Appeal No. UKEATPA/0477/09/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 24 September 2009

Before
HIS HONOUR JUDGE McMULLEN QC
(SITTING ALONE)

MISS J KENNEDY	APPELLANT

ORMONDE TERRACE LIMITED	RESPONDENT

Transcript of Proceedings

JUDGMENT

RULE 3(10) APPLICATION - APPELLANT ONLY

______________________________________________________________________________

	APPEARANCES

For the Appellant	MR O HYAMS
(of Counsel)
Instructed by:
Messrs Webster Dixon LLP Solicitors
4th floor Thavies Inn House
3-4 Holborn Circus
London ED1N2HA

SUMMARY
JURISDICTIONAL POINTS:  Worker, employee or neither
An Employment Tribunal was entitled to decide that an owner-resident in a block of flats, who was a shareholder and director of its management company and acted as its secretary, was not its employee.

HIS HONOUR JUDGE McMULLEN QC
1.	This case is about the status of a property owner who repeatedly said she did not want to be an employee, yet who claimed unfair dismissal.  I have had the distinct advantage to have read the considerable skeleton argument which has been produced on behalf of the Claimant, Miss Julia Kennedy.  The Respondent is Ormonde Terrace Limited.

Introduction
2.	It is an appeal by the Claimant against a reserved judgment of an Employment Tribunal chaired by Employment Judge Lewzey sitting more or less over eight days at London (Central), registered with reasons, extending to 27 pages, on 6 March 2009.

3.	The Claimant was represented, as here, by Mr Oliver Hyams of Counsel.  The Respondent was represented by Mr James Laddie, who has, out of courtesy, turned up today because I can understand how the Respondent has reacted to some of the criticisms but, as it happens, it will not be necessary for me to deal with those.

4.	The Claimant claimed that she was unfairly dismissed and had suffered unauthorised deductions from wages.  The Respondent contended she was not an employee and anyway paid her according to what was agreed to be paid to her in what it regarded as an independent contractor status.

The issues
5.	This is the most densely pre-organised unfair dismissal case I have seen.  There were three CMDs and two preliminary hearings, paving the way for this considerable set of proceedings. For the critical matters, the Claimant having previously represented herself, was represented by Mr Hyams.

6.	One aspect of a CMD before Employment Judge Dr Auerbach concerns a concession made by Counsel then instructed by the Respondent, not Mr Laddie, in relation to what I will describe as the January 2004 minutes and I will return to that.  In essence, the points now live on appeal are: was the Claimant an employee or self-employed and if so employed, was she unfairly dismissed and in respect of wages, were they properly paid?

7.	It follows that when the Tribunal decided that the Claimant was not an employee, the other claims were unnecessary to be decided. An inchoate objection was made by Mr Hyams before me that it may have gone too far.  I take an entirely different view.  I think that when claims are properly put before an Employment Tribunal which depend, for example, on employee status, it is very helpful for the Employment Tribunal to have set out its findings in relation to claims which then become academic, because they may yet revive on appeal.  I am grateful to the Employment Tribunal for making its findings clear on the wages aspects. 

The application
8.	The Claimant appeals against the judgment. In Haritaki v SEDA EAT PA/0006/08 paragraphs 1 to 13 I set out my approach to Rule 3.  It is important to read it in the context of this case.  On the sift, HHJ Reid QC expressed his view about the case and he said as follows:
“This is an elaborate attempt to re-argue the facts.  There is no substance in the suggestion that the Tribunal erred in its application of the law or that it erred in its application of the law or that it erred in failing to treat the case of Massey appropriately.  Ground 10.1 of the Ground of Appeal misrepresents this judgment of the ET.  The ET was quite entitled to make the findings of fact which it did and the allegations of perversity and unfairness do not appear capable of serious argument.  There is no reason why the Claimant should not have adduced evidence as to the amount claimed for unauthorised deduction of wages.  In the absence of any evidence of any deduction the ET’s conclusion at para 129 was a proper one.”  

9.	The jurisdiction of the EAT is confined to questions of law.  The Claimant was given an opportunity to appear on a fresh application and I form my own view on considerably more material than was presented to the procedural judge, not least because I have an extremely detailed skeleton argument with a very substantial number of additional documents together with oral submissions by Mr Hyams.

The legislation
10.	The only relevant provision of the legislation is that a person who is entitled to bring a claim of unfair dismissal is one who is an employee under section 203 of the Employment Rights Act 1996.  No detailed arguments have been addressed to me about the statute itself.  A simple issue for the purposes of today is, was she an employee?

The facts
11.	The Tribunal had to cut through substantial undergrowth to reach the position where it could make decisions in the case.  It had to deal with very significant crossfire between the parties on procedural issues, even after the way had been made clear by the five previous interim hearings, and so descended upon the issues in the case first giving to the reader a summary of its approach to the witnesses.  In short, the Claimant lacked credibility and the Tribunal gave its reasons for taking that view of her.

12.	Broadly speaking, it accepted the credibility of the Respondent’s witnesses and accepted their consistency and helpfulness.  Mr Hyams criticised the Employment Tribunal for doing that, invoking the judgment of Sedley LJ in  Anya v University of Oxford [2001] ICR 1138 at paragraph 23.

13.	I reject the criticism for the Tribunal has not here given a bald statement preferring the evidence of the Respondent over the Claimant.  It has introduced us to the actors in this drama in a way which is helpful.  It has, in no way, sought to protect itself from appeal in a crude way by making that assessment and it has given reasons for its overall assessment of the witnesses it saw.  With those observations in mind, which are at the front of its judgment but which, of course, came at the end of all of the evidence and submissions, the Tribunal decided the relevant facts.

14.	The parties were introduced in this way:
“31	The Respondent is a limited company which owns the freehold of Ormonde Terrace, a residential block of flats in Primrose Hill.  There are 70 flats in the block.  The shareholders in the Respondent are owners of the flats.  The Claimant, Miss Kennedy owns Flat 31 in the block and has done since December 1987. 
  32	Mr N Holcombe, provided services to the Respondent from 1992 until 2002.  He served as managing agent and company secretary from 1992 until 1999, when new managing agents were appointed.  He then remained company secretary until 2002.  When he ceased to be managing agent, he performed a liaison role with the new managing agents.  Mr Holcombe invoiced a fee of £6,000 per annum gross.  This equated to £230 per day gross.  This payment was for four hours per week on a flexible basis. 
  33	At a meeting of the board of directors of the Respondent on 9 April 2002 (page 39‑40), the directors unanimously co-opted Miss Kennedy to the Board of Directors. 
  34	At a board meeting on 7 May 2002, concern was expressed at the performance of the managing agent, W A Ellis.  At a board meeting on 2 July 2002 (page 48-49) Mr Holcombe indicated that he would not be able to continue as company secretary after December 2002.” 

15.	It was the Claimant’s case that she was prepared to take the Company Secretary role for an initial period of time, but that she did not want to be an employee.  She said this:
“I repeatedly said I did not want to be an employee because being an employee of my neighbours and yet as an employee having to argue about asset sales with my neighbours in board meetings would be too much to cope with.”

16.	The Tribunal considered in detail a substantial number of minutes, one of which is regarded as important.  These are the January 2004 minutes, relating to meetings of the board which took place on 21 and 27 January.  There was a dispute about their accuracy and authenticity, but it was conceded at the CMD before Employment Judge Dr Auerbach on 1 October 2008 by Counsel previously representing the Respondent that the documents were genuinely contemporaneously produced and were not a forgery in the sense that they were not later produced and backdated.

17.	The point about the minutes is that they include a passage which indicates that there would be an employment contract for the Executive Officer.  The Tribunal went on to decide however that the document did not accurately reflect what was said at the meeting.  It did so by considering material from those said to be present including Dr Dalili and Mr Bushnell.

18.	The Tribunal made a decision about that document and it must be borne in mind that this was one of a number of pieces of evidence which went towards its findings on employment status.  The Tribunal was not satisfied that the minutes were genuine minutes produced contemporaneously.  That might seem unfair to the Claimant and Mr Hyams made that point strongly. But the Tribunal went on to say that the gist of the minute did not accurately reflect what was said. Even if it were wrong about that finding, it was an indication of what would happen in the future, that is that a contract of employment would be produced and it never was.

19.	The Tribunal divided the sequence of time into three parts.  It concluded that the Claimant at the outset of the relationship was not an employee.  It did so by looking at the documentary material and considering what the parties said and did.  It then turned to the period which began in January 2004, evidenced it is said by the January 2004 minute.  That is in the context of an excursion by the Tribunal to consider whether in the light of its finding that she was not, at the outset, an employee, that position changed at a later date so as to create an employment relationship out of a self-employed relationship.

20.	The Tribunal rejected the Claimant’s claim that her work had increased exponentially. It relied upon a judgment of the Court of Appeal in James v London Borough of Greenwich [2008] ICR 545 as authority for the proposition that an increase in the amount of time spent on a job does not affect the nature of the relationship and rejected the increasing work as by itself changing the nature of the relationship.

21.	The Tribunal looked particularly at the state of affairs said to be portrayed by the January 2004 minutes and by very careful cross-referencing to the witnesses it heard and to the documents, it came to the conclusion that she was not, at that stage, an employee.  It then went on to look at the third period probably beginning April 2004 and decided that from then on she was not an employee either. Reasons were given for holding that she was not an employee in the third period.  These related in a large part to representations made by the Claimant herself to the statutory authorities, all of which point in one direction, she was not an employee.

22.	The Tribunal went on to consider in detail her claim for wages.  It held that she was a self-employed person paid at a rate of £230 gross a day and that there was, therefore, no unlawful deduction for she was not an employee but, in any event, was paid the rate.

The Claimant’s case
23.	The first point taken by Mr Hyams is that there was unfairness and injustice done to the Claimant in these proceedings.  In an entertaining exegesis of the word justice, from revenge and Roman law, Mr Hyams suggests it covers doing something fairly and finding necessary facts.  It is not necessary for me to descend into the definition of the word.  I know it when I see it. As I distil the submission, it is simply for me to decide whether there was unfairness in the Employment Tribunal’s failure to make necessary findings of fact. 

24.	The principal target for this submission is the apparently disparate treatment of the 2004 minutes by Employment Judge Dr Auerbach’s Tribunal on 1 October 2008 and the instant judgment. At first sight, there is substance in it.  But it has to be borne in mind that there was very considerable hostility in this case which was hotly fought.  There were certainly challenges to the Claimant as to her credibility for how else could the Tribunal make the findings which it did at the outset? The Tribunal has indicated that there were a number of different pieces of evidence pointing away from the Claimant’s contention that she was an employee in 2004.  I do not accept that there was unfairness in the Tribunal’s approach to this by way, as it were, of revisiting a conceded fact.  The essential issue is the accuracy of the minutes, granting to the Claimant that she had not fabricated them. They were found to be inaccurate for they did not reflect what was said and the Tribunal came to that conclusion having heard live evidence from people who were said to be there.

25.	However, even it was wrong about that, the Tribunal then went on to analyse what the words meant. No employment contract had actually been produced. This indicates that something was likely to change and to be different. It came to the conclusion on that basis that the Claimant was not an employee at that stage.  It went on in the further alternative to make a further decision as to the nature of payment.

26.	The second major criticism of Mr Hyams is that the Tribunal did not deal with every piece of evidence and he has put three pieces before me which he says, and at this stage there is no one to gainsay it, do not appear in the judgment.  My approach follows judgments of the Court of Appeal in Comfort v Lord Chancellors Department [2004] EWCA civ 349 and High Table Limited v Horst [1997] IRLR 513.  Not every issue of fact has to be decided.  The EAT is not to conduct a detailed examination by use of the non technical fine-tooth comb or the scientific microscope in order to promote such a case.  The Employment Tribunal is to decide those issues which are important to it and if it does not mention a particular piece of evidence, it is not to be condemned for so doing unless it makes the judgment wrong.

27.	There is a very substantial body of material here indicating the nature of the relationship and I do not accept that the failure to mention three particular matters condemns this judgment in the way I have described.  What was important about this case was the description by the Employment Tribunal of the relationship.  It did not have in front of it Secretary of State for Business v Neufeld [2009] IRLR 475 in which the Court of Appeal upheld a judgment I gave reversing a judgment of an employment judge on the status of a director.  The important thing about that case is that it focuses upon the conduct of the parties in deciding whether an employment relationship existed and it is also capable of change during the life of a relationship.  It is important also to note that a director may be an employee, as in Neufeld was the final outcome.

28.	The way in which the matter can be tested is by looking at mutuality of obligation and control.  No criticism has been made by Mr Hyams of the Employment Tribunal’s finding on the former.  The Tribunal decided there was none. Without it, there is no contract of employment.  That ought to settle the appeal. As to the latter, a weak submission was made as to the lack of control.  The Tribunal was damning of the Claimant.  She refused to bow to any sort of supervision.  This is not simply a recalcitrant employee, not obeying her employer’s orders.  She was not prepared to be put in a subservient position in relation to her fellow owners in the block.  On both those grounds, the Tribunal’s judgment is cogently reasoned and I see no error in its approach to either.

29.	The shifting nature of the employment was recognised by the Tribunal focussing on what I have analysed to be three separate periods and in each one, cogent reasons are again given for the decision that the Claimant was not an employee.  Since the conduct and language of the parties is important in any decision about this, one can now see again why the Tribunal’s introduction, based upon its appreciation of credibility, comes to the fore.  The Claimant was not a credible witness and, in light of the Tribunal’s correct approach to looking at conduct and language, it cannot be faulted in making the judgment that she was not an employee.

30.	The Tribunal did not take against the Claimant just because of a dispute over the January 2004 minutes but because of her whole presentation to it.  In those circumstances, I see no error and it is not necessary for me to enter into the second ground of appeal as Mr Hymans accepts.  The point was not argued in this way at the Employment Tribunal and the finding on the wages claim can only be parasitic upon a finding in the Claimant’s favour that she was an employee.  Since that is not the finding, the Tribunal strictly did not need to decide it. I have said I am grateful to it for so doing, but there is no need for me to add my hypothesis upon this. It is also unnecessary for me to enter into the difficult territory of both counsel’s conduct alleged in the skeleton argument which would be necessary for the determination of this point.

31.	I thank Mr Hymans for his very fair articulation of all the points on behalf of his client.  I agree with HHJ Reid QC’s opinion. The application is dismissed.  The appeal will be taken no further.