[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Thomas & Ors v. On Reflection Ltd & Ors [2006] UKEAT 0300_05_0102 (1 February 2006) URL: http://www.bailii.org/uk/cases/UKEAT/2006/0300_05_0102.html Cite as: [2006] UKEAT 0300_05_0102, [2006] UKEAT 300_5_102

[New search] [Printable RTF version] [Help]

APPEARANCES

 

For the Appellants	MR SCOTT PEARMAN (Of Counsel) Instructed by: Messrs Gaby Hardwicke Solicitors 33 The Avenue Eastbourne East Sussex BN21 3YD
For the Respondents	MISS SUZANNE McKIE (Of Counsel) Instructed by: Messrs Holden & Co Solicitors Liberty Building 32-33 Robertson Street The America Ground Hastings East Sussex TN34 1HT

SUMMARY

Tribunal found (i) no transfer of undertaking between employer A, owned by B, and employer C owned by C and in part by B's wife and (ii) employer A was not a stable economic entity. The appeal was based on alleged misdirection – which we did not accept – and, for the most part, on perversity arguments. The circumstances were certainly suspicious; the Tribunal took that into account; it reached a factual conclusion that there had been no transfer which were, on the findings, permissible options. Appeal dismissed.

Topic Num 3C


 


HIS HONOUR JUDGE BURKE QC

The Appeal

1. This is an appeal by thirteen Appellants against the decision of the Employment Tribunal sitting at Brighton, chaired by Mr Trickey and promulgated with written reasons on 16 March 2005. By that decision the Employment Tribunal ruled, on a preliminary issue, that there had been no transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981 of the undertaking of Briskwooden Ltd ("BW") to On Reflection Ltd ("OR"). As a result of that decision the Appellants' unfair dismissal claims, brought against both BW and OR and also against Leslie Britton, who was a director of and the moving spirit behind BW and whose wife was a director and a fifty per cent shareholder of OR, could proceed only against BW, a company which has ceased trading and has no funds sufficient to meet any order for compensation which may be made in the Appellants' favour. The thrust of this appeal is that the Tribunal erred in rejecting the Appellants' case that there had been a transfer of undertaking between BW and OR and that, therefore, the Appellants' employment had been transferred from BW to OR. If the appeal succeeds, the Appellants will be able to pursue their unfair dismissal claims against OR with greater prospects of effective success.
2. Mr Britton was named as a Respondent in the Appellants' Originating Applications on the basis that he was, in reality, the employer of the Appellants; and other allegations were made against him; but before the Tribunal the parties proceeded on the basis that, until the transfer for which the Appellants contended, they were employed by BW. The Tribunal made no decision which directly affected the position of Mr Britton as a Respondent. He has not been made a party to this appeal.
3. The Notice of Appeal sets out not only the Grounds of Appeal but also the outline argument in respect of them; it was treated by Mr Pearman, on behalf of the Appellants, as a Skeleton Argument. It sets out what are described as three grounds of appeal; but they might be more correctly described as three broad fronts upon which the appeal has been based; a number of specific criticisms or grounds of appeal against the Tribunal's decision within each broad front is made. The three grounds or broad fronts are that the Tribunal:

(a) erred in law in failing to give any adequate consideration and/or gave insufficient weight and/or misdirected themselves as to certain material facts ("inadequate consideration");

(b) applied the wrong legal test and/or misdirected and/or failed to direct themselves as to the correct legal principles applicable to TUPE ("misdirection");

(c) erred in law and/or misdirected themselves in when giving undue weight to certain facts, which facts were either irrelevant considerations or considerations that ought as a matter of law to have been given less weight than the Tribunal gave them ("irrelevant considerations").

Under (a) the Notice of Appeal makes, at paragraphs 4.1 to 4.13, thirteen criticisms of the Tribunal's judgment, some of which are sub-divided into a number of sub-paragraphs. Under (b) the Notice of Appeal makes ten criticisms, at paragraphs 5.1 to 5.10, some of which are similarly sub-divided. Under (c) the Notice of Appeal makes at paragraph 6(a) to 6(e) five criticisms of the Tribunal's judgment, one of which is sub-divided into four separate criticisms. We will have, below, to deal with each of these Grounds of Appeal or criticisms of the Tribunal's decision.

4. At the close of the submissions of Mr Pearman on behalf of the Appellants and Miss McKie on behalf of BW and OR and after deliberation, we informed the parties of our decision that the appeal failed and would be dismissed but that we would put our reasons for that decision in writing. We hereby do so.
5. Together with their Answer the Respondents also put forward a Cross-Appeal; it was common ground that that Cross-Appeal could only arise if the Appellants' appeal succeeded. We therefore made and indicated to the parties our decision on the appeal before hearing any argument on the cross-appeal – which argument proved to be unnecessary.

The Facts

6. The Tribunal found that both OR and BW were in the business of the manufacture and supply of furniture and that each had in their employment machinists, assemblers and polishers (as well as administrative/managerial staff). Mr Britton had been involved in the furniture manufacturing business from 1991, at first in a partnership called Rye Associates and then in a business called Real Pine Manufacturing, which was continued by a limited company, Real Pine Manufacturing Limited. In 2003 Real Pine Manufacturing Limited went into administration; and there was a "TUPE transfer" of the undertaking of that company to BW, which had been incorporated by Mr Britton and which continued to trade from the same premises as Real Pine Manufacturing Limited.
7. The thirteen Appellants were all employed by Real Pine Manufacturing Limited before that TUPE transfer, as a result of which they became employees of BW. BW's total workforce was found by the Tribunal to consist of 27 to 29 employees.
8. At the beginning of 2004 (paragraph 4.5 of the Tribunal's judgment says 1994 – that is obviously a typographical error) BW, as the Tribunal found, began to experience financial difficulties. Early in 2004 Mr Britton lent £100,000 to BW; and in May he made further substantial advances; he was eventually owed £123,000 by BW. However this financing by Mr Britton of BW did not rescue it. BW was owed a large sum by one of its principal customers, Wood U Limited; that sum became £300,000 by June 2004. Another customer, Trade Price Pine Limited, owed £80,000. Mr Britton hoped that post dated cheques from the latter customer would tide BW over; but on 14 May 2004 BW learnt that Wood U Limited had gone into administration. The Tribunal found that BW then knew that their financial problems had become very serious. On 24 May BW's accountant advised them that BW would have to cease trading because of its debts; and it did so. A statement of affairs drawn up by the accountant in October 2004 showed BW to be insolvent to the extent of over £250,000; his evidence that the position was the same in June was unchallenged.
9. What happened to BW's workforce? On 3 June, without any prior consultation, the thirteen Appellants received letters dismissing them as redundant. Mr Britton said in the letters that they would receive payment in lieu of notice, redundancy pay and outstanding holiday pay from the post dated cheques of Trade Price Pine Limited; but those cheques did not, to use the Tribunal's words, "come to fruition" for the benefit of the Appellants. Four of the Appellants obtained work with another company, Farmhouse Pine Limited, which had no connection with Mr Britton. According to the Tribunal's findings, about twelve of BW's employees received letters from BW telling them that arrangements had been made for them to report to work for OR on the following Monday; they had been selected for this by BW's foreman, Mr Greenaway, who, being aware that OR needed a foreman, volunteered for that position and suggested to Mr Clark of OR that some of BW's workforce should join him.
10. At BW's premises was machinery owned by a company called Real Pine (Southern) Limited of which Mr Britton was a director and fifty percent shareholder. That company permitted BW to use the machinery. None of that machinery was transferred to OR; some of it was sold to Farm House Pine Limited; the rest was abandoned in BW's premises which were held on licence from the local authority.
11. The Tribunal found that there was no evidence of any organized transfer of any customers from BW to OR. BW's premises reverted to the local authority. BW's vehicles were also owned by Real Pine (Southern) Limited which allowed BW to use them without fees. Soon after BW ceased trading, OR started to use the vehicles formerly used by BW, again with the permission of Real Pine (Southern) Limited.
12. The Tribunal found that some but not all of BW's stock was transferred to OR. Mr Cox, BW's book keeper and financial administrator, gave evidence that there were two invoices totalling £16,000 issued by OR to BW which were "squared up by way of contra stock" i.e. BW paid those invoices by giving OR stock rather than cash. The Tribunal accepted Mr Cox's evidence about this and that BW had been in debt to OR.
13. BW's computers were delivered to OR; the value of any customer information held in those computers was small; most of the customers of BW could no longer be useful customers (Wood U Limited was in administration); and in any event Mr Britton could have informed his wife of the details of BW's customers for the benefit of OR if he had so wished.

The Tribunal's Conclusions

14. The Tribunal, at paragraph 6.1 of their judgment, set out the central paragraphs of the judgment of the European Court of Justice in Spijkers [1986] ECR 1119, namely paragraphs 12 and 13. The Tribunal then considered the various factors which were relied upon by the parties as indicative of the correct resolution of the question – Was there a TUPE transfer? They held, that:-

•    the majority of the employees of BW did not transfer to OR; 4 of them went to work for Farm House Pine Limited;

•    only a very limited amount of customers passed from BW to OR; there were no arrangements for customers to be approached with a view to such transfer. Seventy per cent of BW's customers (Wood U Limited and Trade Price Pine Limited) simply fell away; the remainder went to OR or Farm House Pine Limited;

•    the vehicles were made available by their owner to OR but they were not the property of BW and not transferred by BW to OR;

•    the machinery used by BW did not transfer to OR;

•    BW's business premises did not transfer to OR;

•    there was no evidence that the employees who went to work for OR in some way continued working in BW's business or were assigned by OR to a part of the business of BW.

15. There was no discreet part of BW's business which was capable of transfer or with which any of BW's ex-employees were specifically identified. What had happened was that Mr Clarke of OR was willing to take on more staff and took the opportunity to do so. The fact that Mr Britton was a fifty percent owner of BW and his wife a fifty percent owner of OR had aroused the Tribunal's suspicions and caused them to examine the evidence "most carefully". However it was not possible to conclude that the business of BW (or any part of it) retained its identity after the alleged transfer in any way similar to its identity before the alleged transfer.
16. The Tribunal further concluded, applying Cheesman v R Brewer Contracts Limited [2001] IRLR 1444, that, at the time of the alleged transfer to OR, BW, because it had ceased to trade and had prior to the end of its operations only been completing outstanding orders with little of substance left, was not a stable economic entity capable of transfer.

General Comments about this Appeal

17. The suggestion in the Notice of Appeal that the Tribunal had erred in law in giving insufficient weight to some facts or in giving undue weight to other facts caused us, on reading the papers in this appeal, some concern; and that concern was enhanced by Mr Pearman's opening his oral submissions by telling us that he and his instructing solicitors believed that the Tribunal had "got it wrong" and that all the way through the judgment it seemed that the employees were going to win and should have won but that there was a "twist at the end". Mr Pearman, however, accepted the need to demonstrate errors of law on the part of the Tribunal; and we hardly need to make it clear that the Employment Appeal Tribunal does not and will not embark upon a re-investigation of a Tribunal's factual conclusions or interfere with a finding of fact unless it is established that any such conclusion or finding was reached on the basis of the omission of relevant material, the inclusion of irrelevant material or the conclusion or finding was one which no reasonable Tribunal could reach and was therefore perverse. The weight which a Tribunal choose to give to a particular piece of evidence or factor is a matter for the Tribunal; appeals based on an assertion that the Tribunal gave too much or too little weight to evidence are not to be encouraged and will fail unless perversity is demonstrated.
18. In order to succeed in demonstrating perversity, it is necessary for the Appellant to establish an overwhelming case; see Yeboah v Crofton [2002] IRLR 634 (CA).
19. It is not sufficient for an Appellant to point to the omission in the Tribunal's judgment of a reference to a particular piece of evidence. A Tribunal's judgment is not required or expected to set out all of the evidence or, indeed, all of the relevant evidence. Unless the piece of evidence which is not referred to in the Tribunal's judgment is of such importance that the reasoning of the Tribunal is clearly imperfect such an omission is unlikely to give rise to a successful Ground of Appeal.
20. These are commonplace statements; but we have felt it necessary to repeat them in the context of this appeal and to emphasize to the Appellants that it is not our function as an Appellate Tribunal to re-try the issue as to whether there was a transfer of the undertaking or part of the undertaking of BW to OR, whether because one of the parties contends that the Tribunal has "got it wrong" or otherwise. Our task is to consider whether, under any of the grounds of appeal, the Tribunal have been shown, in deciding the transfer issue as they did, to have erred in law or to have reached a perverse conclusion. We will now turn to the individual grounds of appeal.

Preliminary Points

21. Before taking us through the specific criticism of the Tribunal's judgment in the Notice of Appeal, Mr Pearman made two preliminary points. The first relates to the number of employees who went to work for OR when BW ceased to trade and is, in fact, raised in paragraph 4.8 of the Notice of Appeal; the second relates to the evidence of a Mr Holden who was one of those employees.
22. Mr Pearman's point as to the number of employees who joined OR is that the Tribunal ought to have found that number to have been not about 12 (paragraph 4.11 of the judgment) but 14, plus Mr Britton, his son and Mr Holden. He agreed that the precise number was irrelevant except that there were, he said, indications in some TUPE authorities that whether a majority or a minority of the alleged transferors workforce joined the alleged transferee was or might be important – although, Mr Pearman said, he regarded such dicta as wrong. We note that in the Appellant's Originating Applications, which were in common form, it was alleged, at paragraph 9 in each case, that approximately 14 employees were "notified that their employment would be transferred" to OR. No reference was made to 17 employees being transferred or to Mr Britton and his son being transferred.
23. Although the Tribunal said, at paragraph 6.2 of their judgment, that the majority did not transfer, there is nothing in the Tribunal's judgment which suggests that they were influenced by or that it had been suggested to them that, as a matter of law, they should be influenced by whether the number of BW's employees who joined OR was greater or smaller than the number of those who did not. The Respondents' written submissions to the Tribunal did not suggest that the actual numbers were important. Mr Pearman did not submit that such a consideration should have influenced the Tribunal. In these circumstances, we are confident that whether the Tribunal were or were not factually in error in believing that 12 rather than 14 – or possibly more – of BW's employees went to work for OR is of no materiality. Any such error could not amount to an error of law or potentially undermine the Tribunal's more central factual conclusions. Indeed Mr Pearman, in paragraph 4.8 of his Skeleton Argument (a separate document from the Notice of Appeal) accepted that Miss McKie's argument as to the irrelevance of the precise number was correct in law.
24. Mr Pearman's second preliminary point related to the witness statement of a Mr Holden who was one of the employees of BW who, according to his witness statement, was told on 3 June 2004 that he was dismissed and was then approached on 8 June by one of the other ex-employees who was now working for OR, and invited to join OR and did so some days later. Mr Pearman told us that he did not at any time in the course of the hearing take the Tribunal to Mr Holden's witness statement. He said, with attractive candour, "I missed it". However, he submitted, it was in the bundle of documents put before the Tribunal and was therefore material which the Tribunal ought to have considered.
25. Miss McKie on behalf of the Respondents told us that, before the hearing, she and Mr Pearman had discussed and had agreed that it would be unnecessary for Mr Pearman to read out the witness statements of or call or for Miss McKie to cross-examine all of the Appellants and that Mr Pearman should select his best 3; that was done and the evidence put forward on behalf of the Appellants consisted of those 3 witnesses. The witness statements of the three chosen employees were read out as their evidence in chief; and they were then cross examined. Miss McKie said that Mr Pearman had, at no stage, sought to have Mr Holden's evidence read out, to tender to him for cross-examination or to ask that any other witness statement in the bundle should be read or taken as read. Mr Holden, we understand, was not at the hearing.
26. Mr Pearman agreed that Miss McKie's account was accurate; with even greater candour, he agreed that he had either not appreciated or had forgotten that Mr Holden was not one of the Appellants.
27. Because we wished to understand what point Mr Pearman wanted to make about Mr Holden's evidence, we decided, with the agreement of counsel on both sides, to look at this witness statement "de bene esse" i.e. provisionally and that we would rule later on whether it was material to which we should have regard. In our judgment, it is not such material. It was not read out to the Tribunal; Mr Holden was not proffered for cross-examination and could not be because he was not present. His evidence simply did not get before the Tribunal. It would be wrong in principle for us now to take into account what a potential witness said in a witness statement which was not put before the Tribunal and which was not the subject of cross-examination or indeed any reference at all before the Tribunal. The fact that a witness statement is in a bundle put before a Tribunal or a Court does not mean that that witness statement becomes part of the evidence before that Tribunal or Court. It often happens that a party decides not to call a witness whose witness statement or other document setting out what he has to say is in the Court bundle; normally the Court or Tribunal's attention is drawn to this when it happens and the relevant document is removed; but that may not always happen; and any judicial body is used to putting out of its mind, as it must, material which is lodged but which does not find its way into the evidence.
28. We conclude, therefore, that Mr Holden's witness statement was not material which the Tribunal could or should have considered; nor is it material which we can consider.

Inadequate Consideration

29. Under this broad head we will address each specific ground or sub-ground of appeal separately, using the paragraph numbers in the Notice of Appeal.
30. Paragraph 4.1 - This paragraph draws attention to the absence in the Tribunal's judgment of any express reference to the purposive effect of TUPE, as set out in Litster v Forth Dry Dock and Engineering Ltd [1989] ICR 341, at page 371. Miss McKie submits, and we agree, that there was no need for the Tribunal to set out a principle which was not in issue between the parties; there is nothing in the judgment which indicates that, in so far as it was relevant, the Tribunal did not have that principle in mind. On the contrary, the Tribunal plainly considered the position of the Britton family and its relationship with BW and OR in detail and with suspicion, self-evidently with a view to considering whether the reality of what had occurred was not as the Respondents asserted; see paragraph 6.7 of the judgment to which we will return later. We can discern no error of law on the Tribunal's part.
31. Paragraph 4.2 – Mr Pearman's contention was that the Tribunal failed to give any or any adequate weight to the similarity between the undertaking of BW and the undertaking of OR and the fact that both businesses were ultimately controlled by Mr Britton. He submitted that, although in paragraph 4.1 the Tribunal had expressly found as fact that the two companies were both in the business of the manufacture and supply of furniture and, in paragraph 4.2, that the employees of both companies consisted of machinists, assemblers and polishers, the Tribunal failed to build those findings into the conclusions which they set out at paragraph 6 of their judgment and failed to conclude that Mr Britton was effectively in control of both companies. He drew attention to the fact that the Appellants' case was that the process by which the employees went over to OR was a sham and that all was in effect masterminded by Mr Britton; the Tribunal, he submitted, had not adequately considered and made findings in respect of that case.
32. Paragraphs 4.1 and 4.2 of the judgment contain findings by the Tribunal in crisp and clear terms about the similarity of the business of the two companies and of the skills of their workforce. At paragraph 4.22 the Tribunal made findings in equally crisp and clear terms about Mr and Mrs Britton's positions in relation to OR. They did not find that Mr Britton effectively controlled OR; they found that Mrs Britton and Mr Clarke were joint equal shareholders of OR and that Mrs Britton regularly worked for OR on a job-share basis with Mrs Clarke, but Mr Britton attended the premises of OR on most days, spoke with OR's solicitors and was sometimes present at meetings between Mrs Britton, Mr Clarke and Mr French (accountant to both BW and OR) where he voiced his opinion. In paragraph 6.7 the Tribunal can be seen to have expressly directed their minds to the possible consequences of those findings, with aroused suspicion; but they concluded that what had occurred was that Mr Clarke of OR found himself with an opportunity to take on more staff, was willing to do so and did so. They were plainly alert to the possibility of a sham; but they rejected that explanation of what had occurred in favour of their findings of a genuine transaction on the part of Mr Clarke. They were in our judgment entitled to do so. They were not bound to find that there was a sham; the degree of suspicion and the effects of their suspicion were factual matters for the Tribunal to consider and to weigh as they did. The similarity of the two businesses and of the skills of the two workforces were not considerations which obliged the Tribunal to find that there was a transfer; they were factors which the Tribunal had in mind and considered in reaching their decision that there was not a transfer.
33. For these reasons we see no error of law under this paragraph of the Notice of Appeal.
34. Paragraph 4.3 – In this paragraph the point is made that Mr Britton told the Tribunal in evidence that he was aware of TUPE and that his actions were taken with consideration of TUPE. Miss McKie accepted that Mr Britton had given that evidence; she told us that he had also said he believed that there was not a TUPE transfer. Mr Pearman did not suggest that Miss McKie's description of Mr Britton's evidence was in error. We should point out that we do not have any notes of evidence – so far as we are aware none have been sought.
35. While the Tribunal did not spell out that evidence in their decision, they were not obliged to do so. It was not evidence which was inexorably or even strongly persuasive of the existence of a TUPE transfer. For what it is worth, there is no reason to suppose that the Tribunal did not consider it, particularly in the light of their expressed suspicions. The weight they gave to it was a matter for the Tribunal.
36. Paragraph 4.4 – In this paragraph the Appellants contend that the Tribunal, despite having found that the two Respondent companies' structures and their manner of conducting business was "strange" and that their suspicions were aroused, never went on to consider or decide whether there might have been a sham. Mr Pearman referred to ADI (UK) Limited v Willer [2001] IRLR 542, in which, referring to the earlier Court of Appeal decision in ECM (Vehicle Delivery Service) v Cox [1999] IRLR 559, May LJ said, at paragraph 13:

"13

Thus in short, the ECM [1998] IRLR 416 point is that a transferee who does not take on employees of the transferor in order to avoid the application of the Regulations cannot rely on the fact that the employees were not taken on as a factor going to the question whether there was a transfer for the purposes of the Regulations. Having concluded that there was not in the present case an economic entity and that there was no relevant transfer of an undertaking, the majority of the employment tribunal further expressed their decision as follows:

'We further considered the judgment in the case of ECM v Cox [1998] IRLR 416 but considered that before applying the purposive approach suggested by the President in that case, we must establish that there had been a transfer without posing the hypothetical situation of whether there would have been a transfer had the workforce or the majority of the workforce been transferred in this case. We would, however, observe, having re-read Brintel [1997] IRLR 361 [see below] that the Court of Appeal in that case, expressly said it was unnecessary to decide the second issue in the case which was the ban which KLM had imposed upon its staff on taking on Brintel's employees. They state at p.366 paragraph 47 that if the ban had not been imposed and a modest number of Brintel employees had gone to KLM, that would not have led to a different conclusion in relation to the second issue in this case, namely whether the Brintel Beccles undertaking was transferred, and that it retained its identity in the hands of KLM, so the ban is really of very little relevance. The majority have decided that in this case it is an activities case rather than an economic entity case and, therefore, there was no transfer and have therefore not applied the purposive approach suggested by the President in ECM [1998] IRLR 416.'"

37. We have to a considerable extent addressed this point in expressing our conclusions as to paragraph 4.2 above. In ECM v Cox the transferee deliberately did not take on the transferor's employees in order to avoid the effect of TUPE; the Court of Appeal upheld the decision of the Employment Appeal Tribunal and held that the transferee could not, in such circumstances, rely on the fact that the employees were not taken on by him as a fact negating of a TUPE transfer. In the present case we have seen no evidence before the Tribunal that either Respondent attempted to avoid the consequences of TUPE beyond that to which the Tribunal expressly referred and from which they were invited to conclude that there had been a sham. The Tribunal used the word "strange" in paragraph 4.11 of their judgment to describe the fact that the letters given to the employees who, to put it neutrally, ceased to work with BW and started to work for OR, were not available to the Tribunal; and they used that same word in considering the fact that Real Pine (Southern) Ltd permitted BW to use its vehicles without a fee; but they did not find that the taking on by OR of BW's employees, other than the Appellants was strange. In paragraph 6.7 of the Tribunal's judgment they looked with a suspicious' eye at the transaction to which the evidence and the arguments went; but they said, as to those suspicions:

"…this did not lead us to conclude that there was transfer of undertaking under the Regulations."

38. Reading the judgment as a whole and paragraph 6.7 in particular it is clear, in our judgment, that the Tribunal were alive to what they regarded as unusual features on the evidence; the Tribunal considered the Appellants' case that there had been a sham and rejected it. It has not been suggested that there was no evidence on which that rejection could be based; it was a permissible option for the Tribunal; it was open to them to find as they did that what had happened was that Mr Clark had taken the opportunity of the demise of BW to take on more staff and took that opportunity. The Tribunal found in paragraph 6.7 that the fact that Mr Britton owned 50% of BW and Mrs Britton 50% of OR facilitated that process; but they were correct in saying that such facilitation did not of itself create a transfer of BW's undertaking.
39. Accordingly we see no error of law arising under this paragraph of the Notice of Appeal.
40. Paragraph 4.5 - The Appellants here contend that the Tribunal ought to have taken into consideration or taken into consideration to a greater degree the fact that Mr Britton had a history of what was described as "Phoenix Trading" ie recommencing a failing business under a new identity. The history referred to is that set out in the Tribunal's findings at paragraph 4.4 of their judgment, namely that when Real Pine Manufacturing Ltd went into administration in 2003 Mr Britton transferred its business to BW which Mr Britton had incorporated and which continued to trade from the same premises as Real Pine Manufacturing Ltd.
41. It was not in dispute that, in 2003, a TUPE transfer had taken place between one company controlled by Mr Britton and another company controlled by Mr Britton; there was no suggestion that Mr Britton had sought to avoid the effects of TUPE on that occasion. In the present case the transactions were different; OR was not under Mr Britton's control and was already trading from different premises; it had been so trading from January 2004 after incorporation in October 2003 – these facts were common ground although not recited in the judgment. We asked Mr Pearman why the 2003 history was important; he said that it showed that Mr Britton knew about TUPE. Mr Britton had, however, made that clear in his evidence.
42. There is, in our judgment, no basis for the suggestion that the Tribunal failed to take the earlier history into account; they took the trouble to make express findings of fact about that history and are not to be regarded as having failed to take those findings into account when they came to their conclusions merely because they did not mention them. In deciding what, in truth, happened and whether there was a transfer in 2004, the Tribunal were not obliged to set out again all their findings of fact which might have had some bearing on that decision; and we do not see that anything about the 2003 history could have been so fundamental or even important to the Tribunal's conclusion that they had to set out expressly its effect on their mind. On the contrary, it seems to us that the Tribunal might well have given it little or no weight; but the weight they gave it was a matter for them.
43. Paragraph 4.6 - In this paragraph the Appellants submit that the Tribunal erred in treating OR as a historic business rather than as a vehicle created by the Respondents for the purpose of carrying on BW's business and in failing to a make a finding as to when OR started its activities, who else, other than the employees who left BW and joined OR, worked for OR and in failing to consider that those employees left BW on a Friday and started with OR on the following Monday.
44. We have already referred to the evidence before the Tribunal that OR was formed in October 2003 and began trading in January 2004. Miss McKie contended that Mr Britton and Mr Greenway, BW's foreman, had not been cross examined on the basis that OR had been formed for the purpose of carrying on BW's business. Mr Pearman disputed that contention; but in any event the dates are inconsistent with the assertion that OR was formed as a vehicle for the continuation of BW's business. The Tribunal found that BW began to experience financial difficulties at the beginning of 2004, that Mr Britton lent £123,000 to BW between then and May 2004 and that Wood U Limited, which was obviously a major customer, went into administration in April 2004 as a result of which BW were advised in mid-May that their financial position was serious and ceased trading thereafter. In the absence of other compelling evidence, those facts demonstrate that it was unlikely that OR had been deliberately formed in order to take over BW's business. In our judgment, on the evidence before them and on their findings of fact, the Tribunal were not in error in treated OR as an on-going business before June 2004; there was clearly evidence on which they could so find. It is not suggested, we note, that there was evidence that OR had not been genuinely trading before June 2004.
45. As to the employees starting at OR very soon after they ceased to work for BW, the Tribunal made a specific finding to that effect in paragraph 4.11.
46. We can discern no error of law arising from the absence of a conclusion on the part of the Tribunal that OR was created for the purpose of taking over the business of BW. The Tribunal's findings of fact were such and the evidence was such that they were entitled to reach that conclusion.
47. Paragraph 4.7 – This paragraph asserts that Mr Britton, in effect, deliberately switched business from BW to OR in order to avoid the effect of TUPE. Mr Pearman relied under this paragraph on the arguments which he had already presented and which we have addressed. We do not need to say any more.
48. Paragraph 4.8 - We have already dealt with this paragraph of the Notice of Appeal; it relates to the numbers of employees who left BW and joined OR. See paragraghs 22 and 23 above.
49. Paragraphs 4.9 and 4.10 – These paragraphs draw attention to four asserted facts about the employees who left BW and joined OR, namely that they took up employment with OR (1) with no break of continuity of service (2) under the same contract of employment (3) in the same or broadly the same roles and (4) without seeking to recover redundancy pay from BW. It is said that no-one from OR gave evidence except Mr Greenaway who gave evidence as to the continuation of his employment and of the employment of the other employees who joined OR (there was also a reference to the witness statement of Mr Holden which, in the light of what we have said at paragraphs 24 to 28 above, we leave out of account).
50. Mr Pearman told us that he accepted that there was no evidence before the Tribunal as to the four asserted facts. Mr Greenaway's witness statement sets out that he learned in May 2004 that BW would not be there when he returned after two weeks from his holiday and that, upon hearing this, he went on his own to see Mr Clark who was the director of OR and who had just lost his foreman (evidence incidentally which supports the case that OR had its own pre existing business). Mr Greenaway asked Mr Clark whether there was any room for him to take on other staff and that he was prepared to work for Mr Clark with a group of others. Mr Clark said that that would be fine and that he should tell the other workers "to come over if and when necessary". While on holiday Mr Greenaway learned that BW's employees were being laid off and, on return, went straight to see Mr Clark and then started to work for OR in mid June. We have no note of anything else Mr Greenaway may have said in evidence, either in chief by way of addition to his witness statement, in cross examination or otherwise. Nothing in Mr Greenaway's witness supports the assertions of fact set out in paragraph 4.9 of the Notice of Appeal or the assertions made about his evidence in paragraph 4.10 of the Notice of Appeal.
51. Mr Pearman candidly told us that he had expected to be able to prove those assertions through documents produced by the Respondents but was unable to do so because they were not produced; he referred to the letters written by BW to the employees who subsequently joined OR, which had not been produced, and to the absence of any employment documents produced by OR; he submitted that the Tribunal ought to have drawn an inference against the Respondents from the absence of these documents.
52. The Tribunal expressly considered the absence of the letters; see paragraph 4.11 of the judgment. The burden of proof of a transfer lay on the Appellants; but in so far as these assertions might have assisted them on the transfer issue, evidence in support of them is not alleged to have been put forward by any of the three Appellants who gave evidence. In those circumstances the Tribunal were, in our judgment, justified in not inferring from the absence of documents the truth of any of the assertions made in paragraph 4.9, particularly in the light of the fact that there had been no request for disclosure of any such documents. Even if the Tribunal could have drawn such an inference, we see no reason why they should have done so or could be said to have been in error of law in not doing so.
53. We see no error of law arising from the criticisms made in these two paragraphs of the Notice of Appeal.
54. Paragraph 4.11- In this paragraph the Tribunal are said to have failed to give adequate consideration to the fact that significant production, with several work-loads going out of the factory each day, continued at BW's premises to the date of termination. Mr Pearman submits that this, coupled with the fact that many BW employees moved to OR and carried on working for OR, was deeply suspicious.
55. Miss McKie told us that the Appellants's evidence about the number of vans going out was watered down in cross examination. Mr Britton's evidence was that 2 – 3 vehicles went out each week at the relevant time and that to a large extent these vehicles were needed to take to OR the substantial quantity of stock which the Tribunal found, at paragraph 4.19 of their judgment, was delivered to OR in part satisfaction for £16,000 worth of goods delivered by OR to BW for which OR had not been paid. She submitted that there was, in the circumstances, no error of law on the part of the Tribunal in not referring expressly to the Appellants' evidence as to the number of vehicles leaving BW's premises.
56. It was not, in our judgment, essential for the Tribunal to identify in their judgment the fact that BW was still active until the point at which it ceased to trade we repeat that we do not have the notes of evidence; but even if those notes showed that the Appellants, when they gave evidence, did not retreat from their case that substantial production continued up to the last moment, that would not have been a strong indicator of the transfer of an undertaking in the light of the Tribunal's conclusion that BW was by June insolvent to the extent of over £250,000. It does not seem to us to be at all suspicious, in the context of a disputed issue as to transfer, that a business should continue to seek to earn and to satisfy its customers up to the point at which it ceases operation; but how the point strikes us is not of importance; we do not accept that the Tribunal can properly be said to have been in error of law in not regarding these facts as indicative of a transfer or in failing to mention them in their judgment.
57. Paragraph 4.12. - It was part of the Appellants' case that invoices from OR were being copied by BW at BW's premises. The Appellants were understandably suspicious about this. However, Mr Britton and Mr Cox, BW's book-keeper at the time, explained what happened; the arrangement between Mr Britton and Mr Clark was that stock of a value of about £10,000 was delivered to OR in part-satisfaction of the debt to which we have referred above; and to enable this arrangement to be put into effect, invoices from OR were taken over to BW. As is set out in paragraph 4.19 of the judgment, the evidence of Mr Haywood, one of the three Appellants who gave evidence, was that Mr Dixon copied six invoices of OR's. Mr Cox said that there were invoices which related to the arrangement about the stock. The Tribunal said that they preferred Mr Cox's evidence; see paragraph 4.19.
58. The point is made that Mr Dixon did not give evidence; but the Tribunal heard from Mr Cox that there were two relevant invoices and were entitled to accept that evidence, whether Mr Dixon gave evidence or not. It is clear that the Tribunal, in accepting Mr Cox's evidence, were rejecting Mr Haywood's evidence about six invoices. It was open to the Tribunal, on what we know about the evidence, to reach that conclusion. Paragraph 4.19 of the Tribunal's judgment consists of detailed findings of fact on the basis of the evidence which was before the Tribunal. No error of law arises in our judgment under this paragraph.
59. Paragraph 4.13. Mr Pearson accepted that this paragraph raised matters which had been covered in the previous paragraphs of the Notice of Appeal, which we have already addressed.

Misdirection

60. There are in the Notice of Appeal ten separate grounds of alleged misdirection in law on the part of the Tribunal in reaching their conclusion upon the transfer issues. We will, as before, address each separately, using the numbers of the grounds as set out in the Notice of Appeal.
61. Paragraph 5.1 - Mr Pearman put the first misdirection ground briefly namely that the Tribunal had considered the transfer issue as if the undertaking of BW was an undertaking of the thirteen employees who were Claimants and not as if it were an undertaking of 27 - 29 employees.
62. We do not agree. The Tribunal posed the relevant issue for themselves at the outset of their judgment, at paragraph 1.1, in these terms:

"1.1 Was there a TUPE transfer from the Second Respondent to the First Respondent?"

They then made detailed findings of fact about the history of BW, how it came to cease trading and what happened when it did so, dealing in those findings with multiple aspects of BW's business and with what aspects of that business did and did not go to OR when BW ceased trading. They made specific findings at paragraphs 10 - 13 as to what happened not to the Appellants alone but also to those of the employees who went to work for OR and to the fact that some of the employees went to work for Farmhouse Pine Limited. When they came to their conclusions they summarised what happened to the different classes of employee at paragraph 6.2 and specifically referred to the employees who went to OR and are not Appellants at paragraphs 6.5 and 6.7. In paragraph 6.10, when considering the various criteria relevant to the existence or absence of a transfer, they referred again to the fact that some of the employees had gone to OR.

63. In our judgment there is nothing which shows that the Tribunal were considering the undertaking of BW as consisting only of the thirteen Appellants who did not go to work for OR or asked themselves whether they constituted the undertaking – or the work force involved in the undertaking - as opposed to the whole of the work force. The opposite appears to have been the case.
64. Paragraph 5.2 - It is submitted under this head that the Tribunal, having directed themselves at paragraph 6.1 to use as a check list the factors set out in paragraphs 12 and 13 of Spijkers, failed to consider in their conclusion section four facts, namely (1) the degree of similarity between the activities of the transferor and transferee (2) the period in which BW's business activities ceased or failed to cease (3) "the computers with the customer base and operations" were taken from BW to OR (4) the two companies used the same professional advisers; and it is said that the Tribunal failed to follow the guidance in Spijkers that the Tribunal should make an overall assessment of the whole picture.

.

65. As to (1) we prefer Miss McKie's submission that there was no misdirection. There was never any dispute that the two Respondents carried out similar businesses; the Tribunal expressly so found at paragraphs 4.1 and 4.2. That was uncontroversial and was the background against which the other factors which indicated that there had or had not been a transfer fell to be considered. We have set out earlier in this judgment that the Tribunal were not bound to set out each fact which they took into account in reaching their overall factual decision. The point is not, in truth, one of misdirection in law but one of alleged failure on the part of the Tribunal, in reaching a secondary finding of fact, to take into account a primary finding of fact; but there is nothing to show that the uncontroversial facts relied upon were not taken into account.
66. As to (2) the fact that BW's business activities continued until very shortly before those employees who joined OR did so was the subject of clear findings in paragraphs 4.8 – 4.11 of the judgment. We do not, however, see how that fact was essential to or important in the decision that the Tribunal had to make on the transfer issue. Once the Tribunal had found that BW closed its business in the face of its massive and irrecoverable debts and that it was insolvent, the reason for the cessation of business, when it occurred, was established. In this case, too, no error of law is involved in the Tribunal not referring expressly to the relevant finding when expressing their conclusions.
67. As to (3) the Tribunal, at paragraph 4.21, found that BW's computers were passed to OR; Mr Britton said that they contained a list of customers; but this was to be of little value because 70% of the business, consisting of Wood U Ltd and Trade Price Pine Limited, could no longer be customers as the result of their indebtedness (see paragraph 4.22), and some of the remaining customers went to Farmhouse Pine Limited. Further, the Tribunal pointed out that Mr Britton knew the identity of BW's customers and could have provided that information to Mrs Britton had he wished to.
68. It is true that, in the conclusion section of the judgment, the Tribunal did not refer again specifically to the computers; but their findings of fact as to the computers were such that they could hardly have contributed to any material degree to the Appellants' case as to transfer. The Tribunal did deal with other relevant pointers; in particular at paragraph 6.3 they addressed the issue of the transfer of customers; in the light of what the Tribunal said in that paragraph and their findings as to the value or rather the lack of value to OR of the information within the computers, we regard the omission of any subsequent reference to the computers as probably deliberate but in any event it is of no real importance.
69. As to (4) it is correct that the Tribunal did not refer, in paragraph 6 of their judgment, to the fact that both companies used the same accountants and lawyers; but they made an express finding to that effect. There is no reason to suppose that they did not have that in mind; and this could not in any view have been a major indicator of a transfer, if indeed it was indicative of a transfer at all. The absence of any reference to this fact is not, in our judgment, an error of law.
70. As to (5) we do not agree that the Tribunal failed to look at matters in the round; the Tribunal considered individual factors earlier in paragraph 6; at paragraph 6.9 they specifically referred to an overall view; and in paragraph 6.10 they considered the factors which they regarded as relevant in one direction or the other together before expressing their general conclusion.
71. Paragraph 5.3 - The submission here is that the Tribunal considered as "material and determinative of the absence of a transfer" the fact that assets which were transferred from BW to OR were owned by a third company of which Mr Britton was a shareholder. The assets referred to were the lorries and vans; see paragraph 4.17 of the judgment. The machinery used by BW, which was similarly owned, did not transfer to OR; see paragraph 4.14.
72. At paragraph 6.4 the Tribunal recorded that the vehicles were made available to OR in the same way as they had been to BW but that they were not part of the assets of BW. We accept, therefore, that the Tribunal did take into account the nature of the ownership of the vehicles and how BW and then OR came to use them; we do not agree, however, that this fact was regarded by the Tribunal as determinative of the absence of the transfer and regard such an assertion as a substantial over statement. The Tribunal found that the arrangements made in respect of vehicles for BW were, when BW ceased to trade, made with OR. The Tribunal were, in our judgment, entitled to take that into account and to take into account that the vehicles were not assets of BW or of OR. This was material which it was open to them to consider. The weight they gave to that material was a matter for them.
73. Mr Pearman referred us to Abler and Others v Sodexho MM Catering, Gesellschaft mbH and Others [2004] IRLR 168. In that case a hospital had contracted out its catering services to one organisation but, after retender, awarded the catering contract to Sodexho. The ECJ repeated the view expressed in Spijkers and elsewhere that the individual factors which fell to be considered in determining whether there has been a transfer of an economic entity are factors in the overall assessment and cannot be considered in isolation (paragraph 34) and held (paragraphs 40 - 42) that the fact that the hospital authority retained ownership of the premises and equipment necessary for the performance of the relevant activity, ie the provision of the catering services, could not preclude the existence of a transfer of undertakings. Miss McKie submitted that the alleged transfer of the vehicles had not been raised before the Tribunal, to whom Abler had not been cited; Mr Pearman did not agree, at least to the former of those two points; but we do not need to resolve any differences between them because (1) Abler does not suggest that third party ownership of assets used in the relevant activity is irrelevant (2) the Tribunal did not regard what happened in respect of the vehicles as precluding the existence of a transfer or as decisive. As we have said, they could not be faulted for treating it as relevant.
74. Paragraph 5.4 - By this ground it is argued that the Tribunal treated as "material and determinative" the potential insolvency of BW when they should have treated it as irrelevant. In oral submissions Mr Pearman expressed the point in this way – that there was an over-attentiveness to or over-emphasis by the Tribunal upon BW's financial difficulties.
75. Mr Pearman referred us to the decision of the EAT in Charlton and Charlton v (1) Charlton Thermosystems (Romsey) Ltd and (2) Ellis and Others [1995] IRLR 79. In that case Mr and Mrs Charlton were the directors and shareholders of the Respondent company. The company was struck off the Register because it failed to file annual accounts and was dissolved; but Mr and Mrs Charlton carried on the business, using the same assets and employed Mr Ellis and other employees of the company for a period of over two weeks before they dismissed the employees. The Tribunal found that there had been a transfer of the undertaking of the company to Mr and Mrs Charlton; their decision was upheld by the EAT, presided over by Mummery J. Mr and Mrs Charlton's primary case on appeal was that, because the company had been dissolved, its property became bona vacantia; there was no undertaking which could be transferred under TUPE; see paragraph 12 of the EAT's judgment. The EAT, however, held that the undertaking of the company retained its identity in Mr and Mrs Charlton's hands; see paragraph 50.
76. Miss McKie submitted that the financial situation of BW was material to the Tribunal's consideration of the issue as to whether BW was at the material time a stable economic entity and that it was in that context that the Tribunal referred to it, at paragraphs 6.11 and 6.12 of their judgment. She relied for this proposition, as she did before the Tribunal, on the decision of the EAT, presided over by Lord Johnston in Perth & Kinross Council v Donaldson and Others [2004] IRLR 121 in which a company which had been awarded a housing maintenance contract by the Council found itself in financial difficulties; an interim liquidator was appointed, pursuant to a winding up order; the liquidator sought to find a purchaser for the business but failed; and the Council took the work back in-house. The Tribunal upheld the claim of the company's employees that there had been a TUPE transfer to the Council; the EAT allowed the appeal. At paragraphs 21 and 22 of the judgment the EAT said:

"21

With regard to the other two issues, we cannot contemplate that an operation which depends for its existence from a day-to-day effective handout of work to which it is not contractually entitled, such as could be terminated or ceased at any time, should be determined as a stable entity. We also have considerable doubts, notwithstanding certain cases about single contractors' situations that this case, subsequent to 31 January, could have been regarded as reflecting an entity operating in respect of the work that was being handed out. We are, however, more concerned to decide the case as regards the issue of stability.

22

Finally, on the question of transfer, we do not consider there was anything left to transfer to the council at the time of the cessation of business brought about by the appellants declining to offer any more work. There was simply nothing to transfer. The fact that in due course the work has been taken up by the original employer, ie the appellants, is nothing to the point. Nothing passed between the parties. The liquidator simply brought the business to an end because there was no more work for it to do."

77. We are not persuaded that the decision in Charlton has the effect for which Mr Pearman contends of rendering the evidence of BW's financial situation irrelevant. The issue in Charlton was whether what had happened to the company meant that, as a matter of law, there could not be a TUPE transfer. That was not an issue which arose in the present case; the question whether there was a stable economic entity capable of transfer, a factual question, did not arise in Charlton as it did in the present case. The facts in Perth & Kinross were also very different from those of the present case; BW was not in liquidation; but it was insolvent and for that reason had ceased trading. The Tribunal were aware of that difference and specifically referred to it at paragraph 6.12 of their judgment. However they were, in our judgment, correct to take the view that the financial situation, which they summarised at paragraph 6.12, was relevant to their decision on the issue which they were addressing in that paragraph, namely whether BW was a stable economic entity capable of transfer. Perth & Kinross supports the approach which the Tribunal took.
78. We do not need to say any more about the alternative submission that the Tribunal were over-attentive to or over emphasised BW's financial situation than that, once material, the weight which the Tribunal gave to that part of the case was a matter for them in their resolution of what was a factual issue.
79. Paragraph 5.5 - In this paragraph the Appellants contend that the Tribunal considered "as material and determinative" of the transfer issue the fact that Wood U Ltd had been made the subject of an administration order in April 2004, six weeks before the alleged transfer. The argument is that the Tribunal should not have considered matters prior to the period immediately before the transfer; (see Regulation 3.1 of TUPE); and that the Tribunal "wrongly focussed upon and/or placed undue weight upon" the financial position of BW's customers instead of focussing on the undertaking itself and the evidence for or against the transfer.
80. In our judgment the Tribunal did not err in law in considering what had happened to Wood U Ltd. Firstly, the events relating to Wood U Ltd were part of the history of what happened to BW prior to and of the reasons for its cessation of trading; they were relevant to the sham allegation. Secondly, they were relevant to consideration of the extent to which the customers of BW went to OR; in any event they were relevant to the issue as to whether BW was at the moment of the alleged transfer a stable economic entity. The Tribunal were not in law confined to consideration only of the events after some finite period of time before the moment of the alleged transfer; what had happened earlier was capable of throwing light on the decision the Tribunal had to make, both as to transfer and as to stable economic entity.
81. As to the assertion that the Tribunal focussed on or placed undue weight on the financial position of BW's customers, no error of law arises; the question of weight was for the Tribunal.
82. Paragraph 5.6 - Under this head it is argued the Tribunal wrongly conflated the separate issues as to whether there was a transfer and whether BW was at the material time a stable economic entity capable of being transferred.
83. Again, we disagree. The Tribunal in their judgment can be seen to have considered whether there was a transfer in paragraphs 6.1 – 6.10, applying in their consideration the guidance in Spijkers and in Cheesman. They then, in paragraphs 6.11 – 6.12, considered the stable economic entity issue. At the end of paragraph 6.12, they illustrated the separateness of their consideration by saying that their conclusion as to stable economic entity was enough on its own to determine the preliminary issue but that they had, in any event, found that there was not a transfer. In our judgment the Tribunal both recognised and proceeded upon the basis that the two issues were separate.
84. Paragraph 5.7 - In this paragraph the Appellants contend that, having accepted the Appellants' evidence that the business of BW continued up until the date of the termination of the Appellants' employment, the finding that there was no stable economic entity was "wrong in law" or perverse.
85. In our judgment this contention fails for three reasons:

(1) There was no particulars of perversity as required by the EAT Practice Direction.

(2) The Tribunal found that BW only continued to trade until immediately before the redundancies in order to complete orders.

(3) The fact that BW had so traded did not require the conclusion that there was a stable economic entity; the Tribunal found as facts – and these findings are not challenged – that BW ceased to trade because it was advised that it would be trading fraudulently if it continued It had, as we have said before in this judgment, debts of over £250,000 and it had lost its two major customers. Mr Britton's advances of over £120,000 had not rescued it. There was ample evidence on which the Tribunal could come to the conclusion that there was not a stable economic entity.

86. Paragraph 5.8 - This paragraph contends that the Tribunal wrongly looked at the "shell of the transferor, as in its balance sheet in October 2004 and traced the position back to the transferor at the date of the transfer. This is said to have been wrong because the Tribunal was considering what was left of the transferor and not what was transferred to the transferee.
87. We see no error of law in this respect. The Tribunal were entitled to look at BW's financial position in June 2004 for the reasons we have set out. The evidence that the balance sheet of October 2004 reflected the position as at June was unchallenged. The Tribunal considered not only BW's financial position but what was transferred to OR in detail in paragraphs 6.1 – 6.10 of their judgment.
88. Paragraph 5.9 - This paragraph refers to three decisions of the Employment Appeal Tribunal which were cited to the Tribunal. It is submitted that the Tribunal failed in their judgment to explain why they should depart from those decisions or why they were distinguished.
89. In paragraph 5 the Tribunal said that they had considered the authorities cited to them including these three decisions. It was, in our judgment, unnecessary for the Tribunal to go through each authority cited and to explain why each did not lead to the result sought by the party citing it. If an authority sets out a principle which is decisive of a point of law arising before a Tribunal, the Tribunal will of course be in error of law if it fails to apply that principle – unless it successfully distinguishes it; but it is not an error of law to fail to explain why an authority cited does not have that effect.
90. In Duncan Webb Offset (Mason) Ltd v Cooper & others [1995] IRLR 633 there was no dispute, at least before the EAT, that there had been a TUPE transfer of the undertaking of a company in receivership to another company in the same broad group. The issue was whether the Applicants were employed in the undertaking transferred at the time of the transfer. The EAT's judgment does not refer to any issue arising from the fact that the transferor company was in receivership and is not authority for any principle of law as to whether a company in receivership may be a transferor under TUPE. No question of a stable economic entity arose in that case. In the present case the Tribunal did not base their decision on some principle that a company in receivership or which has ceased to trade because it is technically insolvent cannot be a transferor or could not be a stable economic entity. The Tribunal's decisions on the issues before them were based on facts.
91. Kerry Foods Ltd v Creber & others [2000] IRLR 10 was another case in which the transferor was in receivership; no employees went from the transferor to the transferee to whom the transferor's business was sold as a going concern by the receivers. The Tribunal found that there was a transfer. The EAT addressed that conclusion at paragraphs 9 and 10 of their judgment in these terms:-

"9

Transfer?

Mr Rose's arguments on the transfer issue were, we thought, unconvincing. He stressed the fact that no employees transferred and referred us to the decision of the ECJ in Suzen [1997] IRLR 255. That decision has recently been examined by the Court of Appeal in ECM (Vehicle Delivery Services) Ltd [1999] IRLR 559. They held that the importance of the Suzen [1997] IRLR 255 decision had been overstated as it expressly embraced the earlier decisions of the ECJ and emphasised the need for a consideration of all the material factors suggested in Spijkers. The fact that Kerry did not continue sausage making at the factory in Oreston or recruit any of Luke's employees were two factors which Mr Rose stressed. He said that Luke's business had not been acquired; rather the sausage-making activities remained the same. Miss Tether submitted that there was a seamless transfer of a business. Kerry continued to make sausages previously manufactured by Luke's, without a break. They sold the sausages to the same outlets. They protected the brand which they had purchased by buying and removing from the factory at Oreston the computer and other furniture and equipment so that no competitor could set up a rival business from the old factory. In other words, they were protecting the goodwill of the acquired business. Kerry acquired and sold the last day's production of the Oreston factory.

10

In our judgment, the decision of the tribunal on this issue which is contained in paragraphs 54-56 inclusive of their first decision cannot be faulted. Had this been the sole issue on the appeal, we would not have regarded it as raising any arguable point of law."

92. In our judgment no principle of law decisive of an issue in the present case is to be found in those paragraphs.
93. Dudley Bower Building Services Limited v Lowe & Others [2003] ICR 143 is a decision of the EAT to the effect that whether an alleged transferor was a stable economic entity and whether that entity had in fact been transferred are separate and discrete questions. We have set out in our judgment our view that the Tribunal treated these questions separately.
94. None of the three authorities to which we have just referred establishes a principle which governed an issue in this case, which the Tribunal had to follow unless a distinction could be found, except Dudley Bower the principle in which the Tribunal followed. For these reasons, the Tribunal were not in error of law as is suggested in this paragraph of the Notice of Appeal.
95. Paragraph 5.10 - This paragraph contends that the Tribunal focussed inordinately on BW's assets and did not remind itself that there can be a transfer of undertaking notwithstanding that no assets are transferred. We do not accept this submission. The Tribunal did of course consider what assets were and were not passed to OR; but there is nothing in the judgment to show that they approached the transfer issue by regarding the transfer of assets as an essential prerequisite. The Tribunal looked at all the relevant factors and made a factual decision in the light of them.

Irrelevant considerations

96. This broad ground of the appeal asserts that the Tribunal considered a number of pieces of evidence when they should not have done or gave inordinate weight to such evidence. We have made our comments on arguments about weight earlier in this judgment; we do not need to repeat them. As before, we will deal with each ground under this broad head separately, but briefly.
97. Paragraph 6(a) - The fact that OR's business (it was not a new business as this ground asserts) was located at different premises to those of BW was not irrelevant; a change of premises is a factor which the Tribunal is entitled to take into account; had the premises from which OR operated been the same as those from which BW had formerly operated, we have no doubt that would have been put strongly on behalf of the Appellants as a factor in their favour. The Respondents were entitled to rely on the absence of that factor.
98. Paragraph 6(b) - We have already stressed the arguments about the financial difficulties of BW prior to the transfer; we do not believe that any more from us is required on this issue.
99. Paragraph 6(c) - This point relates to the Tribunal's reference, at paragraph 6.2 of their judgment, to the fact that four of the employees who left BW went to work for Farmhouse Pine Ltd. It is said that no weight ought to have been given to that because those four employees (who were among the Appellants) went to Farmhouse Pine on a self-employed as opposed to an employed basis, because their doing so occurred after the alleged transfer, because they did so without any continuity of employment and because it was always likely that the Appellants would seek similar work somewhere to that which they had carried out for BW.
100. We take the view that it was material for the Tribunal to have in mind that four of the Appellants had gone to work for Farmhouse Pine; it was relevant to what had happened to the workforce of BW and to the way in which that workforce had been scattered. We are not suggesting that it would have been right for the Tribunal to have treated it as a major factor; and there is no suggestion in their decision that they did; but we do not believe that the Tribunal were wrong in law to regard this small piece of evidence as material. Whether the ex- employees of BW who joined Farmhouse Pine were employed were self employed (and the label given to their status may not in law have been accurate) does not appear to us to matter; whether those employees did not or did not have continuity in their new job was a matter for Farmhouse Pine. The Tribunal could not have been unaware that those who lost their jobs with BW would be likely to seek work elsewhere; we do not see why that substantially diminishes the point, still less why it makes the point irrelevant. Nor does it become irrelevant because there was a gap in time between those individuals' loss of their job and their gaining further employment with Farmhouse Pine.
101. The above are said to be factors as a result of which "such weight" ought not to have been given to the employment of those individuals by Farmhouse Pine. No particular degree of weight was attributed by the Tribunal to these factors. We can see no error of law on the part of the Tribunal.
102. Paragraph 6(d) - The criticism here is that the Tribunal should not have regarded as material the fact that Farmhouse Pine bought some assets from BW because those assets were bought some significant time after the alleged transfer. It is not clear to us what evidence there was as to when Farmhouse Pine bought the assets – which consisted of an unspecified amount of machinery; - see paragraph 4.14; but it was relevant for the Tribunal to consider that the machinery used by BW did not go to OR; in considering that point it was relevant for the Tribunal to consider what did happen to the machinery. It was relevant too because Farmhouse Pine took over some of the customers of BW; their taking over both customers of and machinery used by BW was evidence which it was open to the Tribunal to regard as contrary to the transfer of BW's undertaking to OR.
103. Paragraph 6(e) - In this paragraph it is asserted that the Tribunal came to a perverse conclusion, at paragraph 4.20, that the transfer of stock to OR led them to have to conclude that BW was in debt to OR. We regard this as a misinterpretation of what the Tribunal were saying; the fact that stock was transferred to OR by BW did not, of course, require the Tribunal to conclude that BW was in debt to OR; the Tribunal had however already, in paragraph 4.19, accepted Mr Cox's evidence about the squaring up between the two companies by way of contract stock based on two outstanding invoices which he saw prior to the Tribunal hearing. The Tribunal's choice of words may not have been as finely made as they might, in retrospect have wished; but, reading paragraphs 4.19 and 4.20 as a whole we regard the Tribunal as concluding that. on the basis of the evidence which they had heard and which they recited in paragraph 4.19, they were accepting that BW was in debt to OR. That was a decision of fact which it was open and plainly open to them on the evidence to make.

An Overall Look

104. We have, in order to do justice to Mr Pearson's submissions, been through each of his grounds of appeal individually; but we have thought it right, having done so, to look at the position overall and to consider whether the decision overall was one which was perverse. We are firmly of the view that no overwhelming case of perversity has been made out; the decision is not one about which, using the test put forward in Hereford and Worcester County Council v Neale [1986] IRLR 168 we would say "my goodness that must be wrong". The Tribunal directed themselves to follow the guidance in Spijkers and Cheesman; they considered the relevant factors, balanced them and came to a factual conclusion both as to transfer and as to the existence at the material time of a stable economic entity and concluded on both those issues against the Appellants. Their conclusions which were supported by evidence, were open to them to reach and which, in our judgment, were not reached in error of law or perverse.

Result

105. For the reasons we have set out, we indicated that this appeal was dismissed. It was in the circumstances unnecessary for us to embark on any consideration of the cross appeal.