Appeal No.	 EAT/1021/01/TC

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	                   At the Tribunal
	           On 10 October 2002
Judgment delivered on 25 March 2003

Before
HIS HONOUR JUDGE J BURKE QC
MR P R A JACQUES CBE
MRS M McARTHUR

MR R BACHNAK	APPELLANT

EMERGING MARKETS PARTNERSHIP (EUROPE) LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised
______________________________________________________________________________

	APPEARANCES

For the Appellant	MR O BELLINFANTIE
Solicitor
Messrs Steeles
11 Guilford Street
London WC1N IDH	
For the Respondents	MR J LADDIE
(of Counsel)
Instructed by:
Baker & Mackenzie
Solicitors
100 New Bridge Street
London EC4V 6JA	

HIS HONOUR JUDGE J BURKE QC

The facts
1	The Appellant, Mr Bachnak, is a national of Slovakia.  He claimed, in his Originating Application to the Employment Tribunal dated 27 April 2001, that he had, in January 2001, been unfairly dismissed by the Respondents who are a limited company, registered in the United Kingdom, from employment which had commenced in November 1999.  He also claimed that the Respondents owed him pay in respect of time served but unpaid prior to his dismissal and payment by way of reimbursement of expenses.  

2	In their Notice of Appearance, the Respondents contended that the Appellant had been employed by them on a one-year probationary period from November 1999, but that that employment had ended on 23 October 2000; thereafter, they asserted, the Appellant provided services to three separate institutions, based not in the UK but elsewhere in Europe, who were clients of the Respondents; and the Appellant was not under any contract of employment with the Respondents after 23 October 2000.  It was the Respondents’ case that the Appellant provided his services from late October 2000 through the medium of his own limited company which entered into a consultancy agreement with the three institutions.  If those assertions were correct, the Appellant’s claims against the Respondents were bound to fail.  The Tribunal, accordingly, directed the trial, as a preliminary issue, of the question whether the Appellant was an employee of the Respondents at the material time.

3	The Tribunal, sitting at London Central and chaired by Mr Roose, heard evidence on the preliminary issue on 29 June 2001 and sent their Decision to the parties with Extended Reasons on 17 July 2001.  They concluded that, at the material time, the Appellant was not an employee of the Respondents. 
4	The Appellant now appeals against that Decision.  

5	The Appellant obtained an MBA in the United States of America, before coming to the United Kingdom to take up employment with the Respondents as an investment officer.  The Tribunal found that the Respondents’ offer of that position was contingent upon their appointment as Principal Adviser to the AIG Emerging Europe Infrastructure Fund.  The Respondents were so appointed; and the Appellant started his employment on 1 November 1999.  He was able to do so, having obtained a visa permitting his entry to and residence in the UK for forty-eight months on condition that he accommodated himself and any dependants without recourse to public funds, did not enter or change employment, paid or unpaid, without the consent of the Secretary of State for Employment and did not engage in business or a profession without the consent of the Secretary of State for the Home Office.  He was permitted to work in the employment of the Respondents.  

6	In a letter of 1 November 1999 to the Appellant, Mr Baudon, the Respondents’ Chief Executive, confirmed the Appellant’s employment by the Respondents on the terms of the letter and as set forth in a document entitled “Terms and Conditions of Employment October 1999”, which both parties accepted as together constituting the Appellant’s contract of employment.  The terms and conditions of employment document was very comprehensive; it set out in detail express terms as to most, if not all, of the areas which one might expect to find included in such a document between a commercial company and a highly qualified and highly paid employee.  It set out the Appellant’s duties in paragraph 2, which included, at paragraph 2.3, these words:
“Your employment is initially in connection with the appointment of an Associated Company as the “Principal Adviser” to the AIG Emerging Europe Infrastructure Fund L.P.”

Paragraph 18 contained an elaborate definition of “Associated Company” which it is not necessary for present purposes to consider in depth; it is sufficient to say that paragraph 2.3 and paragraph 18 together demonstrated a close relationship between the Respondents and the Fund named in paragraph 2.3.  

7	As to salary, the terms and conditions document referred primarily to the letter of 1 November 1999, in which the Appellant’s basic salary was defined as £80,000 per annum and provision was made for payment of a rental allowance of £210 per week; the terms and conditions document also provided for a discretionary bonus.  There were detailed provisions in respect of confidential information and a number of carefully drafted post-termination covenants.  Paragraph 1.3 of the Terms and Conditions documents provided that:

“Your employment will be subject to a probationary period of one year during which your employment may be terminated by you or by the Company on four weeks notice in writing during or at the end of the one year period.”

8	By a letter of 22 September 2000, the Respondents, pursuant to paragraph 1.3 which we have set out above, terminated the Appellant’s employment with effect from 23 October 2000, before the end of the probationary period.  There is a dispute between the parties as to the reasons for the Respondents taking this step; but it was not relevant to the preliminary issue; and the Tribunal made no findings as to those reasons.  On the same day as that on which the termination took effect, three new documents arose; Mr Baudon, on behalf of the Respondents, provided to the Appellant a letter which offered him “a limited scope fixed term employment” with the Respondents on the terms and conditions set out in that letter and in a further terms and conditions document, which was attached to and referred to in the letter, and headed “Terms and Conditions of Fixed Term Employment October 2000”.  The Appellant, on the same day, signed the letter under the words:
“I agree with the Terms and Conditions of my fixed term employment as set out or referred to above”

The letter specified the term of the fixed term employment offered as being from 24 October 2000 to 24 February 2001 and defined the Appellant’s duties under that employment as providing advice, assistance and support to the Respondents in connection with the arrangement of two specific investments; the Appellant was required to report to Mr Baudon as the Respondents’ Chief Executive Officer and Mr Morrow or Mr Hewitt, Directors of the Respondents.  

9	The Terms and Conditions document commenced:-
“The following Terms and Conditions of Fixed Term Employment apply to your fixed term employment with Emerging Markets Partnership (Europe) Limited …… as at the date of issue of the accompanying employment letter …..They are given to you pursuant to Section 1 of the Employment Rights Act 1996.” 

After this heading there were set out detailed terms and conditions in identical or very similar language to that used in the previous year, with some exceptions, in particular:-

(i) the duties owed by the Appellant were less fully described.
(ii) There was no provision for the payment of salary; but there was a provision (clause 5.1 and 5.2) for the payment or reimbursement by the Respondents to the Appellant of expenses incurred while performing duties on behalf of the Respondents and entitling the Respondents to deduct as a set-off against sums due to him from the Respondents any monies due from him to the Respondents. 
(iii) There was no bonus provision.
(iv) There was no provision for holidays, sick pay or pension.
(v) The provisions in respect of confidential information were no longer present.
(vi) There was a provision for termination forthwith if the Appellant’s performance was determined to be unsatisfactory; there was no retirement age provision; there were no post-termination covenants.
(vii) As in the first set of terms and conditions, the Appellant was expressly required:
“to devote sufficient time, attention and abilities to your job duties during working hours, and to act in the best interests of the Company and its Associated Companies at all times.”

However, the definition of “Associated Company” was changed; whereas in the first set of terms and conditions, an “Associated Company” was defined by clause 18.1 as meaning:
“(a) the Fund, the general partner and manager of the Fund, the corporate general partner of the manager of the Fund, or any investor in the Fund; and (b)………”
	and the fund was further defined as:
 “any fund to which the Company or an Associated Company is for the time being a Principal Adviser.”

	in the 2001 terms and conditions, an Associated Company was defined in clause 14.1 as:
“(a) the AIG Emerging Europe Infrastructure Fund L.P and the Emerging Europe Infrastructure Fund C.V, the general partner and manager of those Funds, the corporate general manager of those Funds, or any investor in those Funds; and (b) …..”

10	The 2000 Terms and Conditions continued to specify, as had the 1999 Terms and Conditions, in addition to the Appellant’s duties, his hours and place of work (the Respondents’ premises in Portman Square, London) and that the Appellant was required to work full time for the Respondents and not to work directly or indirectly for anyone else without consent.  

11	On the same date, 23 October 2000, the Appellant, on behalf of a limited company which he had recently formed in the United Kingdom, entered into what was described as an “Advisory Agreement” with three institutions based in Europe (we were not told in which countries); the first two were described together in the Advisory Agreement as “the Funds” and the third was described as “the Fund Manager”.  The two Funds were the same as those identified in clause 14.1 of the terms and conditions document of October 2000 as “Associated Companies” of the Respondents.  The Tribunal found that these institutions did not have any office or presence in the United Kingdom and that Mr Taylor, the Director of the Respondents who signed the Advisory Agreement, held a general power of attorney to act on their behalf.  

12	By the Advisory Agreement, the Appellant’s company agreed to provide advice, assistance and support to the Funds and to the Respondents in connection with the arrangement of the same two specific investments as those identified in the employment letter of the same date between the Appellant and the Respondents.  Indeed, the first two sub-paragraphs of paragraph 2.1 of the Advisory Agreement defined the services to be provided by the Appellant’s company in the same words as those used in the employment letter; both documents state that the provider of those services would report to Mr Baudon and to Mr Morrow or Mr Hewitt (as under the first Contract of Employment).

13	The Advisory Agreement went on, by clause 2.2, to provide that the Appellant’s company had an option to introduce to the Funds or to the Respondents new investment opportunities and, if interested, the Fund Manager had an option to engage the Appellant’s company to provide advice, assistance and support to the Funds and to the Respondents in connection with such new opportunity.  Clause 3 provided that all advisory work would be carried out by the Appellant’s company acting through the Appellant.  Clause 4 provided that the Fund Manager would pay the Appellant’s company a retainer of £380 per day for each day on which the Appellant worked on the two specific investments, up to twenty working days per month, plus reimbursement of reasonable out-of-pocket expenses from 24 October 2000 to 24 February 2001, the same period as that set out in the employment letter of 23 October.  £380 per day for twenty working days per month represents an annual figure very close to that payable, including the rent allowance, under the first employment contract.  The Advisory Agreement also provided for a success fee of £100,000 in each case, should either of the two specific investments be successfully closed by 24 March 2001, and for other success fees to be payable as a percentage of transaction values.  Finally, for present purposes, clause 6A of the Advisory Agreement provided:

“Nothing contained in this Agreement shall be construed as the establishment or creation of a relationship of employer and employee, or principal and agent, between the Funds, the Fund Manager or EMP on the one hand and the Adviser or Mr Bachnak on the other.  It is agreed that such relationship is that of an independent contractor.”

14	The Advisory Agreement was, pursuant to the power of attorney to which we have already referred, signed on behalf of the Funds and the Fund Manager by Mr Taylor of the Respondents; according to the employment letter of 23 October 2000, Mr Taylor had been involved in discussions with the Appellant about the offer of employment contained in that letter.

15	We were told that the Respondents had a one percent share in the Funds, but that the Funds and the Fund Manager were clients of the Respondents, who acted as their principal advisers on a purely commercial and “hands-off” basis; but the documents demonstrate that there was clearly a close connection between them.

16	By a letter dated 31 January 2001 the Appellant was required by Mr Taylor to attend a disciplinary meeting; he did not do so; his and his company’s relationships with the Fund and with the Respondents were terminated with immediate effect on the following day for repudiatory breach.  

17	The Respondents’ case, as set out in their Notice of Appearance, in particular at paragraph 14, was that the contract of employment, purportedly entered into on 23 October 2000, was, in effect, a sham; there was, they asserted, a special immigration dispensation affecting Slovak nationals who could continue to work in the United Kingdom if they incorporated a company and met other criteria; the Appellant therefore formed a company which entered into the Advisory Agreement; that was a genuine agreement pursuant to which, for the fees set out, the Appellant, through his company, would provide consultancy services to the Fund and Fund Managers.  However, the Respondents asserted, for immigration purposes the Appellant needed to have what appeared to be a contract of employment with the Respondents in order to retain his work permit until the dispensation described above came into effect.  For this reason, the Respondents’ case went, the documents purporting to demonstrate a contract of employment from 24 October 2000, were produced but neither party intended to enter into such a contract.  

18	Thus the Respondents’ case was that there was in reality, as both parties knew, no contract of employment; no remuneration was provided for in what purported to be a contract of employment; without any remuneration, the Respondents asserted, there could not be a contract of employment having legal effect.  

19	The Appellant’s case before the Tribunal was that the October 2000 contract of employment was a genuine contract and, indeed, that under the terms of his visa he had to have a contract of employment and could not change his employer; he had set up his company and entered into the Advisory Agreement at the behest of the Respondents who wished to ensure that the Fund received the benefit of the Appellant’s advice and work on the two investments.  On the Appellant’s case there were two genuine contracts, one a contract of employment between the Appellant and Respondents and one a Consultancy Agreement between his company and the Funds, which the Respondents had wanted and to which he had agreed, which two contracts operated together.  

The Tribunal’s Decision
20	The Tribunal found that, when the Respondents terminated the Appellant’s first contract of employment with effect from 23 October 2000, the Appellant would have had to leave the country within twenty eight days; but he had discussions with the Respondents about ways to soften the blow; and one of the options which emerged from those discussions was the taking advantage of the special dispensation to which we have referred above.  Accordingly, the Appellant formed his company and entered into the Advisory Agreement.  The Tribunal found that there was work for the Appellant to do in respect of the two specified investments.  They then said, in paragraph 5 of their Decision:

“As the Applicant  would continue to attend the Respondent’s offices there were drawn up terms and conditions of fixed term employment which dealt with general housekeeping matters.  There was no provision for any remuneration to be paid by the Respondent to the Applicant.”

21	The Tribunal continued in paragraph 6 of their Decision as follows:

“While the Applicant had previously been issued terms and conditions of employment by the Respondent in October 1999, there was now no provision on the new agreement for payment for holidays or sick leave, he was no longer a member of  pension scheme, he no longer attended staff meetings and his computer access was restricted.  While he had previously been paid through PAYE, his future remuneration from the Fund was paid upon the submission of an invoice by the Applicant from his company.”

22	In paragraph 8 of their Decision, the Tribunal referred to Express & Echo Publications Ltd -v- Tanton  [1999] IRLR 367 as setting out the approach which they should take to the issue before them, namely:
“First, the Tribunal should establish what were the terms of the agreement between the parties which was a question of fact.  The Tribunal should then consider whether any terms of the contract are inherently inconsistent with the existence of a contract of employment, which was a question of law.  If there were no inherently inconsistent terms, the Tribunal should determine whether the contract was a contract of service or a contract for services, having regard to all its terms, which was a mixed question of law and fact.”

23	The Tribunal continued as follows:
“In respect of the first point, the Applicant did not receive any payment or benefits pursuant to the terms and conditions of employment issued by the Respondent.  In accordance with the terms of his advisory agreement, the Applicant provided his advice to the Fund through the Respondent.  For practical reasons, the Fund required the Respondent to reimburse the Applicant’s expenses until a big enough debt had been built up for it to be worthwhile its wiring money across.  In the circumstances and in the absence of consideration, we find that there was no enforceable contact at all between the Applicant and the Respondent.  What there was was a documentary trail which did no more than reiterate the obligations which the Applicant was already under and being paid for pursuant to the advisory agreement.  There had been no intention between the Applicant and the Respondent to create a legal relationship of which the Applicant was aware.  What the parties had attempted to do was to enable the Applicant to satisfy the terms of his visa by building up relationships with third parties.
In respect of the second point, Ready Mixed Concrete (South East) Ltd -v- Minister of Pensions and National Insurance [1968] 2 QB 496 was authority for the proposition that the servant would, in consideration of a wage or other remuneration, provide his own work and skill in performance of some service for his master.
The third point is that there was an absence of a mutuality of obligation between the parties.
In the circumstances we find that the Applicant was not an employee of the Respondent.”

Submissions
24	In summary form, Mr Bellinfantie, on behalf of the Appellant, submitted:
(1) that the Tribunal had failed to consider the two contracts of 23 October 2000 together.
(2) That on the proper construction of the purported contract of employment of 23 October 2000, it was a contract of employment proper and not a document which dealt only with “general housekeeping matters”.
(3) The Tribunal’s conclusions that the employment contract lacked consideration and mutuality of obligation and that there was no intention to create a legal relationship between the Appellant and the Respondents were not supported by adequate findings of fact and reasons and/or were perverse.
(4)  That the Tribunal had failed to address the Appellant’s evidence that he had to have a contract of employment after 23 October 2000, to preserve his immigration status.  

25	Mr Bellinfantie put forward other submissions to which Mr Laddie, on behalf of the 
Respondents, took objection on the grounds that they did not fall within the grounds upon which this appeal was allowed, at its preliminary hearing on 29 January 2002, to proceed to a full hearing.  Those objections included objections to Mr Bellinfantie’s arguments as to perversity.  We indicated, when objection was taken, that we would set out our decision on the objections as part of our Judgment; but, for reasons which will appear, it is unnecessary for us to make any such decision; we have not, in reaching our conclusions on this appeal, needed to consider those further submissions.  

26	Mr Laddie’s submissions, in summary, were that:
(1) the Tribunal was entitled to find that the purported contract of employment of 23 October 2000 was not intended to have contractual effect.
(2) The Tribunal, in so finding, implicitly rejected the Appellant’s case as to the purpose of that purported contract.
(3) There was, therefore, no basis for considering the two contracts together; the Tribunal had to choose between two contracts which were inconsistent with each other.
(4) The Tribunal’s findings as to the absence of the necessary elements of a contract of employment were findings of fact and were adequately reasoned.  

Our conclusions
27	There is no doubt that the Appellant, on the face of the documents, entered into what appeared to be two contracts on the same day, 23 October 2000.  By what, on the face of the relevant documents, was a contract of employment, he personally undertook to render to the Respondents duties which were the same as those which, on behalf of his newly-formed or newly-acquired company, he undertook in the Advisory Agreement to render to the three institutions, who were associated companies of the Respondents pursuant to the definition of “Associated Company” in the contract of employment, who were represented in the UK by the Respondents and who were plainly closely associated with the Respondents.  In respect of those duties he was required to report to the same individuals within the Respondents.

28	It was the Appellant’s case that each of the two contracts formed part of the arrangements between himself and the Respondents by which he was to continue working upon the Respondents’ projects for a limited period and was to be enabled to retain his ability to reside in the UK for immigration purposes while doing so.  The Respondents’ case was that only the Advisory Agreement was genuine and the purported contract of employment was a sham.  If the contract of employment was not a sham, then it was, in our judgment, necessary for the Tribunal to consider whether, as the Appellant urged, the two contracts should be considered together and whether to approach the issue of the existence of a contract of employment, in the context of the circumstances in which both arose, on the basis of the overall effect of both contracts.  We do not say that the Tribunal necessarily had to approach the issue before them in that way; but they had, on the case as put before them, to consider whether that was or might be the correct approach. 

29	As we understand the Tribunal’s Decision, they did not decide that the contract of employment was a sham.  They described it, in paragraph 5 of their Decision, as having been drawn up to deal with general housekeeping matters “as the Applicant would continue to attend the Respondent’s offices”; but they do not explain why they described the contract of employment in that way.  It would have been entirely appropriate for the Respondents, as the UK representatives of the Funds and of the Fund Manager who did not have any offices in the UK, to have permitted the Appellant, informally, to use their offices for his or his company’s work in the UK under the Advisory Agreement; there was no need for a contract of employment to enable him to use their offices for that purpose.  It was not suggested to us that the Respondents had put forward any such rationale for the existence of the purported contract of employment.  

30	We also have considerable difficulty in understanding what the Tribunal meant by their description of the purported contract of employment as “drawn up to deal with general housekeeping matters”.  As we have set out earlier in this judgment, the offer letter of 23 October 2000 identified specific dates for a contract of employment and specific duties to be performed by the Appellant.  The terms and conditions documents spelt out a large number of what were, on the face of it, terms and conditions of the contract of employment offered in the letter and accepted by the Appellant by his signature.  While those terms and conditions included what might be described as housekeeping matters e.g. the place of work and a prohibition of smoking on the Respondents’ premises, the overwhelming majority of the terms set out in the relevant documents could not, in our judgment, be properly so described.  The offer letter and the terms and conditions document, taken together, appear to constitute a very detailed contract of employment, although they did not include some of the provisions, including provisions as to remuneration, which had appeared in the first contract of employment.  

31	Accordingly, the Tribunal, at the outset of their consideration of the purported contract of employment, reached a conclusion as to its nature which, on a proper construction of the relevant documents, or on a proper approach to the factual context in which these documents came into existence, was not, in our judgment, open to them.  

32	In paragraph 8 of their Decision the Tribunal described the purported contract of employment in different terms when they said that there was a documentary trail which did no more than reiterate obligations which the Appellant was already under and being paid for, pursuant to the Advisory Agreement.  That description was, also, in our judgment, not one which was open to them on a proper appreciation of the documentation.  Firstly, there was, so far as we are aware, no evidence that the Advisory Agreement was entered into before, as opposed to contemporaneously with the purported contract of employment.  Secondly, the purported contract of employment did much more than reiterate the obligations set out in the Advisory Agreement; it purported to impose obligations directly on the Appellant, as opposed to his company; it imposed obligations on the Appellant towards the Respondents and not towards the Funds and the Fund Manager; and it contained numerous provisions, including provisions in relation to hours of work, place or work, duties in relation to confidentiality, copy- rights, inventions and patents and data protection and provisions for termination which were not contained in the Advisory Agreement.

33	For these reasons we agree with the submissions made on behalf of the Appellant that the Tribunal misconstrued and misunderstood the nature and terms of the contract of employment apparently concluded by the offer letter and the terms and conditions document in describing that contract as they did in paragraphs 5 and 8 of their Decision.  

34	It further appears to us that the Tribunal failed to address the Appellant’s fundamental point that the two contracts should be considered together.  Had the Tribunal concluded that the purported contract of employment was a sham, then there would, of course, have been no contract of employment and the Appellant could not have been an employee of the Respondents at the material time; but in the absence of such a conclusion, in considering whether there was an intention to create a legal relationship between the parties by entering into the purported contract of employment, and whether there was consideration between the parties, the circumstances and effect of both contracts together had to be considered; but we cannot see that the Tribunal did so.  The Appellant’s case was that both contracts came into existence so as to enable the Appellant to continue working and to enable the Respondents to have the benefit of his work, in the period to which the documents related, without damage to the Appellant’s immigration status; but while the Tribunal, at paragraph 5, accepted that the purpose of the Advisory Agreement was to enable advantage to be taken of the special dispensation to which we have referred, and, at paragraph 8, described the parties as attempting to enable the Appellant to satisfy the terms of his visa by building up a relationship with third parties, they did not make any comment upon and appear not to have taken into account the need of the Appellant to have a co-existent contract of employment, in addition to the Advisory Agreement, as described by  the Respondents in paragraph 14 of their Notice of Appearance.  The existence of the Advisory Agreement was not necessarily inconsistent with the existence of a contract of employment; it was therefore necessary for the Tribunal to consider, unless the purported contract of employment was found to be a sham, whether both contracts should be regarded as valid and co-existing and, if so, what on that basis was the effect of both as to the status of the Appellant. 

35	This, in our judgment, the Tribunal failed to do.  They may have been attracted into that course by focusing upon the decision of the Court of Appeal in Express & Echo Publications Ltd -v- Tanton, to which we have referred; that decision sets out important guidance as to the correct approach which the Tribunal should follow in deciding whether a contract is a contract of employment or a contract for services; but in this case that was not the issue; the issue was whether, in circumstances in which there existed a contract for services between other parties, the purported contract of employment was a contract at all.   

36	We further agree with Mr Bellinfantie’s submission that the Tribunal’s conclusions that there was no consideration between the Appellant and the Respondents, no mutuality of obligation and no intention to create a legal relationship between them, are insufficiently reasoned to enable the parties to know sufficiently why they had won or lost respectively on these issues, as required so as to be “Meek compliant”, to borrow a phrase coined by Sedley LJ in Tran -v- Greenwich Vietnam Community [2002] IRLR 735 at paragraph 17, referring, of course, to the well known principles set out by Bingham LJ in Meek -v- City of Birmingham District Council [1987] IRLR 250, or so as to explain how the Tribunal went from their findings of fact to their conclusions, as the need to be “Meek” compliant was described by Sedley LJ in that same paragraph in Tran.  

37	As to consideration, the Tribunal referred to the absence of any provision in the purported contract of employment for any payment or benefit to the Appellant; but consideration moving from the Respondents to the Appellant was not only potentially to be found in salary or benefits akin to remuneration e.g. pension, health insurance, personal accident insurance (all of which had been present in the first contract of employment).  One possible consideration moving from the Respondents to the Appellant was the procuring or signing by the Respondents of the Advisory Agreement; another was the provision by the Respondents of a place of work at which the Appellant and his company could provide the services owed under the Advisory Agreement to the Fund and the Fund Manager; a third was the Respondents’ agreement to pay expenses incurred by the Appellant in performing duties on behalf of the Respondents (a different provision from that in the Advisory Agreement for payment of expenses which would necessarily be expenses incurred on behalf of the Fund and the Fund Manager which the Tribunal found were to be paid through the medium of the Respondents).  Looking at the two agreements together would, of course, have revealed that what was to be received by the Appellant’s company was very similar to that payable under the first contract of employment to the Appellant.  

38	Paragraph 8 of the Tribunal’s Decision does not deal with these or any other possible elements of consideration moving from the Respondents to the Appellant, so as to explain why they were not regarded as sufficient.  There was no difficulty as to consideration moving from the Appellant to the Respondents; his undertaking to them to discharge the duties set out in the offer letter of 23 October was plainly such consideration. 

39	As to intention to create legal relations, if the Tribunal in paragraph 8 based their Decision on the absence of consideration as appears to have been the case from their words:
“….in the absence of consideration we find that there was no enforceable contract at all between the Applicant and the Respondent”

that conclusion cannot stand in the light of what we have said as to the Tribunal’s finding of absence of consideration.  If the Tribunal were basing themselves on other factors, what they were and why the need for there to be an employment contract for the purposes of enabling the Appellant to maintain his resident status and why the detailed terms of the letter of 23 October 2000 and the October 2000 Terms and Conditions did not demonstrate an intention to create a legal relationship between the Appellant and the Respondents are not spelt out in paragraph 8 so as to enable the parties sufficiently to understand why the Tribunal had so concluded or what factors the Tribunal had or had not taken into account.  

40	For similar reasons, the Tribunal’s conclusion that there was absence of a mutuality of obligation was not sufficiently explained.  

41	Mr Laddie submitted, essentially, that the findings that there was no intent to create legal relations, no consideration and no mutuality of obligation, were findings of fact.  So far as consideration was concerned, we are inclined to the view that the Tribunal’s Decision was one of construction of the documents rather than one of fact; but for the reasons we have set out, we have concluded that the Tribunal’s decision in relation to consideration, intent to create relations and mutuality of obligation was reached without taking into account factors which had to be taken into account, was not based on sufficient reasoning, and was not sufficiently explained so as to comply with well established principles.  Mr Laddie further submitted that the 23 October 2000 offer letter and the terms and conditions document on the one hand and the Advisory Agreement on the other hand were mutually inconsistent and that therefore the Tribunal were entitled to reach their conclusion on the former alone; however we do not accept that the two sets of documents were necessarily mutually inconsistent; we see no reason why they could not be treated as intended to operate together; contrary to Mr Laddie’s submission it was not, in our judgment, necessary for the Tribunal to choose between one set of documents and the other.  

42	For these reasons we are satisfied that the Tribunal’s Decision cannot stand and the appeal must be allowed.  However, we cannot ourselves determine what the outcome of the preliminary issue should have been; that outcome must be dependent not only on construction of the relevant documents but also on the evidence given by the parties as to the reasons for and circumstances in which there came into existence what, on the face of the documents, are two contracts, one of employment and one for services, between different parties, relating to the same work.  Accordingly, the only appropriate course is to remit the preliminary issue for redetermination by a fresh Tribunal.  

43	We are aware that we have not addressed all of the arguments put forward on behalf of the Appellant, in particular the perversity arguments and other arguments to which Mr Laddie took objection; because of our conclusion, this case must go back to the Tribunal for the reasons which we have set out.  We have regarded it as unnecessary and as potentially unhelpful to examine any arguments beyond those with which we have dealt expressly above.  The remitted hearing should take place free from any views of ours on points which it is not strictly essential to decide for present purposes.  We have also, in the circumstances, not felt it necessary to refer to many of the authorities to which our attention was helpfully directed.