Appeal No. EAT/1255/00

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 13 December 2001

Before
HIS HONOUR JUDGE D M LEVY QC
MR D CHADWICK
MR G H WRIGHT MBE

SECRETARY OF STATE FOR TRADE & INDUSTRY 	APPELLANT

(1) MR R N RAWBONE 
(2) BLACK SEA & BALTIC GENERAL INSURANCE CO
 (IN LIQUIDATION) & OTHER	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR N COX
(of Counsel)
Instructed by:
The Treasury Solicitor
Queen Anne's Chambers
28 Broadway
London SW1H 9JS	
For the First Respondent

For the Second and Third Respondents	The Respondent in person

No appearance or representation
by or on behalf of the Second and Third Respondents 	

JUDGE D M LEVY QC

1	The Secretary of State for Trade & Industry (“the Department”), makes an appeal in these circumstances.  Mr Rodney Rawbone, the First Respondent to the appeal, commenced employment with Black Sea & Baltic General Insurance Company Ltd on 7 February 1977.  A winding up petition was presented against that company by its directors on 24 August 1998, and on that same day, Pumphrey J made an appointment of Provisional Liquidators of the company.  

2	On 28 August 1998, the Provisional Liquidators terminated Mr Rawbone’s employment.  By a letter dated the same day, the Provisional Liquidators informed Mr Rawbone that the Appellant would make payments for his statutory redundancy payment.  In that letter it was stated that it might become possible to pay other claims.  The letter stated that if that opportunity arose, Mr Rawbone would be informed.  

3	On 26 October the Provisional Liquidators wrote again.  They told Mr Rawbone that the Appellant would pay £5,720 in redundancy pay, but that the Department could not pay holiday pay and notice pay claims; these would rank as claims in the liquidation of the company.  

4	Subsequently, the Department made a statutory redundancy payment to Mr Rawbone notifying him of it in a document which referred to sections 182 - 183 of the Employment Rights Act 1996.  The document stated his employer was not insolvent within the meaning of those sections and it was unable to accept the Applicant’s other claims made under section 184 of the 1996 Act.  It stated that the payment was made under section 166 of the 1996 Act, in accordance with the “financial difficulties” procedure.  Those procedures do not cover insolvency payments provided for by sections 182 - 184 of the Act.  On 4 November 1998 a further letter was sent by the Department to Mr Rawbone.  There, holiday payment was refused on the grounds we have set out.  

5	On 6 November 1998, Mr Rawbone presented an Originating Application to an Employment Tribunal, claiming unfair selection for redundancy and seeking twelve weeks arrears of pay in lieu of notice and holiday pay, under section 184(1)(b) and (c) because the employer was not insolvent within the definitions in sections 183 or 166 of the appropriate act.  

6	On 4 December 1998, the company and the liquidators put in Notices of Appearance, because it was against them that Mr Rawbone claimed the monies.  They denied unfair selection for redundancy; they admitted twelve weeks arrears of pay in lieu of notice; holiday pay was due, but they disputed the amount.  The Department was joined as Third Respondent by the Employment Tribunal, of its own motions, in October 1999, and put in its Notice of Appearance on 11 November 1999.  

7	There was a hearing of Mr Rawbone’s complaint before a Tribunal sitting in central London on 8 August 2000.  The Decision of the Tribunal was promulgated on 24 August 2000.  The Tribunal unanimously decided that the Appellant was liable for payments to Mr Rawbone, in respect of twelve weeks pay in lieu of notice, and twelve days holiday pay.  

8	From that decision the Department appealed, by a Notice dated 2 October 2000.  Today, Mr Cox on behalf of the Department has addressed us for some three hours on the appropriate law and on the history of other similar cases which led to the Department being brought to the Tribunal, and having to come to this Tribunal on no less than four previous occasions.  Among the authorities, to which he has referred us in date order on this subject, are: The Secretary of State -v- McGlone  [1997] BCC 101; The Secretary of State -v- Forde [1997] IRLR 387; The Secretary of State for Trade and Industry -v- Walden [2000] IRLR 168 and The Secretary of State for Trade and Industry -v- Henson [unreported] 13 March 2000 (EAT).

9	In the Extended Reasons of the Tribunal, paragraph 5 sets out some of the facts and paragraph 7 says this:
“7.  The claim against the Third Respondent is pursuant to section 182 of the Act.  It was maintained by the Third Respondent [that is the Department] that Mr Rawbone had not supplied the Department with any evidence which demonstrated that his employer is insolvent.  It was further maintained that section 166(4) provides that legal proceedings in section 166(1)(a) does not include any proceedings before an industrial tribunal.  Therefore the Department can require an applicant to apply to an industrial tribunal to establish an entitlement to a redundancy payment before making a payment from the Fund.”

There was then reference to Carr -v- British International Helicopters Ltd (in administration) [1994] IRLR 212.  In paragraph 9, the Extended Reasons made a finding on the evidence, that the First Respondent was insolvent within the meaning of section 183 of the Act and that the Second Respondent is then absolved from payment.  The paragraph continued:
“We find, as a fact, that section 184 of the Act applies and, in particular, section 184(c) in respect of the holiday pay claimed by Mr Rawbone and section 184(b) in respect of the notice pay claimed by Mr Rawbone.  We find that the Appellant is liable to pay these sums pursuant to section 166(5) of the Act in that the Company is insolvent within the meaning of section 166(1)(b) of the Act.”

10	Mr Cox has taken us carefully through the provisions of section 183 and all the other appropriate sections, in particular he has drawn our attention to the provisions of section 183(1)(b) which provides:
“(1) An employer has become insolvent for the purposes of this Part -……..
        (b) where the employer is a company, if (but only if) subsection (3) is satisfied.”
Subsection (3) reads:
“(3)  This subsection is satisfied in the case of an employer which is a company - 
(a) if a winding up order or an administration order has been made, or a resolution for voluntary winding up has been passed, with respect to the company.”
It is clear that none of those had been made in this case.  
(b)  if a receiver or (in England and Wales only) a manager of the company’s undertaking has been duly appointed,…….or
(c)  if a voluntary arrangement proposed in the case of the company for the purposes of Part 1 of the Insolvency Act 1986 have been approved under that Part of that Act.”
None of those had happened here.  

11	Therefore, prima facie, the Appellant is right in the arguments put forward by Mr Cox that the Decision below is wrong.  Mr Cox had, very properly, as Mr Rawbone was representing himself on the appeal, presented to us every conceivable argument that a professional representative for Mr Rawbone could have put, and has satisfied us - much as we might have liked to have acceded to one or other of such submissions - that it was not possible for us to do so.  This is a disappointment to us because we are sad that somebody in the Respondent’s position has already had to wait some years for the holiday pay to which he is undoubtedly entitled, and may have to wait for some further years.  

12	With reluctance, we have to allow this appeal, but we do hope that something may be done, some time in the near future, to remedy the situation.  The reason for this particular Decision is that because an insurance company went into liquidation, a Provisional Liquidator was appointed who simply does not fit into the scheme of section 183 and we are satisfied, from all the other statutory references to which we were taken, that this cannot have been unintentional.  In the circumstances, we will do as we are asked to do, and allow this appeal to the extent of setting aside the declaration that was made below.  We would thank Mr Cox very much for his submissions and Mr Rawbone for his patience and hope that he will not have to wait too long to receive the sums claimed in his application.