APPEARANCES
| For the Appellant |
MS BARBARA HEWSON
(of Counsel)
Instructed by:
Messrs Bevans Solicitors
Grove House
Grove Road
Redland
Bristol
BS6 6UL |
| For the Respondents |
MR JONATHAN SWIFT
(of Counsel)
Instructed by:
Messrs Clifford Chance LLP
10 Upper Bank Street
London
E14 5JJ
|
THE HONOURABLE MR JUSTICE RIMER
- This is an appeal against a decision of an employment tribunal chaired by Mr D.A. Pearl and held at London Central over six days in June and July 2004. The tribunal's extended reasons were sent to the parties on 6 August. The applicant before the tribunal, now the appellant before us, is Mr Jonathan Hiscock. There are two respondents to his application, and now to this appeal: (i) Starbucks Coffee UK Ltd ("Limited") and (ii) Starbucks Coffee EMEA BV ("BV"). The "EMEA" in BV's name stands for Europe, Middle East and Africa. Limited and BV are wholly owned subsidiaries of a US company, Starbucks Coffee International.
- The decision under appeal was on preliminary issues in disability discrimination proceedings brought by Mr Hiscock against Limited and BV, who are former employers of his. The tribunal's decision on those issues was that (i) Mr Hiscock had been employed by Limited from 1 March 1999 to 1 September 2002, and (ii) by BV from 2 September 2002 to
1 June 2003. Mr Hiscock's application to the employment tribunal was presented on 1 September 2003. His case on the preliminary issues was that he had been employed by Limited not just down to 1 September 2002 (as the tribunal found), but down to 1 June 2003. The tribunal's rejection of this case, and its decision as to the term of his employment by Limited, raised a potential difficulty in the way of his substantive claim against Limited. By this appeal, he has argued that the tribunal was wrong in rejecting his case. Ms Barbara Hewson represented Mr Hiscock on his appeal. Mr Jonathan Swift represented, as we understand it, both respondents, although BV did not enter an appearance to the employment tribunal proceedings and took no part in the hearing of the preliminary issues before the tribunal. The questions we have to decide fall within a small compass but we must first summarise the background against which they arise.
Mr Hiscock's employment by Limited and BV
- Mr Hiscock was employed by Limited under a written contract made in January 1999, which provided (by clause 1.1) that his employment was to commence on 1 March 1999. He was engaged as Limited's Supply Chain Operations Director. Clause 2.2 provided that his employment would continue unless terminated by (initially) not less than one month's prior written notice given by either side and (as from 1 September 1999) by not less than six months' prior such notice. This provision is relevant to an application for leave to amend the notice of appeal that Ms Hewson made at the beginning of the hearing. We refused leave for reasons we said we would give in this judgment, and we will come to them later.
- On 23 August 2000, Mr Mark McKeon, Starbuck's president for Europe, the Middle East and Africa ("EMEA"), wrote to Mr Hiscock offering him "promotion to the role of Supply Chain Coffee Operations Vice President (Europe Middle East and Africa)." The new post was to start on 2 October 2000 and was to be based initially in the UK. The letter stated that Limited would continue to be Mr Hiscock's "employer of record" but that:
"We may subsequently establish a separate subsidiary for our Europe, Middle East and Africa regional operations, and it is expected that your employment will be transferred to a new entity and location when the location of the regional office is determined and it is appropriate for the position."
On 31 August 2000, Mr Hiscock countersigned Mr McKeon's letter by way of acceptance of the offered promotion.
- Mr Hiscock made a valuable contribution to the EMEA operations. In August 2001, BV was incorporated in the Netherlands as the vehicle which was in future to be responsible for them. On 11 October 2001, Mr McKeon, as President of BV, wrote to Mr Hiscock offering him the position of vice-president of BV, a position based in Amsterdam. The letter stated that his employer of record would be BV. It described his duties as vice-president, of which the first was to "devote all [his] professional time to fulfilling the duties of [his] employment." It explained that:
"You may also be asked to serve as a director of [BV], of certain Associated Companies and of certain joint ventures between [BV] and third parties. You will (with or without further remuneration as [BV] may determine) carry out duties consistent with your existing duties hereunder on behalf of any Associated Company."
and it further provided as follows:
"Relocation Date/Effective Date of Contract
Your relocation date will be a mutually agreeable date between March 1, 2002 and August 1, 2002 (the 'Relocation Date'). Your employment with [BV] will commence on your Relocation Date. This Relocation Date will also be the effective date of this contract and the provisions outlined herein."
- The letter detailed the terms of the new employment. Under the heading "Notice and Severance", it provided that the employment could be terminated by either Mr Hiscock or BV by a notice of termination required under Dutch law. It stated that "This job offer letter has been made according to Dutch Labour Law. Any disputes, arguments and final consequences will ultimately be ruled by Dutch Law." Finally, having invited Mr Hiscock to accept the offer by signing both copies of the letter and returning one, the letter said:
"After your acceptance of this offer, your employment with [Limited] will cease as of your first day of employment with [BV] and your employment contract with that company will have no further force or effect."
This was an important term of the letter and we will call it "the termination provision." On 10 December 2001, Mr Hiscock signed a note accepting the offer made by, and in the terms of, the letter of 11 October 2001. We will refer to that acceptance as creating "the December 2001 agreement."
- Mr Hiscock relocated to the Netherlands in September 2002. With effect from 2 September 2002, he took up residence in Haarlem and worked from BV's offices in Amsterdam. That relocation thus happened later than was contemplated by the letter of 11 October 2001, but nothing turns on that. The purported effect of the termination provision in the December 2001 agreement was that Mr Hiscock's employment with BV commenced on 2 September 2002, when his employment with Limited ceased. That is also what the tribunal found had happened.
- Between 28 November 2002 and 10 February 2003, Mr Hiscock was on sick leave. He was treated in a clinic for stress and depression. He returned to work on 10 February 2003. On 20 February 2003, he was confronted with a complaint concerning his personal conduct towards an assistant. He was given the choice of resigning or of being summarily dismissed.
Following that meeting, he took an overdose and was admitted to hospital in Haarlem. On 24 February 2003, he was dismissed, purportedly with effect from 20 February 2003. Following his dismissal, various legal proceedings were commenced in the Netherlands, whose nature and outcome we must summarise.
Mr Hiscock's proceedings in the Netherlands
- On 7 March 2003, Mr Hiscock brought proceedings against BV challenging the lawfulness of his dismissal. He contended that BV was his employer. BV disputed this and asserted that Limited was his employer, which Mr Hiscock contested. Part of the relief he sought was an order that he be allowed to resume working for BV as soon as he was fit enough. On 11 April 2003, the court (Judge De Waal) made an interlocutory decision reflecting the court's provisional view that Mr Hiscock had shown an arguable case that BV was still his employer and that his dismissal was unlawful. The court granted him certain injunctive relief, but it did not order his reinstatement.
- BV served a defence in July 2003. It asserted that Mr Hiscock had remained in Limited's employment even after his relocation to Amsterdam, that Limited continued to pay him and that BV was not his employer. By his reply, Mr Hiscock re-asserted that BV was his employer. He said that, following his relocation to Amsterdam, he started receiving the salary and benefits outlined in the letter of 11 October 2001 and that his change of employment was not affected by the fact that part of the payments came from England. On 29 January 2004, there was a hearing in which the court appears to have accepted Mr Hiscock's case that he became employed by BV and was in its employment on 20 February 2003. The hearing was adjourned so as to enable the parties to achieve, if they could, a settlement of their differences. They failed to do so and the court gave its final decision on 17 June 2004. That decision was that Mr Hiscock had been employed by BV, not by Limited; that BV's dismissal of him had been unlawful; and that BV's employment of Mr Hiscock had finally ended on 1 June 2003 (a date explained by the proceedings to which we next refer).
Proceedings by BV and Limited against Mr Hiscock in the Netherlands
- On 1 April 2003, Limited and BV started their own proceedings against Mr Hiscock. They were responsive to those that Mr Hiscock had started shortly before: the employment tribunal said they had been described as "protective" proceedings. Their premise was that the dismissal on 24 February 2003 was or may have been unlawful and, if so, the two applicants sought the court's order dissolving any still subsisting employment contract between Mr Hiscock and whichever Starbucks company employed him. The primary case was that Limited was his employer as at 24 February 2003, the alternative case was that his employer was BV. Mr Hiscock defended the proceedings, asserting that as at 24 February 2003 he was employed only by BV.
- Judgment in these proceedings was given on 11 April 2003 (also by Judge De Waal, who had made an order in Mr Hiscock's proceedings on the same day). The court found that Mr Hiscock was employed by Limited as from 1 March 1999; that he concluded a contract on 10 December 2001 under which he was to start working for BV; that, in order to perform that contract, he moved to Haarlem on 2 September 2002; that he became disabled from work on 28 November 2002 but resumed work on 10 February 2003; that on 20 February 2003, he took an overdose and was admitted to a hospital in Haarlem; that on 24 February 2003, BV sent a letter to the hospital notifying him of his dismissal with effect from 20 February; that he did not receive that letter, but did receive a copy of it on 6 March 2003. The court found that Mr Hiscock was employed by BV as at 20 February 2003, but not by Limited. It then made certain orders which were conditional on the establishment by any other court judgment (or in any other manner) that the employment contract between the parties was still in effect, such orders including (i) a declaration that Limited's claim was inadmissible, and (ii) a dissolution of the employment contract between BV and Mr Hiscock with effect from 1 June 2003. The premise of the latter order was that Mr Hiscock's dismissal on 24 February 2003 was unlawful, an issue which fell to be determined in Mr Hiscock's separate proceedings. As we have said, the final outcome of those proceedings was that the dismissal was unlawful and that the employment contract between Mr Hiscock and BV was therefore dissolved as from
1 June 2003.
Mr Hiscock's application to the employment tribunal
- On 1 September 2003, Mr Hiscock presented an application to the employment tribunal claiming relief under the Disability Discrimination Act 1995 ("the DDA"). He joined both Limited and BV as respondents. His case is that he was employed by Limited from
1 March 1999 to 30 May 2003 and by BV from about August 2002 to 30 May 2003. His complaint is that both respondents discriminated against him as a result of his disability and he asks for compensation (his IT1 also asked for reinstatement or re-engagement, but his particulars of claim did not repeat that claim). The complaints of discrimination all appear to relate to events post-dating his relocation to Holland in September 2002. BV did not enter an appearance but Limited served an IT3 in which, in paragraph 2, it took (amongst other points) the point that it was not Mr Hiscock's employer at the time of the complaints he was raising and that his application against Limited was anyway out of time (see section 8 of, and Schedule 1 to, the DDA). Limited's case (in contrast to its case in Holland) is that it had ceased to be Mr Hiscock's employer on 1 September 2002 upon his relocation to Holland.
- The matter came before the tribunal on 28 April 2004 at a hearing listed to decide five preliminary issues. One was as to whether Mr Hiscock was disabled within the meaning of the DDA. For the short reasons they gave, the tribunal held that he was. Two further issues were whether the complaints were presented in time and, if not, whether it was just and equitable to extend time: they were adjourned to the ultimate merits hearing. The two remaining issues, which tribunal adjourned to a hearing in June 2004, were as follows:
"1.1 What were the dates that [Limited] employed [Mr Hiscock] and when was the effective date of termination?
1.2 What were the dates that [BV] employed [Mr Hiscock] and what was the effective date of termination?"
- Those are the issues that were the subject of the decision by the tribunal now under appeal. As we have said, the tribunal's answer to the first issue was 1 March 1999 to 1 September 2002 and their answer to the second issue was 2 September 2002 to 1 June 2003. It is only the first of those two decisions that Mr Hiscock challenges in this appeal.
The decision of the employment tribunal
- The tribunal explained that only Limited had sought to defend the proceedings: BV had not entered an appearance and had taken no part in them. The tribunal made findings of fact in paragraphs 7 to 22, saying that many of the essential facts were not in dispute. They referred to the original employment contract between Mr Hiscock and Limited under which his employment with Limited started in March 1999; to the letter of 23 August 2000; and to the letter of 11 October 2001 and to Mr Hiscock's acceptance of the offer in it on
10 December 2001. They said there was no dispute that Mr Hiscock transferred to Amsterdam on 2 September 2002.
- The tribunal then referred to Mr Hiscock's case that there was an agreed deferment of "the relocation date/effective date of contract" (see again the letter of 11 October 2001) until a mutually agreeable date in December 2002. This agreement was said to have been reached with Mr McKeon some time after October 2001. Mr Hiscock said, and the tribunal found, that at that stage there were a number of loose ends which still required further negotiation and agreement. Two of them (education costs and an item of compensation) were agreed by December 2001 but the tribunal said the major difficulty was with regard to the SAYE savings plan which had been launched by Limited in 1999 and was due to mature in 2002. The tribunal said that, in order to remain within Inland Revenue rules, the parties' understanding was that Mr Hiscock had to be remain on Limited's payroll. Mr Hiscock's case was that, on an unspecified date between October and December 2001, it was orally agreed that his employment with Limited would continue until at least December 2002. Limited's case was that any agreement only amounted to an administrative change to the effect that Mr Hiscock would remain on Limited's payroll.
- The tribunal said the surrounding evidence touching on this issue was not conclusive. The parties were agreed that the only potentially material document was a partner transfer request (Starbucks referred to its employees as "partners") signed by Mr McKeon and Mr Hiscock on 31 July 2002. This referred to 1 September 2002 as being the physical transfer date to Holland and to 13 December 2002 as being Mr Hiscock's last day on Limited's payroll. It also referred to the payment of housing and relocation allowances before 1 September 2002. The tribunal said the document was inconclusive, and that both sides could rely upon it for their respective contentions. They said (in paragraph 13) that the issue for them was:
"… whether or not the agreement that was reached had effect as a variation of the contract. We doubt that contractual questions and, in particular, the question relating to the identity of the employer, were uppermost in [Mr Hiscock's] mind at the time that he took part in any relevant discussions. The commercial reality was that he was required to work in Amsterdam and that this amounted, in a practical sense, to his relocation."
- The tribunal then referred to the Netherlands proceedings and pointed out that Mr Hiscock had advanced no case in either such set of proceedings that he had been employed by Limited after September 2002, whereas Limited had advanced the assertion in those proceedings that it had employed him until 1 March 2003. As the tribunal put it (in paragraph 16) "[Mr Hiscock] and [Limited] adopted wholly contrary stances in the Dutch proceedings to those they have maintained in these proceedings."
- Before ruling on the issue as to this alleged variation of the relocation agreement, the tribunal explained that Mr Hiscock also asserted that a second variation of it had been agreed with Mr McKeon on 28 November 2002, after he had fallen ill. The tribunal said he was, understandably, anxious to preserve his health benefits under his contract with Limited. They then said, in paragraph 17:
"[Mr Hiscock] tells us that Mr McKeon sent him a text message saying that he would be retained in UK employment for this purpose. However, [Mr Hiscock] volunteers to us that he was substantially medicated at the time and he cannot say whether the text message referred to remaining in UK employment or being kept on the UK payroll"
The tribunal said that what Limited and BV had said about this in the Dutch proceedings, including that Mr Hiscock had "attempted once more to delay his start date with [BV] until 1 March 2003", appeared to support Mr Hiscock's case, although they again referred to Mr Hiscock's contrary stance in the Dutch proceedings. In paragraphs 18 to 22, the tribunal made various findings of fact to which we should refer.
- They found that on 8 August 2002, before moving to Amsterdam, Mr Hiscock was removed as a signatory of Limited's bank account. He registered as a resident of Haarlem on 2 September 2002. At a meeting in October of Limited's steering committee, he was described as a visitor to the UK. BV paid him school fees and housing allowances after September 2002. On about 23 September 2002, he relinquished his Limited credit card and he had a BV business card. The tribunal said these were all pointers to his having become an employee of BV at the beginning of September 2002, subject to any variation to the agreement of 10 December 2001 that he might establish. The tribunal found that it was because of his illness that Mr Hiscock did not move on to the BV payroll on 13 December 2002. They then said:
"19. … As to the events of February 2003, we do not regard these as throwing a great deal of light on the preliminary issues. We find that Ms Middleton, the human resources manager for the Support Centre of [Limited], received a call on 30 January 2003 from [Mr Hiscock]. He said he was returning to work on 10 February 2003 and in consequence she asked Mr McKeon whether [Mr Hiscock] should be made 'a leaver on the UK payroll effective 7 February 2003?' … The reply was that Mr McKeon was happy that he be processed as a leaver as of 7 February. Ms Middleton later discovered that [Mr Hiscock] had never been put onto the payroll of [BV] and therefore [he] was reinstated to the payroll of [Limited]. He was subsequently removed from the payroll for a second time effective from 20 February. We do not find that any of these administrative processes, or the raising of P45s, has any bearing on the question of employment, given the particular and unique circumstances of the case. In answering questions from the Tribunal, Ms Middleton made it plain that the operation of the payroll was a wholly administrative matter. An important consideration was one of simple convenience. We ought to add that [Limited] was named as the employer on the relevant P45s.
20. As to the termination of the employment, the evidence we received from Ms Hailstone, [Limited's] Head of Human Resources, which we accept, is that Mr McKeon asked her to draft a termination letter while he was visiting the UK. That letter … was written on the headed notepaper of [Limited] and we accept that Ms Hailstone did not have any of [BV's] notepaper to use. It referred to a summary dismissal from 'Starbucks Coffee Company' and was signed by Mr McKeon as President of 'Starbucks Coffee (EMEA)'. There is a letter of 19 March 2003 … written by Mr Myers the senior vice-president, human resources, of Starbucks Coffee International, the American company. It was drafted by Ms Hailstone and refers to a dismissal from [Limited] on 20 February 2003. In the circumstances of this case, we do not regard that reference as giving any assistance as to whether or not there was a contract of employment in existence at that date. …
22. We ought to add that it is not in dispute that allowances and other payments paid by [Limited] to [Mr Hiscock] after September 2002 were recharged to [BV]. As with other factors in this case, including the various responsibilities that [Mr Hiscock] retained in London after 2 September 2002, we do not find this to be a determining pointer towards answering the question as to the identity of [Mr Hiscock's] employer or employers."
- After a careful review of the course of the two sets of Dutch proceedings, the tribunal came to their conclusions on the preliminary issues, first reminding themselves that, under section 68 of the DDA, "'employment' means … employment under a contract of service or of apprenticeship or a contract personally to do any work, and related expressions are to be construed accordingly."
- The tribunal recorded that Mr Hiscock's case was that from 2 September 2002 to 24 February 2003 he had two employers – Limited and BV – and that, in respect of each of them, he satisfied the test of a contract for services and also a contract personally to do work. He relied on his receipt of pay and other benefits through Limited's payroll. His case was that the December 2001 agreement (under which Mr Hiscock's employment was to be transferred from Limited to BV) was consensually varied so as to permit employment also by Limited from 2 September 2002.
- The tribunal rejected the submission that Mr Hiscock continued in Limited's employment after 1 September 2002. They said that the letter of 23 August 2000 signified the intention that Mr Hiscock's employment would be transferred to a new entity, an intention which "crystallised into commercial reality" by the termination provision of the letter of 11 October 2001. They said it followed that Mr Hiscock's case that he continued in Limited's employment after 1 September 2002 was centrally dependent on his case that there was an agreed variation of the terms of the December 2001 agreement. There was no dispute by Mr Hiscock that he was employed by BV as from 2 September 2002. The question, said the tribunal in paragraph 36.6, was whether "there was, at the same time, a contract with [Limited], running alongside that with [BV]." The tribunal rejected the case that any such contract existed. They said:
"36.7 Our conclusion is that the evidence is insufficient and also too imprecise for us to be satisfied that such a contract existed. This is the case whether we look at the matter as one that might have been affected by variation, alternatively by way of implication. The essential factual point, in our judgment, is the need, as perceived by the Parties, for [Mr Hiscock] to remain on [Limited's] payroll so that he and his colleagues could exercise the SAYE options on 1 December 2002. We have found that questions of contractual intention and questions relating to the identity of the employer were not high in [Mr Hiscock's] mind at the time. We conclude that it would be surprising if he had been thinking in those legalistic terms, given the clear evidence to us that retaining [Mr Hiscock] and others on [Limited'] payroll was an administrative step taken for convenience; specifically, to meet the objective of enabling him to benefit from the SAYE arrangements. If it had registered in [Mr Hiscock's] mind as being contractually significant, we think that there is some force in the observation that he might have been expected to have documented this by memo or in some other way. We consider that for [Mr Hiscock] to succeed in his contention, he must show by clear evidence that the parties intended substantially to vary their earlier written agreement so that the employment with [Limited] continued, whether or not employment with [BV] was either to be commenced or deferred. We can find no such evidence. On the contrary, there are many pointers in the evidence to the parties having intended that the original written agreement should be performed."
- The tribunal then, in paragraph 36.8, identified those various pointers in detail. We do not find it necessary to list them, although we will at least refer to the tribunal's point that:
"The payment by [Limited] of salary and other benefits can properly be regarded as an administrative exercise which would not have been entered into but for the SAYE plan. It does not amount to a contractual relationship between the parties and appears on the facts that we have been presented with to be an administrative device only."
Having identified the various pointers they did, the tribunal concluded that "[a]gainst the background of the clear contractual documentation, we have no basis to find for [Mr Hiscock] on his first alleged ground of variation."
- The tribunal then disposed as follows of the case that Mr Hiscock was an employee of Limited after 1 September 2002:
"36.9 As to the second alleged variation, [Mr Hiscock] very fairly put this in guarded terms. In one sense, because we have found against [him] on the alleged first variation, this is an even more difficult matter for him to establish. We think it impossible to find that Mr McKeon had agreed to retain [him] in the employment of [Limited]. We are not satisfied that [Mr Hiscock's] case as to the second variation has been made out and that any agreement was effected by text message while [he] was in hospital and, as he accepted, under heavy medication.
36.10 [Mr Hiscock's] submissions appear to embrace a contention that he was contracted personally to do work for [Limited] after 2 September. We do not consider that such a contract has been made out on the facts of the case. In any event, we would adopt the extensive reasoning set out by Mr Swift in his written submission to the effect that there is no necessity to imply or erect or find such a contract. The relationship of the parties was governed by the agreement that had been reached between [Mr Hiscock] and [BV] and after the date of transfer the employment with [Limited] ceased. We adopt the legal analysis that [Limited] has made in the written submission and we agree that there would have to be a necessity to imply a further contract with [Limited] after 2 September. In our view, there is no necessity at all. Mr Swift has returned to the theme at paragraph 38 of his submission where he adjusts the focus of the enquiry somewhat and asks whether there is additional room for an agreement between [Mr Hiscock] and [Limited] that would satisfy section 68 which, as a minimum, requires a contract personally to perform work. It suffices to say at this point that we adopt all of his submissions up to paragraph 39 and agree that: (a) there is no room for implication of such an agreement; (b) there appears to be no contractual obligation owed to [Mr Hiscock] to pay him, where (as happened here) the two companies made their own arrangements for the reimbursement of [Limited] by [BV] of salary and other costs; and (c) there is no obligation on the facts for [Mr Hiscock] to perform services for [Limited] because the work that he performed that affected [Limited] fell within his contractual duties to [BV]."
- The result was, therefore, that the tribunal concluded that Mr Hiscock had no contract of employment with Limited after 1 September 2002: as from 2 September 2002, he was employed solely by BV. The tribunal then turned to consider Limited's further argument in support of this conclusion, namely that the result of the Dutch proceedings was to estop Mr Hiscock from arguing that he remained an employee of Limited after 1 September 2002. The type of estoppel relied upon was issue estoppel. The tribunal referred to the threefold requirement for such an estoppel identified by Lord Brandon in The Sennar (No.2) [1985] 1 WLR 490, at 499: first, that the judgment in the earlier action relied upon as creating the estoppel must have been (a) of a court of competent jurisdiction, (b) final and conclusive and (c) on the merits; second, that the parties (or their privies) in the earlier action and those in the later action in which the estoppel is raised as a bar must be the same; and, third, that the issue in the later action, in which the estoppel is raised as a bar, must be the same issue as that decided by the judgment in the earlier action. The tribunal concluded that the same issue as that with which they were concerned had been finally decided by the Dutch courts adversely to
Mr Hiscock and that in consequence Mr Hiscock was estopped from now seeking to argue for something different. The tribunal said:
"36.21 In our view, Mr Swift is correct to submit that the factual background to the question before the Dutch court, namely who employed [Mr Hiscock] in February 2003, had to be considered before the question could be answered. We agree that it was exactly the same factual background as we have traversed in this hearing. [Mr Hiscock] did not advance a case that he was an employee after 2 September 2002. He expressly relied upon the relocation and legal effect of the same, which was derived from the agreement that he had signed. We agree that the orders of the Dutch court were underpinned by the fundamental factual finding that [Mr Hiscock] became an employee of [BV] on or about 2 September 2002. That he now states that he was employed by [Limited] thereafter is in contradiction to the necessary factual finding of the Dutch court that he transferred to the employment of [BV], and that the employment was consecutive. Our conclusion is that the issue estoppel arising from the judgments and findings of the Dutch court operates to as to prevent [Mr Hiscock] from asserting the contrary case before us. The argument that the Dutch court would only have recognised one employer at any one time, and that this explains the stance that he adopted in his pleadings, is, we consider, not only highly artificial, but incorrect. [Mr Hiscock] maintained a clear position on the legal effect of the agreement that he had signed and further the legal effect of his transfer to Amsterdam. The courts found for him and adopted the submissions that he made. We are accordingly obliged to recognise not only the decisions of the Dutch courts in [Mr Hiscock's favour] but also the necessary and fundamental findings that underlay those decisions, bearing in mind his own submissions and pleadings before those courts. We find that the issue estoppel is made out in this case."
The appeal to this appeal tribunal
- Mr Hiscock's case before the employment tribunal was that he continued to be "employed" by Limited after 1 September 2002 because he still had a contract of service with Limited or because he was under a continuing contract with Limited personally to do work (see section 68 of the DDA). The tribunal found against him on both limbs of his argument. By paragraph 7.6 of his notice of appeal, Mr Hiscock disclaimed any challenge to the tribunal's finding that he had no continuing contract of service with Limited after 1 September 2002. The notice of appeal confined itself to a challenge to the correctness of the decision that nor did he have a contract with Limited under which he was required personally to do work.
- The case to that effect made in the skeleton argument before us (one prepared by Mr James Holmes-Milner, who had represented Mr Hiscock before the employment tribunal) is that the essential ingredients of the contract relied upon were a mutually enforceable set of obligations. It is said that, apart from school fees, all incidents of pay and benefits to which Mr Hiscock was entitled upon and following his translation to the Netherlands on
2 September 2002 (bonus, pension, private health insurance, life insurance, car allowance, SAYE scheme, relocation allowance and housing allowance,) were paid and administered by Limited as a result of an agreement between it and him. It is pointed out that Limited had admitted (in paragraph 8 of its Defence) that it had agreed that it would continue to pay Mr Hiscock until 1 December 2002 in order to protect his tax position and his entitlement under the SAYE scheme, although it would do better justice to that admission to point out that Limited also there asserted that it was making these payments as BV's agent and that the salary costs were re-charged to BV. It is further said that, if Limited's agreement to make these payments was supported by valuable consideration, then there was a binding contract. It is said that it was supported by such consideration, namely an obligation on the part of Mr Hiscock to Limited to work for BV in exchange for the benefits he was receiving from Limited; and reference was made to Burton v Higham (t/a Ace Appointments) [2003] IRLR 257 as authority for the undisputed proposition that it is enough for section 68 purposes that work is done for a third party in return for payment from the alleged employer. As to the arrangements that Limited claimed it made with BV for reimbursement of its outlay, they were said to be in dispute at the hearing and anyway irrelevant to whether there was a contract between Mr Hiscock and Limited of the nature asserted. The submission advanced in the skeleton argument is that the tribunal wholly failed to deal with Mr Hiscock's case that the relevant post-1 September 2002 contract between him and Limited was one under which, in consideration of his promise to Limited to work for BV, Limited would continue to make the payments to him that it did. It is further said that, had the tribunal addressed themselves to this submission, they should and would have found that Mr Hiscock had the benefit of a contract with Limited personally to do work. The tribunal ought then also to have found that the agreement contained in the letter of 11 October 2001 was varied so that the employment relationship with Limited did not, contrary to what that agreement had provided, automatically terminate on 2 September 2002. The complaint is that the tribunal never considered this in terms, any more than they considered whether there was a second variation by which the contract personally to do work was extended after 13 December 2002.
- In her oral argument to us in support of the appeal, Ms Hewson focused in particular on the fact that, following his move to the Netherlands in September 2002, Mr Hiscock was enjoying the benefits of the medical insurance cover that Limited had been obliged to make available to him. The relevant policy of insurance was not in evidence, which did not assist the argument, but the submission was founded on the rhetorical question to the effect that, if Mr Hiscock did not continue to be employed by Limited, how could he have continued to claim under the medical insurance cover? The essence of Ms Hewson's submission was that it was obvious that Mr Hiscock would have wanted Limited to be under an enforceable obligation to him to make the post-1 September 2002 payments, and therefore there must have been in place just such a contract as that which was asserted on his behalf.
- Forcefully though the case was argued by Ms Hewson, we were not persuaded that there is any basis for criticism of the tribunal's careful findings and conclusion. The question whether there was any contract between Mr Hiscock and Limited after 1 September 2002 was at the heart of the debate before the tribunal and the tribunal found there was not. They found that there had been no subsequent variation of the terms of the letter of 11 October 2001; that when Mr Hiscock moved to the Netherlands on 2 September 2002, his contract with Limited came to an end and was replaced by a contract with BV; and that there was no subsequent variation to that arrangement either. Mr Hiscock's point on this appeal is that, as he remained on Limited's payroll after 1 September 2002, it was irrational for the tribunal not to find that Limited remained under a contractual obligation to make the payments to him that it did make. But in order for there to have been any such contractual obligation, there had to be mutually enforceable promises. His case is that Limited agreed to make him the payments. So far so good, but that does not help him unless its promise was supported by valuable consideration moving from him. What is suggested in support of that is a promise by him to Limited that he would work for BV. The notion that he should have made such a promise appears to us, however, to be thoroughly artificial. Mr Hiscock had a separate, and perfectly good, contract with BV which required him to work for BV, and our understanding is that it was anyway no part of his evidence that he in fact ever made Limited such a promise. The idea that there was ever such an agreement between Mr Hiscock and Limited as is now suggested on his behalf appears to be nothing other than the fruit of his lawyers' ex post facto efforts so to rationalise the relevant events as to conjure up a contract which will support his claim under the DDA - the existence of any such contract being something that Mr Hiscock himself denied in the course of the Dutch proceedings. In our view the conjuring does not work. There is no reason why the making of payments by Limited to Mr Hiscock had to be pursuant to a contract. The tribunal made a finding that they were simply made under non-contractual administrative arrangements. That was a finding to which they were properly entitled to come and it was one which shut the door on Mr Hiscock's belated claim that he remained an employee of Limited after 1 September 2002. We see no error of law in that decision. It follows that Mr Hiscock's appeal fails.
- Had Mr Hiscock persuaded us that the tribunal were wrong in their conclusion that there was no employment contract between him and Limited after 1 September 2002, he still could not have succeeded on this appeal unless he could show that they were also wrong to hold that he was estopped by the Dutch proceedings from arguing the point. We find it unnecessary, for reasons given, to devote extended consideration to this element of the appeal, but say simply that, had it been necessary to do so, we would probably have concluded that Mr Hiscock was not so estopped. His only case before us has been that the nature of his employment contract with Limited was one under which, in consideration of his agreement to work for BV, Limited promised to make certain payments to him. We do not understand the Dutch courts to have considered, let alone decided, whether a contract of that nature existed between Limited and Mr Hiscock after 1 September 2002 (not least because no-one, including Mr Hiscock, was suggesting that there was any such contract) and in those circumstances our provisional view is that no estoppel would have prevented Mr Hiscock from arguing the point.
The application for leave to amend
- At the beginning of the hearing Ms Hewson sought leave to amend the notice of appeal to assert a new ground of appeal, namely that the tribunal failed to consider whether Mr Hiscock's service agreement with Limited had ever been validly terminated, the further intended assertion being that it had not been. Ms Hewson wanted to argue that Mr Hiscock's elaborate case about alleged variations of the terms of the letter of 11 October 2001 so as to show that he remained an employee of Limited after 1 September 2002 was unnecessary surplusage. She wanted to argue that he had a much easier road to victory. That argument was that (i) clause 2(2) of his January 1999 service agreement with Limited provided that the agreement could only be terminated by at least six months' notice by either side, (ii) no such notice was ever given, and (iii) whilst the letter of 11 October 2001 provided that, if its terms were accepted (which they were), Mr Hiscock's employment contract with Limited would come to an automatic end on his relocation to the Netherlands, that was no more than a pious thought writ in water because the letter was written not by Limited but by BV: and BV and Mr Hiscock could not between them effect a variation of the latter's service agreement with Limited.
- The logic of the point is solid enough although its application to the facts is less than compelling. For example, Mr Holmes-Milner's skeleton argument asserted (in paragraph 8) that "[Limited] and [BV] are closely connected operationally, financially and organizationally (e.g. the MD of [Limited] reported to the President of [BV])." That assertion would suggest that, had the point been explored at the hearing before the employment tribunal, there would have been ample scope for an inquiry as to whether Mr McKeon (the author of the letter of
11 October 2001) had Limited's authority to purport by his letter to propose a variation of the terms on which Mr Hiscock's service agreement with Limited could be terminated.
- Mr Swift opposed the giving of leave. We heard an extended debate on the matter. As we have said, we refused leave and now give our reasons for doing so.
- The hearing before the tribunal was a split hearing. The tribunal sat first on
24 and 25 June 2004, when Mr Witold Pawlak, then of counsel, represented Mr Hiscock. Those two days were devoted to Mr Pawlak's opening and the expert evidence on Dutch law. We understand that Mr Pawlak made it plain that he would be unable to continue to represent Mr Hiscock at the resumed hearing, which was from 19 July 2004 onwards, the reason for that later emerging as being that Mr Pawlak had been appointed to the Circuit Bench. The result was that, on the resumed hearing, Mr Holmes-Milner took over Mr Pawlak's brief. The resumed hearing was devoted to the factual evidence and to the closing speeches.
- We have been shown Mr Pawlak's opening skeleton argument prepared for the hearing on 24 June. It ran to 12 pages. Paragraph 8 included the assertion that:
"8. There is no documentary evidence which shows that [Mr Hiscock] was not employed by [Limited] after any particular date or that his employment with [Limited] ended at any time prior to February 2003."
Paragraph 9 then set out nine matters said to support the conclusion that Mr Hiscock was employed by Limited as at 20 February 2003. The fourth of them read:
"(4) [Limited] has never terminated [Mr Hiscock's] employment in accordance with clause 2 of its employment contract (page 46)."
Thus the point Ms Hewson sought to raise was there squarely identified. Nowhere, however, is it referred to in the tribunal's extended reasons. Since it is apparently such an obvious point, the question arises: why not?
- As to that, we cannot see that the point was ever raised in the pleadings. We were shown extracts from Mr Hiscock's witness statements, which covered areas where the point might have been raised. Nowhere did he expressly assert that he remained an employee of Limited after 1 September 2002 because no valid notice had been served determining his service agreement with Limited. He did of course advance other arguments as to why he claimed he remained an employee of Limited. We refer to three passages in those statements. The first was Mr Hiscock's comment on the letter of 23 August 2000, about which he said:
"I do not dispute that it was agreed between Starbucks UK, Starbucks EMEA and myself that my employment would transfer from the UK to a new regional level entity. Indeed, I was committed to this and absolutely pivotal in determining that it would be in Starbucks' best interests to relocate not only its regional office but its roasting plant also from London to Amsterdam. I personally sponsored both these projects. However, the reality is that my employment was never formally transferred to either of these entities, Starbucks EMEA BV or Starbucks EMEA Manufacturing BV."
- That passage illustrates the factual background against which the letter of
11 October 2001 came to be written: Mr Hiscock's own understanding and agreement, in common with Limited, were that there would or might come a time when his employment would be transferred to another entity. The point sought to be raised by the proposed amendment needs to be seen against that background.
- The second passage we quote is of Mr Hiscock's comment on the termination provision in the letter of 11 October 2001. He said of that:
"(a) This would be relevant if indeed my formal employment with [BV] had commenced. It simply did not happen, as is borne out by the fact that all of my UK terms and conditions of employment remained unchanged …"
That appears to amount to a recognition by Mr Hiscock that, had he become a BV employee, he would have ceased to be a Limited employee, a stance which is inconsistent with the point that his employment with Limited could only have been validly terminated by a clause 2(2) notice. We should, however, also refer to his comment in the next paragraph of the same statement, in response to the statement on Limited's "EMEA Partner Transfer Request" that his physical transfer date was stated to be 1 September 2001. He said of that:
"I agree with the statement that I physically relocated to Amsterdam with effect from 1 September 2002. However, I strongly disagree with the inference that my employment automatically transferred from [Limited] to [BV] at the same time. My contract of employment was not terminated by [Limited] and neither was a formal [BV] contract implemented."
That passage certainly asserts that Limited did not terminate Mr Hiscock's service agreement, which is consistent with the point that no clause 2(2) notice was ever served. We doubt, however, whether, in the context of what Mr Hiscock was saying on this subject, that was in fact the point he was making. Nowhere does he spell it out.
- The position is, therefore, that by the time of the commencement of the hearing on 24 June 2004, the clause 2(2) point had not been expressly raised in the pleadings or in the witness statements, although it was raised in paragraph 9(4) of Mr Pawlak's skeleton argument. The hearing then proceeded and our understanding is that, when it came to the oral evidence, no questions were raised or evidence given in relation to the clause 2(2) point. The matter then moved to closing speeches. Mr Holmes-Milner's closing written address was dated
26 July 2004. Nowhere in it did he take the clause 2(2) point. In paragraph 10, he asserted that Mr Hiscock had been initially employed by Limited under a contract of service. Paragraph 14 opened a section of the argument headed "Termination". Mr Holmes-Milner then referred to Limited's reliance on the termination provision in the letter of 11 October 2001. If the clause 2(2) point was regarded as part of Mr Hiscock's case, now was the time for Mr Holmes-Milner to make it. But he did not. He certainly asserted that Mr Hiscock's contract with Limited continued in being, but he based that argument solely on the case that the terms of the letter of 11 October 2001 had been consensually varied in certain respects. His concluding point on the termination provision in the letter of 11 October 2001 was, in paragraph 22, that:
"In summary, the tribunal is urged to find that the penultimate clause of the agreement was expressly varied to provide a termination date of 13th December 2002 and then expressly or impliedly varied to provide a termination date 'to be determined'…"
That was Mr Hiscock's whole case on the point: no mention was made of clause 2(2). By inference, Mr Holmes-Milner was impliedly conceding that Mr Hiscock was not relying on the clause 2(2) point, since the variation argument would only need to be invoked if the clause 2(2) point was a bad one.
- Mr Holmes-Milner also drafted Mr Hiscock's notice of appeal. In paragraph 7.6, he expressly disclaimed any appeal against the tribunal's finding that no contract of service between Mr Hiscock and Limited survived after 1 September 2002. If there was ever anything in the clause 2(2) point, that amounted to a recognition that it was not regarded as part of Mr Hiscock's case by the end of the hearing before the tribunal. Mr Swift submitted that, if the clause 2(2) point was ever in the frame, it was impliedly abandoned by Mr Holmes-Milner in his closing address. We agree.
- In the circumstances outlined, we refused leave to amend. We were distinctly uneasy about giving leave and concluded that, as a matter of discretion, we ought not to do so. Save that Mr Pawlak raised the clause 2(2) point in his opening skeleton argument, the point does not appear to have been put in issue by Mr Hiscock in the proceedings, and we are far from satisfied that the respondents came to the hearing on the basis that it was one they had to deal with. If they had foreseen it as a point that was being relied upon, then it appears probable, as Mr Swift indicated, that they would have wanted to raise an argument as to Mr McKeon's authority (either actual or ostensible) on behalf of Limited to include the termination provision in the letter of 11 October 2001; and perhaps as to whether Mr Hiscock was estopped by convention from raising the point. Any such arguments would have been fact-sensitive and would have had to be explored in evidence, which they were not. If, therefore, we had allowed the clause 2(2) to be taken on the appeal, we doubt whether we could simply have treated it as a discrete point of law which we could decide without injustice to the respondents. We consider that the most we could fairly have done would have been to remit the point for a re-hearing by the employment tribunal, giving both sides leave to adduce such evidence touching on the point (that is, as to authority and/or estoppel) as they might be advised. That way of dealing with the point would show that what we would really be doing was allowing a new point to be taken on appeal when the point could only fairly be disposed of after considering further evidence.
- That last consideration satisfied us that we should not give leave. We were referred to the decisions of this appeal tribunal in Kumchyk v Derby City Council [1978] ICR 1116, in particular to what Arnold J said at pp. 1122/1123, and to the later decision of the Court of Appeal in Jones v Governing Body of Burdett Coutts School [1998] IRLR 521. We find it unnecessary to cite from either decision but refer in particular to paragraphs 19 and 20 of the judgment of Robert Walker LJ (as he then was) in the latter case. They make it clear that there is solid authority to the effect that this appeal tribunal does not, and should not normally, allow an appellant to raise a new point of law not raised (or raised but conceded) before the employment tribunal, and that leave to do so should be given only in exceptional circumstances, especially if the result would be to open up fresh issues of fact which, because the point was not in issue before the employment tribunal, were not investigated there. We regarded that guidance as providing the answer to Ms Hewson's application. Whilst we recognise that Mr Pawlak raised the clause 2(2) point in his opening skeleton argument, we regard it as clear that Mr Holmes-Milner had impliedly abandoned it by the time of his closing address and none of the evidence before the tribunal was directed to the points on authority or estoppel to which we have referred. In the circumstances, we regarded the amendment application as one directed at seeking to re-argue on appeal a point which had been impliedly abandoned before the employment tribunal and which, if resurrected on appeal, would be likely to open up fresh issues of fact. We therefore concluded that we should exercise our discretion by refusing to allow the amendment.
Result
- We dismiss Mr Hiscock's appeal.
