Appeal No.	 EAT/193/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 26 April 2002

Before
HIS HONOUR JUDGE J R REID QC
MR B V FITZGERALD MBE
MS G MILLS

MRS L A PREEDY	APPELLANT

(1) MR J SMITH t/a EASTERHILL FURNITURE 
(2) MR H M GIDDY	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR D PREEDY
(Representative)	
For the Respondents	MR D MAXWELL
(of Counsel)
Instructed by:
Messrs Lee Crowder
Solicitors
39 Newhall Street
Birmingham B3 3DY	

JUDGE J R REID QC

1	This is an appeal by Mrs Preedy, who was the Applicant below, against a Decision of an Employment Tribunal held at Birmingham on 29 November 2000.  At that hearing the unanimous Decision of the Tribunal was to strike out the application on the grounds that the conduct of the proceedings had been vexatious and to order the Applicant to pay a contribution of £75 by way of costs to each of the First and Second Respondents.  The Decision was sent to the parties on 15 December.  The application by Mrs Preedy had been for unfair dismissal, redundancy pay, notice pay, holiday pay and arrears of pay.  The Respondents were Mr Smith and Mr Giddy.  

2	The background facts were these: that Mrs Preedy had been employed by Mr Smith, trading as Easterhill Furniture since 1994.  It became apparent that Mr Smith was aging and was anxious to retire and in 1999 he arranged to sell his business to a Mr Giddy.  The nature of the business was that he was the English agent for a German furniture manufacturer.  It appears that the final transfer of the business, or completion of sale, I should say, from Mr Smith to Mr Giddy took place on 30 September.  

3	Mrs Preedy never went into work for Mr Giddy.  Her Originating Application said this:
“On 30 Sept 1999 John Smith T/A Easterhill Furniture ceased to trade without paying the redundancy pay, notice pay, holiday pay and arrears of pay.  John Smith claims that there was a transfer of an undertaking which I dispute.”

It is perfectly clear that there was, in fact, a transfer of undertaking.  The suggestion that there was not was one which was made by Mrs Preedy, and to some extent, advanced on her behalf by her husband, Mr Preedy, but no intelligible argument to support that was ever in fact advanced either to the Employment Tribunal or to us.  
4	The course of events before the Employment Tribunal was that a directions hearing was held on 28 April which directed, amongst other things, that:
“Witness statements be provided for each witness who will give evidence at the hearing of the case.  These statements will form the evidence in chief of the witnesses concerned and may, at the discretion of the tribunal be taken as read.  The witness statements be mutually and contemporaneously exchanged between the parties 14 days before the date fixed for the hearing of the case.”

There was then a provision for an agreed bundle to be provided, or failing that, for each party to supply its own bundle of documents, and a provision for skeleton arguments to be mutually and contemporaneously exchanged, seven days before the date fixed for the hearing.  There were, in fact, two adjournments and when the matter eventually came on, on 29 November, they came on after a delay of an hour and a half because, apparently, there was a shortage of one member and a new member to make up the panel had to be found.  

5	The start of the hearing drew an application by Mr Maxwell, on behalf of Mr Smith, then as now, for the application to be struck out.  He drew the attention of the Tribunal to the terms of the Order made on the hearing for directions, complaining that he had received no witness statements until a few minutes before the proceedings opened which did not give him time to take instructions or consider whether further evidence might be necessary and he complained also that the Skeleton Argument that had been provided was not, in truth, a Skeleton Argument.  What had happened was that apart from putting together a bundle of documents, Mr Preedy had provided what he believed to be a Skeleton Argument, but consisted of no more than a list of a large number of cases together with a very brief summary of what those cases were about.  There was no attempt to identify any principles to be drawn from cases, still less to advance any coherent argument from those cases, as to why TUPE Regulations did not apply, or as to why Mr Smith might be liable.  

6	The Tribunal decided that they did not need to have notice given because Mrs Preedy, represented by Mr Preedy, was present and he was given an opportunity to show cause orally why a striking-out Order should not be made.  This, in our view, was at best a doubtful decision because it meant that Mr Preedy, on behalf of his wife, had to deal with the matter without any opportunity to consider or formulate his arguments against it.  

7	The Tribunal, having heard his submissions and the submissions made on behalf of the two Respondents, said this in paragraph 12 onwards of the Extended Reasons:
“12  The Tribunal believed there was no ambiguity or lack of clarity in the terms of the Interlocutory Order of 28 April 2000; it took the form of directions and contained an explicit note to the effect that failure to comply could result in the striking out of the originating application.  
13.  Further, a letter from the Tribunal to the parties dated 2 August 2000 emphasised that “It is for the parties to ensure this matter is prepared for hearing in accordance with the Order of 28 April 2000, the terms of which are clear.  Any issues as to non-compliance will be dealt with at the outset of the hearing.”

The Tribunal then continued at paragraph 14:
“14  Having heard the submissions of the parties on the matter of compliance with the Interlocutory Order, the Tribunal took account of the general conduct of these proceedings on behalf of the Applicant (including the presentation as a “Skeleton Argument” of matters which gave no indication of the main elements of the Applicant’s case, the production of a statement by the principal witness minutes before the hearing opened, and the first reference to constructive dismissal during the hearing itself.  The Tribunal decided, in exercise of its powers under Rule 13(2)(e) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 1993, to strike out the originating application in this matter on the grounds that the conduct of the proceedings had been vexatious.”

They then went on at paragraph 16:
“The Tribunal has taken particular care with its decision in view of the fact that the Applicant was not legally represented before us, although it would seem from the remarks made by her representative that advice had been taken from a number of sources.  Whether that advice was entirely sound, complete and correctly understood is a matter for the Applicant.”

And then to paragraph 18:
“We are therefore satisfied that it is appropriate to strike out the application on the grounds of vexatious conduct of the proceedings, and that it would not be a proper use of judicial time to allow the case to continue.”

8	So far as the three matters of complaint which appear to have been relied on by the Tribunal in striking out are concerned, the first related to the form of the Skeleton Argument and true it is that the document produced would not be recognised by anyone having any lengthy contact with a Tribunal or Court as being a Skeleton Argument, but that was a matter which could have been dealt with, and indeed, the essence of what Mr Preedy wanted to say, as a matter of law on TUPE, was explored by us, orally, this morning.  There was certainly nothing there which would have prevented the case being properly determined after an adjournment to produce another attempt at a Skeleton Argument, an explanation having been given as to what was required.  

9	Secondly, as the late production of the principal witness’s statement, i.e. Mrs Preedy’s statement, the position we were told by Mr Preedy was this, that the statement had been prepared, it was not exchanged because following reading the handbook provided for lay persons appearing in the Employment Tribunal, and talking to the Employment Tribunal service hotline, Mr Preedy was under the impression that the Order related to the exchange of statements by persons who were witnesses but not parties.  It is fair to say that there are points in the documentation which do draw, for obvious reasons, distinctions between witnesses and parties.  Now, it may seem to a lawyer, or to an experienced member of the Tribunal, a silly mistake to make but it does not seem to us to be a mistake it was impossible for a layman to make and we are prepared to accept, for the purposes of this appeal at any rate, that the reason that the witness statement was not delivered earlier was because Mr Preedy’s view was he did not have to do so because it was a statement from a party, as opposed to a witness.   

10	As to the third matter:
“ the first reference to constructive dismissal during the hearing itself,”
that may be so but it is fairly clear from the way in which the ET1 was framed was that what was being suggested on behalf of Mrs Preedy was the change when the Second Respondent, Mr Giddy took over was the cause of her leaving her employment.  Again, it does not seem to us that there was anything untoward in that being made clear by a litigant in person at a late stage.  

11	We therefore have some doubts as to whether the draconian decision which the Tribunal took was one which they ought to have taken, even on their own view of the law.  However, it is clear that the Tribunal did not have available to them the citation of authorities which we have had made available to us, not least I suspect, because the case in which the authorities have now been most conveniently gathered together, had not at that stage been decided.  What I  propose to do is simply to take a passage or two from that case, Wilson -v- De Keyser Ltd, a judgment delivered on 20 March of last year by the President.  At paragraph 24 the President said:
“As for matters not taken into account which should have been, the Tribunal nowhere in the course of their exercising their discretion asked themselves whether a fair trial of the issues was still possible.  In a case usefully drawn to our attention by both sides’ Counsel, namely Arrow Nominees Inc -v- Blackledge [2000] 2BCLC 167  the Court of Appeal had before it a case where the Judge below had more than once declined to strike out the proceedings on the basis that whilst one party had, in the course of discovery, disclosed forged documents and had lied about the forgeries during the trial, a fair trial was, in his view, still possible.  We pause to reflect on the magnitude of the abuse there in comparison with Mr Pollard’s and De Keyser’s.  Whilst in other respects the context of the Arrow Nominees case is very different, there are passages in the judgment in the Court of Appeal of relevance.  Thus at page 184 there is a citation from Millett J.’s judgment in Logicrose -v Southend United Football Club Ltd (1988) The Times 5th March 1998 as follows”

This was a passage from Mr Justice Millett’s judgment in these terms:
“But I do not think that it would be right to drive a litigant from the judgment seat without a determination of the issues as a punishment for his conduct however deplorable, unless there was a real risk that that conduct would render the further conduct of [those] proceedings unsatisfactory.  The Court must always guard itself against the temptation of allowing its indignation to lead to a miscarriage of justice.”
In Arrow Nominees Chadwick L.J adopted those observations in a passage which although directed to discovery, is of more general application.  Thus at page 193 g-h one finds:-
“But for my part I would allow that appeal on a second, and additional, ground.  I adopt as a general principle, the observations of Millett J in Logicrose…that the object of the rules as to discovery is to secure the fair trial of the action in accordance with due process of the Court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules, even if such disobedience amounts to contempt for or defiance of the Court, if that object is ultimately secured, by (for example) the late production of a document which has been withheld.”

12	It seems to us clear that in this case, no doubt because the appropriate authorities were not then so readily available and were not drawn to the Tribunal’s attention, the Tribunal did not, as it should have done, take into account the issue of whether or not a fair trial could still take place.  We, therefore, have to look and see what the position is.  

13	Although there are some issues of fact in this case, they are of a comparatively limited nature and, in our judgment, there is nothing to suggest that it would not now be possible for the case fairly to be tried.  In those circumstances, it seems to us that the Tribunal was wrong in law and would not, had it had the advantage of the authority cited to us, have reached the conclusion which it did.  We take the view that, in the circumstances, the application to strike out should not have succeeded and should be rejected.  The question then is what should we do?  Should we remit the entirety of the case to the Tribunal, or some part only?  We have had the advantage of a much fuller exposition by Mr Preedy of what his case is, as against Mr Smith.  

14	It is clear to us that there has been a transfer of undertaking within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations.  In those circumstances, by virtue of Regulation 5(2) any liability which Mr Smith might have had has now been transferred and now falls on Mr Giddy.  The only exception to this, which might have been of relevance, is to be found in paragraph 5(4A) of those Regulations which is in these terms:
“(4A) Paragraphs (1) and (2) above shall not operate to transfer his contract of employment and the rights, powers, duties and liabilities under or in connection with it if the employee informs the transferor of the transferee that he objects to becoming employed by the transferee.”

It was made clear to us, not least by production of the witness statement that contained Mrs Preedy’s evidence, that that was not being suggested in this case.  What she said was that the problem was that Mr Giddy wanted her to work four full-time days rather than working considerably less, some twenty or twenty four hours a week that she had been working before.  

15	On 10 September she had a meeting with him.  She says: 
“Michael Giddy said he was now organising a written contract of employment between John Smith and myself to be signed.  I just listened while he gave me some details about his own company and some details of what would be contained in his companies written contract of employment.”

And then sets out the terms.  It is clear that she is not suggesting that at any time did she inform Mr Giddy or Mr Smith that she was not prepared to work for Mr Giddy.  What she says happened was that on 1 October:
“I had no alternative but to not report for work, Mr M Giddy had changed my contract of employment and terms and conditions to my detriment.  
I was also expected to work in the presence of John Smith who was to remain at Evesham offices as a paid consultant and I would have to continue to suffer his rudeness to me.  I was forced out of employment”

What she is saying, as we read it, is that Mr Giddy’s requirements as to the hours that she should work, amounted to a fundamental change in the terms of her employment, such that she was entitled by reason of that to treat the contract of employment as having been repudiated, and this she did.  

16	This being the case which is in fact being put, any liability will have transferred to Mr Giddy and no liability remains, under the Regulations, on Mr Smith.  In our judgment, therefore, the appropriate course is only to remit the matter as for further hearing, as against Mr Giddy.  At that further hearing, the remaining live issues can then be dealt with.  

17	The ET1, as I have already indicated, claimed unfair dismissal, redundancy pay, notice pay, holiday pay and arrears of pay.  Of those, the redundancy pay item need not be remitted, because the case which is being made now, as is clear, is one of unfair dismissal and with it the claim for notice pay.  Quite separately from that, there are two claims for unpaid holiday pay for two previous years, and one for arrears of pay which we understand to be a bonus claim to be due in respect of the previous Christmas.  So when the matter goes back to the Tribunal, the parties will be Mrs Preedy and Mr Giddy only, the issues will be firstly whether she was constructively dismissed unfairly by reason of Mr Giddy’s requirement as to first of all her hours of work, and secondly, it appears from the terms of her witness statement, of her being required to work in the presence of Mr Smith, who was to remain at the Evesham offices as a paid consultant and:
“I would have to continue to suffer his rudeness to me.”
Beyond the question whether or not she was unfairly dismissed, there are questions whether she was entitled to any notice pay and, separately, the historic issues relating to holiday pay and the allegedly unpaid bonus.  It is to be hoped that those matters can be dealt with in comparatively short order and in a comparatively short space of time.  We therefore remit the case on that basis.  

18	As to the Order for costs:  that order will be set aside as against Mr Giddy.  Clearly it is set aside as part of the remission back.  The Order in favour of Mr Smith flowed from submissions which were made on Mr Smith’s behalf and should not have been successful.  The fact that the case is not being remitted as against him owes nothing to the correctness of the Decision that the claim should be struck out, but simply to what, after a fair amount of prodding from the Tribunal, we have managed to elicit as being Mrs Preedy’s true case.  In those circumstances, therefore, the Order for costs in favour of each of the two Respondents will be set out and the matter will be remitted for a re-hearing, before a different Tribunal.