given to the employees prior to the transfer about the pension rights.   By then three actuaries had considered the schemes and concluded that they were broadly comparable.  (Originally the claimants alleged that it was not reasonable for ICI to have said even that the schemes were broadly comparable, but in the light of the evidence Mr. Bueno wisely decided not to pursue that always optimistic argument.)   In particular, ICI had taken the unusual and laudable step of paying for an actuary who was instructed by the unions.   As a result a firm of actuaries called Corroons was instructed and they reported that the two schemes were within one percent of each other.   The claimants have raised some doubts as to whether Corroons  had all the information needed for the assessment, but I have no reason to believe that they did not.   In any event, it is accepted that they were able to get such information as they did require from RES and ICI. 
241.	I have no doubt that the conclusions in the Corroons report would have become generally available.   A few claimants say that they were not aware of it, but I am satisfied that most of them must have been at the time. This expert advice relating to their pension rights must have been a matter of some moment to them, and they would surely have been interested in the conclusions of their own expert.   I do accept, however, that since it was broadly in line with what they were being told by management, albeit a little more pessimistic, it would not have been likely to have caused any fresh concerns. 
242.	Mr. Simmonds Q.C. counsel for ICI dealing with the pension issues, submits that in view of this information the claimants cannot say that they relied upon the half a percent statement.   I accept that, and indeed a number of the claimants, including Mr. Hagen and Mr. Leonard, said as much.   But in my judgment they would still have reasonably expected their personal pension benefits to be very close to equivalent.   The reference to one percent would have suggested that it was perhaps a little less satisfactory than they had initially been led to believe, but not significantly so.   Unless they were told that they could expect more extensive variations, in my judgment they did rely, and could reasonably rely, upon their pensions being at worst only a little short of the ICI pension.   The half a percent statements continued to provide the backcloth against which later information was interpreted, and in my judgment the actuaries’ reports did not constitute a sufficiently unambiguous disavowal of them.
243.	Mr. Simmonds suggests that there was plainly information available to the employees which would have shown that for certain individuals there were variations of up to 5%.   (There is some argument over the exact figures; I shall return to that below.)   He says that this information must have been available to Corroons, and could have been obtained from them by the claimants or their trade unions.   Alternatively, after the pensions explanation given by RES in July and August, the employees were given the opportunity to take advice from either RES or independent pensions experts and could have discovered the shortfall of their own pension benefits under the new scheme.   Accordingly, any misleading statement had been corrected.   In my judgment neither of these possibilities provided a satisfactory response.   As I have indicated above, legally once a false impression has been created, it is for the defendant unambiguously to correct it.   I do not consider that either of these steps can be said to constitute such an unambiguous correction.   For a start, since no one had suggested that there was likely to be a significantly greater variation of their personal pensions than they had been led to believe, there was no particular need for any individual to obtain this information.   Moreover, it was not apparently suggested to the unions that when they instructed an actuary they should focus upon this information also and make it available to the employees.
244.	As to the use of the advisors, I very much doubt whether even if the claimants had taken advantage of these opportunities to take individual advice given to them, they would necessarily have realised the potential detriment to them as individuals.   As Mr. Brown, the ICI’s internal pensions specialist, accepted, the principal reason why individuals were being asked to see these advisors was to help them decide the question whether to transfer their pensions to the Trafalgar House scheme or to crystallise their rights in that scheme and join the Trafalgar House scheme as new entrants.   Other witnesses including Ms. Ellis of RES, agreed that this was their purpose.   (In fact, as Mr. Brown and a number of other pensions experts have said, there was little doubt that, exceptional cases apart, all the employees would be better off transferring to the Trafalgar House scheme.   That was the advice which was apparently given by all the three sets of advisors.) 
245.	Moreover, the advisors were in fact unpaid, and whilst there is no reason to suppose that they were unable to give the basic advice for which they were appointed, they do not appear to have been particularly specialised in their field.   A few of the complainants who did seek to take advantage of this service said that the advisor they saw did not have details of the two schemes and could not have given any comparative information.   Having said that, I have no doubt that had any individual specifically asked for his own personal comparison statements, it would in time have been given to him.   There was no deliberate intent to conceal it.   However, until the employees were given some indication that there were the potential discrepancies of which they might wish to be made aware, they might reasonably have thought it unnecessary. 
246.	The claimants have alleged that ICI ought to have provided specific comparative statements for individuals showing how they personally were going to be affected by the transfer.  Indeed, it seems that the claimants were particularly suspicious of the failure of ICI to provide them.   The evidence shows that RES proposed that this should be done but that it was rejected by ICI.   Was this because there was a fear that it would demonstrate that the schemes were not as favourable as ICI were alleging?   That is in essence what the claimants have at least been strongly hinting.   The decision not to provide individuals with these documents was taken by Mr. Brown from ICI’s pension department.   He said that he did not want to do that because it was not helpful to the staff concerned.   He assumed that the transfer was by then an established fact, and on that assumption he was plainly justified in concluding that there was little purpose to be served in telling the staff the extent to which their pension rights had changed.   However, he did accept that if the employees still had to make a decision about whether to transfer or not, then it would be highly relevant to make statements of comparable benefits available to them. 
247.	I unhesitatingly accept Mr. Brown’s evidence about his reasons for not wanting the statements produced.   From his perspective, assuming as he did that the decision to transfer on these pension terms was irreversible, it was wholly understandable.   I am fully satisfied that there was no intention to conceal the fact that some employees would be worse off than they had been led to believe.   Even so, the effect, in my view, was that the extent to which individuals who were falling below their ICI pensions was never apparent to the employees.   I do not suggest that the position should necessarily have been made clear in this particular way; Mr. Mitchell, a pensions expert for ICI expressed a number of concerns about the use of these statements.   But I am satisfied that ICI ought at least by some means to have put individuals on notice that their pension rights may be adversely affected by the transfer more than they had been led to believe, and to give them the opportunity, with knowledge of that fact, to discover by how much.   This was not done.
248.	I will consider below the implications of my conclusion that there was a misrepresentation about the anticipated pension benefits of the employees when I have considered the other allegations.

Acquiescing in Mr. Pinder and Mr. Smithson misrepresenting their position. 
249.	The claimants make a complaint about two managers who were allowed to take voluntary early retirement and yet still transferred to RES.   These two were Smithson and Pinder, two members of Central Engineering’s management team. It was originally alleged that they had been treated more favourably than the rest of the staff, and furthermore that they had received payments in breach of statements by ICI that no one could transfer pursuant to TUPE and at the same time receive any severance or early retirement pensions.    In fact it emerged in the evidence given by Mr. Booth that both had applied for early retirement before any decision had even been taken about who the transferee should be.   At that stage, he said that the three companies considered as potential transferees had all made it clear that they would want to bring in their own management team.   Accordingly, there was no reason to refuse their applications for early retirement.   It was only subsequently, after their applications for retirement had been accepted, that RES expressed an interest in obtaining their services.   They did not go across under TUPE and nor did they retain their ICI terms and conditions but in fact were employed under RES’ own terms and conditions.   This explanation was confirmed by Dr. Tomlinson evidence for RES.   I suspect that when agreeing to early retirement both the men and Mr. Booth had a shrewd idea that they may well be wanted by the successful bidder because of their experience, but I accept that there was certainly no assurance that they would be so employed.
250.	In any event, in view of the evidence the claimants rightly do not persist in their complaint of inequality of treatment.   They do appear now to be saying that the staff were told that they could not be employed by RES whether pursuant to TUPE or otherwise and receive a severance or early retirement payment.   I do not accept that the evidence substantiates that unpleaded allegation.   Indeed, in my view it is plain that all management were doing was explaining the effect of TUPE i.e. that someone transferring under TUPE was not entitled to severance pay. 	  That is an entirely accurate legal statement.   The same does not, however, apply to those who end up in RES quite independently of TUPE, as Smithson and Pinder did.   So their statements, so far as they went, were an accurate statement of law. 
251.	However, the claimants also allege (following a Re- re-amendment to the Statement of Case that I permitted just before Mr. Bueno made his closing submissions) that Alec Smithson and Ray Pinder represented that they were going across to RES on the same basis as everyone else, and that ICI acquiesced in this deception.   Both these managers were actively supporting the transfer and saying to those staff with whom they had influence that it was the best move for the Central Engineering staff.   Plainly, they were trusted by the staff with whom they came into contact and who reasonably assumed that they were in the same boat as the staff were.   Indeed, some of the claimants allege that Smithson and Pinder positively represented that they were in the same position.   Whether this was so or not, it would be the only reasonable inference if they said that they were transferring to RES without any further explanation.   I have no doubt that their advice would have been scrutinised with a more rigorous eye had it been understood that they were becoming employed by RES following the receipt of generous early retirement payments from ICI. 
252.	The claimants originally alleged that the management instigated these two to mislead the employees.   Unfortunately, neither of them gave evidence before me. Mr. Booth denied any instigation and I accept his evidence on that.   However, he did accept that both Alec Smithson and Ray Pinder had raised with him the question whether they should remain quiet about their early retirement moneys and he told them that it was a matter for them whether or not they mentioned it. So there plainly was acquiescence in their conduct.
253.	I have no doubt that it was a serious mistake to permit their payments to be concealed in this way.   I can see that the fact that they had both received the early retirement payment and were to be employed by RES was potentially embarrassing to ICI, even if in fact there was nothing untoward or improper about it.   But deep suspicions will understandably have been harboured about the frank nature of the communications by ICI once this matter emerged; and it is one of the factors which lends support to a conspiracy theory which I have rejected.
254.	I do not, however, believe that this acquiescence by ICI constitutes a basis for any legal redress by the claimants.   I have no doubt, essentially for reasons I have already given, that management did genuinely feel that the deal was good for the employees.   The effect of the deception was to reinforce a message which was thought to be correct.   The fact that Smithson’s and Pinder’s advice would have been treated differently had the employees known the true position does not alter the fact that management did genuinely believe the advice to be correct.   No doubt more attention would have been paid to what others were saying, but in truth they were saying substantially the same thing.   The episode does, however, suggest that in terms of selling the deal to the workforce, there was a tendency to conceal from them matters which, however justifiable, might have provided a source of discontent or opposition. 

The transfer was in the best interests of the staff. 
255.	I have left this particular representation to the end because it was made on the basis of the other representations to which I have referred.   Again, it is not disputed that this was said to the employees on numerous occasions.   As I have already said, in my view this constitutes advice, but for reasons I give below I do not believe it was advice in respect of which ICI had undertaken a duty of care.   Even so, in case I am wrong about that, I will consider whether the advice was negligent.
256.	It is necessary to put the statement that “the transfer would be in the best interests of the staff” in context.   Management was not saying that it was seeking to benefit the staff in direct conflict with or at the expense of ICI’s own interests.   As Mr. Booth and Mr. Anderson both recognised in evidence, ICI is not a philanthropic body and plainly the strategy had to benefit ICI as well as the employees affected.   I have no doubt that that was fully understood by the staff; indeed, they are a shrewd crew and would not have believed it had they been told otherwise.   They were frequently told that the transfer constituted a “win, win, win situation”; that is, that each of ICI, RES and the employees of Central Engineering would all benefit from the agreement.   The potential advantage to ICI in retaining access to a skilled and knowledgeable workforce was an important feature of the agreement as far as ICI was concerned and this was never concealed from the employees. Moreover, the reference to it being in the best interests of the workforce to transfer was, I have no doubt, intended to mean, and could only reasonably have been understood to mean, that it was in their best interests given the commercial constraints under which management of Central Engineering were operating.   It may be, for example, that the policy of giving greater autonomy to the business units was not in the best interests of the Central Engineering workforce, but management had to operate within that constraint, and they could not ignore it when advising the claimants.
257.	Did the management reasonably form the view in all the circumstances that the transfer was in the best interests of the workforce?   I have no doubt that they genuinely held that view.   When giving advice of this nature, which is not objectively capable of being analysed as right or wrong, the only question is whether the management could reasonably give that advice in the light of the circumstances as they reasonably perceived them to be.   In my judgment their concerns for the longer term employment of the Central Engineering employees within ICI and their belief that they would be likely to have better prospects with RES were based on reasonable grounds, for reasons I have already set out.   Whilst I accept that there may on occasion have been some over enthusiasm in transmitting that message, I do not believe that it rendered the advice negligent. Indeed, I have little doubt that many of the claimants are in fact better off with RES, although that is not what I have to decide

The complaints against RES.
258.	I now turn to consider the claims made against RES following the analysis set out in paragraph 36 above.

There would be no redundancies and no changes to terms and conditions.
259.	The claimants say that there were two representations made by RES which were plainly incorrect and could never have been made on reasonable grounds.   The first was that there was no plan to make any of the transferred staff redundant; and the second was that there would be no change in the terms and conditions after transfer. 
260.	The claimants originally alleged that it was always recognised by RES that it would be necessary to make staff redundant or alter terms and conditions, and that this is what has in fact occurred.   However, it is not now alleged that there was any preconceived plan to do this; it is accepted that these statements of intention were genuine when made, but it is said that RES should have appreciated that it was impossible in the light of all the relevant facts that these intentions could be realised.   This is a very high hurdle to jump and requires the court to conclude that the conclusions drawn by RES management were not reasonable commercial conclusions to draw. 
261.	RES accepts that statements were indeed made prior to the transfer to the effect that there was no intention to make any of the transferring staff redundant.   Mr. Tomlinson accepted that he would have said as much when he addressed the staff in November 1993 (although not at meetings on the 25 and 26 July 1994 as originally pleaded; it is now common ground that he was not in fact at those meetings.)   Indeed, Dr. Tomlinson accepts that he may well have said or indicated that employment would be “forever”, or that there would be a job for life, but that was in a context where he was envisaging a growing and successful business.   Much emphasis has been put on that statement. Mr. Bueno said that it would have given the impression to the claimants that their employment with RES would be as secure as their jobs with ICI had been.   I do not accept that; these employees are shrewd enough to recognise that managers, particularly when taking over a new venture, will always be upbeat about its prospects and will paint a generally optimistic picture of the future both for the business and the staff.   I accept that this statement may have provided some reassurance to the workforce, but I doubt whether at the time it had much more significance than that.
262.	As to the statement that terms would not be changed, as I have said in relation to a similar complaint against ICI, this clearly would not include changes made via an LWA agreed between the parties, nor truly voluntary agreements.   However, the way the matter is put by Mr. Bueno is that there was a representation that the business could succeed without the need either to make staff redundant or to put them in a position where they would face loss of employment unless they agreed to changes. 
263.	The claimants point to a number of factors to which I have already made reference to support their contention that RES had no chance of surviving without either redundancies or changes in terms and conditions: that it was only with the support of ICI through what has been termed the “inefficiency subsidy” that the business could stay afloat in the first few years; that RES was relying upon the workload guarantee; and also to the fact that there was a payment made under the agreement which was specifically referable to future redundancies. 
264.	In my view, for reasons I have already given and will not again rehearse,  although the last of these factors relates specifically to the payments for redundancies, it does not significantly advance the claimants’ case.  It shows that it was recognised that redundancies could not be wholly discounted, but that is a mile away from saying that redundancies were planned or should have been anticipated.   I am satisfied that the payment referable to severance under the agreement was not to cater for envisaged or planned redundancies. 
265.	I accept the evidence of Dr. Tomlinson that he thought and hoped that the business would expand and that it would then be necessary to retain all the transferred staff.   Moreover, this was not just the over-optimistic view of a sanguine senior manager.   RES had carried out a detailed analysis of the effect of acquiring Central Engineering, resulting in a business plan which was submitted to ICI prior to the transfer.   Plainly nobody in ICI was perturbed by its contents since they were prepared to transfer Central Engineering to RES.
266.	I also heard evidence from Mr. Moon, the Head of Business Development of RES, about the plan.   I found him a straightforward witness.   As he says, and as the documents bear out, RES spent a considerable amount of time looking into the feasibility of Project Windsor, and they would not have done this and then have been willing to go through the deal had they had serious doubts about whether the business could succeed.   The cost of redundancies was very significant, even after taking account of the financial support received from ICI referable to this.   It would have been commercially imprudent to have acquired the business if there had been a serious risk of widespread redundancies.   He accepted that it was recognised from the beginning that it would be necessary for RES to grow.   It was clear to RES that the labour costs of the transferred staff were high compared with other RES staff, and the corresponding hourly rate to the client would be higher than the market could bear.   The claimants put considerable emphasis on these factors.
267.	But I accept the evidence of the RES witnesses that it was envisaged that changes could be made which would alter this situation.   Certain productivity improvements were anticipated, but perhaps most importantly was the expected growth of the business.   As Dr. Tomlinson and Mr. Moon both accepted, an expansion in market share was crucial to the long term success of the business and would help dilute the overheads of the more expensive ex-ICI employees.   In addition it was planned to develop the business away from hourly rate contracts to those which involved providing work for a fixed price. RES was optimistic that such growth was possible.   Indeed, Mr. Moon was originally an outside consultant who joined RES at the point of transfer. He claimed in evidence that he had considerable confidence in the business plan and would not have joined the company otherwise.   His action in joining the company at that time does suggest that he had a real confidence in its future.
268.	Accordingly I am quite satisfied that RES did genuinely believe on realistic grounds that they could so improve the efficiency of the business and expand its market share that they could avoid making staff redundant. 
269.	I turn to consider the alternative limb of this submission, namely that RES intended to alter the terms and conditions of employment, notwithstanding TUPE, in order to cut cost.   To substantiate this, Mr. Bueno relies upon certain statements made during the negotiations which clearly anticipated changes in terms and conditions.   In particular he put some emphasis on a statement from a Mr. Curry of RES who had said in a letter dated 10 March 1994 that: 
“if we don’t take the initiative and make changes at this stage of Project Windsor we will have to wait till LWA is debated and as we know this will be at the cost of a 14% increase”. 

Mr. Shooter explained, and I accept, that these were the personal views of Mr. Curry, expressed at a time when he was not aware of the implications of TUPE.   He did not appreciate that RES was legally obliged to continue to honour the terms and conditions of the transferred staff.
270.	Both Mr. Tomlinson and Mr. Moon were clear that they accepted that the result of TUPE was that they could not lawfully change the terms and conditions so as adversely to affect the employees’ interests.   It was never envisaged that they would do so.   It was, however, intended to seek to make certain changes through LWA, and these would have altered in particular working practices.   It was also originally hoped to deal with the problems of absenteeism and diverted time by using this agreement.   As Mr. Moon put it, LWA was envisaged as the “sole vehicle for achieving contractual change”.   I accept his evidence, which was echoed by a number of other RES witnesses.   It is in part the failure to achieve any advances in this area that has caused problems for the company.
271.	I should add two further points.   First, there is nothing in the documents to suggest that there was ever any intention to impose changes upon the ICI employees against their will or as an alternative to redundancies.   If that had been envisaged then one would have expected to find some reference to it in a confidential memorandum sent by Dr. Tomlinson to the board of RES on the 19 May 1994 when he sought approval to sign the contract with ICI.  In fact his recommendation as an experienced businessman was that the acquisition provided a sound base to enable RES to expand into Europe.   Even if there were an intention to seek changes by a genuine voluntary agreement, that is a matter of no consequence; the workforce can simply refuse to accept the terms on offer. 
272.	Second, there has in fact been no change in terms and conditions, a fact which itself lends support to the evidence on this matter given by the RES witnesses.   It is true that there are now, some seven years after the transfer, negotiations in which RES is trying to persuade the transferred staff to accept adverse changes.   But even then it is not as far as I am aware being imposed under threat of dismissal if they refuse or anything of that kind.   In any event, developments occurring seven years after the representations are of very little evidential value in determining the reasonableness of statements of intent made seven years earlier.
273.	Accordingly, I reject the submission that these statements by RES management constituted statements of intention that they could never have reasonably believed would be recognised.

They undertook to implement LWA with a consequential 14% pay increase. 
274.	It is plain from the terms of the transfer agreement that RES did undertake to “seek to implement material aspects of the 1991 Staff Agreement …..on a self-financing basis.”   Furthermore they represented to the workforce that they were committed to the agreement and would seek to give effect to the spirit of it.
275.	In order to determine whether RES did indeed break this undertaking, it is necessary to consider exactly what it was they were agreeing to do.   It is accepted that they were only agreeing to introduce a productivity agreement provided it was one where the benefits exceeded the costs.   They were not saying that come what may they would give a pay increase of 14%, irrespective of the union’s position on other elements of the negotiations.   Nor were they representing that they would pay 14% simply for the productivity improvements that had been agreed between the workforce and ICI.   In so far as any of the employees ever had any understanding to the contrary, it was not based on anything RES had stated and it was plainly unreasonable for them to have done so.
276.	Mr. Hillier for RES submits that RES was in no way committed to the 14%; at most it had only committed itself to bargaining in good faith a productivity deal where benefits exceeded costs.   He says that RES plainly did comply with that obligation; it is undisputed evidence that after the transfer they reached an agreement with the shop stewards which secured an 8% increase in return for a variety of productivity improvements.   It was accepted by Mr. Serplus and Mr. Booth that the increase was a fair reflection of the value of the benefits to RES under the agreement.   But this offer was subsequently rejected by the men.   This particular agreement was made after the representatives had made it absolutely plain that there would be no agreement to any proposal for annualised hours. That message was unambiguously given, and thereafter RES never sought to make it part of the agreement. 
277.	 I do not entirely accept Mr. Hillier’s analysis.  It gives insufficient weight to the significance in the agreement to the specific reference to benefits of 14%.   Mr. Shooter for RES accepted that part of the agreement was that the benefit under the agreement should be 14%, as is plain from its terms.   As I have said, that would not have to be agreed unless the benefits exceeded that figure; but it seems to me that RES were impliedly representing that they at least envisaged that there was the possibility of an LWA being agreed that would be capable of achieving 14% savings and thereby resulting in a 14% pay increase.
278.	In my view an important question in relation to this aspect of the claim against ICI is whether RES genuinely believed on reasonable grounds that these savings could be achieved.   Evidence on this was given by Mr. Shooter, the RES manager who had been most active in the negotiations.   He accepted that some of the managers at RES were sceptical about whether 14 % could be achieved, but his own view prior to the transfer was that it was possible.   Similarly, Mr. Moon, the head of business development, said in evidence that prior to the transfer it was believed that productivity increases might be able to fund a 14% increase. 
279.	In a document dated 28 September 1993 (a month after the transfer), RES costed the LWA.   On the assumption that they moved from cost plus contracts to fixed price contracts it was calculated that they would have benefits exceeding costs, notwithstanding a 14% increase in pay, if they could reach agreement on diverted time (which included securing greater mobility of staff across Teesside), the annualised hours, and the improvements in productivity.   However, they would lose out very significantly if they remained working for contractors on a cost plus basis.
280.	Both Dr. Tomlinson and Mr. Shooter confirmed this; they accepted that the introduction of annualised hours, together with a reduction of overtime, would positively be to the disadvantage of RES in connection with any commercial contracts where payment was made by reference to an hourly rate for the work done.   Unless the hourly rate were increased (which would be difficult given the market pressures to keep the contract price down) the result would be that the client and not RES would obtain all the benefits of the productivity improvements.   However, that would not be so if RES moved onto fixed price contracts; they could then take advantage of their efficiency gains by completing the contract work more quickly and freeing staff for other work.   This was, however, one of their objectives as stated in the business plan; as Dr. Tomlinson and Mr. Shooter confirmed, it was always recognised that they could only successfully compete by moving largely to fixed price contracts. 
281.	I have no doubt that RES recognised that reaching an accommodation on LWA would be difficult.   They knew that this had become a sticking point in the negotiations within ICI. But although I have had some doubts about this, I believe that they did think that there were in principle productivity gains which could potentially achieve benefits in excess of 14%. 
282.	In my view, that was a reasonable, if arguably optimistic, basis for believing that the terms of the 1991 Agreement could be implemented.   But in any event, Mr. Hillier has argued that since the workforce made it plain that they were intractably opposed to one of the principles of the agreement, namely the annualised hours, they cannot legitimately complain if RES then consider themselves free to negotiate a fresh agreement on a different basis and free from the obligation to provide 14%.   That is, to my mind, an answer to any claim based on a breach of an implied warranty since a party cannot hold the other contracting party to a contract it is not itself prepared to honour.   But it also defeats the claim based on Hedley Byrne, for I do not see how the claimants can say that they were reasonably relying upon RES to give effect in full to the principles of an agreement which they themselves would not honour.   In saying this I recognise that it is likely that RES would not have wanted the annualised hours principle implemented even if the workforce had been pressing for it, but that situation never arose because it was made clear to RES from the beginning, by the shop stewards, that the annualised hours would never be agreed.    

Pensions statements
283.	The other three complaints are directed to aspects of the pensions information given to the staff by RES.  The precise nature of these allegations varied at different stages of the argument.  
	The Time to Decide booklet was misleading.
284.	First, there were allegations made about the content of a booklet which was provided to give information about pensions, called “Time to Decide”. It was initially alleged that the booklet was inaccurate but all the experts, including the claimants’ own expert, Mr. Burns, accepted that it presented a “reasonable and factually correct overview of the benefits provided under the scheme”. The thrust of the argument has now shifted and it is alleged that the booklet contained material omissions and was given to the employees in circumstances which made it inaccurate.   In substance it is said that the booklet ought to have contained information informing the staff of the following: that the RES (Trafalgar House) scheme contains a power to discontinue the scheme whereas the ICI scheme did not; that it failed to mention that a death in service benefit is only given to married spouses under the RES scheme but may extend to nominated dependant partners under the ICI scheme; that it did not say that RES would treat persons retiring early differently to ICI; and that it did not give comparison statements setting out the benefits available to individuals under both schemes.  
285.	Only the first of these complaints was raised in the pleadings.   It is a relatively minor feature of the pensions scheme, and will apply only to some of the claimants.   Not surprisingly, it barely figured as a concern expressed by the claimants when giving evidence.  On any view, there were far more fundamental complaints raised.   Even had the other issues been specifically addressed in the pleadings, in my judgment all these particular complaints are doomed to fail.   The omission of statements only gives rise to a legal complaint if there is either a legal duty to communicate the information omitted or if the effect is to make what is stated misleading.   I have rejected the argument that there was a duty either derived from the Scally case or the duty of trust and confidence to provide any of this information; and it is not said that the omissions made any statement in the booklet misleading, save at least in relation to the power to discontinue.
286.	In any event, the purpose of this booklet was expressly stated to be to assist the employees to decide whether or not to transfer their pensions into RES or to let them crystallise with ICI.   Plainly comparative information which assumes that the employee may remain as a contributing member of the ICI scheme is irrelevant to that decision.   Also, Mr. Burns, the claimants’ actuary accepted that it is a matter of judgment what to put into a booklet of this kind.   He would have drawn attention to some of these matters, but he accepted that it could not be said to be negligent to fail to do so.   Furthermore, Ms. Ellis said that information that the pension in RES was limited to the spouse only and not other dependant partners was spelt out at the pensions’ presentations, and correspondence between RES and Corroons appears to confirm this.   As to the alleged failure to inform the workforce about the different way in which RES would exercise its discretion in relation to those who were opting to retire early, RES submits that in any event it was not proposing to exercise its discretion differently.   For reasons I develop below, I accept this contention.
287.	The failure to notify the employees that there was a power to discontinue the scheme was a matter which plainly caused some of the claimants, particularly Mr. Hagen, considerable concern.   He thought that this significantly put the continuation of the pensions seriously at risk.   If that were right, then it would indeed be a matter of substantial significance to the members, but for reasons given by Mr. Simmonds for ICI, I am satisfied that this is not in fact the case.   First, pension rights can be discontinued only for the future; the accrued benefits cannot be affected.   Second, and more importantly, the rights can be discontinued only with the consent of the trustees, and their fiduciary obligations are to the members of the scheme.   It is only in the most exceptional of cases that they would be justified in consenting to such a course of action consistent with their duty to the members.   It would need Kvaerner to be in extremely dire financial circumstances.   Indeed, they would be such that if ICI were in a similar financial plight, it would be at serious risk of not being able to meet the pension liabilities whether the scheme could be discontinued or not.   Accordingly, I think that the risks of the future benefits being denied to these members are very small indeed, and it was not a matter which needed to be specifically referred to in the Time to Decide booklet.   Indeed, this was accepted in terms by the claimants’ own pensions expert, Mr. Burns.

	The state pensions supplement was payable in the same way as under the ICI scheme.
288.	The second complaint relating to pensions concerned the state pensions supplement.   The allegation here is that RES had represented that the state benefit would be paid to persons who retired early from RES’s employment in the same way as it had been paid to early retirees in the ICI  scheme.   In fact this was not so.   There was a payment which was made to RES early leavers.   For those over 62 the state pension was paid in full until 65.   But for those retiring from 57, they had a reduced payment which had the effect of spreading over the years until they were 65 the total they would have received between 62 and 65.    By contrast, under the ICI scheme employees received the payment in full from age 57.
289.	The Time to Decide booklet set out the position on what it referred to as the “Temporary Supplement” in relation to both the ICI and the RES schemes.   It is not necessary for me to set this out because it is accepted that it is an accurate statement of the position. 
290.	However, it is said that at certain meetings on 25 & 26 July Ms. Anette Scott for RES said that the position was the same under the RES scheme as under the ICI scheme.   A number of witnesses have alleged that this was said. 
291.	I received a witness statement from Ms. Scott which was admitted under the Civil Evidence Act.   Accordingly she was not cross-examined on it.   She very frankly said that she could not now remember precisely what she said, but she explained how she would have gone through material of this kind.  Her evidence is that it is very unlikely that she would have said anything inconsistent with the Time to Decide booklet.   Moreover, Ms. Ellis, another pensions’ expert from RES, was present and Ms. Scott says that she would have expected her to correct any error of this kind had it been made.   Ms. Ellis confirmed this, but again she could not remember the particular meetings.   When giving her explanation of the schemes to the employees, Ms. Scott referred to a series of slides.   I do accept that the slides used to explain the two schemes were potentially misleading on this point. One slide said that persons retiring at 57 under the RES scheme would receive an unreduced pension.   They were then told that they would receive a state pension supplement.   They were told the same in relation to the ICI scheme.   I can see how this could well have given the impression that the sums paid under this head were the same in both schemes.   Had the slides been the only information on the point, then I could see considerable force in the claimants’ case on this aspect.   But in my judgment the slide has to be read together with the position as clearly stated in Time to Decide, and the information which I am satisfied would have been given by Ms. Scott.   In this connection it is highly relevant that Ms. Ellis said that she could recall during a trial run that Annette Scott gave of her talk that she had specifically told Ms. Scott to bring out the difference in the two schemes as far as the state supplement is concerned precisely because the slides were not clear on the point.
292.	I also bear in mind that as Mr. Serplus said in his evidence, there were detailed figures and examples given both in the booklet and at the talk, although he frankly accepted that he did not pay much attention to them.   In my opinion, this suggests that Ms. Scott did deal with the matter, and if she did so then I would be extremely surprised if she had positively misstated the position or that if she had, Ms Ellis would have let it pass unnoticed.   But even assuming that Ms. Scott did not refer to it apart from referring to the slides, the booklet makes the position clear.
293.	I can accept that some of the claimants possibly did simply concentrate upon the slides and paid little or no attention either to the information given in the booklet itself or to the explanation given by Ms. Scott.   If they had done that, they would have gone away with a false impression of what the RES scheme provided.   But RES can hardly be liable in law for any such lack of attention.
For these reasons, I find that on the balance of probabilities Ms. Scott did explain the position accurately and that there was no misrepresentation on this point.   In any event, I am certain that she would not have positively misrepresented the position, and the Time to Decide booklet made the position on this point perfectly clear.

Acquiescing in the half a percent statements. 
294.	The final allegation made against RES in relation to pensions links with a similar allegation directed against ICI.   The claimants say that the RES management team who were at the meetings on the 25 and 26 July permitted Mr. Ritchie to represent that the pension benefits were within half a percent and did not seek to correct this misinformation.   It is alleged that as a matter of law RES must be taken to have adopted this statement as its own.   Since I have found that the statement was not made at those meetings, this claim against RES falls away also.   In any event, even if it were made at any of those meetings, I could not properly on the evidence be satisfied that it had been sufficiently drawn to the attention of the RES management present to infer that they had assumed responsibility for it. 

Was there reasonable reliance on the representations?
295.	I have so far simply analysed the representations to consider whether or not they were false and negligently made.   However, even if they had been, I am not satisfied that all the representations alleged by the claimants to have been relied upon in fact could be said to have been reasonably relied upon by them.
296.	In my judgment the employees clearly relied upon what they were told about the risks of losing their employment with ICI and the greater likelihood of the security of their employment with RES.   I also accept that they relied upon the statements made to them about the protection of their terms and conditions and in particular what had been secured by way of their pension arrangements. In my judgment it was clearly reasonable for them to have relied upon those statements. However, there are a number of representations which I do not consider it was reasonable to rely upon. 
297.	Perhaps most importantly, I do not accept that the representation that it was in their best interests to move fell within the duty of care assumed by ICI, or that if it did, it was reasonable for the staff to rely upon it.   It is not in my view reasonable to assume that the employees, when making up their mind whether or not to transfer, will rely upon the advice given by their employer as to what is in their best interests.   They will independently and carefully consider the information with which they have been provided; they will –and did- extensively discuss the matter between themselves; and no doubt they will also take account of the advice given by their trade unions.   That is not to say that the observations of the employer will not carry any weight.   Different managers will be considered to be more or less wise and their opinions will as a consequence be more or less respected.   Moreover, as I have indicated, the nature and scope of the information provided may be such as effectively to dictate the decision which the employees have to make.   It may be tantamount to advice.   But the employer has no special expertise or knowledge which would put him in a position to advise the employees on how they should assess the information provided to them.   The employer has in my view a duty to take care in connection with the information he gives, but he can then express his own views on the decision to be taken without incurring legal liability if his opinions prove to have been erroneous.   It is not reasonable to assume that the employees will rely upon that particular advice.  As I have said, an alternative way of analysing this is to say that there is no duty of care.   Objectively viewed, there is in my opinion no assumption of responsibility with respect to that advice.   Even in a contractual relationship which is moulded by the duty of trust and confidence, I consider that it would be stretching the obligations of the employer too far to impose a duty of care for such honest statements of opinion, either in contract or in tort. 
298.	I also take the view that it was not reasonable for the staff to have relied upon ICI for information about whether or not RES would enter into an LWA with benefits of 14% and pay overtime in addition.   ICI management could not do more than express a personal opinion about the likely outcome of the LWA negotiations.   They had no special expertise or inside knowledge about that, and nor did they represent that they had.   Moreover, it was open to the staff prior to the transfer to raise directly with RES what their attitude was to the issue.   Indeed, there were attempts by ICI to foster negotiations between the employees and RES prior to the transfer taking effect, but they were unsuccessful.  So the staff must have recognised that RES was keeping its powder dry.
299.	Furthermore, whilst I believe that there was in fact some particular weight put on the information and advice given by Messrs. Smithson and Pinder precisely because they were represented to be in the same position as the rest of the staff, I do not consider that any such reliance would have been more than supportive rather than substantive, essentially for reasons I have already given. 
300.	I consider that the position in relation to the question of reliance is more complex with respect to RES.  For reasons I have given, in my view a statement of intention can exceptionally be treated as implicitly containing within it a statement of fact that the representor has reasonable grounds for believing that the intention is capable of being achieved.  However, I accept the submission of Mr. Hillier that in connection with the statements that there was no intention to create redundancies or change terms and conditions, there was no reliance on the fact that the intentions were capable of being given effect.   Once the claimants had (rightly) disavowed any allegation that they had not been genuinely made, the real complaint here was that they were not in fact carried into effect.  It is highly artificial to say that the employees were relying on the fact that RES had reasonable grounds to believe that they could give effect to their intentions.  Rather they were relying upon the fact that they would give effect to them.   In substance the claimants were seeking to treat these representations as though RES had warranted that no redundancies or changes in terms would occur.   This RES plainly did not do, and it was not alleged in terms that they had.
301.	The representation in relation to the implementation of LWA seems to me to fall into a different category.   In that case in my view it was in principle important for the claimants that they might obtain 14% by way of pay increases.   However, since benefits had to exceed costs, RES could only have stated an intention to implement the LWA if they had believed that there were the requisite benefits to be achieved.   And if they could be achieved, then there was every incentive for RES to enter into the agreement, provided of course that the workforce were willing to agree to the relevant productivity improvements.   Here, therefore, where the context is that it will benefit the defendant to give effect to his intentions if they are capable of being achieved, the crucial issue will be whether they can indeed be fulfilled.   It is realistic to infer, therefore, that the employees were relying on the implied representation (as I have found) that the intention could be fulfilled, rather than simply relying upon the fact that it would be fulfilled.   The latter would in all probability flow from the former.   However, that part of the claim fails for other reasons.
302.	I do not consider either that the specific pensions representation relating to the state subsidy, even if substantiated, could be said to have been more than a minor matter reinforcing a decision taken for substantially other reasons.   The concern was with the benefits considered overall rather than with this particular and relatively insignificant element.   Accordingly, I would not have found the relevant reliance in respect of this matter.   By contrast, had RES been treated as liable for confirming the statement that pensions were within half a percent, I would have held that the necessary reliance was placed on that.

Two miscellaneous complaints.
303.	Finally I must consider two further complaints of a more specific nature which are not related to general allegations of misrepresentation.   First, Mr. Bueno suggested that in imposing red-ringing, ICI acted in breach of the duty of trust and confidence.   The second relates to a particular allegation of a misrepresentation relied upon by one of the complainants, Mr. Bartlett. 

Red–ringing. 
304.	It is not disputed by ICI that with effect from June 1993, persons employed in Central Engineering were not permitted to take early voluntary retirement or early severance.   At that stage they could still apply to be redeployed in other parts of the ICI business.   This meant that as and when jobs were advertised by the business units, they could apply for them.   However, as Mr. Booth admitted in evidence, the business units had been discouraged from advertising for staff at that time because of the concern that the Central Engineering might fall below the level of staff necessary to maintain a viable engineering unit.   There was a concern that numbers might fall to a point where there would be insufficient numbers and balance of skills to constitute a business attractive to third parties.
305.	In September, the employees who were to be transferred to RES were formally red-ringed.   Generally the use of that somewhat ambiguous phrase would  mean that they would be deprived of the option of applying for jobs in other parts of the ICI business.   In fact, as Mr. Booth and Mr. Ritchie again accepted, and indeed as the figures show, there was even thereafter a significant number of staff who continued to escape the red-ringing net and successfully applied for jobs elsewhere.   According to Mr. Booth, the significance of the red-ringing was that RES had the right to object to the transfer from that date if they considered that the worker concerned was important to the business.   This was confirmed by Mr. Tomlinson of RES.   The gist of Mr. Ritchie’s evidence was that it was more a joint decision, and I suspect that in practice that probably overstates the role of RES.   ICI had the experience of running the business and RES did not; inevitably, therefore, the views of the management of ICI would carry considerable weight in determining what would be a viable workforce and therefore in determining who should be allowed to leave.   I suspect, and indeed the evidence suggests, that the impression given to the employees was that it was RES who wanted this control over the workforce, whereas in reality it was plainly in the interests of both parties that a viable workforce should remain in place.   ICI after all had a vested interest in the engineering work being successfully carried out after the transfer.   But the fact that ICI understated its own reasons for wanting to control the movement of staff out of Central Engineering does not affect the basic point that the decision was taken in the best interests of the business and to ensure a viable unit.   I do not accept, as Mr. Bueno submitted, that it was just to save money; if that had been the objective, there would not have been the exceptions to the policy that there were.   Moreover, there were many steps ICI could have taken had their real aim been to cut costs.
306.	The complaint of the claimants here is not so much that there had been any misrepresentation in respect of the red-ringing (although as I have said, I think that ICI understated its own interest in a viable workforce being maintained), but rather that it was unjust and a breach of contract to red ring them.   They claimants submit that it was both a breach of the term of trust and confidence and also a breach of the Security of Employment Statement that had been incorporated into their contracts.  As to the latter, I have already held that there was no incorporation of the Security of Employment Statement into the contract.   As to the former, I do not accept that any of the steps complained of constituted a breach of the trust and confidence term.   It was plainly important for ICI to be able to transfer a balanced and skilled workforce to the transferee of its business.   It is equally plain from the evidence I have heard that a very considerable number of the staff would have wanted to remain working in the ICI group if they could do that.   Moreover, it is not disputed that the employees affected were given notice that they would no longer be able to exercise the right to apply for voluntary severance or voluntary early retirement, and they had the opportunity to assess their position before that decision was implemented.   It is true that initially the removal of this right was to have been introduced after only about three days notice.   But as a result of representations made to them by the trade unions, management extended the period during which the relevant employees could continue to take advantage of these provisions by about two weeks.
307.	Accordingly, in my view there is no basis for saying that in implementing red-ringing as they did, ICI was in breach of the duty not to undermine trust and confidence in the employment relationship.

Mr. Bartlett’s complaint.
308.	Mr. Bartlett made a specific complaint that he had been misled by Mr. Muir who, in the course of oral conversations, had given him advice to accept a job as deputy allocations planner in Central Engineering and thereafter transfer to RES.   It seems that Mr. Muir understood that the option was for Mr. Bartlett to return to a job in the buildings	 section, but at the time he gave the advice he thought that the buildings section was going to transfer in any event.   I entirely accept that that was his understanding.   He considered that the job as deputy allocations planner was better than the alternative, and since he understood that Mr. Bartlett would have to transfer in any event whichever job he chose, he was in no doubt that Mr. Bartlett should take that job.   In the event, the buildings group did not transfer, and Mr. Bartlett says that he suffered by following the advice.   He alleges that he would have been better off with the job in the buildings group because he would then have remained within ICI.
309.	I totally reject this claim.   Mr. Muir was Mr. Bartlett’s immediate superior.   He was plainly supportive of Mr. Bartlett and was wanting to help him.   In my judgment, he was not assuming any particular responsibility to discover whether or not the buildings group was going to transfer in these informal conversations, and the law should not in the circumstances impose a duty of care.   It would be absurd and very damaging to everyday human relations to impose legal liability for each piece of advice or expression of opinion that one manager makes about the position of a particular employee who informally seeks his advice.   Furthermore, it is far from clear to me that Mr. Muir was in any better position than Mr. Bartlett to discover whether in fact the buildings group was going to transfer.   Both parties appear to have been under the same misapprehension that it was.

J.   Conclusion on liability.
310.	In my judgment the only negligent misstatement which has been established is in relation to the various representations made by ICI relating to the pension benefits which the individuals would be entitled to receive from RES. Although by the time of transfer they could not rely upon any unambiguous statement about the precise value of their pensions, I have no doubt that taking the series of representations together, they would reasonably have expected their benefits to be closer in value to the ICI benefits than they were at least for some of the claimants.   It is accepted by the ICI witnesses that the value of these benefits was always a matter of considerable importance to the employees, and as I have said, I have no doubt that there was substantial reliance on the impression given by the statements made taken as a whole.   ICI had negotiated the pension arrangements and therefore knew or were in a position to know, what the position was. 
311.	However, in my judgment there is no liability for this misrepresentation in the action pleaded in contract.   It is impossible to say that there was in the circumstances a breakdown of trust and confidence arising from the negligence of ICI.   There was no wanton negligence bordering on recklessness or gross indifference.   Accordingly, given the way in which the claimants have put their case, the liability rests solely in tort.

K. The consequences of the misrepresentation.
312. 	I have found that ICI failed to communicate the potentially adverse effect of the transfer on the pension benefits of some of the transferred employees.  In order to determine what loss, if any, has been suffered, it is necessary to ask what would have happened had the correct (in the sense of non-negligent) information been given.   It was suggested by counsel for the claimants that the employees would have rejected the pensions’ deal; that there would have been no further negotiations between RES and ICI; and that the transfer would not have taken place. 
313.	In support of this conclusion the claimants made reference to an internal confidential memorandum from ICI dated 12 May 1994, which reported on a meeting between RES and ICI the previous day concerning the valuation of the pensions’ liability, which was proving to be a sticking point in the negotiations.   It is reported that at that meeting Mr. Earnshaw said that ICI had reached its authorised limits, and that it appeared unlikely that the parties would be able to bridge the gap.   I do not accept that this shows that there would have been no more room for pensions’ negotiations, for a number of reasons.   First, the memorandum reports the position adopted at that time in negotiations; it does not necessarily demonstrate that ICI would have gone no further in fact.   Second, and more importantly, the limit was being reached in relation to the particular negotiations concerning the transfer value of the pensions.   ICI might well have been willing to pay more to cover an improvement in the benefits of some of the transferring staff.   Indeed, Mr. Anderson said in evidence that he was not aware that individuals might be some 5% or so worse off under the RES scheme, and it would have caused him concern had he known he would have wanted to look at bridging the gap.   Third, Mr. Earnshaw said in terms that if there had been concern expressed by the actuaries that there were too many “outriders” as he called them i.e. those coming out worse than the main body of the employees, there would have been further negotiations about the pension.   I see no reason in principle why this would not have occurred also to deal with the strongly held concerns of the workforce.   Finally, ICI were clearly keen to enter into this arrangement, and I do not believe that they would have jeopardised it for the sake of some tweaking of the pensions arrangements. 
314.	I should in any event add that even if it could be said that but for the breach the transfer would not have been carried into effect, the damages would still only be those flowing from the failure to give the correct information.   It would not be the whole of the damages flowing from the entering into the transaction.   This would be in accordance with the Bank Bruxelles case.   In this case, it seems to me that such loss would be calculated in the same way. 
315.	What agreement would have been negotiated?   I accept that in practice there may have been a new deal which could have improved the lot of some and made worse the position of others.   I also recognise, as Mr. Simmonds submitted, that it was always appreciated that there would be some winners and some losers, and that accordingly this would have indicated that there was some leeway and that not everyone could reasonably have been expected to be precisely within one percent.   However, I am satisfied that had the employees been aware of the extent to which some of them fell short of their ICI pension, they would have pressed for improvements.  It is difficult to be sure what shortfall would have been considered acceptable.  Clearly, some would have been since the employees were aware that their pensions were not necessarily as beneficial under the new arrangements, and many of the claimants accepted that they could have lived with some detriment.   I consider that on balance the probability is that they would have drawn a line at anyone being more than 2% worse off under the RES scheme than he would have been under the ICI scheme.   This also seems to me to reflect the experts’ views that when comparing whether schemes are broadly comparable, most employees would be expected to be at least within a margin of that kind.
316.	On what basis is that comparison to be made?   It has been urged upon me that the employees understood that each element of their package would, taken individually, be “broadly comparable” in the way described.   Apparently Mr. Hagen had understood this would be the case.   I reject this argument.   The pension was never represented in this way, and indeed it is clear that certain benefits, such as the death in service benefits where the change was clearly drawn to the attention of the employees, were nowhere near “broadly comparable” taken on their own.   I do not, therefore, accept that it was reasonable to assume that this was what was being said. 
317.	I should add that if, contrary to my view of the applicable legal principles, I had been obliged to ask what would have happened if there had been no representation about the pensions payable to individuals, I would have concluded that the employees would have refused to move.   They would have insisted upon knowing the position before accepting a transfer.   In reality, of course, they would have been told the position.   It is inconceivable that ICI would just have remained silent in the face of the reasonable demands for information.   Moreover, such information about the implications for the pension rights of employees would in any event have had to be provided to the trade unions as part of the TUPE consultation.   In my view, the unreality of assuming that the employers could have said nothing at all and maintained that position reinforces my conclusion that the loss should be assessed by considering what would have happened had the correct information been given.

L.  Calculating the loss: the appropriate assumptions.
318.	I accept Mr. Simmonds’ argument that in essence the loss should be the extent to which the pension, treated as a package, fell short of the value of the ICI pension, taken as a package, which the claimants had reasonably been led to believe they would receive, and which I have held should be 98%.   There should then be interest calculated as from the date of transfer and allowance made, if any, for the effects of tax and national insurance.   It is common ground, and plainly correct, that the comparison should take into account both past and future pension loss.
319.	It was common ground between the parties, and seems right in principle to me, that the relevant assumptions for making the calculation ought to be those that would have been acceptable in 1994.  The general rule is that damages are assessed as at the date of breach (see Miliangos v George Frank (Textiles) Ltd. [1976] A.C.443 at 468 per Lord Wilberforce), and there is no good reason for departing from that principle here.   It may be that some of those assumptions will have in practice been proved false.   This may have caused the difference in value to alter for many of the employees.   However, any attempt to give 98% as of today would be in danger of distorting the position that would have been achieved had the ICI not committed the tort.   It seems to me that using the figures which would have been adopted at the time puts the claimants whose pension benefits fell short of their expectations in the position they would have been in had the accurate information been given and the renegotiations of the pension benefits taken place. 

The assumptions.
320.	In his expert report, Mr. Mitchell relies upon various assumptions that were, as I understand it, those that were used by Watsons, the ICI’s advisors, in 1994 when calculating the capital value of the transferred pension rights.   I will not rehearse them all here.   They are summarised in a document that was helpfully prepared by Mr. Simmonds entitled “Summary of Demographic and Statistical Assumptions Used for Calculating Comparitive Capital Values of Trafalgar House Fund Benefits and ICI Fund Benefits”.  These assumptions do not depend upon what in fact will happen to particular individuals after the transfer, because they are not concerned with asking what would have happened if no transfer had occurred.   In adopting these assumptions he said this: 
“I can confirm that these assumptions overall were not atypical of actuarial assumptions in general use at, or around, this time. Note in this context that, within reasonable bounds, I would expect that whilst the adoption of a different actuarial assumption is likely to affect the absolute values of the respective benefit packages, it is less likely to have a very significant impact on the relative values in percentage terms.”

This suggests that the consistent application of the assumptions is more important than the assumptions actually adopted.
321.	The other expert actuary witnesses, each of whom I found to be highly competent, did not use these assumptions, but for the most part they did not consider them to be unreasonable assumptions to have adopted at the time.  Indeed, apart from the matters which I now address, I understood Mr. Burns, the claimants’ expert, specifically to accept that the assumptions adopted by Watsons were within reasonable parameters to have adopted in 1994, even although he would not personally have necessarily used the same assumptions.
322.	There were however three matters in respect of which it has been contended that the assumptions adopted by ICI’s actuaries in 1994 were inapposite.   The first is the concept of pensionable pay in the RES scheme.   All the experts have accepted that in fact this was not properly assessed.   The reason is that it ought to have included a certain payment which was received in lieu of holidays, but it did not.   This increases the value of that pay by about 2%.   Plainly it is necessary to correct a false premise in the calculation, and no-one has contended to the contrary.
323.	The second issue is whether, in calculating the pension benefits that would have been earned from ICI, it is legitimate to assume that the enhanced band element would have been increased.   (The enhanced band element is that part of the ICI salary which attracts a higher percentage of pension contribution from the employer; in 1994 it was £10,500.)   The assumption made in 1994 is that it would not.   Mr.Ross Russell, the expert witness for RES, supported by Mr. Mitchell, submits that it would be illegitimate to assume that the band will increase.   The rules of the pension fund confer a discretion upon the employer whether and when to make such increases, and Mr. Russell says that there is no reason to treat this potential discretionary change any differently from other discretions which are given under the rules and which permit the employer to improve the pension.   Mr. Burns, the expert for the claimants, disagrees; he says that the fact that the element has been increased at least on occasions in the past shows that it is unrealistic to believe that it will be frozen at the current level. 
324.	In principle, I accept Mr. Burns’ submission on this point.   In my judgment it is highly unlikely that the figure would have remained unadjusted into the future. The question is what is likely to have happened in fact, not what are the strict legal rights under the pension scheme.   It is, however, difficult to anticipate what the increases would have been, not least because I have no evidence as to precisely what the employer’s objective was in increasing the level in the past, save in the very general sense that it was to improve pensions.   I suspect that it is likely to be less than the 2% relied upon by Mr. Burns.   Looking at the pattern of increases (or more accurately, lack of them) I doubt whether it would have been more than, on average, 1% per year, and that is in my judgment an appropriate assumption to make.
325.	The third factor is the question of whether the employees would receive unabated pensions if they retired early.   Again it is plain that the rules of the two schemes are the same.   In each case there is an unabated pension for someone who has reached the age of 50 and leaves at the request of, or is dismissed by, the employer.   Similarly, if the employee resigns and is 57 or over, he may receive an unabated pension if the employer consents.
326.	However, in respect of this latter category of resignations it is said that the exercise of the discretion is different at ICI and RES to the detriment of the claimants.   Mr. Brown, who is the pensions officer at ICI, said that the employer had in the last twenty years or so almost always exercised this discretion at ICI although there were one or two exceptions, and ICI would occasionally keep the employee in place until they felt that they could spare him.   However, this was not as a result of a policy always to exercise the discretion in the employees’ favour, but rather because at a time when ICI was seeking to reduce staff it was a way of facilitating that objective.   It was suggested that a different policy will be adopted at RES.   But there is no evidence that anyone who has resigned over the age of 57 has in fact been refused an unabated pension.   It appears that there may on occasions have been  some threatening noises that this would not happen, but in fact they have not been acted upon.   Furthermore, the transfer value of the fund passed from ICI to RES was on the assumption that staff would retire between the ages of 57 and 58 without any reduction.  
327.	 It is right to say that in her evidence, Ms. Ellis was not prepared to guarantee that RES would always adopt this principle.   It may be that the expectation of an unabated early pension at 57 may not be as strong with RES as it was with ICI, if only because the need to shed staff may not be as strong.   However, in my judgment I cannot properly assume on the totality of the evidence I have either that RES currently has a different policy to ICI, or that it will at least in the near future change its current practice on this matter.   On any view it would be wrong to treat RES as though its policy was positively not to exercise its discretion in favour of employees over 57 seeking retirement. Accordingly, I do not think that any distinction can be drawn between the two schemes on this score.
328.	I assume, perhaps optimistically, that this will provide enough information to enable the experts to calculate both which of the claimants fall below the 2% margin I have identified, and to determine the sum of money which would have been necessary to make good the shortfall i.e. the capital value of the difference in the benefits.   Interest should then be awarded on that sum as from the date of transfer.   If I have not, or arguably have not, resolved sufficient issues to enable the proper calculations to be made, I will hear further argument on the matter.   Similarly if there is any dispute about the appropriate rate of interest. 

M.  Does the liability transfer under TUPE?
329.	I have found that ICI is liable to some of the claimants at least in respect of the pension benefits.   Does a liability in tort transfer to RES?   Ms. Booth submitted that in general it would, and Mr. Hillier did not make submissions to the contrary.   Mr. Bueno did, and Mr. Hillier, without any apparent enthusiasm, simply adopted them. 
330.	In my view it is plain from the decision of the Court of Appeal in Bernadone v Pall Mall Services Group [2000] IRLR 487 that a liability in tort is in principle capable of passing under TUPE, and it will particularly do so where it mirrors a contractual liability.   It is a liability which arises “in connection with” a contract of employment within the meaning of regulation 5(2)(a) of TUPE and accordingly transfers to the transferees i.e. RES.   Essentially Mr. Bueno’s contrary argument was that a tort which effectively secured a transfer which would not otherwise have occurred could not be said to arise in connection with the contract of employment.   I confess that I do not see why not, and I reject this submission.
331.	However, I have found that there is liability only in respect of misrepresentations made about the benefits conferred under the pension scheme.   Does it make any difference that the liability is in respect of a misrepresentation about pension rights?   All parties accepted that the liability in respect of pensions did not transfer, because of regulation 7.   This provides that the principle of the automatic transfer of contracts and liabilities shall not apply
“to so much of a contract of employment ….as relates to an occupational pension scheme….or to any rights, powers, duties or liabilities under or in connection with any such contract or subsisting by virtue of any such agreement and relating to such a scheme or otherwise arising in connection with that person’s employment and relating to such a scheme

332.	This is framed in very broad terms.  Its effect is that no liabilities transfer where they arise under or in connection with so much of the contract as relates to an occupational pension scheme.   In my judgment, given the wide meaning given to the words “in connection with” in Bernadone, a liability which arises from a misrepresentation about pension benefits under an occupational pension scheme gives rise to a potential liability “in connection with” that part of the contract relating to the scheme.   Accordingly it is caught by regulation 7 and does not transfer.   It follows that the liability remains with ICI.

N.  The loss consequential upon the transfer.
333.	Strictly this issue does not arise since, for reasons I have given, I do not consider that there is any liability upon either of the defendants for damage suffered consequent upon the transfer.   However, I have heard much evidence and argument about the assumptions that ought to be made in order to calculate this loss, and in deference to those arguments, I shall briefly set out certain conclusions on the main factual issues that needed to be resolved to determine any such liability.   There was some disagreement before me as to which of these elements should be assessed on the test of balance of probabilities and which on a loss of chance basis.   This involves determining the application in this context of the principles enunciated in Allied Maples Group v Simmons and Simmons[1995] 1 W.L.R.1602.  Given my conclusions on the factual issues, it is not in the event necessary to reach any determination of those questions.
334.	It seems to me that in calculating the loss resulting from the transfer there are three matters in particular about which findings need to be made.   First, what were the earnings with RES compared with what they would have been with ICI?   This involves determining in particular whether LWA would have been implemented, and if so, what effect it would have had on the opportunity for the workers affected to work paid overtime.   Second, how long would the employees have remained in employment with ICI had they remained there and not transferred to RES.?   Third, if they had not transferred to RES and had not remained with ICI, would they would have obtained new employment and if so, when and on what terms and conditions?
335.	The crucial question which has to be determined when assessing the pay that would have been earned at ICI had the employees remained is whether an LWA would have been entered into and, if it would, what effect it would have had on overtime.   I have little doubt that an LWA would have been adopted at Central Engineering at the latest by the end of August 1995 i.e. a year after the transfer date.   I recognise that there had been sustained hostility by the workforce to the annualisation of hours and the anticipated reduction in overtime.   For many of the employees the overtime constituted an important element of their take-home pay, and they preferred the money to the additional free time which the proposed LWA agreement would have provided.   Even so, I am satisfied that they would have had to give way.   The pressures on the workforce to accept it would in my judgment have been overwhelming.   They would have had to become more efficient in order to be able to compete for the work from the business areas.   It would have been the only way they could realistically have hoped to stay in business.   All groups within ICI were under great pressure to improve efficiency, and Central engineering would have been no exception to this.   Also, the full time union officials were strongly in support of the idea; it meant a more skilled workforce and a shorter working week.   Furthermore, it was in fact introduced in all areas of ICI at Teesside.   I do not believe that Central Engineering could possibly have resisted the flow of this current for change. 
336.	What effect would this have had on paid overtime?   As I have indicated, the introduction of an LWA, even if directly regulating hours in the way envisaged by the agreement, does not necessarily preclude the working of paid overtime.   Overtime may be paid but only once the benefit hours have been exceeded for the year.   In practice I have no doubt that any overtime would have largely disappeared.  In 1999 and 2000 the overtime worked at the remaining ICI plants at Teesside where an LWA had been introduced amounted to less than 1% of the wages of the staff concerned.   Whilst recognising that that one must be careful in drawing an analogy with different areas of business, it does lend some support to the conclusion that the LWA, if implemented, would have been likely to achieve its objective of largely doing away with paid overtime.   Moreover, Mr. Ward, who had been an employee relations’ advisor at ICI, said that in other areas where the LWA had been introduced, the amount of overtime worked had been trivial.   This was confirmed by the evidence of Ms. Warrior from the personnel department.   Moreover, as both she and Mr. Booth pointed out, even where the benefit hours are exceeded the staff is encouraged to take time off in lieu rather than pay.   In addition, it will sometimes be cheaper to employ outside contractors rather than pay for overtime.   So there were various ways of eliminating paid overtime.
337.	Mr. Bueno submitted that Central Engineering was different to the other working areas in that it was vital for it to respond quickly to any breakdowns in the business areas so as to prevent plant remaining unutilised.   He suggested that the volume of work would have been such that some significant overtime, albeit falling short of the 14%, would have been required, even after allowing for the benefit hours.   I would accept that there might have been some small amount of overtime, but it would have undermined a vital feature of the LWA as far as management was concerned to have permitted it to be more than marginal.   The benefit hours were intended to provide the necessary flexibility to avoid overtime.  
338.	Accordingly, I reject the contention of the claimants that had they remained at ICI and agreed an LWA there would still have been potentially significant overtime earned.   The employees covered by the agreement would have received the 14% increase, but they would have lost the rewards formerly earned by way of paid overtime.   I think it would have been very largely if not wholly eradicated.   It is true that ICI employees occasionally received a special bonus, and this could be given as a reward for significant overtime worked amongst a large range of other reasons.   But there was no evidence that it was in fact given with any regularity for that; and the evidence of Ms. Worral was that looking at ICI as a whole, special payments were paid to fewer than 5% of the employees.  
339. 	Taking these matters into consideration, it could not in my view be said that there would have been any real likelihood of overtime exceeding 1% of the salary if the LWA had been introduced.   This means that for most (although not all) the employees, the extent of the overtime worked at RES meant that their earnings would have been higher there than with ICI.  (I recognise that some of the claimants told me that they would have preferred the free time rather than the overtime, but that is not a grievance that sounds in damages.)
	The monthly paid staff
340.	The conclusion I have reached so far would apply only to the blue-collar workers.   The white collar or “monthly” staff were not within the purview of the LWA agreement.   They were subject to a new set of pay arrangements from 1991.  These were known as the DPWR payment arrangements.   The determination of their pay involved the application of the Hay system of job evaluation and the fixing of grades by reference thereto.   There was a considerable variation of pay permitted within a grade; newly promoted staff would usually start at 80% of the normal salary or “reference point” at a particular grade and in the standard case it was envisaged that there would be an increase to the 100% level over 4 years.   There was scope to reward individual performance up to a maximum of 130% of the reference point. 
341.	There was no direct link between the LWA and the payments made to monthly staff.   However, as both Mr. Anderson and Mr. Ward realistically accepted, in practice managerial staff, and particularly supervisory staff, would expect their differentials to be maintained, although with adjustments in particular cases to reflect good or poor performance.   I am aware that the evidence of Ms. Warrior, a human resources officer at ICI, was that when LWA was introduced in other areas there was no increase in the salaries of monthly paid staff.   However, that merely confirms no automatic link.   It seems to me that over time the differentials would have been maintained at least very substantially; in the practical world of industrial relations it could hardly be otherwise.
342.	Accordingly, the introduction of LWA would almost certainly in practice have had a significant impact on the salaries of managerial staff, particularly at the lower levels.   I accept that some increases may have already been foreshadowed before LWA was introduced; but I would have expected the differentials as at 1991, when the DPWR was introduced, to have been broadly maintained over time.
343.	The next issue is how long the staff would have remained employed by ICI.   If there had been no transfer to RES then I have no doubt that the workforce would in any event have been dissipated within about five years.   By that time there had been a divestment of all the major businesses.   For reasons I have already given, I accept the evidence of the management that about half of the staff would have lost their employment relatively quickly.   The evidence strongly indicates that the first job casualties would almost certainly have been those working in the workshops at Wilton.   Even if some of those had been redeployed, it would have made the prospects of redeployment for the remainder even poorer. 
344.	It may be that the process for this first batch of job losses would have taken some 12 months or so to be completed, but I have no doubt that the reduction would have been made.   In my judgment only a small number of these would have been redeployed; virtually all of those over 50 would have taken early retirement, and I suspect that ICI would have been willing to retain employees in employment for, say, a year to enable them to reach that age and take the benefit of the early retirement option.   That would have been giving effect to the spirit of the Security of Employment Statement.   However, the remainder would have been made redundant, either compulsorily or voluntarily.   The tried and tested methods would not have been available given ICI’s gradual disengagement from Teesside, for reasons I have already given at some length. 
345.	I therefore consider that the overwhelming likelihood was that the remaining members of the group would have lost their employment certainly within five years of the transfer and probably before that.   By the end of the Millenium ICI had virtually ceased to operate out of Teesside –something that was almost unthinkable even five years earlier.   It would be ludicrous to suppose that Central Engineering would have been maintained to service the embers of a once flourishing business.  Equally, the continuing opportunities for redeployment within ICI itself were continually being reduced as a result of the sale and closure of the business areas. 
346.	Of course, it does not follow that all the employees made redundant would have remained out of work thereafter.   Some may by then have had the opportunity to be redeployed in the business area, and they could then have transferred with the businesses pursuant to TUPE.   In this connection there is agreed evidence before me that there were some seven transfers effected in this way since the divestment of Central Engineering.   In some cases the employees so transferred continued on identical pension schemes and in others on broadly comparable schemes; and in some cases there was some limited guaranteed pension protection.   But I have no way of determining who might have been redeployed and then subsequently transferred in this way, nor where they might have been expected to end up.   There seems to me to be no reason why I should assume that they would have been better off with those new companies than with RES.   Similarly, some of those made redundant would no doubt have subsequently found some other employment, but again I cannot properly assume that they would be on better terms or with any greater security than in their employment with RES.  It seems to me that there is an equal chance that they would or would not.
347. 	In conclusion, therefore, whilst it is of course possible that if the transfer to RES had not taken place some of the employees would have ended up materially better off than they have by transferring to RES, the odds must be against that for most of them.   Perhaps there are a few made redundant by RES who would have been able to show that they would have earned more in continuing employment with ICI, but even without doing detailed figures it seems to me that they would be very few.   In view of my conclusions on liability, I have not further expanded this judgment by considering the individual cases. 
O.  Conclusion
348.	In brief, my conclusions are: 
(1) ICI negligently misrepresented the position of the employees in relation to the pension benefits they could expect to receive under the RES pension scheme. 
(2) Those representations were reasonably relied upon to the detriment of some of the transferred employees.   Had the staff been aware of the true position, they would have caused ICI to renegotiate a more favourable pensions scheme with RES.   
(3) Following those renegotiations, the most likely outcome would have been that nobody would have received pension benefits which were, taken as a package, more than 2% less favourable than the benefits they had been receiving from ICI.
(4) In determining whether the benefits are within that margin on an actuarial calculation, the assumptions which should be adopted are those I have set out at paragraph 320 above.
(5) There are no other respects in which ICI is liable, either in contract or in tort. 
(6) No liabilities in either contract or tort have been established against RES.