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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Race (t/a Metframe Service Co) v Romaine [1995] UKEAT 1042_93_0510 (5 October 1995) URL: http://www.bailii.org/uk/cases/UKEAT/1995/1042_93_0510.html Cite as: [1995] UKEAT 1042_93_0510, [1995] UKEAT 1042_93_510

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BAILII case number: [1995] UKEAT 1042_93_0510

Appeal No. EAT/1042/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 5th October 1995

Before

HIS HONOUR JUDGE HULL Q.C.

MRS P TURNER

PROFESSOR P D WICKENS OBE

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DENNIS JOHN RACE T/A METFRAME SERVICE CO          APPELLANT

MR R ST ROMAINE          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR MARTYN WEST

(Personnel Consultant)

Peninsula Business Services Ltd

2nd Floor

Stamford House

361-365 Chapel Street

Manchester

M3 5JY

For the Respondents MS HELEN GOWER

(of Counsel)

Messrs Evill & Coleman

113 Upper Richmond Road

Putney

London

SW15 2TL


 


JUDGE HULL Q.C.: This is an appeal to us against the refusal of a review by a Chairman of an Industrial Tribunal in October 1993. The decision was promulgated on 2nd November 1993. To make sense of our decision, I must go into the circumstances and facts.

Mr St Romaine said that he was an employee of Mr Race. He worked for Mr Race in various ways over a considerable period of years. Mr Race has several businesses, or had several businesses when Mr St Romaine began working for him. One of them was called Metframe Service Co. It was not in fact a separate legal entity, but it was a trading name under which Mr Race traded, amongst other activities. Mr St Romaine is described as a window fitter or fabricator. Mr Race said that at all material times Mr St Romaine had been self-employed and had been working for him on a self-employed basis, that is to say as an independent contractor.

Mr St Romaine started to work for Mr Race in August 1972 when Mr Race had, I think two unincorporated companies or two trading names and one limited company, and he did work apparently for each of those companies and so for Mr Race. But in due course, from 1980 onwards, Mr St Romaine worked solely for Metframe Service Company.

There were a number of factors which suggested that he was perhaps self-employed. There were a number of factors which suggested that he was perhaps an employed person. Among others, he paid his income tax under Schedule D, and he paid National Insurance contributions apparently on the basis of being a self-employed person, but in respect of those he was indemnified, he was paid by Mr Race. There were various other factors. From 1985 onwards, he was paid when he was off sick.

There came a time when Mr Race dispensed with his services, that was on 23rd July 1992. Within the time allowed by the law, Mr St Romaine presented a complaint to the Industrial Tribunal. He complained that he had been unfairly dismissed, that he was entitled to redundancy pay, that he was entitled to pay during his period of notice which he should have received, and he asked for compensation.

Now of course that application was based entirely on the basis that Mr St Romaine was saying that he was an employed person, to use old-fashioned language, it was a master and servant situation, not an independent contractor situation. That was his application.

On 21st September 1993, less than three weeks later, Mr Race (who was not advised apparently) put in his answer, his IT3, and in that he said quite clearly that Mr St Romaine was a sub-contractor and not an employee.

The Industrial Tribunal decided to try the question as a preliminary issue whether indeed Mr St Romaine was an employee or not. Their decision, which is at page 21 of our papers, was reached after a hearing on 6th May 1993 and was promulgated on 17th June 1993. I will refer shortly to that decision.

The Industrial Tribunal sat under the chairmanship of Mr Baron with two members. They said that their majority decision was that the Tribunal had jurisdiction to hear the application of the applicant. They considered a number of factors. One of the members was of opinion that this was a case in which Mr St Romaine was indeed self-employed. He laid particular stress on the express agreement of the parties at the start, that Mr St Romaine should be self-employed, and on the tax consequences, the National Insurance. The majority, in the case of the Chairman with some difficulty or reluctance, found that he was an employee. They looked at the reality of the situation as they saw it, and considered other matters, such as the fact that Mr St Romaine had a fixed working week, I think it was 40 hours, that he was paid a set amount, that he was paid when he was off sick, matters of that sort.

They adopted the correct approach. The question whether a person is an employee or self-employed is a question of status and it is the reality of the situation, and not the label which the parties choose to put on it, which is conclusive. Of course matters such as National Insurance and tax, and many other matters, come in to it, and of course the express agreement of the parties as to what label they put on their relationship is, or may be, of importance. But the Tribunal adopted the correct approach in going into the matter in the way that they did, and reaching the conclusion which they did. They heard Mr Race, they heard the applicant, and that was their decision.

The decision was not acceptable to Mr Race, and he gave Notice of Appeal, that is at page 19, on 27th July 1993. He appealed on the basis that the majority had not taken properly into account all the factors in the relationship including the ability of the respondent to work for others. That was part of his appeal. He said that the conclusion was perverse, though he put it rather more politely, he said that no reasonable Tribunal could conclude as this one did if proper account were taken of the evidence. So that was his appeal against the decision.

Three days later he applied to the Industrial Tribunal itself for a review. Of course that was very much out of time. The decision had been promulgated on 17th June 1993, and here he was applying for a review, having taken advice, on 30th July 1993. The letter in which he did that is at page 31 of our bundle. He wrote the Regional Office, or rather Peninsula his consultants wrote to the Regional Office.:

"We write to advise you that we have been consulted by the Respondents in this case with regard to the possibility of an appeal. Our clients advise us that since the hearing information has come to light which indicates that the Applicant was in fact working on a sub-contract basis for other persons during his period of working for the Respondents."

Pausing there, it was a rather curious matter to raise by way of review, because in fact that was part of the appeal; that evidence was given before the Tribunal that the applicant was perfectly free to work for others in his own time. But anyhow, that was what was put.:

"We regard this as new evidence justifying an application for review on the grounds that in the interests of justice so require. We refer you with respect to Rule 10 of the Rules of Procedure. [And as Mr West has pointed out this morning, of course it is substantially the same for present purposes as Rule 11.]

"We are asking our client to provide full details of this new evidence and how it came to light. We do understand however at this stage that was not information which could reasonably have been known or foreseen at the time of the Tribunal hearing.

We appreciate that this application is outside the 14 day time limit, but would ask that the time limit be extended in order that this application be considered."

So that was the application as it was made, as I say very much out time.

Then on 27th September 1993, after nearly another two months had elapsed, Peninsula were able to put the matter in greater detail and substantially alter their position. They said their letter to the Regional Office of the Tribunal:

"It has now been established that the Applicant sold over 70 sets of windows to customers. These were sold on a supply only basis and our client has extracted all those which pre-date their 1982 "clear out".

I pause there. We have been told today, by Mr West, that what had happened was that Mr Race had gone back to his office, and had thought about the way in which the case had been heard, which was not apparently quite the way in which he had expected the case to be heard. He had gone through a large number of invoices relating to the supply of windows. People did come into Mr Race's premises and ask simply - not for windows to be fitted - but to buy windows. He found that 60 or 70 of those were cases in which the sale of the window took place when Mr St Romaine was actually there and served the customers, and brought about the sale; which led him to think, he having seen Mr St Romaine on one or two occasions working to fit windows for other people, but not on Mr Race's business, that this might be something which he was doing on a much larger scale, and not doing simply for friends or relations, as he had suggested, but doing generally. Again I simply going on what Mr West has told us, that that made him think that this was an important matter which might have affected, indeed would in his view have affected, the decision of the Industrial Tribunal; notwithstanding, as I say, that it was part of his case in front of that Tribunal, and he put it forward, that Mr St Romaine did in fact work on his own account, and was entirely free to do so. No doubt the question whether Mr St Romaine did in fact fit these windows which he had sold, or many of them, would have to be looked into, because there was no evidence about that. Then the letter goes on:

"Mr Race recalls encountering the Applicant carrying out the installation of one of these "supply only" orders. This is not something which was within our client's immediate memory at the time of the hearing because when he had attended the hearing his perception of the issues was such that he felt that the principle approach by the Tribunal, perhaps the only approach the Tribunal need to consider was the question of the label put on the relationship by the parties and the taxation arrangements. It was only with later thought and consideration and the checking of the records of supply only windows where Mr St Romaine was involved that this incident and the implications of it came to light. A discussion with ourselves confirmed that the Tribunal needed to consider the wider issues.

The implications are that in view of the number of supply only contracts in which Mr St Romaine was involved, it is most improbable that these were all for family and friends and much more probable that they were persons who were interested in having windows supplied and fitted and who wished Mr St Romaine to do the fitting on their behalf subject to a supply of windows. The arrangement was that they would order the windows from Metframe and would pay Mr St Romaine as an independent installer to install the windows.[I understand that to be only a speculative suggestion, or one which was based on probability, rather than anything of which there was evidence.]

We are making further enquiries with regard to these orders, to ascertain how many of them were actually installed by Mr St Romaine as a window fitting contractor.

We regard this as a fundamental factor in this review application as it indicates that not only was the Applicant undertaking work for our client, but was also working and in business on his own account as an independent contractor in a relationship where our client was one of several customers, albeit our client was probably the largest customer.

We enclose copies of the orders as received from our client."

That shows that the applicant was indeed saying that this reinforced a contention which he had made when he was in front of the Industrial Tribunal, which the Tribunal had considered; and it was a matter which he wished to appeal about. Namely, that one of the many factors to be considered was that Mr St Romaine was carrying out work on his own account. To embellish it with detail on some of these occasions, perhaps as many as 60 or 70 over a number of years, not only was he working on his own account, but he was working with materials supplied by Mr Race. We do not need to say what the merit of that contention was, whether it would or would not have had the slightest effect on the minds of the Tribunal, or whether the Tribunal would have thought it was of some importance, that was what he wished to put.

Now to go on with the facts.

In October 1993 the Chairman of Industrial Tribunals refused the application for a review. A review is to be carried out by the Industrial Tribunal in the full sense of the Tribunal sitting with its lay members. It is not like other interlocutory matters which can be dealt with by a Chairman sitting by himself, it is more in the nature of a hearing. However, there is an apparent exception to that which is set out in sub-rule 5 of what is now Rule 11:

"An application for the purposes of paragraph (1) [that is the application for a review] may be refused by the President or by the Chairman of the tribunal which decided the case or by a Regional Chairman if in his opinion it has no reasonable prospect of success."

I say that it is an apparent exception because what is happening is that, as an interlocutory measure the Chairman is refusing the application for review, not conducting it and then dismissing it. He may, says Rule 11(5), refuse it "if in his opinion it has no reasonable prospect of success." Before I leave that, I would point out first of all that the formation of that opinion is for the Chairman concerned, as long as he forms it on reasonable grounds, and without making any error of law, without taking into account anything irrelevant, or without failing to consider relevant matters, it is a finding of fact, a matter of discretion for him, an interlocutory order with which we will not interfere unless an error of law is shown. That follows from the provisions of Section 136 of the Act itself. If the Chairman forms that view (it is for him and not for us to form that view) we certainly have no general jurisdiction to form our own view and say that it differs from that of the Chairman. What he had to do, as I say, was to decide whether the application had any reasonable prospect of success. I may also say before I leave that, that it is discretionary, he may refuse it if he forms that view.

So now I go to the decision of the Chairman which is set out at page 8 of our papers. He said that:

"The application for review contained in the Applicant's letter dated 30 July 1993 is refused under Rule 10(3) [as it then was] of the Industrial Tribunals (Rules of Procedure) Regulations 1985 on the grounds that it has no reasonable prospect of success."

Then he gives his reasons, as follows. First of all he refers to the letter and quotes from it:

"... Mr West sought a review under Rule 10(1)(e) of Schedule 1 to the Industrial Tribunals (Rules of Procedure) Regulations 1985. He also said that "this was not information which could reasonably have been known or foreseen at the time of the Tribunal hearing". This wording is very similar to the wording of Rule 10(1)(d) although the "not" is in a different position. He also sought an extension of time for making the application in accordance with Rule 12(2)(a).

2 I am treating the application as being under both Rules 10(1)(d) and (e).

3 With a letter to the Tribunal of 27 September 1993, Mr West enclosed a bundle of orders/invoices which the Respondent had "extracted" and all of which were apparently issued by the Respondent. It is clear from the letter that these documents were in existence at the time of the hearing on 6 May 1993, and were available to the Respondent, but he had not appreciated any significance they may have had.

4 I therefore conclude that there are no grounds for a review under the provisions of Rule 10(1)(d).

5 In considering the application under Rule 10(1)(e) I have taken account of the guidance in Flint - v - Eastern Electricity Board [1975] ICR 395 and General Council of British Shipping - v - Deria [1985] ICR 198. I conclude that the application for review under this rule has no reasonable prospects of success as there are no obvious mitigating factors as mentioned in Flint, other than the interests of the Respondent. In coming to this conclusion, I am also taking into account the fact that the initial letter seeking the review was written 44 days after the decision was promulgated and the details of the new evidence were supplied 27 days later."

I pause here again, he was mistaken about that they were supplied not 27 days but a month and 27 days later, almost 2 months later. Then he added:

"6 I am not dealing with the application for an extension of time under rule 12(2)(a) as that is a matter for the Tribunal, not its Chairman."

So that is the decision of the Industrial Tribunal Chairman, which is under appeal to us today.

I will just deal with what has happened thereafter to complete the story.

As I say, a Notice of Appeal was served against the decision of the Industrial Tribunal and then a good deal later of course on 14th December 1993, the Notice of Appeal was served which we are considering today.

On 16th September 1994 both matters came before this Employment Appeal Tribunal which was chaired on that occasion by Judge Hicks, Q.C. This Employment Appeal Tribunal found nothing in the points that it was a majority decision, that the Chairman joined rather reluctantly in it and that the Industrial Tribunal had, as it was suggested, simply added up the points and said well the score narrowly is in favour of employment rather than self-employment, and they said there was nothing to indicate that the Industrial Tribunal had adopted so naive an approach. They therefore dismissed the appeal against the decision of the Industrial Tribunal. But they gave leave for the present appeal to continue and so it is before us today.

There is an answer to this appeal: it raises the point whether having not merely, so to speak, heard the Industrial Tribunal give its decision, but actually having appealed it, it is consistent to proceed with an appeal against a refusal to review that decision, or whether indeed the first appeal should had been stood out by the appellant so that this question of a review could be considered; because of course the effect if this should be successful is that having had one appeal dismissed the appellant will then go back and start again before the Industrial Tribunal. That is certainly not the ground of our decision, but it is a point which would give one some doubt or difficulty if one were considering it.

The question is as it was put very fairly and shortly by Mr West; was the Chairman entitled to hold that there were no reasonable prospects of success in this application? The Chairman correctly directed himself and this is accepted, that it was in the nature of an application under Rule 11(1)(d), that is to say that: new evidence had become available, although it was not strictly a case of new evidence for this evidence was at all times available. Then he could say under (e) that the interests of justice required a review. Was he entitled to say there were no reasonable prospects of success in that contention?

There has been considerable debate in the cases, and a certain amount of conflicting authority, as to whether (e) is exclusive of (d), that is to say, if evidence for any reason cannot be new evidence or what is called new evidence, cannot be admitted under (d) for any reason or is held not to be admissible for the purposes of a review under (d), whether indeed the Tribunal can say that the interests of justice require a review, nonetheless, so that the evidence should be admitted notwithstanding that it is not strictly "new". That has been considered in a number of case including the case of Flint which has been referred to by the Chairman and the case of Deria which is also referred to by the Chairman. What is clear, from Flint itself, is that merely to produce evidence which has not been heard by the Tribunal and say well, although it is not evidence which is strictly admissible for the purpose of paragraph (d,) it should nonetheless lead to a review under paragraph (e), is not enough. If the fact is that the evidence was available at the time, and could, as a matter of practicability, have been put before the Industrial Tribunal, then there must be some satisfactory reason to explain the omission. It was put by Phillips J, I think in Flint, that there must be some special circumstance relating to the failure to put it before the Tribunal. It has also been said, of course, that it must be evidence such that it would probably have an important effect on the decision. It does seem to us from what we have been told today that it is exceedingly improbable that this evidence would have had an important effect on the decision; certainly without further evidence being called. It is admitted that in a general way Mr Race knew about these matters. He was perfectly aware that Mr St Romaine worked for others. He was also perfectly aware that he sold, with Mr St Romaine's assistance on various occasions, windows to various people. But it was said that he did not carry out this analysis until some time after the Industrial Tribunal hearing.

What is said to us by Mr West today is that as a matter of law, the fact that Mr Race was before the Tribunal in person and as he said did not appreciate the basis on which the Tribunal was going to consider the matter, did not understand the law as to how a court or tribunal decides whether a person is employed or self-employed as the case may be - all that is capable of being a mitigating circumstance, or an exceptional circumstance which goes to the question whether the Tribunal should exercise its power to review. And, says he, notwithstanding the lateness of it, therefore the Tribunal Chairman could not be satisfied that there was no reasonable prospect of success.

Mr West relies upon a decision of the Employment Appeal Tribunal which coincidentally was chaired by me last year. That case was Mackin v Denbrook Builders Ltd T/A Drain Spec. But it was decided on a quite different basis. What had happened in that case was that an Industrial Tribunal had decided a preliminary issue as to continuity of employment. The employer had not troubled to attend, but he had sent to the Tribunal a number of documents which showed that indeed there had been no continuity of employment or transfer of undertaking, which was the matter of contention, and the Tribunal treated the matter as undefended, they did not look at the documents which had been sent to them by the employer, they heard the employee give evidence to them that he had been continuously employed by the same employer for several years, and therefore held that he had been employed for the necessary period of two years. When the matter came for trial, the employer applied to them to review that decision. They then for the first time looked at the documents, they realised that they had made a mistake, and they decided they must review their decision: they then reached the contrary conclusion that there had indeed been no transfer of undertaking and nothing else which could preserve continuity of employment, and that the employee had not therefore been continuously employed for two years. The employee appealed to us saying that they had no jurisdiction to review their decision. We said that they had; it was a wholly exceptional circumstance and as we said:

"There are most unusual factors in this case. First of all, it seems perfectly clear to all of us that the Industrial Tribunal cannot have studied, on its first hearing in March 1992, these documents. It should have done that, but one has to remember the circumstances of practical life. The Respondents had chosen not to attend, they say on wrong advice. The Applicant did attend with his Solicitor. The matter was dealt with very shortly in three paragraphs which give no indication whatever that the Respondent's case had been considered. It looks very much as though this Tribunal, instead of going into the merits, treated the matter as undefended."

We went on to say:

"... It was then made very clear to them, by the letter to which I have referred from Peninsula, that they had not got jurisdiction and that in due course when they came to try the question of unfair dismissal and the question of compensation and all the questions which arose they would be doing so in the quite clear recognition that they had made a mistake in saying that they did have jurisdiction. ..."

Then we say a little further on:

"This Tribunal had decided a preliminary issue. It was then made to appear to them that they had wrongly decided it. Rather than embark on what would have been an entirely vacuous exercise if that contention were right and tried out a case where they had no jurisdiction, leaving the luckless parties to go to appeal on the whole matter, the Tribunal agreed that they would review their own decision and see whether indeed it could be said there was no jurisdiction. Having heard for the first time both sides of the matter they decided that they had not got jurisdiction. Miss Winfield says that although their decision is not accepted (so to speak) there is no question of appeal, it is regarded as a question of fact."

We said:

"In our belief the authorities, important and interesting of course as they are, do not apply directly to a situation such as this. This was indeed an exceptional circumstance: namely, that there was a serious possibility of a great waste of time and money and a serious injustice if the Tribunal did not agree to review their decision. If they reviewed it and decided that their earlier decision was wrong then they had no jurisdiction. No Court, no Tribunal should proceed on the basis that it has no jurisdiction and that it has made a mistake in that regard. We think that this Tribunal therefore acted correctly."

If one must put a label on it, it was a case of a procedural mishap of a very serious sort, and therefore squarely within paragraph (e). That was our view and we held that the contention made to us that the Industrial Tribunal had no jurisdiction in the circumstances to review their decision was mistaken. They had treated the matter, in effect, as ex parte, undefended, when in fact the employer had sent them documents, and before they had heard the employer. So that was the situation there.

Mr West today has invited our attention to that because he says that in one passage in our judgment at page 5 G:

"... However, having heard the evidence of Mr Vince [he was the employer] and having read the documents, the Tribunal found that the significance of the documents had not been realised by Mr Vince until he had seen Mr Huss." [That was his representative.]

That was simply reciting what the Industrial Tribunal had found, and it was not the ground of our decision; to cite it so is to make a mistake about the ground on which this Tribunal decided the case of Mackin v Denbrook Builders Ltd T/A Drain Spec. So that decision in our view does not take us any further forward in considering the present matter.

Now the Chairman had as we say to consider, as he quite rightly said, whether there was a mitigating circumstance, something exceptional here. Although this was not new evidence of the type which the Tribunal could admit under paragraph (d), nonetheless was it something which should cause them to exercise their discretion even out of time, under paragraph (e)? He had to say whether in his view there were no reasonable prospects of success in that.

Now if we were deciding it for ourselves we might have a number of matters in mind. We might have in mind that so far from it being exceptional for a party to attend a Tribunal in person and not to be clear about the way in which the Tribunal was going to proceed, and not being clear about what evidence he should produce, Mr Race was simply doing what the great majority perhaps of people do. They appear before Tribunals in person they are not lawyers, they are not familiar with Tribunal practice. That is an every day thing. So far from being exceptional it is commonplace. We might have had that matter in mind. We might have had in mind that Mr Race was indeed fully cognisant of the fact that Mr St Romaine worked on his own account. Indeed he told the Tribunal so, indeed was appealing on that very ground. There are many other matters which the Chairman might, which we might if we were deciding it for ourselves, have in mind. What he did do was to decide it like this. "I conclude that the application for a review under this rule (and he is saying this after considering the authorities) has no reasonable prospect of success as there are no obvious mitigating factors as mentioned in Flint, other than the interests of the Respondent." He did not say that what was put in front of him was incapable of being such a mitigating factor, he said that in his view it was not. He was not making any proposition of law at all. He was saying that having considered this, and the authorities, having considered what was laid before him, he was of opinion that this application for review had no reasonable prospects of success as there were no obvious mitigating factors as mentioned in Flint; nothing exceptional and nothing which in his view would lead to reasonable prospects of success. He was entitled to consider the whole application put before him and everything that had taken place. He did so and that was his conclusion.

In our view, such a conclusion was open to him. It is not necessary for us to say whether we would have reached the same conclusion, or whether another chairman might have reached a different conclusion, that is entirely beside the point. It would be an extraordinary thing if, in the large number of cases in which parties appear in person and can truthfully say they were not fully alive to all issues and the ways in which they should deal with them, they could then go away, do some research, and come back perhaps three months later and say "I have thought of some matters which now seem to me to be important and found some documents which I had all along." Such circumstances might or might not, certainly they might in an exceptional case show mitigating or exceptional circumstances such that such an application should be allowed to go forward. But we all of us think that this Chairman was well entitled as a matter of law to reach the conclusion that he did.

In those circumstances there is no ground in law shown to us which would entitle us to interfere with the decision of this Chairman of Tribunals, and we have no right to allow the appeal and most certainly do not do so.

}********************{

JUDGE HULL Q.C.: Although any appeal against a discretionary or interlocutory order is very much at the peril of the appellant, having heard that Judge Hicks, knowing a good deal about the case of course with his Tribunal here, gave leave for the matter proceed, we do not think that this falls within the words "unnecessary, improper or vexatious" or that "there has been unreasonable delay or other unreasonable conduct" and in those circumstances we do not think that we should make any order for costs between the parties.