Heathman Ltd T/A County Contractors & Ors v Quadron Property Services Ltd & Ors UKEAT/0451/15/DA
Appeal by the claimant, County, that the claimants' employment had been transferred to them after Quadron, the respondent, became insolvent. The Secretary of State cross-appealed against the date of the insolvency. Appeal dismissed, cross-appeal allowed.
The original claimants were employed by Quadron which became insolvent. County then took on some of the work from Quadron but denied at the ET that it was aware of the fact that Quadron had gone into administration or that it was taking on work previously done by Quadron. The Employment Tribunal did not accept that, holding that County was aware that it was taking on work previously done by Quadron and that the claimants subsequently transferred to County. The ET also held that at the time of the transfer, the transferor was insolvent meaning that some liabilities passed to the Secretary of State. County appealed and the Secretary of State cross-appealed.
The EAT dismissed the appeal but allowed the cross-appeal. First, on the appeal, the EAT said that it was important for Employment Tribunals in this relatively complicated statutory framework to be left to make the simple factual decisions, which are called for by the text of the statutory instrument. That is what the Employment Judge did, and she did not fall into any error. On the cross-appeal, the EJ was perverse in coming to the conclusion that evidence which related to the date of the transfer could not be relied on. The Employment Judge reached a conclusion that no reasonable Tribunal properly directing itself could have reached.
Appeal No. UKEAT/0451/15/DA
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE
At the Tribunal
On 22 January 2016
HIS HONOUR JUDGE HAND QC
RJ HEATHMAN LTD T/A COUNTY CONTRACTORS & OTHERS (APPELLANTS)
QUADRON PROPERTY SERVICES LTD & OTHERS (RESPONDENTS)
Transcript of Proceedings
JUDGMENT**APPEAL & CROSS-APPEAL****APPEARANCES**
FOR THE APPELLANTS: MR RICHARD REES (Representative) Peninsula Business Services Ltd The Peninsula Victoria Place Manchester M4 4FB
FOR THE RESPONDENTS: For Places for People Group Ltd MR DANIEL NORTHALL (of Counsel) Instructed by: DAC Beachcroft LLP 3 Hardman Street Manchester Lancashire M3 3HF
For Secretary of State for Business, Innovation and Skills MR GEORGE ROWELL (of Counsel) Instructed by: Government Legal Department One Kemble Street London WC2B 4TS
For Mr B Daniels and other Claimants MS NATASHA JOFFE (of Counsel) Instructed by: OH Parsons LLP 3rd Floor Sovereign House 212-224 Shaftesbury Avenue London WC2H 8PR**SUMMARY**
TRANSFER OF UNDERTAKINGS - Transfer
TRANSFER OF UNDERTAKINGS - Insolvency**The Appeal**
In relation to Regulation 3(3)(a)(ii) of TUPE it is necessary to identify what the client's intentions were "immediately before the transfer" as to the activity to be carried out by the new contractor after the transfer. This involves identifying both the activity or activities and the client's intentions and that means identifying the underlying task or function of the client, which forms the activity or activities, the subject of the transfer, and the client's intentions in relation to the carrying out of the activity or activities by the new contractor. Finally what has to be decided is whether the client intends the new contractor to carry out that activity or activities in the context of a single specific event or of a task of short duration.
It is important for Employment Tribunals in this relatively complicated statutory framework to be left to make the simple factual decisions, which are called for by the text of the statutory instrument. That is what the Employment Tribunal had done and the appeal was dismissed.**The Cross-Appeal**
The decision as to whether or not there has been a transfer of a service provision change under Regulation 3(1)(b)(ii) of TUPE, and, if so, when, involves an objective assessment of the facts, in which, although the subjective intention of the parties is a relevant consideration, it is not a determinative factor; Celtec Ltd v Astley and Ors  IRLR 647 and [Housing Maintenance Solutions Ltd v McAteer and Ors ]() ICR 87 considered. The Employment Tribunal had misdirected itself as to the significance of the subjective intention of the parties and had reached a conclusion about the reliability of a piece of evidence, which no reasonable Tribunal properly directing itself could have reached on the evidence. The cross-appeal was allowed and on the basis that evidence should have been regarded as an indisputable fact and in accordance with paragraph 21 of the Judgment of Laws LJ in [Jafri v Lincoln College ]() ICR 920 a finding that the transfer had taken place on 16 November 2009 was substituted for that of the Employment Tribunal that it had taken place the following day.**HIS HONOUR JUDGE HAND QC****The Appeal**
- This is an appeal from a Reserved Judgment and Reasons of an Employment Tribunal, comprising Employment Judge Mulvaney, sitting at Bristol on 6 and 7 May 2014, the Judgment and Reasons having been sent to the parties on 22 May 2014. The Claimants below were employed by Quadron Property Services Ltd ("QPSL") which became insolvent. The Claimants made claims for unfair dismissal, redundancy pay, unpaid wages, holiday pay and notice pay against various Respondents. The Employment Tribunal held that there had been a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") on 17 November 2009 between QPSL and RJ Heathman (Contractors) Ltd trading as County Contractors ("County"). The appeal is against that finding, and there is also a cross-appeal by the Secretary of State. I have heard the appeal and decided to give a Judgment in relation to it largely for the convenience of counsel not involved in the cross-appeal, who need not be detained any longer than the giving of this Judgment because they are not involved in the cross-appeal. Some of the narrative that I set out will be relevant both to the appeal and the cross-appeal.
- QPSL was a property maintenance company providing maintenance services to local authorities and registered social landlords. It had a considerable number of contracts and employed about 300 people. Groups of employees worked permanently on specific contracts to which they were assigned. The Claimants below were assigned to a contract between QPSL and the Fourth Respondent, Places For People Group Ltd ("PFP"), a social landlord. There was another contract, between PFP and County, also relating to PFP properties. There seems to have been a controversy as to whether these contracts were split along geographical lines by virtue of postcodes or were simply split in some other way, described by the Tribunal as "numerically". The Employment Tribunal accepted that the split was not on geographical lines. That is certainly not relevant to the appeal; it may be relevant to the cross-appeal but whether it matters very much for present purposes I think remains to be seen.
- Employment Judge Mulvaney identified the time at which QPSL went into administration as about 1.00 pm on 17 November 2009. The appointed administrators were Deloitte, and they informed the Claimant Mr B Daniels, who was a Contract Supervisor, that he and other QPSL employees working on PFP properties had been made redundant. These Claimants were out of work until they were taken on by PFP either on 14 December 2009, in the case of Mr B Daniels and his relative, another Mr Daniels, or on 4 January 2010, in relation to six of the others. One of the team was not re-employed, and although the subsequent team was made up to nine, that was by the appointment of somebody not involved in this case. Deloitte did not send out letters of dismissal until 19 November 2009 and the Employment Judge found as a fact that the letters would have been received on 20 or 21 November 2009. On 18 November 2009 PFP instructed its employees responsible for allocating work that orders which would have been raised with QPSL should now be raised with County. It was also said that County would "pick up QPSL works as an interim measure" (see paragraph 24 of the Reasons). In that quarter and the next three quarters, the amount of work being done by County more or less doubled. Another finding, which is of importance to the cross-appeal, but I will mention it at this stage, is that there had been an increase in orders allocated to County on 16 November 2009 (see paragraph 62 of the Reasons).
- Evidence was given on behalf of County that it was unaware of the fact that QPSL had gone into administration or that it was taking on work previously done by QPSL. The Employment Tribunal did not accept that and held that County was aware that it was taking on work previously done by QPSL (see paragraph 26 of the Reasons). Indeed, the Employment Tribunal said (see paragraph 27 of the Reasons) that it:
"… found as a fact that County Contractors took on all of the work previously allocated to Quadron from 17 November 2009."
- PFP started to operate its own maintenance department, which I shall refer to as "PMD", with effect from 11 January 2010. Initially, the work done thereafter was so-called void work. That is work done after tenants have vacated properties in order to prepare those properties for incoming new tenants. There was a factual dispute as to how much void work had been done by QPSL. It was alleged on behalf of County that it amounted to a considerable proportion, but PFP alleged that it only represented 20 per cent of the contract. After about six to eight weeks - so, sometime in February or March - PMD started to do so-called responsive work, which, as the name implies, means responding to requests for day-to-day repairs and maintenance, including emergency work. By June 2010 the workload of PMD was "roughly equivalent to that which QPSL had been undertaking prior to its insolvency" (see paragraph 31 of the Reasons).
- The Employment Tribunal directed itself as to Regulation 3 of TUPE by setting out its terms at paragraphs 35 to 37 and as to Regulation 4 by setting out the terms of that Regulation at paragraphs 38 and 39. It considered the exceptional circumstances of "relevant insolvency proceedings" at paragraph 42 and directed itself in accordance with the Judgment of the Court of Appeal in [Key2Law (Surrey) LLP v De'Antiquis ]() IRLR 212 that:
"… any insolvency involving the appointment of an administrator falls within the regulation 8(6) TUPE definition."
- The effect was that the transferee was not liable in respect of the payment of certain statutory entitlements and instead the Secretary of State has had to make some payments, albeit not the full liability but a lesser sum, the calculation of which is regulated by statutory instrument, limiting it both by in terms of duration and amount. A more precise analysis is to be found at paragraph 46 of the Employment Tribunal's Reasons.
- The liability of the Secretary of State is the subject of the cross-appeal, which really involves a question as to whether the Employment Tribunal has erred in allocating the liability to the Secretary of State as opposed to County. This is a matter that in terms of the amount at stake would perhaps appear at first sight not to be particularly important. Mr Rowell of counsel, who appears on behalf of the Secretary of State, has emphasised that it is a question of some significance going beyond the confines of this case, because it is a problem that the Secretary of State is likely to encounter in similar cases on a regular basis in the future.
- The competing contentions of the various parties at the Employment Tribunal were concentrated upon whether or not there had been a TUPE transfer between QPSL and County. One of the Claimants - Mr Holton - and the Secretary of State contended that there had been such a transfer on the 17 November because activities, namely the carrying out of property maintenance services by QPSL, had already undergone a service provision change either then or before then. In the case of the Secretary of State, the contention that it had happened on 16 November was advanced; something to which I need to return in relation to the cross-appeal but which is not the subject of this current Judgment. The other Claimants and County contended that the activities that QPSL had carried out before 17 November 2009 were not the same as County had carried out thereafter and so there had not been a transfer.
- There were other arguments about whether, as between PFP and County, the service provision change involved the carrying out of a single specific task of short-term duration or not. This arises from the wording of Regulation 3(1)(b)(ii) and (3)(a)(ii) of TUPE which reads:
"3. A relevant transfer
(1) These Regulations apply to -
(b) a service provision change, that is a situation in which -
(ii) activities cease to be carried out by a contractor on a client's behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person ("a subsequent contractor") on the client's behalf;
and in which the conditions set out in paragraph (3) are satisfied.
(3) The conditions referred to in paragraph (1)(b) are that -
(a) immediately before the service provision change -
(i) there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client;
(ii) the client intends that the activities will, following the service provision change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; …"
The argument is focused on what might be described as "the exception" in Regulation (3)(a)(ii) and the meaning of the phrase "other than in connection with a single specific event or task of short term duration" is the subject matter of this appeal.
- Employment Judge Mulvaney recognised that, following the guidance given in [Enterprise Management Services Ltd v Connect-Up Ltd ]() IRLR 190, her first task was to identify what activities had been undertaken by QPSL. It was submitted to her that she ought not to take "a too-narrow or technical approach" to this issue, and she was referred to Metropolitan Resources Ltd v Churchill Dulwich Ltd  IRLR 700. At paragraph 51 of the Reasons she quotes a paragraph of that Judgment invoking "a common sense and pragmatic approach" when asking:
"… whether the activities carried on by the alleged transferee are fundamentally or essentially the same as those carried out by the alleged transferor. …"
- Her answer is set out at paragraph 52 of her Judgment:
"52. On the basis of the facts that I have found, I was satisfied that the activities carried out before the 17 November 2009 were property maintenance services in the South West consisting of both responsive and void work. After the service provision change the activities carried out by County Contractors were essentially the same. Although Mr Hitchen's evidence was that it undertook mainly responsive work and not the voids work, the spreadsheet of works indicated that void works were being allocated to County Contractors. No distinction was made in the documentary evidence about which work was being allocated to County Contractors. On the contrary Mr Hitchens referred to having taken over the 'total contract' in his email of the 4 December 2009 and County Contractors were thanked for covering the contract in January 2010."
- This conclusion led her at paragraph 53 to state that she:
"… was satisfied that the service carried out by County Contractors was essentially the same service and the activities were fundamentally and essentially the same before and after the 17 November 2009 for the purposes of Regulation 3(1)(b)."
- She did not accept, however, that the service provision change dealt with by Regulation 3(1)(b) of the TUPE Regulations was "in connection with a single specific event or task of short term duration". Broadly speaking, she accepted was that the re-allocation was a measure only in place whilst PMD was being set up. At paragraph 56 of her Reasons Employment Judge Mulvaney referred to some of the evidence in relation to what intention PFP had formed when setting up its PMD and what its intention was in respect of County. As to the latter, she said this:
"56. … Its intention in respect of County Contractors was that it would cover the QPSL contract on an interim basis until such time as the PMD might be in a position to undertake some of the work in-house. The length of time that it might take to set up the PMD and to take on a proportion of the work was not clear at the time of the transfer."
- At paragraph 57 she made these findings and reached these conclusions:
"57. The activities to be considered at point (b) above are the activities identified earlier, namely property maintenance services in the South West. I have to determine whether Places for People intended that those activities be carried out in connection with a task or event of short term duration. There was no task or event of short term duration connected to the provision of the activities in this case. The provision of property maintenance services in the South West was an ongoing task with no specified end date." (Original emphasis)
- In short, she found there had been no certainty as to when PMD might become fully operational, therefore she concluded that what could be described as "the exception" in Regulation 3(3)(a)(ii) TUPE did not apply and it is to paragraph 58 one then goes to see how she brought matters to a conclusion in respect of this issue. This reads:
"58. There was no evidence to indicate that Places for People knew itself or had indicated to County Contractors for how long a period County Contractors might be required to continue the activities. Although Places for People intended to set up its own PMD there was no certainty as to when this might be operational and when it might be able to take on some or all of the activities. In those circumstances I concluded that the condition in regulation 3(3)(a)(ii) was satisfied, that is Places for People intended that the activities would following the service provision change be carried out by County Contractors other than in connection with a single specific event or task of short term duration."
- There in the second sentence she repeats that there was no certainty about when the PMD might become fully operational. She then asked herself when the transfer had taken place. She concluded that it had taken place after 17 November 2009. In reaching that conclusion, at paragraph 62 of the Written Reasons, she recognised that there had been an increase in orders allocated to County on 16 November 2009 but thought that there was no evidence to suggest that this was anything other than a response to the fact that QPSL was having difficulties with its suppliers. She also had to decide when the dismissal took effect and, by a combination of paragraphs 21 and 64 of her Reasons, she took the view that it took effect on 21 November 2009.
- I turn then to the arguments in relation to the appeal. Mr Rees of Peninsula Business Services Ltd, who appeared on behalf of County, argued that Employment Judge Mulvaney erred in rejecting the argument that work had been assigned to County only as a single specific event or task of short-term duration. This was not a question of fact but a question of statutory interpretation. Mr Rees felt that he could put it no better than HHJ Eady QC had put it during the sift procedure when allowing this appeal through to this Full Hearing. She said that the grounds of appeal identified a reasonably arguable error of law on the part of the Employment Tribunal as to its approach on liability to the question of "in connection with a single specific event or task of short-term duration". Having found as a fact that the relevant allocation of work to County was done as an interim measure because the client, PFP, intended to establish its own in-house department and to take back the work, the Employment Tribunal then erred by requiring that the client's intention must be that the task in question would be of a fixed duration rather than simply short-term (see paragraph 57).
- This was, Mr Rees submitted, an error of interpretation by in effect imparting a gloss to the words of Regulation 3(3)(a)(ii) of TUPE by adding to "short-term" the words "fixed" or "certain". That was the effect, he submitted, of Employment Judge Mulvaney's approach. He pointed in his submissions to his skeleton argument; his focus was very much on paragraphs 52 to 58 (summarised above). The real issue in this case, in his submission, was what inference ought to have been drawn from the use of the expression "interim measure". As Slade J, presiding over a division of this Tribunal in [Swanbridge Hire & Sales Ltd v Butler and Ors ]()UKEAT/0056/13, had said at paragraph 46 of her Judgment, if the completion date is not expressed in the contract, the intended duration is to be determined by inference. The evidence, submitted Mr Rees, was this allocation of work by PFP to County would be of short duration. The Employment Tribunal had failed to make a subjective assessment as had been suggested by the then President of this Tribunal in the case of [Denton v Kirwan ]() IRLR 966 at paragraphs 43 and 44. Mr Rees's argument was really as straightforward and simple as that: the Employment Judge had introduced into the statutory instrument a parameter that is not to be found there. Nothing there requires the duration to be "fixed"; it only needs to be "short".
- The positions of Ms Joffe, who represented the Claimants, Mr Northall, who represented PFP, and Mr Rowell, who represented the Secretary of State, were more or less identical. Mr Rowell made extensive submissions, Mr Northall adopted that and added a relatively brief oral submission, and Ms Joffe relied both on her skeleton argument and adopted the submissions of the other two. Mr Rowell's primary submission, with which Mr Northall and Ms Joffe agreed, was that as a matter of textual analysis the words "of short-term duration" qualify the activity of the client in Regulation 3(3)(a)(ii) of TUPE. The logical process that any Employment Tribunal must undertake in relation to this condition, which must be fulfilled if there is to be a service provision change, is to identify the activities carried out after the transfer, something that Mr Rowell submitted would be a question of fact; secondly, to ask what the task was; and thirdly, to consider whether it was a single specific task and of short-term duration. He submitted that all of the authorities approached the matter in this way. The Swanbridge case, to which Mr Rees had referred, was authority for that proposition (see paragraph 53 of the Judgment of Slade J), and similarly see paragraphs 43 and 44 of Denton, which, although probably obiter dictum because the case was decided on the simple but conclusive ground that the client had actually changed as a result of a liquidation or an administration, looked at this matter in exactly the same way.
- Therefore, as a matter of statutory interpretation, the arguments of Mr Rees simply failed at the outset because what was to be considered was the activity of PFP in relation to the owning, letting and managing of properties as a social landlord, one of the incidental features of which was maintaining them. Absent any error of law obvious in either paragraph 57 or paragraph 58 of the Reasons and absent any challenge to the factual findings, then that must be the end of the matter.
- His alternative and very powerful subsidiary point was that Employment Judge Mulvaney had been entitled to find as she did on the facts. At paragraph 57 she had answered what he submitted were in essence factual questions and she had answered them in accordance with the simple three-step process that he had outlined in relation to his textual analysis of the Regulation. The only way that those findings were open to challenge was if they could be said to be findings that no reasonable Tribunal properly directing itself on the factual material could have made. Apart from the obvious difficulty that the Appellant faces of not having put the appeal in that way, I understood from his submissions that if it had been raised by the grounds of appeal Mr Rowell would have argued it was a totally unsustainable point to make in respect of Employment Judge Mulvaney's analysis. But as things stood he did not need to because there was no perversity ground in the grounds of appeal.
- Mr Northall supported all of that and also wished to emphasise that what Employment Judge Mulvaney had done, and in effect was being criticised for doing, was what she was actually obliged to do by the statutory instrument. She was obliged to consider whether or not there was a task of short-term duration. She was not obliged to then go on and decide whether or not there was a task of any other sort of duration. She did not have to fix any particular point, and that was why the proposition being put forward by Mr Rees about an introduction by Employment Judge Mulvaney of an extraneous concept was misconceived. Employment Judge Mulvaney had to decide only whether this was a task of short-term duration at the time of the transfer. She did not have to decide what it might be if it was not of short-term duration. Putting it another way she had to decide what it was not but she did not have to decide what it was.
- I take the view there is no point of law raised by the Appellant. What the Employment Tribunal has to do is precisely the exercise set out in Mr Rowell's skeleton argument and analysed by him in his oral submissions. It has to identify what the client's intentions were "immediately before the transfer" as to the activity to be carried out by the new contractor after the transfer. This involves identifying both the activity or activities and the client's intentions and that means identifying the underlying task or function of the client, which forms the activity or activities, the subject of the transfer, and the client's intentions in relation to the carrying out of that activity or activities by the new contractor. Finally what has to be decided is whether the client intends the new contractor to carry out that activity or activities in the context of a single specific event or of a task of short duration.
- In my judgment at paragraphs 57 and 58 of the Reasons Employment Judge Mulvaney was carrying out precisely that kind of analysis. It seems to me that, as Mr Rowell submitted, after a correct self-direction in law the conclusion that she reached was in essence a factual conclusion, which she was entitled to reach on the evidence, and in doing so she was not adding a gloss to the statutory instrument. In those two paragraphs she was not discussing the need for the duration to be fixed but asking herself whether PFP intended the period during which County would carry out the activities to be a specific single or a task of short duration. She found that PFP did not know for how long County would be required to carry out the activities of maintaining and repairing its properties and that those activities were to be on going for a time which PFP could not then specify. In my judgment she was entitled on those findings to conclude that there was no intention on the part of neither a single specific event nor activities of short term duration.
- It has not been contended that this was a factual conclusion impossible from the evidential material. It is important for Employment Tribunals in this relatively complicated statutory framework to be left to make the simple factual decisions, which are called for by the text of the statutory instrument. That is what Employment Judge Mulvaney did, and I do not think that she fell into any error and the appeal will be dismissed
- Earlier today I gave Judgment in the appeal in this case, and in that Judgment I set out a good deal of the factual background. Consequently, I do not need to repeat what I said there. I need only add for the purposes of setting the scene for the arguments relating to the cross-appeal one or two further observations.
- Mr Rowell, who appears on behalf of the Secretary of State, mainly in the context of his alternative submission, has taken me relatively briefly to some of the extensive material that has been placed before this Tribunal in respect of the issues that arise in the cross-appeal. They concern the findings made at paragraphs 61 and 62 of the Judgment of Employment Judge Mulvaney. I can do no better than set out those two paragraphs rather than attempt to summarise them. They read:
"61. Having determined that there was a service provision change between QPSL and County Contractors, the next issue to determine was whether the transfer took place before or after the appointment of administrators on 17 November 2009 in order to determine whether the transfer came within the exception to the wholesale transfer of liabilities provided for under Regulation 8.
62. On the facts found I concluded that the transfer took place after the appointment of the administrators on the 17 November 2009. It was clear that the claimants were still working on QPSL allocated works on the morning of the 17 November 2009. For reasons already set out I was not satisfied that the data showing orders placed was reliable as to the dates of those orders. The internal emails of Places for People indicate that it was only after being informed of the administration [of] QPSL that it instructed its scheduling staff to allocate QPSL works to County Contractors. Whilst there was an increase in orders allocated to County Contractors on the 16 November 2009 there was no evidence to suggest that this was any more than a reaction to a potentially temporary problem that QPSL was having with its suppliers. It was not until it became clear that the situation was not temporary that the decision was made on the 18 November 2009 that County Contractors cover the totality of the QPSL work. This was after the administrators were appointed on 17 November 2009."
- The other part of the Reasons that relates to these findings is to be found at paragraph 20. Likewise, I think it is better to quote that in full than to attempt a synopsis:
"20. The Places for People spreadsheet which listed orders placed with its contractors showed that no maintenance orders were placed with QPSL after Friday 13 November 2009 (save for a single order on the 19 November 2009 which appears to have been an error). The spreadsheet data also showed a significant increase in orders placed with County Contractors after the 16 November 2009. Mr Patel was the only witness for Places for People and he could not verify or give evidence about the significance or accuracy of the data in the spreadsheet. Mr Hitchens for County Contractors expressed the view that the data contained within the spreadsheet may have been altered following QPSL's insolvency on the 17 November 2009. He considered that it might have been administratively convenient to, for example, substitute County Contractors' name for QPSL's on work allocated to QPSL prior to its insolvency but then subsequently reallocated to County Contractors. I concluded that it was not possible to rely on the data as showing accurately when orders were placed and with whom during the week of the 12 - 19 November 2009."
- Plainly, the reference at paragraph 62 to the data showing orders placed and the finding that it was unreliable relates back to the spreadsheet referred to at paragraph 20 and the evidence that was given in relation to it.
- There is some procedural history attaching to this part of Employment Judge Mulvaney's reasoning. I need not set it out in any detail. Disclosure having taken place in the normal way, as a result of exchanges about the evidential material relating to the orders placed by PFP with County and for that matter with QPSL, eventually, after a great deal of correspondence, a spreadsheet was produced that showed by entry in rows and cells, as one finds in a spreadsheet, the particular dates and some information about contracts.
- Included in Mr Rowell's skeleton argument that was prepared for the hearing at the Employment Tribunal was a series of annexes that dealt with a variety of spreadsheets. A synopsis of them appeared at paragraph 51 of his skeleton argument at page 80 of the appeal bundle. The spreadsheet itself starts at page 82. Obviously, like any spreadsheet or database, the information consists of entries made from other material. At one time in the correspondence there had been issues as to whether this other material should be disclosed or not, but, as I have already mentioned, by the time the hearing came around the kind of summary that one might expect, which in this case took the form of the spreadsheet, had passed between the parties. At paragraph 51 is a list of the days from 9-23 November showing the number of orders issued to County from PFP. There is a marked contrast between the upper half of the list and the lower half. Whereas in the upper half of the list the maximum number of jobs issued is 14 on 10 November, and many of the days include fewer issued jobs than that, commencing on 16 November, with 39 jobs, there is a period of significant increase through to 20 November, when there are still 22 jobs issued. So, 39 were issued on 16 November, only 22 on 20 November, then there was a rapid decline on 21 and 22 November (9 and 1 respectively), and on 23 November it goes back up to 31. As a statistician might say, there is a significant difference as between the first part of the list and the second part.
- At the time that document was drafted there had been no suggestion there was anything wrong with the spreadsheet. That suggestion was first made, if I have understood the history correctly, in a skeleton argument available either shortly before or at the Employment Tribunal hearing. The skeleton argument was prepared by Mr Skinner, a colleague of Mr Rees, on behalf of County. It was a skeleton argument produced before anybody had given a word of oral evidence and with there being not a jot or syllable of the written evidence to breathe a word of the criticism or allegation of unreliability as to the spreadsheet that causes Mr Rowell to use what he described as an ambush at the hearing in respect of this material. I myself thought at the outset when he used that terminology that it was the rhetorical licence frequently found in advocacy, but indeed it seems to me, having grasped the true picture, that he has chosen his words quite carefully and entirely aptly.
- The hearing before Employment Judge Mulvaney occurred now nearly two years ago, and, not surprisingly, the recollections of advocates involved will have faded, and the exact course of events is probably quite difficult to reconstruct, particularly given that the advocate involved in conducting a case with all of the management of the various factors involved does not always make a complete record, blow by blow or step by step, of everything that has occurred, and in particular, of course, the advocate who is making oral submissions or representations or conducting a cross-examination has a limited ability to actually note down what he or she is saying. So, it comes as no surprise to me that Mr Rowell cannot absolutely accurately trace every step that was taken.
- Moreover, when, just before the end of last term, an application was made for the Employment Judge's Notes of Evidence, the matter came before myself, and I refused that application on paper. I did so, as I explained to Mr Rowell during the course of his oral submissions, on the basis to a large extent that I felt that it would inevitably mean that this hearing would have to be postponed. There were other reasons, but I will not take up time explaining them now, particularly since there has been no appeal against the direction that I made.
- Mr Rees, who appears on behalf of County, submits that Mr Rowell ought to have applied for an adjournment. Sometimes for an advocate about to or already having embarked upon an oral hearing, everybody being present, all of the expenditure having been incurred and the battle either about to commence or already going on, it is not necessarily a clear-cut decision as to whether or not one should apply for an adjournment and if refused then seek an adjournment to go off immediately to this Tribunal to launch an appeal. It does not seem to me that it is really a sustainable criticism of Mr Rowell that he did not seek an adjournment, or at least if he did, did not insist upon it to the point of causing the proceedings to halt whilst an appellate Tribunal considered whether an adjournment ought to have been granted. What I understand that he did was to maintain throughout the hearing that Employment Judge Mulvaney ought not to entertain the line that was being taken, particularly by the main witness - he may have been the only witness - for County, Mr Hitchens, who in the course of his oral evidence suggested that the spreadsheet may have been altered following the insolvency of QPSL (see paragraph 20).
- It is perhaps somewhat disappointing that, Mr Rowell having maintained that line, Employment Judge Mulvaney does not actually deal with it expressly by devoting a small part of her Reasons to why she felt that it was fair in the circumstances to entertain this contention in relation to the spreadsheet even though the Secretary of State and others, including the Claimants, had had no notice of the matter or at best very little and certainly not any adequate notice that would have enabled anybody to do anything about it.
- Instead, what appears is the finding at paragraph 20; if it is right to call it a finding. Mr Patel, the witness called on behalf of PFP whose spreadsheet this was, if I have understood it correctly, could not, as Employment Judge Mulvaney put it, "verify or give evidence about the significance or accuracy of the data in the spreadsheet". That is not very surprising; apparently, Mr Patel was not dealing with that side of the business and had not been in Bristol very long. He was in a position of many witnesses who come to give evidence but do not purport to give evidence about every aspect or every factual matter in a case, and it must be remembered in this case, at the time that Mr Patel made his witness statement and the Secretary of State and others scrutinised his witness statement and the witness statements of others, it was not appreciated that the veracity, as the Employment Judge put it, of the spreadsheet was an issue. Accordingly, the fact that Mr Patel was not able to support the spreadsheet was neither surprising nor in any way significant. It certainly was not a basis for impugning the spreadsheet's veracity.
- Mr Hitchens, on the other hand, appears to have had some very strong views to express about the spreadsheet - his evidence on the point is described in exactly those terms by Employment Judge Mulvaney - but what is not recorded is whether any of his evidence stemmed from what one might call a forensic root. It is not made clear that he had any specific knowledge of any of these transactions. Indeed, it appears that what he was doing was asserting that somebody else somewhere else had altered the spreadsheet; the "somebody else" must be PFP and the "somewhere else" must be PFP's offices, possibly on their equipment. As I understand it he was not purporting to say, "I can contrast that entry with the documentary material that I have, and I can tell you that particular entry is not valid" or, if he was, that has not been recorded by Employment Judge Mulvaney in the Reasons.
- Nor is it likely that even had there been proper disclosure in this case and everybody had been armed with the underlying contractual material in so far as it existed, that he would be referring to County's own material, because if one looks at paragraph 20 what he appears to have been actually saying is that County's name had been substituted for QPSL's name in the spreadsheet. Apart from the fact that appears to me to be an allegation of fraud and forgery, serious matters in themselves, it is obvious that he had no evidential basis - or at least Employment Judge Mulvaney does not refer to any evidential basis - for that kind of allegation to rest on. That is what I meant by the expression I used earlier of a "forensic root".
- Employment Judge Mulvaney appears to have accepted this assertion, because she reached the conclusion that it was not possible to rely on the data as showing accurately when orders were placed and with whom during a particular period. Thus it seems to me that what she has done is accepted a speculative assertion that was incapable of being rebutted or indeed forensically challenged given that none of the parties were armed with any of the underlying contractual documents.
- That leads on to paragraphs 61 and 62, which are of course not about the evidence but about the conclusions to be drawn from the evidence. I do not understand Mr Rowell to be critical of what at paragraph 61 in fact seems to me to be a statement of a fundamental issue that has to be decided. It was in fact Employment Judge Mulvaney's task to decide when the transfer took place and it was a significant issue in the case as to whether it had taken place before, on or after 17 November. Mr Rowell's skeleton argument put forward at the Employment Tribunal made it quite clear that it was the Secretary of State's contention that the transfer had occurred on 16 November; indeed, that is what paragraph 51 of his skeleton is all about and meant to demonstrate.
- Mr Rees submits that at paragraph 62 all that one has is a collection of findings of fact, and the fundamental issue in this case, as between Mr Rees and Mr Rowell, is whether that is all that the date of the transfer amounts to: simply a finding of fact. In one sense, I can see that it must be. I should start with Regulation 2 and the interpretation of the Regulation to point out that "relevant transfer" means both a "transfer" and a "service provision change", the more recent concept added to TUPE as a result of developments over the years since it was first enacted. Plainly, a transfer in one form or another is what underlies TUPE and always has done, although there was a great deal of controversy as to the extent to which originally they would actually accurately implement it, is the Acquired Rights Directive ("ARD").
- As Mr Rowell points out, the ARD, as is usually the case with European Union legislation and its interpretation, is very much more concerned with purpose and objective than might be the case with the interpretation of a domestic statute. Mr Rowell submitted that the ARD sets out mandatory and objective criteria for the ascertainment of the date of the transfer, which is of very great importance in achieving the objective of providing protection to employees who are involved in transfer situations. He referred me to the case of Celtec Ltd v Astley and Ors  IRLR 647 and to paragraph 29 of the Judgment of the European Court of Justice, as I think it will have been called then, which makes clear it is the date of transfer that determines the shift in liability for employees from transferor to transferee and thus ensures their protection in the uncertain circumstances that might otherwise prevail were the situation not regulated across the EU by the ARD, which has been implemented in the UK by TUPE.
- He also referred to what happened when the case was remitted to the House of Lords and submitted Astley demonstrates that even though neither party might have intended a particular outcome, indeed even though they might have thought that they had agreed a contrary outcome, the question of when a date of transfer occurs is an objective matter to be ascertained from the evidence. Thus in the Astley case, although the civil servants, who had gone on secondment to the private sector in 1990 on the basis that they thought that they were still civil servants and in 1993 had agreed to go on to private contractual terms, had nevertheless been transferred to the private sector in 1990, not in 1993, because, on an objective assessment, it was in 1990 that a transfer of an undertaking had occurred.
- He also referred me to the recent case of Housing Maintenance Solutions Ltd v McAteer and Ors  ICR 87, a case that has some similarity to the instant case in that it also involved a social landlord. In that case, the Employment Tribunal held that an indication of willingness to take on a workforce dictated the date of transfer. On appeal to this Tribunal it was held that the relevant question was when the business had transferred and not when an expression of future intention had been made. In a sense, says Mr Rowell, that case is the obverse or mirror image of this case. That case was expression of future intention made before the transfer; this case is about expression of intention made after the transfer; but the principle in both is exactly the same. It is objective indications of a transfer having taken place, as opposed to expression of intention, whenever made, that really matters.
- The date of the transfer is determined essentially by Regulation 3(6); although it does not purport specifically to be determining the date of the transfer, it is quite clear from the overall statutory regime that there must be a fixed date for the transfer, and that is what benefits the employee, although perhaps in some cases, like Astley, the employee may not think so. So, Mr Rowell's first submission was that this is not really a question of fact, although the background is the factual circumstances that I have just explained. This is a case where at paragraph 62, looked at properly, what the Employment Tribunal has done is objectively determined the date of the transfer as being 16 November. Later expressions of intention, referred to at paragraph 61, making clear that situations are not temporary or that decisions have been made, as Employment Judge Mulvaney found happened on 18 November, are nothing to the point. Nor is it material even if it were sound evidentially or forensically - and Mr Rowell submits that it is not - for one to explain the transactions on 16 November as being transactions that occurred because they were:
"62. … [nothing] more than a reaction to a potentially temporary problem that QPSL was having with its suppliers. …"
- What the Employment Tribunal should have done was to look at the facts objectively. If that approach had been adopted then, starting on 16 November, unless the spreadsheet is to be regarded as having no evidential value at all, the work has shifted from QPSL to County, and that happened before the date of the liquidation, which was found to have been at 1.00 pm on 17 November. Therefore this was a "solvent transfer" not an "insolvent transfer". These may not be technical expressions - indeed they may be jargon - but they expresses a significant distinction relevant to this case, which is that if the transferor is solvent at the time of the transfer then some liabilities do not pass to the Secretary of State. The position is otherwise if the transfer is insolvent.
- Employment Judge Mulvaney's decision meant that the transfer took place after the insolvency with certain consequences in relation to liability passing to the Secretary of State. Mr Rowell's argument is that in fact the transfer can be seen to have taken place before the transferor became insolvent and so the Secretary of State is not liable in respect of certain matters. As I said earlier in my Judgment, in relation to the appeal, whilst not of enormous financial significance in this case, this is a matter with significant ramifications for the Secretary of State and that is why this cross-appeal is of some importance. All that said, however, Mr Rowell's analysis is actually a conventional analysis involving the proposition that Employment Judge Mulvaney reached a conclusion not open to her on the evidence. It can be expressed as an error of misdirection when applying the law to the evidence or as perversity. It comes to the same thing; on any objective assessment of the evidence, Employment Judge Mulvaney could not reach the conclusion that she did and as a matter of law she could only conclude that the date of the transfer was 16 November.
- Mr Rees submits that this is just all a question of fact, and I acknowledged earlier that in one sense he must be correct. The question is whether the approach of Employment Judge Mulvaney is correct or not. In my judgment, the factual material that was placed before her, unless she was entitled to reject it as wholly inaccurate, which I have concluded she was not, should have led her to the conclusion that the transfer took place on 16 November. Even if, at that stage, there had been no firm decision made by the client I accept the proposition that it would make no difference, The question is whether on 16 November a process had started that amounted to a service provision change. Such a change occurs where activities cease to be carried out by a contractor on a client's behalf and are carried out instead by a subsequent contractor (see Regulation 3(1)(b)(ii) set out above at paragraph 10 of this Judgment).
- It is worth pointing out that the intentions of the client referred to in Regulation 3(3)(a)(ii) are simply intentions that the activities will be carried out by the transferee following the service provision change and that really goes to the nature of the activities and whether they do or do not fall within the stated exception. This was the subject of the appeal itself. The question of what the client intended more broadly, in my judgment, is not a relevant consideration in the way that Employment Judge Mulvaney seems to have regarded it at paragraph 62. The issue that she identifies in the penultimate sentence, as to whether the situation was temporary and when a decision was actually made, whilst no doubt part of the factual matrix to be taken into account, is not, in my judgment, in any way determinative.
- The real and fundamental question, to my mind, is whether activities have ceased to be carried out by a contractor and have since been carried out instead by another person; that is to say, I accept Mr Rowell's submission that the decision in relation to Regulation 3(1)(b)(ii) is an objective decision to be determined on the facts. Has there been a cessation? Is the new contactor now carrying out the work? If that analysis had been applied to 16 November, then the other factors on 16 November would have made no difference to the conclusion that was the point at which there had been a cessation in relation to QPSL and that the work was now being carried out instead by County.
- Even though, as a matter of law, I regard Employment Judge Mulvaney as having made an error in relation to paragraph 62, that conclusion must be subject to asking the question whether there was indeed evidence that the work had ceased to be carried out by QPSL and was instead being carried out by County? That depends upon the veracity of the spreadsheet. To that extent, it seems to me that Mr Rowell's second point is not subsidiary; it is actually crucial. If, as Mr Rees submits, Employment Judge Mulvaney was entitled to disregard the spreadsheet, then there would be no evidence that County had started to carry out a significant amount of work on 16 November. Indeed, that seems to me to be what Mr Hitchens was asserting.
- As an occasional Judge of this Tribunal sitting for several weeks a year, even in that short time I hear many cases, some at a preliminary stage, fewer at Full Hearing, where it is alleged that there has been perversity on the part of the Employment Tribunal. In almost none of them is that made out, but this is an exception. In my judgment, these were conclusions that no Employment Judge properly directing himself or herself could have arrived at in this case in relation to the spreadsheet.
- Firstly, there was no evidence. This was a piece of assertive speculation by Mr Hitchens. He asserted what might be so, but he had no evidential basis or forensic basis for making that assertion, and certainly, in my judgment, Employment Judge Mulvaney had no evidential basis for reaching the conclusion that the material could not be relied on. That somebody says, "You cannot rely upon it", is not evidence of its unreliability. Secondly, the neutrality, if I can put it like that, of Mr Patel was irrelevant. That he could not prove it begs the question as to whether he was in any way obliged to prove it or that PFP were obliged to prove it. Thirdly, it does not seem to me that you can at the same time impugn the document and then rely upon it being explicable on the basis that this is temporary and not permanent. That seems to me to have been a piece of speculation on the part of Employment Judge Mulvaney. I can see no evidence at least referred to on the face of her Judgment that could support that. Fourthly, as I have already indicated, I think it was undesirable, to put it mildly, for this matter not to have been resolved in terms of Mr Rowell's submission that she should not deal with this matter or entertain this line of argument. At the very least, she was obliged to explain in her Judgment why she thought that it was possible for her to base an adverse finding, so far as the Secretary of State was concerned, on a late development that the Secretary of State complained she had had no opportunity to deal with.
- For all those reasons, it seems to me that Employment Judge Mulvaney reached a conclusion that no reasonable Tribunal properly directing itself could have reached on the spreadsheet. I have to consider whether this is a matter where the error that I think she has made can be corrected by me. I thought I ought to hear submissions about that.
- Having heard submissions, I need to consider what it is I have found in order to decide how to dispose of this cross-appeal. The cross-appeal will be allowed; the question is whether it should be allowed with a remittal to the Employment Tribunal or whether I should exercise my powers to substitute a finding for that of Employment Judge Mulvaney. Clear guidance has recently been given on this matter in the Court of Appeal in the case of Jafri v Lincoln College  ICR 920. In essence, the test for remittal - established some considerable time ago in Dobie v Burns International Security Services (UK) Ltd  ICR 812 by Sir John Donaldson MR at page 818 - has been reaffirmed in characteristically trenchant terms by Laws LJ at paragraph 21 of his Judgment in Jafri. This is, as Mr Rowell, for the successful cross-Appellant, accepts, a case where if there had been no finding by me about the spreadsheet then the result would have been different. The issue is whether I can conclude what the result must have been without making any factual assessment or any Judgment as to the merits of the case.
- Mr Rowell submits that the matter is relatively straightforward if one approaches it in this way. I have concluded, firstly, that Employment Judge Mulvaney did not direct herself correctly at paragraph 62; secondly, that unless she was entitled to ignore the spreadsheet the conclusion that she reached at paragraph 62 cannot be correct as a matter of law; and thirdly, that she has not supported her reasons for regarding the spreadsheet as unreliable in a way that could be said to be a proper conclusion by a reasonable Tribunal on the evidence or, putting the matter another way, that her decision in common parlance on this particular issue is perverse. Mr Rowell submits that being so, then the spreadsheet cannot be challenged; it is an "indisputable fact", in the words of Laws LJ.
- At one point I felt that the kind of error involved in this case did mean that the matter should go back for the Employment Judge to make a decision about whether or not she should be entitled to discard the spreadsheet on the evidential material, but I have come to the conclusion that on my own findings there was no basis for disputing it and she should have recognised that. I should say that Mr Rees has very responsibly taken instructions and his clients do not object to my taking the course of substituting my own decision. That is not determinative, but, in the event, I am persuaded by Mr Rowell's submissions that this is one of those exceptional cases where I can substitute my own view. I shall therefore allow the cross-appeal and direct that a finding that the transfer took place on 16 November 2009 be substituted for the finding made by Employment Judge Mulvaney at paragraph 62 of her Judgment.
- An application has been made for costs on the grounds that the appeal was misconceived because in relation to Regulation 3(3)(a)(ii) the argument rested on a misconstruction or wrong interpretation of that Regulation. That is always the way that Mr Rowell has put it. It does not seem to me, however, that the issue argued by Mr Rees is really based upon a misconception of Regulation 3(3)(a)(ii). He has always argued that the Employment Judge has failed properly to understand "short-term duration" and has put an unwarranted gloss on that expression.
- In my judgment, that cannot be regarded as misconceived, even though it was ultimately unsuccessful. This was an appeal that a Judge of this Tribunal thought was reasonably arguable with sufficient prospects of success to justify it going through to a Full Hearing. It is, of course, always possible that a Judge of this Tribunal will lend himself or herself to a misconception, but it seems to me unlikely and in this case does not seem to me to have happened at all. Accordingly, that ground is not made out.
- As to conduct, it is perfectly true that in terms of the litigation before the Employment Tribunal an allegation could have been made that the Respondent to the cross-appeal had misconducted themselves in the way that they had introduced the argument that the spreadsheet was unreliable at a very late stage. Even though the Secretary of State had lost on that point, it was open to the Secretary of State to apply to the Employment Tribunal for the costs that related to that conduct at the Employment Tribunal. In my judgment, the Secretary of State cannot now apply, or if that puts it too high, she ought not be permitted now, to this Tribunal for costs that result from the fact that an Employment Judge accepted that point could be raised and pursued.
- In those circumstances, it does not seem to me that there has been any unreasonable conduct in the way in which the Judgment of the Employment Tribunal has been defended on the cross-appeal. It was a perfectly correct and acceptable argument that was put forward by Mr Rees that when a transfer has taken place is essentially a question of fact. In my judgment, he was entitled to defend the Judgment of Employment Judge Mulvaney on that basis. His conduct has not been in any way unreasonable, and, although, on my analysis of this case, he has based himself upon a view of the question to be asked and the significance of evidence, which I have concluded was wrong, he was entitled to do so, and he was entitled to try to support the conclusions of Employment Judge Mulvaney about the spreadsheet. Accordingly, that ground for awarding costs is not made out, and I refuse the application.
Published: 30/03/2016 10:25