Appeal No.	 EAT/916/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 16 June 2000

Before
HIS HONOUR JUDGE PETER CLARK
MR P M SMITH
MR T C THOMAS CBE

MR D HOLOHAN	APPELLANT

1.	T CARTLEDGE LTD
2.	DAVID WEBSTER LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

FULL HEARING
Revised

	APPEARANCES

For the Appellant	MR R PULLEN
(Barrister)
Brent Community Centre
389 High Road
Wilsden
London  NW10 2JR	
For the Respondents	1st Respondent
MR T LINDEN
(of Counsel)
Engineering Employers Federation 
Broadway House
Tothill Street
London  SW1H 9NQ

2nd Respondent:
MR A LOCK
(of Counsel)
Messrs Beachcroft Wansbroughs
10 - 22 Victoria Street
Bristol  BS99 7UD	

JUDGE CLARK

1	This is an appeal by Mr Holohan, the Applicant before an Employment Tribunal sitting at London (North) Chaired by Mrs Enid Prevezer, supported by the first Respondent below, T Cartledge Limited (Cartledge) against that Employment Tribunal’s decision, promulgated with extended reasons on 16 June 1999 following a hearing held on 20 May, striking out his claim of unfair dismissal against the second Respondent, David Webster Limited (Webster).

Background
2	This being a strikeout application by Webster under Rule 13(2)(d) of the Employment Tribunal Rules of Procedure the Employment Tribunal heard no evidence, other than the Applicant himself who was given the opportunity to show cause under Rule 13(3) why his claim against Webster should not be struck out.  Nevertheless, the following factual picture emerged.

3	The Appellant commenced employment with the London Borough of Brent in 1983.  He was a supervisor engaged on street lighting duties.

4	In April 1994 Brent contracted out their street lighting work to Cartledge.  The initial contract was for a three-year term, but was later extended until 31 October 1997.

5	In 1997 Brent pit the contract out to tender on a Private Finance Initiative (PFI) basis.  Both Cartledge and Webster tendered for the new contract.  Webster was successful.  In the summer of 1997 Cartledge were informed that they had been unsuccessful, but by agreement the Cartledge contract was extended to the extent of providing an emergency lighting service on a month by month basis from 1 November through to the end of December 1997.
6	Webster then provided a similar service under contract with Brent from 1 January 1998.

7	Meanwhile the Appellant was given notice of dismissal by Cartledge by letter dated 15 September 1997 which took effect on 31 October 1997.

Procedural History
8	Initially the Appellant commenced these proceedings by an Originating Application naming Cartledge only as the Respondent.  He complained of unfair dismissal.  Subsequently Webster was joined as second Respondent and Brent as third Respondent.  Brent has since been dropped out of the proceedings.

9	By their Notice of Appearance, Cartledge contended that the Appellant had been fairly dismissed by reason of redundancy and Webster denied that the Appellant had ever been their employee, or an employee for whom they had any responsibility, whether by virtue of the provisions of the TUPE regulations or at all.  They asked that the claim against them be struck out.

10	At a directions hearing held before a Chairman, Mr Carstairs, on 8 January 1999 certain orders were made and set out in a letter to the parties dated 29 January 1999.  Directions were given for a preliminary hearing to determine whether there was any basis for the claims brought by Mr Holohan and other Applicants against Brent.  As to the claims against Cartledge and Webster, those cases were listed for a full hearing to take place over seven days commencing on 20 May.

The Prevezer Employment Tribunal Hearing
11	We see from the Chairman’s Notes of evidence that the seven-day full hearing listed for 20 May did not get very far.  Two matters were dealt with.
12	The Appellant, then appearing in person, applied for an adjournment on the basis that the Respondents had not provided full discovery.  That application resulted in the Appellant receiving a costs warning.

13	The Employment Tribunal then gave the Appellant an opportunity to give evidence as to why his claim against Webster should not be struck out.

14	Essentially he took two points.  First, that there was a series of transactions which meant that he was employed immediately before a relevant transfer for the purposes of regulation 5(3) of TUPE.  Alternatively he contended that he was dismissed because of TUPE and there was a transfer.  He cited the House of Lords decision in Lister –v- Forth Dry Dock Co Ltd (1989) ICR 341.

15	Mr Lock, for Webster, is recorded by the Chairman as submitting that Cartledge continued the work until December 1997.  The Appellant was dismissed on 31 October 1997.  He had to show that he was employed immediately before the transfer, therefore please strike out the claim.

The Employment Tribunal Decision
16	The Employment Tribunal upheld Mr Lock’s submission.  Their conclusion is expressed in this paragraph of their reasons:

“The fact that the Applicant was employed only to 31 October and the transfer did not take place at the earliest time until 1 January 1998, as was agreed by all the parties, means that the Applicant cannot be said to have been employed by the first Respondents immediately prior to the transfer and therefore he is not protected by the Transfer of Undertakings Regulations 1981.  For those reasons therefore we dismiss the second Respondent from the proceedings.”

Striking Out
17	Rule 13(2)(d) of the Employment Tribunal Rules and Procedures provides so far as is material
(2)	A Tribunal may-
(d)	subject to paragraph (3), at any stage of the proceedings, order to be struck out any Originating Application or anything in such application on the grounds that it is scandalous, frivolous or vexatious.

18	The meaning of the expression ‘scandalous, frivolous or vexatious’ was considered, in the analogous context of the then costs rule in the Industrial Tribunal, by the National Industrial Relations Court in Marler Ltd –v- Robertson (1974) ICR 72, where Sir High Griffiths said this:

“If the employee knows that there is no substance in his claim that it is bound to fail or if the claim is on the face of it so manifestly misconceived that it can have no prospect of success it may be deemed frivolous and an abuse of the procedure of the Tribunal to pursue it.  If an employee brings a hopeless claim not with many expectations of recovering compensation, but out of spite to harass his employers or for some other improper motive he acts vexatiously and likewise abuses the procedure.  In such cases the Tribunal may and doubtless usually will award costs against the employee.  It is for the Tribunal to decide if the Applicant is being frivolous or vexatious and thus abuses the procedure.  It is a serious finding to make against an Applicant for it will generally involve had faith on his part and one would expect the discretion to be sparingly exercised.”

19	Thus the question for the Prevezer Employment Tribunal, bad faith not being alleged against the Appellant, was whether his claim against Webster was manifestly misconceived, in fact hopeless.

The Appeal
20	Mr Pullen submits, supported by Mr Linden, that before the Prevezer Employment Tribunal could strike out the Appellants claim against Webster as manifestly misconceived, without a full hearing, it was necessary to consider whether the Appellant was unfairly dismissed by Cartledge for a reason connected with a relevant transfer of a part of the undertaking of Cartledge in which the Appellant was employed to Webster, such as to render that dismissal automatically unfair by virtue of regulation 8(1) of TUPE and whether liability for that unfair dismissal transferred to Webster under regulation 5(2).

21	For that purpose it was, he submits, necessary for the Employment Tribunal to determine
(1)	whether there was a relevant transfer (under regulation 3)
(2)	what were the transactions forming part of a series of transactions relied upon by the Appellant, and when did each transaction take place (regulation 3(4)
(3)	was the Appellant employed in the undertaking or relevant part of the undertaking immediately before the transfer (regulation 5(3))
(4)	was the Appellant deemed to be employed in the undertaking or part of the undertaking immediately before the transfer by operation of the principle in Lister?  That case adds words to regulation 5(3) so as to read as follows:

“a person employed in an undertaking or part of one transferred by a relevant transfer is a person so employed immediately before the transfer, or would have been so employed if he had not been dismissed in the circumstances described in regulation 8(1).”

22	Regulation 8(1) provides that a dismissal will be unfair if the transfer or a reason connected with it was the reason or principal reason for dismissal.  Regulation 8(2) provides a defence to the employer where the reason or principal reason for dismissal was an Economic Technical or Organisational reason and where the employer acted reasonably in treating that as a sufficient reason for dismissal under what is now Section 98(4) of the Employment Rights Act 1996.

It is submitted that none of those enquires were made by the Employment Tribunal on the face of their reasons and thus the reasons were inadequate, see Meek –v- City of Birmingham District Council (1987) IRLR 250.

23	Further as appears on the face of their reasons, the Employment Tribunal simply proceeded on the basis that the temporal gap between dismissal on 31 October 1997 and the transfer date, which they took to be 1 January 1998, of itself precluded a finding of employment of immediately before the transfer.  That overlooked the deeming provision inserted into regulation 5(3) by the House of Lords in Lister, a case to which the Employment Tribunal were expressly taken and which is referred to in their reasons.

24	For the purposes of this appeal only, the matter not having been fully tested in evidence or argument below, we shall assume, as did the Employment Tribunal, that there was a relevant transfer from Cartledge to Webster on 1 January 1998 and that the Appellant was dismissed by Cartledge on 31 October 1997.  In these circumstances, can the Employment Tribunals strike out decision stand?

25	Mr Lock submits, in support of the Employment Tribunal’s decision that they accepted his submission below to the effect that Cartledge’s reason for dismissing the Appellant was redundancy and not for a reason connected with the transfer, assuming in the Appellant’s favour that there was a transfer to Webster on 1 January 1998.  Accordingly the Lister principle does not apply.  The Appellant has wholly failed to show that he was employed immediately before the transfer.  Consequently he cannot rely on the TUPE provisions.

26	He seeks to make good his submission on the reason for dismissal by submitting that at the time when notice was given by Cartledge it was anticipated that their contract with Brent would terminate on 30 September 1997.  Since the Effective Date of Termination of the contract by that notice was to be 31 October, the reason for dismissal must be redundancy and not the transfer, which only, if at all, indirectly affected the decision to dismiss.

27	There are a number of difficulties with that submission, namely:
(1)	the Chairman’s notes do not record that submission, but
(2)	even if the submission was made in those terms:
(a)	it is certainly not reflected in the Employment Tribunal’s extended reasons.  The sole basis for the decision is as set out earlier.  That is, the temporal gap between dismissal and the assumed transfer date.  The question posed under Lister is simply not addressed
(b)	there was no evidence before the Employment Tribunal from Cartledge as to their reason for dismissal, merely a contention contained in their Notice of Appearance and therefore no opportunity was given to the Appellant to test that evidence.  As a matter of law, Webster must rely on Cartledge’s reason for dismissal.  See B S G Property Services –v- Tuck (1996) IRLE 134.
(c)	It will often be the case that a dismissal by reason of a transfer overlaps also with the statutory definition of redundancy.  It will be for the Employment Tribunal, having heard all necessary evidence and argument to decide what was the reason or principal reason.  See e.g. Warner –v- Adset (1998) ICR 1056.
(d)	The factual basis of Mr Lock’s submission is, to put it at its lowest, questionable.  As Mr Pullen points out, in their letter of dismissal dated 15 September 1997 Cartledge informed the Appellant that their understanding then was that Webster would take over the Brent Street lighting contract on 1 November 1997 and as a result the Appellants employment would be terminated on 31 October 1997.
(3)	in these circumstances it is plain to us that 
(i)	the Employment Tribunal misdirected themselves in law in considering whether or not the Appellant could have been employed immediately before the transfer by failing to analyse the position in accordance with Lister, and
(ii)	erred in law in concluding that the Appellant’s case against Webster, as formulated earlier, was hopeless or wholly misconceived, assuming that they applied that test, which it is common ground before us was the appropriate test on a strike out application.

Conclusion
28	It follows, in our judgment, that this decision is fatally flawed and must be set aside.  The appeal is allowed.  The case is remitted to the Employment Tribunal for the full hearing originally directed by Mr Carstairs in January 1999.

29	There are lessons to be learned.  Employment Tribunal’s should be slow to exercise their draconian powers to strike out claims or parts of claims without a proper enquiry into the merits save in the most obvious case.  Short cuts can and in this case have led to unnecessary delay and expense to the parties.  Where, as here, real issues arise for determination the law requires that that determination is reached after a hearing at which all the necessary evidence is received and the arguments fully ventilated.