Appeal No.	EAT/1110/98

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 18 June 1999

Before
HIS HONOUR JUDGE WILKIE QC
MR A C BLYGHTON
MR T C THOMAS CBE

GORMLEY (MARBLE SPECIALISTS) LTD	APPELLANTS

MR G J JOHNSON	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR S RASHID
(of Counsel)
Instructed by:
Mr K P Nathan
Messrs Markandan & Co
Solicitors
54 The Broadway
Southall
Middlesex
UB1 1QB	

For the Respondent	

NO APPEARANCE BY OR ON BEHALF OF THE RESPONDENT	

	JUDGE WILKIE QC:	This is an appeal by the appellant, who was the respondent before the Employment Tribunal, against a decision of the tribunal dated 16th July 1998, by which the tribunal declined to validate the Notice of Appearance filed out of time and on the basis of an appearance not having been entered it found that the applicant was an employee and was unfairly dismissed by the respondent, Gormley (Marble Specialists) Ltd and also made a declaration of unlawful deduction from wages in respect of holiday pay and made an award both by way of basic award and compensatory award for unfair dismissal and ordered the respondent to pay the sum unlawfully deducted from wages.

	This matter has proceeded to a full hearing of the appeal pursuant to an order of this Court on 2nd December 1998 on the basis of an amended grounds of appeal dated 11th December 1998. 

Although this has been a full hearing the respondent to the appeal, Mr Johnson, who certainly in the course of the appeal was represented by a firm of solicitors, has not appeared before us, he having notified the Employment Appeal Tribunal office that he was not appearing at this hearing.

May we say that we have been greatly assisted by Mr Rashid for the clear and concise way in which he has argued this appeal and for the learning which he has placed before us.

1.	Essentially, Mr Rashid’s main ground of appeal is that the tribunal erred in law in rejecting the application for an extension of time to put in a Notice of Appearance. He says that the error of law is in the tribunal’s refusing to consider issues of prejudice to the appellant in refusing an extension of time on the basis, that, and in accordance with a decision of this tribunal in the case of City Centre Restaurants (UK) Ltd t/a Garfunkels v Calheiros (EAT/1061/96), there being no evidence before the tribunal of the reason for the delay then that was determinative of the application against the party seeking extension and therefore there was no need to consider any prejudice.

2.	Mr Rashid has drawn our attention to a decision earlier in time than the City Centre Restaurant case but of this tribunal, namely Kwik Save Stores Ltd v Swain [1997] ICR 47 in which that particular division of this tribunal concluded that any exercise of discretion in respect of a decision on an application to extend time has to be based not just on the question of any good or no reason for delay, but also on a balancing exercise taking into account all matters including the prospects of the defence put forward succeeding and any other matters of prejudice. 

3.	Thus, we today are faced with two decisions of this tribunal close in time which appear to take a contradictory view as to what is required of an Employment Tribunal faced with an application for an extension of time where there is either no reason or no good reason for the delay put forward.

4.	Mr Rashid says that binding on us, or at the very least highly influential on us, should be decisions of the Court of Appeal dealing with other jurisdictions in which the question of application for extension of time has been considered in circumstances where the applicant for the extension of time has not put forward any or any proper reason for the delay. He has drawn our attention to the case of Mortgage Corporation Ltd v Sandoes reported on 27th December 1996 in the Time Law Reports and the case of Finnegan v Parkside Health Authority reported on 16th December 1997. In each of these cases the Court of Appeal has in effect said this. It rejected the argument that the absence of a good reason was always and in itself sufficient to justify the Court in refusing to exercise its discretion. Once a party was in default then it was for him to satisfy the Court that despite his default the discretion should nevertheless be exercised. The party in default could do so in reliance on any relevant circumstances. That was the Court of Appeal in the Mortgage Corporation Ltd case referring to an earlier decision of the Court of Appeal Beechley Property Ltd v Edgar.

5.	Mr Rashid relies in particular on the list of matters which a Court ought properly to have regard to and he highlights particularly that the overriding principle must be that justice must be done and that in considering whether to grant an extension of time to a party who is in default, the Court would look at all the circumstances of the case, including the considerations identified earlier in that decision and in particular Mr Rashid says the overriding principle that justice must be done.

6.	Without determining one way or the other which of the two contending approaches of the Employment Appeal Tribunal to which I have referred is the correct one, we are content to deal with this case on the basis that we are entitled to look at the merits of the defence as well as the reasons now put forward for the delay and any other prejudice that has been identified to us. 

7.	Mr Rashid has, very properly, conceded that we are in as good a position as was the Employment Tribunal to reach a final decision whether extension of time should have been granted or not, as the case may be. It is not necessary for this matter to go back to an Employment Tribunal whether the same one or a differently constituted one for that matter to be argued. Of course the reason, if any, for the delay is a factor which weighs in the balance and indeed it is an important factor.

8.	Mr Ison, who is a manager with the appellant company, has sworn an affidavit dated 25th August 1998 in connection with this appeal. In that affidavit in paragraphs 12 to 15 he deals with the question of delay. In paragraphs 2 to 4 he sets out the background of this company, which is family owned company, the directors being Mr and Mrs Gormley, husband and wife. He says its small in size but says it has around 80 employees. It does not have a legal department and it is first time that the company has ever had to face an action when the respondent referred this matter to the Employment Tribunal. Whether or not that is accurate we have had our attention drawn to another Employment Tribunal decision involving this company which may or may not have been first in time, but certainly this is not now the only litigation which this company has faced in the Employment Tribunals. He frankly acknowledges in paragraph 14 that the filing and archiving system really was inadequate to enable rapid retrieval of information that was more than six months old, and that the system by which hard copy material could be retrieved was inadequate in order to permit the Notice of Appearance to be put in in time.

9.	In addition, Mr Rashid has, in argument, indicated that perhaps the solicitors who were engaged by the company failed to act as expeditiously as they might.

10.	The period of delay was a matter with which the Employment Tribunal dealt in its reasons. The initial application was dated 2nd April 1998; the appellants denied that they received that application but they were aware that there had been an application as early as 6th April 1998 because they received a letter from ACAS and their response was that they were looking into the applicant’s case and would be in contact after the Easter break. This, apparently, was overly optimistic because, according to Mr Ison, Mrs Gormley, who was to deal with the matter, chose to go on holiday and apparently did not leave arrangements for the matter to be dealt with during her absence. At any rate, on 30th April 1998 the appellant received notice of a hearing date, namely 15th May 1998, they then did not do anything for a week, contact the tribunal office on 7th May 1998 and on the same date they instructed solicitors. The Chairman ordered re-service of the Originating Application because the appellants had informed the tribunal office that it had not received the application and that was received on or about 16th May 1998. Therefore they were by that stage dealing with the matter of which they had had notice since 6th April 1998 that there was something in the pipeline and on 30th April 1998 they knew that there was a tribunal hearing. Therefore, by that stage they must have known that there was a degree of urgency in the matter and they had had several weeks in which to sort out their documentation and take steps to inform themselves so as to enable them to proceed timeously. However, even after re-service, they failed to comply with the time limit of 21 days and in fact the Notice of Appearance was some ten days late.

11.	As I have indicated, there was no explanation given before the Employment Tribunal. The explanation which has been given by Mr Ison in his affidavit does not amount really to a explanation, it is simply an expression of regret that the arrangements within this company, which is not a very small company but substantial given its 80 employees, simply were inadequate to enable it to meet the challenge of what is not an overly strict time limit particularly given the extra period during which they were aware that there was something afoot. Therefore, our view is that there really is not any reasonable excuse put forward for the delay. That is an important factor to be born in mind along with the other factors in deciding whether time should have been extended.

12.	The question of the merits of the defence put forward is a matter which we should consider. In essence the defence was on two bases. The first was that, in any event, at no time prior to May 1997 did the appellant employ Mr Johnson, but that throughout the period of his engagement from 1993 onwards he was self-employed. 

13.	In essence, Mr Ison’s case on this issue is encapsulated in paragraphs 5 to 9(a) of his affidavit. Mr Rashid has indicated, as it appears to us sensible to do, that there is little if any conflict of fact as to the sequence of events during his engagement, or as to the arrangements and the conditions under which he worked. Those were gone into by the Employment Tribunal very fully at paragraphs 34 to 42, and Mr Rashid has drawn our attention to certain of the matters contained within those paragraphs as supporting, in his contention, a defence that the applicant to the Employment Tribunal was self-employed.

14.	In essence, what Mr Ison’s evidence amounts to is that it was inevitable that Mr Johnson was not employed by the appellant company but was engaged as a subcontractor because both parties were aware of this status, had intended to create legal relations on that basis, and subsequently conducted their business on those terms. At all material times, they represented that their relationship was that of subcontractor. He relies in support of this by the fact that the parties did, until May 1997, deal with Mr Johnson’s pay and tax affairs on the basis of an Inland Revenue Construction Industry Deduction Certificate, known as a 23% Certificate in which it is stated explicitly that he was a subcontractor, the contractor being Gormley (Marble Specialists) Ltd and he exhibits to his affidavit the first such Deduction Certificate for the tax year 1993. Essentially, therefore, what Mr Ison says is that everybody recognised what his standing was and acted on the paper work accordingly.

15.	That was certainly not something with which Mr Johnson disagreed. Indeed, that was part of his evidence. He went on in his evidence to indicate that he had been paid on a gross payment basis and that he had the services of an accountant to make up his accounts.

16.	However, the Employment Tribunal, in our judgment entirely correctly, said that they had to look at the reality of the situation and not at the title which the parties themselves placed on their relationship. And as I understand Mr Rashid’s submission, he accepts that that is an appropriate approach. 

17.	On the basis of the very full setting out of circumstances, which Mr Rashid acknowledges is not in dispute, and bearing in mind the only matter which Mr Ison seeks to put forward as supporting the defence in this respect, is the signing of the form or the availability of the relevant form for tax purposes, it is our judgment that the Employment Tribunal had that point well on board and the decision which they took could not conceivably have been any different had the respondent been permitted merely to say that which Mr Ison says in his affidavit, which really did not add anything to the evidence which they were already considering.

18.	Therefore, our judgment is that, looking at that limb of the prospective defence, it really had no sensible prospect of succeeding. Therefore it does not weigh with any great weight in the balance on the question of granting an extension of time.

19.	The second line of defence is that even if it be the case that Mr Johnson was an employee of the appellant company, then he ceased to be an employee of the appellants in May 1997 and became an employee of another entity known as Gormley (M&E) Services. There is some uncertainty as to what Mr Ison’s evidence is about Gormley (M&E) Services. In paragraph 7 of his affidavit he describes it as Gormley (M&E) Services Ltd and describes it as a company which employed Mr Johnson from 22nd May 1997 until his dismissal on 19th February 1998. Later on in his affidavit at paragraphs 8, 9(b) and 11, he describes it as Gormley (M&E) Services. It is right to say that in the Notice of Appearance it was described as Gormley (M&E) Services Ltd. But in a contemporaneous document, namely a document dated 17th August 1997, filled in by the employer for the Inland Revenue, the employer’s name is said to be Gormley (M&E) Services.

20.	All that Mr Ison says is an assertion that as of 22nd May 1997 the appellant could no longer engage Mr Johnson apparently because work at a particular site came to an end. He had however been a conscientious worker. Gormley (M&E) Services Ltd were looking for a stone polisher and the appellant company recommended him. The company then employed him, we assume Gormley (M&E) Services Ltd, until his dismissal on 19th February 1998.

21.	The appellant is a family company; the directors are husband and wife according to Mr Ison. The address of the appellant is exactly the same as the address put forward by Gormley (M&E) Services.

22.	We look with great scepticism at a bare assertion that there are separate employers within this particular industry where there are people working on different sites from time to time, particularly where there is no evidence as to the standing of the second employer, whether it is a trading name, whether it is a firm, whether it is a limited company, and where that second employer has the same or a variation of the same name as the first employer and has exactly the same address. Furthermore, the documentation exhibited by Mr Ison in order to support this part of the defence does not support that defence, certainly not unambiguously. The employer fills out one part of the document which he has exhibited, to which I have already referred. It is a document in two parts, and that describes the employer’s name as Gormley (M&E) Services of a certain address. However, the part which the employee has filled out asks him to set out in date order all the jobs which the employee has had in any periods when the employee was out of work during the last 12 months. Mr Johnson has filled the following details. “From FEB 1993 to 22ND MAY 1997 - self-employed. 22 MAY 1997 TILL NOW - employed” Additional information is asked for in this form. He is asked to give the following details. “Your employer’s name and address if you were employed, your business name and address if you were self-employed” What Mr Johnson has filled out as additional information is “Gormley Marble Specialists” of the same address. It seems to us, and indeed Mr Rashid has indicated, that Mr Johnson was no fool, indeed he was professionally advised by an accountant. It seems to us perfectly clear that what he is there setting out is the identity of his employer during the period of his employment from 22nd May 1997 until now. Not his business name and address which of course Gormley (Marble Specialist), Gormley House, etc. is not. Therefore the documentary evidence put forward by Mr Ison does indicate that Mr Johnson was of the view that his employer from 22nd May 1997 was the selfsame company. His evidence before the Employment Tribunal was, in paragraph 35, that “at all times he worked solely for the respondents” i.e. Gormley (Marble Specialists) Ltd, “and he never worked for any other organisation. He worked at approximately 10 different sites mainly in the London area.” Then there is further detail as to how that employment came about. What he says at paragraph 39 is that:

“On the insistence of the Inland Revenue, at the end of May 1997, the applicant then began to be paid on the PAYE basis. There was no difference in his work or his method of work. He received the same hourly payments, but his daily pay was reduced by £2.10 per day, apparently to cover holiday stamps.”

23.	It seems to us that Mr Ison has, whether by accident or design, simply failed in any way to flesh out at all the relationship or inter-relationship between the two entities, Gormley (Marble Specialist) Ltd and Gormley (M&E) Services or Gormley (M&E) Services Ltd, whichever it is. In the absence of any evidence whatsoever, it seems to us that this line of defence can properly be considered as being shadowy in the extreme and not one which, in our judgment, should weigh very heavily at all in the balance on this exercise of whether the overriding interests of justice require the appellant to be granted an extension of time.

24.	Mr Rashid indicates that there is prejudice, but it seems to us that what his argument on prejudice amounts to really is is no more than the prejudice inherently present in the appellant not being able to put forward the defence that it wishes to put forward at a substantive hearing at which both sides would give evidence and would no doubt be cross-examined upon it. That really does not add anything to the question of the underlying merits of the defence, which, as we have already indicated in our judgment, is virtually non-existent in terms of the standing of employer/employee/self-employed and is shadowy in the extreme in the case of the identity of the employer from May 1997 onwards. 

25.	Therefore, weighing in the balance all these factors, our conclusion is that the overriding interests of justice do not require or even permit the appellants to have any extension of time in respect of service of their Notice of Appearance. No good reason has been put forward for the delay. The defence is either non-existent or extremely shadowy, and in our judgment, the prejudice of permitting them now to put in their defence and to force the applicant to go through a further hearing, is all against the applicant and not against the appellant. 

26.	Therefore, in our judgment, the decision of the Employment Tribunal is not one which we should overturn, even though in an abundance of caution, we have explicitly considered a wider range of matters in dealing with the exercise of discretion than the Employment Tribunal saw fit to do. Therefore, notwithstanding Mr Rashid’s efforts, we dismiss this appeal.