Appeal Nos. UKEAT/0428/06/RN, UKEAT/0435/06/RN
& UKEAT/0447/06/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 8-9 March 2007
Judgment handed down on 28 March 2007

Before
HIS HONOUR JUDGE PETER CLARK
MR B R GIBBS
MRS J M MATTHIAS

UKEAT/0428/06/RN
R A JONES                                                                                                                APPELLANT

(1) FRICTION DYNAMICS LTD (IN ADMINISTRATION)
(2) DYNAMICS FRICTION LTD (IN LIQUIDATION)
(3) FEROTEC REALTY LTD
(4) THE SECRETARY OF STATE FOR TRADE AND INDUSTRY                  RESPONDENTS
_____________
UKEAT/0435/06/RN
AMICUS									      APPELLANT

(1) FRICTION DYNAMICS (IN ADMINISTRATION)
(2) DYNAMEX FRICTION LTD (IN LIQUIDATION)
(3) FEROTEC REALTY LTD (4) SECRETARY OF STATE FOR
TRADE AND INDUSTRY				                                            RESPONDENTS
______________
UKEAT/0447/06/RN
SECRETARY OF STATE FOR TRADE AND INDUSTRY	                               APPELLANT

(1) FRICTION DYNAMICS LTD (IN ADMINISTRATION)
(2) DYNAMICS FRICTION LTD (IN LIQUIDATION)
(3) FEROTEC REALTY LTD                                                                                RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

UKEAT/0428/06/RN
For the Appellant

MR M J KEENAN
Solicitor
Messrs Walker Smith Way
Solicitors
26 Nicholas Street
Chester
Cheshire
CH1 2PQ	
For the 1st Respondent

For the 2nd Respondent

For the 3rd Respondent
	NEITHER PRESENT NOR REPRESENTED

NEITHER PRESENT NOR REPRESENTED

MR C R SMITH
Representative	

For the 4th Respondent

MISS ALISON HEWITT
(Of Counsel)
Instructed by:
The Treasury Solicitor (Employment Law Team)
1 Kemble Street
London
WC2B 4TS

	
UKEAT/0435/06/RN
For the Appellant
	MR ANDREW ALLEN
(Of Counsel)
Instructed by:
Messrs Walker Smith Way
Solicitors
26 Nicholas Street
Chester
Cheshire 
CH1 2PQ	
For the 1st Respondent

For the 2nd Respondent

For the 3rd Respondent	NEITHER PRESENT NOR REPRESENTED

NEITHER PRESENT NOR REPRESENTED

MR C R SMITH
Representative	

For the 4th Respondent

MISS ALISON HEWITT
(Of Counsel)
Instructed by:
The Treasury Solicitor (Employment Law Team)
1 Kemble Street
London
WC2B 4TS

		
UKEAT/0447/06/RN
For the Appellant
	MISS ALISON HEWITT
(Of Counsel)
Instructed by:
The Treasury Solicitor (Employment Law Team)
1 Kemble Street
London
WC2B 4TS	
For the 1st Respondent
	NEITHER PRESENT NOR REPRESENTED	
For the 2nd Respondent
	NEITHER PRESENT NOR REPRESENTED	
For the 3rd Respondent
	MR C SMITH
Lay Representative	

SUMMARY

UKEAT/0428/06/RN			(Code 9I)

Frustration of contract by illness.  Employee had recovered at time ET found frustration occurred.  Decision reversed

UKEAT/0435/06/RN and UKEAT/0447/06/RN		(Code 3F; 8R)

Whether employed immediately before transfer – inadequate reading by ET – whether administration ‘stage-managed’.  Case remitted for rehearing by fresh ET.

HIS HONOUR JUDGE PETER CLARK

UKEAT/0428/06/RN
Judgment

1.	The Appellant, Mr R A Jones, was one of 6 Claimants appearing before an Employment Tribunal chaired by Mr A B Rees and sitting at Shrewsbury on 18, 19 and 25 April 2006 which heard a discrete issue in each of those cases, namely whether the Claimants’ contract of employment with the first Respondent, Friction Dynamics Ltd (In Administration) was terminated by operation of law or by dismissal.  The terminating event was said by the 3rd Respondent, Ferotec Realty Ltd to be frustration of the contract due to ill-health incapacity.

2.	By a Judgment with reasons promulgated on 13 June 2006 the Employment Tribunal rejected that contention in respect of 5 of the 6 Claimants.  In the case of Mr Jones they upheld it, finding that he was not dismissed by his employer and thus was unable to pursue his claims of unfair dismissal, breach of contract and entitlement to a redundancy payment.  As to which of the Respondents would be liable to compensate him if such claims were made out is not a relevant issue in this appeal.  The only question for us is whether the Employment Tribunal erred in law in finding that his contract was frustrated (whilst employed by Friction Dynamics Ltd (the Company), which went into administration on 7 August 2003).

The Facts
3.	Mr Jones commenced employment with the predecessor of Friction Dynamics, Ferodo, on 5 June 1973.  He was a factory operator/machine operator.  In April 2001 he had an accident at work.  He describes in his witness statement how he was grabbed from behind by a fellow employee called Tewson.  As a result he sustained 2 fractured ribs.  That was the full extent of his injury.  He was initially signed off sick by his GP for 2 weeks.  Thereafter he was given a 6 months certificate.

4.	Mr Jones was a member of the T & GWU, a union recognised by the Company.  It so happened that shortly after Mr Jones went off sick that union called out its members at the factory site where he worked on strike.  In subsequent proceedings brought in the Liverpool Employment Tribunal by workers who went out on strike and were dismissed it was found that their dismissals took effect on 1 May 2001.  That fits with a letter which is before us, sent to Mr Jones by the Company’s Business Manager, Ken Godfrey and dated 1 May 2001.  It reads:

“Dear Mr Jones,
Industrial action
You have taken industrial action and by doing so have repudiated your contract of employment.
The Company recognises and accepts your repudiation.”

That letter was followed by a further letter from Mr Godfrey to Mr Jones dated 3 May 2001 in which he stated that, as a result of the industrial action, the Company had decided to suspend payment of sick leave unless supported by a Doctor’s Certificate.  Then Mr Godfrey wrote again on 22 June, requiring Mr Jones to notify him of his intention to return to work on 27 June, failing which he would be dismissed.  That letter has the appearance of a standard form letter to all those believed to be on strike.

5.	On 25 June Mr Jones replied.  He said this:
“As you know I have been unable to follow my employment because of illness for quite some time.  I am being treated by my GP and as soon as the treatment is complete and he says I can return to work I will do so immediately.”

6.	On 12 September 2001 Mr Godfrey wrote to Mr O’Leary, Mr Jones’ representative informing him that he would receive back sick-pay of £1,343.12, a fact noted by the Employment Tribunal at paragraph 4 of their reasons.

7.	Thereafter there was no contact between Mr Jones and the Company until, it is common ground, Mr Rutherford, one of the Joint Administrators, wrote to him and the other 5 Claimants, among others, on 7 August 2003 summarily dismissing him.

8.	The Employment Tribunal found that the Company could have expected him to return to work at the end of 2001.  His contract of employment was terminated by frustration on or about that time.

Frustration of Contract

9.	The Common Law doctrine of frustration of contract does not altogether sit well with the statutory concept of dismissal.  Its application to the field of employment has been considered in a number of cases, beginning with the Judgment of the NIRC (Sir John Donaldson P presiding) in Marshall v Harland & Wolff Ltd [1972] ICR 101.  That and a number of the later authorities were cited to the Employment Tribunal and are recorded at paragraph 2 of their reasons.

10.	Applying the common law doctrine to employment contracts the President, in Marshall, set out valuable guidance at page 105.  He posed the relevant question in this way:

“In the context of incapacity due to sickness, the question of whether or not the relationship has come to an end by frustration sounds more difficult than it is.  The tribunal must ask itself: “Was the employee’s incapacity, looked at before the purported dismissal, of such a nature, or did it appear likely to continue for such a period, that further performance of his obligations in the future would either be impossible or would be a thing radically different from that undertaken by him and agreed to be accepted by the employer under the agreed terms of his employment?””

11.	In answering that question the President identified the following factors to be taken into account; the terms of the contract, including the provisions as to sickness pay (Mr Craig Smith, appearing on behalf of the 3rd Respondent, Ferotec Realty Ltd, which raised the frustration issue below, helpfully told us that the Company operated a sick pay scheme of 6 months full pay followed by 6 months half pay); the nature of the employment, particularly whether the employee was a key worker; the nature of the illness or injury, for how long it had continued and the prospects of recovery; and the period of past employment (a relationship of long standing is less easily destroyed than one of short history).

The present case

12.	We should first contrast the facts of the other 5 Claimants before the Employment Tribunal whose contracts were found not to have been frustrated.  All were, so far as we can tell, genuine long terms sick; all with long service stretching back to the 1960s.  They kept in touch with the Company and medical reports were obtained on their progress up until 12 February 2003.  There was no suggestion that their jobs had to be filled.  They were employed in the same capacity as Mr Jones.

13.	What of his case?  On the Employment Tribunal findings he was fit to return to work at the end of 2001; far from being incapacitated at the time when, the Employment Tribunal found, his contract was frustrated, he was in fact fit to return.  What then, submits Mr Keenan on his behalf, was the frustrating event?  It was not sickness, because he was, the Employment Tribunal found, no longer incapacitated for work through illness.  Far from being unable to perform his obligations under the contract he chose not to return to work and the Company did not require him to do so, failing which he would be dismissed.  That position continued until the Administrator wrote his letter of dismissal on 7 August 2003.

14.	In advancing that submission Mr Keenan has very properly taken us to the Court of Appeal decision in FC Shepherd & Co Ltd v Jerrom [1968] IRLR 358, a case which, as I recall having appeared as Counsel for the unsuccessful Claimant, occupied the Court for 5 days, it being thought important, particularly by Mustill LJ, to examine a line of charterparty cases in this matter involving an apprentice who was not taken back into employment following a period of Borstal training imposed on him by a criminal court.

15.	The argument advanced on his behalf, that for frustration to arise it must be an event outside the control of both contracting parties and that the Claimants incarceration was as a result of his own fault, was rejected.  The doctrine of self-induced frustration was considered.  The Court held (per Lawton LJ, paragraph 22; Balcombe LJ, paragraph 77) that the frustrating event was outside the control of the parties.  It was the act of the judge who sentenced him which brought the contract to an end.

16.	Miss Hewitt, on behalf of the Secretary of State responsible for guaranteeing payment of certain debts owed to former employees of insolvent employers, has adopted a neutral stance in this appeal as she did below.  Mr Smith, on behalf of the 3rd Respondent, accepts that the Company did not acknowledge that the long-term sick, including Mr Jones, had repudiated their contracts of employment, although he points out that Mr Jones failed to meet his obligations by failing to return to work in late 2001 when, on the Employment Tribunal’s findings, he was fit to do so.

Analysis
17.	In our view Mr Keenan is correct in submitting that at the time at which the Employment Tribunal found that Mr Jones’ contract was frustrated there was no frustrating event in place.  He had recovered from the effects of his two cracked ribs sustained in April 2001.  There was nothing then preventing the Claimant from returning to work and fulfilling his contractual obligations.  Thus, the argument which failed for the Claimant in Jerrom succeeds in this appeal.  In the absence of a frustrating event the only reason for non-performance of the contract, putting the case at its highest for the employer, was the employee’s repudiatory act in failing to present himself for work.  But an unaccepted repudiation, as Asquith LJ observed in Howard v Pickford Tool Co Ltd [1951] IKB 417, 421, “is a thing writ in water and of no value to anybody”.  That repudiation remained unaccepted up until the date on which the Company’s Administrator terminated Mr Jones’ employment on 7 August 2003.  It was that dismissal which was the terminating event.

Disposal
18.	For these reasons we shall allow this appeal.  We agree with Mr Keenan that no further findings of primary fact are necessary.  Applying the law to the facts we set aside the Employment Tribunal’s finding that Mr Jones’ contract of employment was frustrated and substitute a declaration that he was dismissed by the First Respondent, the Company in Administration, in the same terms as that at paragraph (c) of the Employment Tribunal’s Judgment in relation to the other 5 Claimants.

UKEAT/0435/06/RN 
AMICUS - V- FRICTIONS DYNAMICS ET AL 

UKEAT/0447/06/RN
SECRETARY OF STATE -V- FRICTION DYNAMICS LTD (IN ADMINISTRATION)
(2) DYNAMICS FRICTION LTD (IN LIQUIDATION) (3) FEROTEC REALTY LTD

HIS HONOUR JUDGE PETER CLARK
Judgment
1.	We heard these 2 appeals together.  They raise precisely the same point.  Were the relevant employees of the First Respondent, Friction Dynamics Ltd (In Administration), (Dynamics), members of the recognised Trade Union, Amicus, employed in the Company’s undertaking immediately before its transfer to the Second and Third Respondents on or about 15 August 2003 for the purposes of TUPE 1981 reg 5(3)?  Their employment had been terminated by one of the Joint Administrators, Mr Rutherford, on the day of their appointment, 7 August 2003.  The Judgment under appeal is that of an Employment Tribunal sitting at Shrewsbury chaired by Mr A B Rees, (The Rees Tribunal) promulgated with reasons on 22 June 2006.

Background
2.	Events centre on a site at Griffiths Crossing, Caernarfon where car parts were, for many years, manufactured by Ferodo.  In 1977 Mr Craig Smith, with his son Bradley, created 3 limited companies which were to become Friction Dynamics, Ferotec and Ferotec Realty.  (The Ferotec Group of Companies).

3.	Through that medium the Smith family acquired the former Ferodo plant.  The recognised unions at the plant were Amicus and T & GWU.

4.	On 1 May 2001 some 86 employees, members of T & GWU, were dismissed on the grounds that they were taking part in strike action.  They brought successful claims in the Liverpool Employment Tribunal for unfair dismissal; those claims being upheld against Dynamics in November 2002.  An appeal was lodged by Dynamics in the EAT but later withdrawn.  Compensation has yet to be assessed in those cases.

5.	The 2003 annual shutdown at the plant took place between 1-18 August.  The workforce then took their holidays.

6.	During the shutdown the Joint Administrators were appointed and the workforce dismissed.  In due course the individual dismissed employees and their trade union, which complained of a failure to consult contrary to Section 188 TULRCA 1992 brought claims before the Employment Tribunal.  They named 4 Respondents: Dynamics; Dynamex Friction Ltd (Dynamex), Ferotec Realty Ltd (Realty) and TBA Textiles Ltd (TBA).  The Secretary of State for Trade and Industry was joined as 5th Respondent, having an interest as the statutory guarantor of certain payments due to employees from insolvent employers.

7.	Certain preliminary issues came before the Rees Tribunal sitting at Abergele in late September 2004.  By a Judgment with reasons promulgated on 27 October 2004 the Employment Tribunal held:

(1)	that there was a relevant transfer from Dynamics to Dynamex and Realty
(2)	that Amicus, among other unions, was recognized by Dynamics
(3)	the special circumstances defence, excusing lack of consultation, was not made out.

8.	The Rees Tribunal was reconvened, sitting at Shrewsbury over 8 days in April 2006 to determine whether or not the individual Claimants were employed by Dynamics immediately before the relevant transfer which took place on about 15 August. 

9.	The issue, by reference to the House of Lords’decision in Litster v Forth Dry Dock [1989] 2WLR 634, was whether the reason for dismissal was an economic reason, in which case they were not employed in the undertaking immediately before the transfer, or a reason connected with the transfer (reg 8(1) in which case they were.  The Employment Tribunal concluded that it was the former.  Hence limited liability for the individual claims rested with the Secretary of State; the remaining solvent transferee, Realty, escaped liability.

10.	Against that finding both Amicus and the Secretary of State now appeal.  The individual Claimants have played no active part in this hearing.

The Appeals
11.	Five grounds of appeal are advanced:
(1)	failure to give adequate reasons
(2)	failure to take relevant factors into account
(3)	perversity
(4)	prejudging the issues
(5)	misapplication of the Litster principles.

12.	There is a degree of overlap between the stated grounds of appeal.  We prefer to deal with the matter under these heads:
(a)	adequacy of reasons
(b)	reason for dismissal
(c)	perversity
Adequacy of Reasons
13.	We begin with a short statement of the new well-established principles governing the duty of an Employment Tribunal to give adequate reasons for its Judgment.

14.	The starting point in the cases is the judgment of Bingham LJ in Meek v City of Birmingham [1987] IRLR 250, paragraph 8.  Decisions of Industrial Tribunals (now Judgments of Employment Tribunals) are not required to be an elaborate formalistic product of refined legal draftsmanship, but must contain an outline of the story: a summary of the Employment Tribunal’s basic factual conclusions and a statement of the reasons which have led them to reach the conclusion which they do on those basic facts.
 
15.	Sedley LJ took up that theme in Anya v University of Oxford [2001] IRLR 377.  Dr Anya, a black Nigerian academic, brought a complaint of direct racial discrimination against the University following his unsuccessful application for a post which went to a white candidate.

16.	It was part of his case that events prior to the relevant interview showed racial hostility towards him by the interviewing panel.  Those factual assertions were not dealt with in the Employment Tribunal’s findings.  That was held to be an error of law requiring remission of the case for rehearing by a fresh Employment Tribunal.  In the course of his judgment (paragraph 24) Sedley LJ cited a passage from the judgment of Morison P in Tchoula v Netto (EAT, 6 March 1998) where the President said this:

“‘A bald statement saying that X’s evidence was preferred to Y’s is, we think, both implausible and unreasoned and therefore unacceptable; and it might appear to have been included simply to try and prevent any appeal.  It seems to us likely the there will be a great deal of background material which is non-controversial.  There is no need to recite at length in the decision the evidence which has been received.  What a tribunal should do is state their findings of fact in a sensible order (often chronological), indicating in relation to any significant finding the nature of the conflicting evidence and the reason why one version has been preferred to another.
It is always unacceptable for a tribunal to assert its conclusion in a decision without giving reasons’”

17.	In Tran v Greenwich Vietnam Community [2002] IRLR 735 Sedley LJ returned to the question as to whether an Employment Tribunal’s reasons were ‘Meek-compliant’.  At paragraph 17 he emphasized the requirement for the Employment Tribunal to explain how it has got from its findings of fact to its conclusions; simply to recite the background and the parties’ contentions and then to announce a conclusion is not to do it at all.

18.	Five days after the Judgment was given in Tran a different division of the Court of Appeal gave judgment in English v Emery Reimbold [2003] IRLR 710.  That was not, unlike Meek and Tran, an employment case; but the principle to be applied is the same and the circumstances of interest.  The trial judge in an action for damages for personal injuries was faced with 2 conflicting expert medical opinions.  In his judgment he quoted extracts from each expert’s report and then concluded on the balance of probabilities that he preferred the evidence of one expert to that of the other.  The judgment was set aside.  It did not explain the Judge’s reasoning in arriving at the conclusion which he reached.

19.	A degree of formality has been introduced into the Employment Tribunal’s reasons by Regulation 30(6) of the Employment Tribunal Rules of Procedure 2004.  That Rule provides, so far as is material:

“(6)     Written reasons for a judgment shall include the following information –
(a)	the issues which the tribunal or chairman has identified as being relevant to the claim;
(c)	findings of fact relevant to the issues which have been determined;
(d)	a concise statement of the applicable law;
(e)	how the relevant findings of fact and applicable law have been applied in order to determine the issue;”

20.	In Balfour Beatty v Wilcox [2007] IRLR 63, (paragraph 25) Buxton LJ commented that the rule was intended to be a guide and not a straightjacket.  Provided it can be reasonably spelled out from the tribunal’s determination that what Rule 30(6)  requires has been provided by that tribunal then no error of law will have been committed.

The Shrewsbury Judgment 
21.	In supporting the Employment Tribunal’s reasoning Mr Smith points out that this case was heard over 8 days (albeit with interruptions, Mr Allen tells us).  Two of those days were spent hearing Mr Smith’s own evidence.  He was extensively cross-examined by Counsel now appearing before us.  The Employment Tribunal had every opportunity to consider the case being put forward on behalf of Amicus and the Secretary of State, namely that Mr Smith had ‘set-up’ the administration of Dynamics with the intention of resurrecting its business through the medium of a company, Dynamex, in which he was to have an interest.  Having considered that case the independent Employment Tribunal rejected it.  They found, as fact, that the ultimate transfer to Dynamex and Realty was not pre-planned.  There was no collusion between Mr Smith and the administrator (none was alleged), nor between Mr Smith and the transferee, Dynamex (Realty is not here mentioned) (Reasons paragraph 16).  The sole reason for the dismissals was an economic one; when the administrators took over Dynamics there were no assets out of which to pay the workforce.  That is why, Mr Rutherford said, he dismissed the employees.  The Employment Tribunal accepted his evidence.  It was not for a transfer-related reason.

22.	The Employment Tribunal’s reasons, running to 18 pages, were prepared by a very experienced Chairman.  A large number of the facts relied on by the Appellants before us were common ground.  The relevant facts appear in the Employment Tribunal’s reasons.

23.	There is no error of law, applying the approach of Buxton LJ in Balfour v Beatty.

24.	We see the force of those submissions but ultimately we are persuaded by Mr Allen and Miss Hewitt that the Employment Tribunal’s reasons are not ‘Meek-compliant’.  There are a number of reasons for that conclusion.

25.	First, the structure of the Employment Tribunal’s reasons.  We had thought that Employment Tribunal reasons which simply recite the evidence given by the principal witnesses, instead of setting out the story in a logical order; making findings of fact on the basis of both agreed and controversial evidence, explaining, where there is a dispute, why the evidence of one witness was preferred to that of another, was a thing of the past.  On appeal we are not concerned with what evidence was given below, but what were the Employment Tribunal’s material findings of fact.

26.	Unhappily, the structure of these Employment Tribunal’s reasons falls into the former category.  We stress, this is not simply a criticism of style but one of substance.  Having helpfully set out the background at paragraph 6, the Employment Tribunal simply summarise the evidence given by Mr Rutherford (paragraph 7); Mr Smith (paragraph 8) and Mr Hamilton, Regional Officer of Amicus (paragraph 9).  There is no analysis of the evidence given leading to their findings of fact.  That inevitably leads to the risk of material factual disputes being left unresolved.  We take one example.  At the Abergele hearing Mr Smith did not attend before the Employment Tribunal but Mr Weir, a long-serving sales manager at Dynamics and its predecessor, did.  Mr Hamilton gave evidence at the Abergele hearing.  At paragraph 10 of their reasons the Employment Tribunal accepted his evidence that on 23 July 2003 (before the relevant dismissals) he attended a meeting with Mr Weir, together with a shop steward, Mr Bearman.  During the meeting, Mr Hamilton said, he painted a hypothetical scenario that Dynamics would go into Receivership as a stage-managed event and that the Company could then rise Phoenix-like out of the ashes and be controlled remotely by Mr Smith.  Mr Weir’s response was “You’re not a million miles away”.  The Employment Tribunal then record Mr Weir’s acceptance of that evidence, as representative of Dynamex on that occasion.  Mr Weir did not choose to give evidence at the Abergele hearing.

27.	Against that clear finding of fact in the Abergele judgment we move forward to the Employment Tribunal’s Shrewsbury judgment.  That finding is not repeated.  Rather, in a similar vein, the Employment Tribunal record Mr Hamilton’s evidence (paragraph 9), that the whole administration had been stage-managed and that Mr Craig Smith was still in control of the administration.  At paragraph 8, reciting the evidence of Mr Smith, the Employment Tribunal note that he disputed evidence given by Mr Hamilton.  However, that factual dispute was never resolved.

28.	Secondly, the tribunal’s fact-finding.  It is not simply a failure to resolve disputes of fact; nor indeed the absence of a coherent story, but the Employment Tribunal’s failure to deal with the factual case advanced by these Appellants from which the Employment Tribunal was invited to draw the inference that the administration of Dynamics and subsequent transfer of that business to Dynamex and Realty was ‘stage-managed’ by Mr Smith.  In the Shrewsbury Judgment, reasons paragraph 11, having set out the provisions of Regulations 5 and 8 TUPE, the Employment Tribunal touch on the closing written submissions of Mr Allen and Miss Hewitt, which we have read.  They say:

“The Tribunal has carefully noted the inferences to be drawn in para 24 of (Mr Allen’s) written submissions.  The Tribunal has also carefully noted the inferences put forward by Miss Hewitt … in para 7 of her written submissions.”

29.	At paragraph 23 of his closing submissions Mr Allen set out 8 factors on which he relied in arguing that the reason for the dismissals was transfer connected rather than economic and at paragraph 24 he traced the complex history of the relevant companies and their connection with the Smith family in support of the contention that what happened here was an attempt to evade the proper operation of the TUPE Regulations.

30.	Miss Hewitt, at paragraph 7 of her closing submissions developed in her own way the line which was being taken both by Amicus and her client, the Secretary of State, by setting out a series of findings of fact which she invited the Employment Tribunal to make, based on both oral and documentary evidence before it, leading to the inference that the events were stage-managed by Mr Smith in order to evade the provisions of TUPE.

31.	In our judgment it is simply not sufficient for the Employment Tribunal to record as noted those paragraphs in Counsel’s closing submissions.  It is, of course, well-settled that an Employment Tribunal does not have to set out in their reasons each and every point put before them.  However, we accept Mr Allen’s submission that the detailed points advanced in both closing addresses represented a carefully framed factual picture designed to make the Appellant’s case that an intricate web had been woven by Mr Smith, using the Administrator as an ‘unwitting tool’ to circumvent the TUPE provisions.  Whether that case is made out or not is for the Employment Tribunal to decide; but in reaching a determination it is incumbent, in our view, on the Employment Tribunal to demonstrate by its reasons precisely what material findings of fact it made and why it declined to draw the inference which the Appellants asked it to draw.  This, the Employment Tribunal failed to do.  We see similarities between our view of this case and the Court of Appeal approach in Anya. 

32.	Which brings us to our third reason for upholding the Appellants’ submissions as to adequacy of the Employment Tribunal’s reasons.  The reasoning process, specifically identified in Rule 30(6)(e) of the 2004 Employment Tribunal Rules.  Having failed to make relevant findings of fact, set out in a coherent order, the Employment Tribunal then reached its conclusions as to the reason for the dismissals without giving any explanation for those conclusions.  The Appellants literally do not know why their case based on inferences to be drawn from the primary facts was rejected.

33.	Thus, for all these reasons, we accept that the Employment Tribunal’s reasons are not ‘Meek-compliant’.

Reason for dismissals
34.	We have earlier identified the principal issue for determination by the Employment Tribunal at the Shrewsbury hearing, based on the House of Lords’ approach in Litster; was the reason (or principal reason) an economic reason under Regulation 8(2) TUPE or an automatically unfair transfer connected reason under Regulation 8(1)?  Applying the purposive approach laid down in Litster to Regulation 5(3), if the former, then the employees were not employed in the undertaking immediately before the transfer; if the latter, they were.

35.	The question which has troubled us in this connection is, whose reasons are we concerned with?  The dismissals were effected by Mr Rutherford as administrator of Dynamics; he was not, it is common ground, in collusion with Mr Smith (cf the collusion found as fact in Litster between the receivers and the transferee).  His stated reason, accepted by the Employment Tribunal, was purely economic; the business had no assets out of which to pay the wages.  In these circumstances, is it relevant for the Employment Tribunal to consider whether or not events were staged-managed by Mr Smith, even if the Appellants’ case was accepted?

36.	It is convenient at this point to deal with one of the grounds raised in these appeals; pre-judgment.   Mr Allen puts it in this way.  At a CMD held before Mr Rees on 17 January 2006 the Chairman drew to the attention of the parties my judgment in Honeycombe 78 Ltd v (1) P Cummins and Others & (2) Secretary of State for Trade and Industry (EAT/100/99,  10 December 1999 unreported) indicating that it is similar to the present case; and in the Shrewsbury judgment (paragraph 18) the Employment Tribunal say:

“This particular case is more closely akin to that of the case of Honeycombe 78 Limited where the claimants were not employed in the business immediately before the transfer.”

37.	Mr Allen submits that in latching onto the decision in Honeycombe the Chairman in particular short-circuited proper consideration of the case being advanced by the Appellants on the basis that the EAT decision in Honeycombe was determinative of the issue in this case. 

38.	We do not accept that in referring to that authority the Chairman was prejudging the present case.  We agree with Mr Smith that the Chairman, and his lay colleagues are quite entitled to form a preliminary view of the case and that the Chairman acted perfectly properly in drawing to the attention of the parties an authority which may have a bearing on the present case; an authority which was similar to, but not the same as this case.

39.	However, we believe that Miss Hewitt raises a valid point when she submits that the Employment Tribunal took too narrow a view of the issue before them in the present case by relying too heavily on Honeycombe which, rather than raising a principle of law, merely applied the law as found in Litster to the facts of that case.

40.	In Honeycombe, an administration order was made on 26 January and the following day the administrator dismissed 4 members of staff; there were no assets from which to pay them.  On 11 February a relevant transfer took place to a shelf company set up by the previous owners of the company in administration.  On appeal, the Employment Appeal Tribunal held that on the Employment Tribunal’s findings of fact the administrator’s reasons for dismissal was economic, not transfer-related.  Although the previous owners were possible purchasers the administrator decided to dismiss the staff in spite of that potential sale, not with a view to effecting it (Judgment, paragraph 50).  In giving the judgment of the Employment Appeal Tribunal I said that Employment Tribunals will be astute to detect any collusive agreement between transferor and transferee to avoid the regulations (paragraph 44), but that collusion between the administrator and transferee (as in Litster) is not a pre-requisite for a transfer-related reason for dismissal.

41.	Whist we can see the similarities between Honeycombe and the present case, based on the Employment Tribunal’s factual conclusions, the result there may have been different had a factual case similar to that advanced by the Appellants and rejected in the present case been established.  It all depends on the facts and, for the reasons given earlier, we find that the Employment Tribunal failed to adequately explain its reasons for the factual conclusions which it reached.

Perversity
42.	The Appellants have sought to persuade us that the findings of fact made by the Employment Tribunal were perverse.  That is a difficult row to hoe, see Yeboah v Crofton [2002] IRLR 634.  It would require us to put ourselves in the position of the fact-finding tribunal and draw the inferences from the facts relied on adverse to Mr Smith.  That is not our function and not within our jurisdiction, which is limited to correcting errors of law.  We therefore reject this ground of appeal.

Disposal
43.	We shall allow these appeals.  The issue before the Shrewsbury Employment Tribunal must be reheard.  Mr Smith urges us to remit the matter to the Rees Employment Tribunal, which is, or was, familiar with the background to the case.  We shall not do so.  Having formed a firm view it would be difficult for that Employment Tribunal to revisit the same issue and, whilst not impugning the professionalism of the Employment Tribunal, there may be a perception of pre-judgment should they ultimately reach the same conclusion.  A further practical difficulty, we understand from Mr Allen, is that the Chairman, Mr Rees, has now retired.  In these circumstances we direct that the matter be heard before a fresh Employment Tribunal appointed by the Regional Chairman.