Appeal No.	 EAT/955/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 18 October 2002

Before
THE HONOURABLE MR JUSTICE WALL
MR P DAWSON OBE
MR J HOUGHAM CBE

MR R F COX	APPELLANT

EXCALIBUR BOATS INTERNATIONAL LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR C SHELDON
(of Counsel)
Instructed by:
Messrs Battens 
Solicitors
23 Market Street
Crewkerne
Somerset 
TA18 7JU

For the Respondent	MR B REYNOLDS
Representative
Peninsula Business Services Ltd
Stamford House
361-365 Chapel Street
Manchester
M3 5JY	

THE HONOURABLE MR JUSTICE WALL

1	This is the hearing of an appeal by Mr Rodney Francis Cox against the Decision of the Employment Tribunal held at Exeter on 22 May 2001.  The unanimous Decision of the Tribunal was that Mr Cox had been unfairly dismissed by his employer, Excalibur Boats International Ltd (Excalibur).  The Tribunal ordered Excalibur to pay Mr. Cox the sum of £4,775.52.  

2	Mr Cox appeals against that Decision on two principal grounds.  The first of those grounds is that the Tribunal should have adjourned the application to allow another Respondent,  Sea Lord International Ltd (Sea Lord),  to be joined to the proceedings on the basis that there had been, or was likely to have been, a TUPE transfer from Excalibur to Sea Lord. The second ground is that the Tribunal was wrong to proceed to assess compensation in the sum which it did.  

3.	Excalibur is in liquidation, and the judgment against it is worthless.  It is, however, represented today by Mr Brian Reynolds, who appears as a matter of courtesy.  He represented  Excalibur in the Tribunal below, and we are grateful to him for his attendance.  

4	This is one of those cases where it can properly be said that the Skeleton Argument put forward by Mr Sheldon, on behalf of the Appellant, is both immaculate and compelling. We make no secret of the fact that our judgment follows that Skeleton closely, because we regard the arguments put forward in it as effectively irresistible, and we propose to take the majority of this judgment from it.  

5	Mr Cox was employed in a senior capacity by Excalibur and was dismissed on 5 January 2001. The reason given for his dismissal was redundancy.  The unfairness of the dismissal was conceded by Excalibur at the Tribunal, and as a consequence, as we indicated earlier, Mr Cox’s representative applied for an adjournment of the remedies hearing so that she could consider whether to amend the application to join another respondent to the proceedings. The basis of the application was that she had recently received information that Excalibur had ceased trading and that a transfer of Excalibur’s business may have taken place.  

6	Before the Tribunal was a document to which it does not refer in its Reasons, written by Excalibur’s Managing Director to another company, called Refinish Systems Ltd, a document dated 14 December 2000, which reads as follows:
“Excalibur Boats International has been acquired by the Autohome group, which has been established for 30 years.  The group is based in Northampton.  In future all accountancy will be dealt with in Northampton. 
You will be aware that the boats have been marketed under the name Sea Lord.  It is proposed to change the name to Sea Lord International Ltd.  
As a consequence of the changes Rod Cox is no longer employed by the company.  All future purchases will be made by George King or myself.
In the meantime, it would be most helpful if you could let us have an up to date statement.  This will ensure that the correct balance is entered in the new records set up at our head office.”

That, on any view, in our judgment, is material upon which it would be reasonable to infer that a TUPE transfer may have taken place.  

7	The Tribunal dealt with the application to adjourn in the following way.  We quote from the Tribunal’s Reasons: 
“The date put forward by Excalibur for this occurrence was the 1 April 2001.  Mrs Cowan contended that it was now being alleged by Excalibur that it was insolvent and therefore any remedy may be worthless so far as the applicant was concerned and that was one of the factors why she wished to consider joining additional respondents.  This was not a matter previously raised by the applicant.  We noted that the applicant had taken advice from his solicitors shortly after his dismissal and that the matter had been listed for liability and remedy today.  Excalibur opposed the application to adjourn….”

The Tribunal then went on:
“…it was not in the interests of justice for the matter to be delayed further and remedy should proceed to a hearing today.  In coming to this conclusion, the Tribunal bore in mind that any application to add additional respondents was out of time bearing in mind that the effective date of termination was the 5 January 2001, and that in order for the applicant to succeed in pursuing a claim against any purported transferee by virtue of Regulation 5 of Transfer of Undertakings (Protection of Employment) Regulations 1981, the applicant would have had to have been employed by Excalibur immediately before any such transfer.  The Tribunal noted the time lapse in question.  The Tribunal therefore refused the application to adjourn…..”

It then went on to consider the question of remedy, and made a number of findings of fact.  

8	The Tribunal noted that a number of staff were made redundant in January/February 2001 and that:
“(ii) ……..The rest of the members of staff were taken on by another company called Sea Lord International on the 1 April 2001.  Excalibur ceased trading at the end of March 2001.
(iii)  The Directors of Sea Lord International are broadly the same as those of Excalibur.  They use the same premises as Excalibur did.  The other staff employed by Sea Lord International are completing any outstanding orders.”

The Tribunal then went on to hold that it was just and equitable to award compensation to the Appellant; however it was limited to “Loss of earnings for the period up until 1 April 2001 since Excalibur ceased trading on that date.”

9	In relation to the first ground of appeal advanced, that of refusing an adjournment, Mr Sheldon accepted that the Tribunal had a broad discretion as to whether or not to grant an adjournment to a party to proceedings before it, as set out in the Regulations in force at the time, namely  paragraph 13(7) of Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 1993. He submitted, however, that the discretion had to be exercised judicially and in accordance with a proper direction as to the relevant law. 

10.	Mr. Shelton argued that the citations we have read from the Tribunal’s Reasons contain two serious misdirections in  law. These are, firstly, that the Tribunal erroneously directed itself that any application to join additional respondents would be out of time; and secondly, that the Tribunal erroneously directed itself that the Applicant would have had to have been employed by Excalibur immediately before any such transfer, if Regulation 5 of TUPE was to bite.  

11	On the question of the application to join Sea Lord being out of time, Mr Sheldon pointed out that paragraph 17(1) of Schedule 1 to the 1993 Regulations provided that:
“A tribunal may at any time, on the application of any person made by notice to the Secretary or of its own motion, direct any person against whom relief is sought to be joined as a party, and give such consequential directions as maybe just”

Mr. Sheldon referred us to Drinkwater Sabey Ltd -v-Burnett [1995] IRLR 238 in which permission to join a transferee was properly granted four months after the date of the dismissal.  He pointed out that this was outside the normal time limits for unfair dismissal. He submitted that the Tribunal appears to have ignored the power set out at paragraph 17(1), but focused instead on time limits for bringing a claim against any party under section 111(2)(a) of the Employment Rights Act 1996.  Even then, however, he points out that if that was the case, the Tribunal had the jurisdiction to enlarge time to permit the Applicant to issue proceedings 
“within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three months.”

12.	Mr. Sheldon  submitted that the escape clause could be relied upon if the Applicant was ignorant of any fact fundamental to the right to complain of unfair dismissal. He cited several authorities in support of that proposition, which is one we accept.  

13	Mr. Sheldon argued that in this case Mr Cox was ignorant of the fact that there had been a transfer of undertaking, or of facts that tended to suggest that there may have been a transfer of an undertaking, until shortly before the Tribunal hearing, or the date of the hearing itself.  The Tribunal, he submitted, took its decision without hearing evidence on these points

14.	In relation to this aspect of the matter, Mr Reynolds pointed out that it may have been practicable for an application to join Sea Lord to have been made earlier.  It was not clear precisely when the letter of 14 December, which of course was not addressed to Mr Cox, came into his possession, but in any event, Mr Reynolds submitted, Mr and Mrs Cox were both shareholders in the company, and therefore ought to have been in a position to know, or to have found out what was going on.  

15	In our judgment, whilst that submission is helpful, it does not detract from the force of Mr Sheldon’s argument.  The point here was, in paragraph 17(1), the phrase “at any time”  is unqualified. Thus,  even if Mr Cox had become aware of the transfer, or the potential transfer at an earlier stage, it is unlikely that either the application to join Sea Lord would have been heard by the Tribunal before 22 May; alternatively, the application would have been made on 22 May.  We do not, accordingly,  think there is anything in Mr. Reynolds’ point.  

16	Mr Sheldon then addressed the question of the application of TUPE.  The argument adopted by the Tribunal appears to have been that since the Appellant was dismissed on 5 January 2001, and the transfer was said to have taken place on 1 April 2001, Mr Cox was not employed “immediately before any such transfer” with the consequence that Regulation 5 of TUPE could not have applied. Mr Sheldon submits that in adopting this reasoning,  the Tribunal misdirected itself by ignoring a fundamental proposition set out in the well known case of Litster -v- Forth Dry Dock and Engineering Co Ltd [1989] IRLR 161, namely that  TUPE also applies to an employee who:

“would have been so employed if he had not been unfairly dismissed in the circumstances described in Regulation 8(1) which prohibits as automatically unfair dismissals whose principal reason is “the transfer or a reason connected with it”.  

17	Moreover, Mr Sheldon submitted, it has been held that a dismissal could be unfair and for a transfer related reason, even though the dismissal took place some time before the actual date of the transfer, and even before a particular transferee had been identified. He referred us to the case of Morris -v- John Grose Group Ltd  [1998] IRLR 499 which is clear authority for that proposition.  Mr Sheldon pointed out that this ground of appeal was by no means a sterile one; and that there were reasonable grounds for considering that if the Tribunal had directed itself properly on the law, it would have granted an adjournment. There was information that Excalibur had ceased trading, and that  any remedy for unfair dismissal was going to be worthless in the Appellant’s hands if directed to Excalibur.  In this context, Mr Sheldon placed reliance on the letter which we have read, and pointed out that the TUPE transfer was clearly suggested by the Tribunal’s own findings, with respect to the issue of compensation. 

18	In these circumstances, we are in no doubt that the Tribunal was plainly wrong not to grant an adjournment for the two reasons Mr Sheldon advances.  The refusal to grant an adjournment was prejudicial to Mr Cox, given that he has not received, nor is he likely to receive any of the award made to him by the Tribunal against Excalibur..  

19	Mr Sheldon also challenges the compensatory award, submitting that the Tribunal erred in law in arriving at its Decision as to the level of compensation to which Mr Cox was entitled.  He submits that by limiting the award to the period between the date of dismissal and the date Excalibur ceased trading, the Tribunal fell into error because it ignored the possibility that if he had not been unfairly dismissed, Mr. Cox would have continued to have been employed by Excalibur up until the date of the transfer to Sea Lord. He would then have been transferred to Sea Lord, and his employment might well have continued beyond 1 April 2001.  Mr Sheldon points out that the Tribunal’s own findings of fact indicate that a TUPE transfer probably occurred as Excalibur’s staff had been taken on by Sea Lord and were using the same premises. Furthermore,  the orders for boats were being fulfilled by the transferred staff.

20	Accordingly, by limiting the compensatory award to 1 April, Mr. Sheldon submitted that  the Tribunal erred in law and ignored the possibility that the Appellant would have been engaged for longer by the transferee and thus failed to award him any compensation for that loss of opportunity.  Once again, we think that ground made out and that it is a further reason for this appeal being allowed.  

21.	This leads us to the difficulty as to what should now occur.  Plainly the Tribunal should have granted an adjournment and in our view should have joined Sea Lord. In these circumstances, it seems to us that the proper course is to allow the appeal; to set aside the Tribunal’s Decision; to make an Order that Sea Lord International Ltd be joined to the proceedings as a party.  In the event of  Sea Lord International objecting to being joined it  will be given liberty to apply to the Industrial Tribunal within twenty one days of service of the Order of the EAT on this appeal  upon it,  to set aside the order  joining it.   There should also be a direction that the question of compensation be reheard in its entirety by a different Tribunal.