Appeal No.	 EAT/242/97

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 17 February 1998

Before
HIS HONOUR JUDGE PETER CLARK
MR A D TUFFIN CBE
MR K M YOUNG CBE

SIDNEY SMITH CASTINGS LTD	APPELLANT

MR B HILL	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE APPELLANT	
For the Respondent	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE RESPONDENT	

	JUDGE PETER CLARK:  Mr Brian Hill (the employee) commenced a period of continuous employment with Sidney Smith & Sons (Stourbridge) Ltd (“Stourbridge”) as a coremaker in March 1990.

	On 15 January 1996 Ian T Walters and Gordon Christie of Arthur Anderson were appointed joint Administrative Receivers (“the Receivers”) of Stourbridge.

	On 15 May 1996 the employee was one of 15 staff dismissed by reason of redundancy with immediate effect.  He received a redundancy payment of £1,800 and a further £1,302 pay in lieu of notice.

	On 30 May 1996 the employee presented a complaint of unfair dismissal to the Industrial Tribunal.  He named “Sydney Smith & Son” as Respondent.

	By letter dated 28 June 1996 the Receivers informed the Industrial Tribunal that they would not be defending the claim.  There was no prospect of funds being available to satisfy the employee’s claim, if successful.  That letter was treated as a Notice of Appearance on behalf of Stourbridge in Receivership.

	On 17 July 1996 the employee wrote to the Industrial Tribunal alleging that the business of Stourbridge in receivership had been sold as a going concern to Sidney Smith (Castings) Ltd (“Castings”).  He applied to joint Castings as second Respondent, relying on the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE).

	By letter dated 24 July 1996 the Tribunal informed the employee that Castings had been joined as second Respondent and the relevant papers had been served on them.  Castings did not enter a Notice of Appearance and did not appear at the hearing of the complaint held before an Industrial Tribunal sitting at Birmingham on 3 September and 21 November 1996.  Accordingly, only the employee appeared and gave evidence to the Tribunal.

	Based on that evidence, the Tribunal found that the employee was unfairly dismissed on 15 May 1996;  he had been peremptorily dismissed on that day without prior warning or consultation.

	Then, at paragraph 13 of their extended reasons dated 3 January 1997, the Tribunal said this:

“Whether there had been an effective transfer of the first respondent’s business in July 1996, and if so whether that transfer would fall within the 1981 Regulations, and whether the dismissals in May were at the behest of the transferee were all matters on which, in the absence of either respondent, the Tribunal could only speculate.  We would however, not wish our award of compensation to be paid to the applicant to be frustrated, and for that reason have decided to make it a joint and several liability of both respondents.”

	Having found both Respondents jointly and severally liable, the Tribunal went on to assess compensation at a total of £10,164.00 and made an award in that amount in favour of the employee.

	Against that decision Castings appealed by a Notice dated 10 February 1997.  The grounds of appeal were that the Tribunal had failed to make findings as to whether there had been a relevant transfer to Castings;  whether the reason for dismissal was connected with the transfer;  whether it was for an economic, technical or organizational reason;  and whether it was open to the Tribunal to find both Respondents jointly and severally liable.

	In an affidavit sworn by Pauline Joy Bailey, a director of Castings, on 16 May 1997, it was further contended that if there was a relevant transfer to Castings, then the employee was not employed in the undertaking transferred immediately before the transfer.  It is there said that the transfer took place on 19 July 1996.

	Pausing there, we have also seen a letter from the Receivers to Castings’ solicitors dated 31 January 1997, in which it is said that four months into the receivership a prospective buyer of the land occupied by the business was identified.  It was intended to use that land for a car salvage business.  That proposed sale caused the redundancies on 15 May 1996 which, it is asserted, were for an economic, technical or organizational reason.  In the event, the sale fell through for lack of planning permission and the Receivers then entered into negotiations with the eventual purchasers, David Fabb (Holdings) Ltd in late June 1996 which resulted in the transfer of the business as a going concern on 19 July 1996.

	Reverting to the affidavit of Ms Bailey, an explanation is given as to why Castings took no part in the Tribunal proceedings.  It seems that on 2 September 1996 a Mr Andrew Mitchell, the works manager and a director of Castings, was informed by the employee of these proceedings.  Mr Mitchell spoke to a Mr Menzies, a former director of Stourbridge, who told him that the Tribunal case was being dealt with by the Receivers.  Accordingly, no action was taken, despite correspondence being received from the Tribunal, which he believed was “for information” until after the Tribunal promulgated its decision.  Following receipt of the decision, solicitors were instructed and the Notice of Appeal lodged.  A draft Notice of Appearance is exhibited to the affidavit of Ms Bailey.

	Initially, the employee resisted the appeal.  We have seen an affidavit sworn by him on 25 June 1997 in opposition to that sworn by Ms Bailey.

	On 28 September 1997 a division of this Tribunal (Judge Hicks QC presiding) allowed the appeal to proceed to a full hearing.

	The employee sought Counsel’s advice and by a letter to solicitors acting for Castings, dated 10 December 1997, solicitors acting for the employee indicated that he would not resist the appeal.  That remains the position.  We are invited to allow Castings’ appeal and set aside the Tribunal’s Order against Castings, with no order as to costs.

	In accordance with the practice of the Employment Appeal Tribunal laid down by Mummery J in J. Sainsbury Plc v Moger [1994] ICR 800, we will not allow appeals by consent against reasoned decisions of Industrial Tribunals without first satisfying ourselves that the appeal ought properly to be allowed.  We shall allow this appeal and make the order sought by consent for the following reasons:

(1)	It is through no fault of the Industrial Tribunal that they were not put in possession of the material which is now before us and has been referred to earlier in this judgment.
(2)	Nevertheless, Castings have provided an explanation as to why no Notice of Appearance was entered by them and no appearance made before the Industrial Tribunal.
(3)	Whilst we understand the Tribunal’s desire to ensure that the employee received his compensation from someone, that is not of itself a good ground for ordering joint and several liability against both Respondents.
(4)	It is now established that the provisions of regulation 5(2) of TUPE do not permit joint and several liability on the part of both the transferor and transferee.  Liability can only attach to one or the other.  See Sterling District Council v Allan [1995] IRLR 301 (CS), over-ruling the EAT decision to the contrary in that case (1994) IRLR 208.
(5)	The first question, therefore, is whether the employee was employed in the undertaking transferred immediately before the transfer within the meaning of regulation 5(3).  On the facts now before us the employee was dismissed by the Receivers on 15 May 1996;  negotiations for the transfer to  Castings did not commence until late June 1996 and that transfer was completed on 19 July 1996.
(6)	That factual matrix brings into focus an apparent conflict between the EAT decisions in Harrison Bowden Ltd v Bowden [1994] ICR 186 and Ibex Trading Co Ltd v Walton [1994] ICR 907, unresolved in Michael Peters Ltd v Farnfield [1995] IRLR 190.  We prefer to follow the reasoning in Ibex to the effect that where the dismissal took place before the transferee came onto the scene the employee was not employed in the undertaking transferred immediately before the transfer.
(7)	On this basis we are satisfied that the employee cannot rely upon the regulations.  There is no liability for his unfair dismissal on Castings.  Accordingly, the appeal is allowed and the Industrial Tribunal’s Order against Castings only is set aside and there will be no order as to costs.