Appeal No. EAT/1202/00

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 21 March 2001

Before
MR RECORDER LANGSTAFF QC
MR J R CROSBY
MR D J JENKINS MBE

1) MR D BOUGHTON  
2) MRS W BOUGHTON  	APPELLANTS

AUDIO GROUP INTERNATIONAL LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING 

Revised

	APPEARANCES

For the Appellants	The Appellants in person	

MR RECORDER LANGSTAFF QC

1	This is a case in which, when the matter was first opened before us, we could not identify what we thought was an arguable ground of appeal.  In the course of the hearing, we have changed our view, at least so far as Mrs Boughton is concerned.  We regret that for reasons we shall elaborate upon, we remain of the same view in respect of Mr Boughton.  

2	The matter comes before us by way of a preliminary hearing from a decision of the Employment Tribunal at Exeter, promulgated on 15 August 2000.  The Tribunal faced four claims, only two of which were proceeded with.  

3	One was a claim by the employee for constructive unfair dismissal, the second was for breach of fixed term contracts.  The Respondents said that the Applicants before the Tribunal, the Appellants here, had resigned in breach of contract and raised counterclaims against them.  

4	The Appellants were employed as Managing Director and Sales Director of Heybrook Ltd, a small company which was sold to the Respondents in March 1998.  Thereafter the Boughtons were employed on terms identified at paragraph 6 of the Tribunal’s Decision in these terms:

“6.  …….They were to be employed as directors of AGI to carry out duties to be assigned to them by its board, such duties to be commensurate with the duties which they had been carrying out as directors of Heybrook and to be performed within the AGI group as a whole.  They were also to continue as Heybrook directors.”

The Tribunal found that contrary to the express terms of that agreement, the Respondents did not assign the Appellants duties of such a commensurate nature as had been agreed, and at no stage were they allowed to operate as directors of AGI.  That breach, however, was not the - and I stress the next word - immediate cause of the Appellants’ resignation from service with AGI because it had been apparent to the Employment Tribunal that that position was reached by October 1998, and it was not until the summer of 1999 that the resignation occurred.  The Tribunal said in the opening words of paragraph 24 that they were satisfied:

“that the applicants affirmed their contracts of employment as varied by the respondent’s breach by October 1998 at the latest.”

We think it arguable that there was no such variation and that the term of the engagement of the Boughtons, identified by the Employment Tribunal at paragraph 6, remained in contractual though not, it appears, in actual force.  

5	What led to the parting of the ways is described in paragraph 17 of the Employment Tribunal Decision.  There was a meeting on 26 April 1999, in the course of which it was made clear to the Boughtons that they would be expected to perform clerical tasks to assist in Heybrook’s administration.  Apparently a document saying just this had been prepared in advance of the meeting, and was before the Tribunal and we direct should be made part of the appeal bundle for the hearing before this Tribunal, when the matter comes back for full argument. 

6	It seems to us arguable that there was no acceptance or affirmation by the Boughtons of a requirement that they should conduct clerical tasks.  The Employment Tribunal appear to note that they would have regarded this as demeaning to their status.  That, it seems to us, is where proper consideration of the effect of the contractual terms in paragraph 6 comes in.  If, upon full argument, it is thought that employment as directors, performing duties commensurate with other duties that had previously been performed as directors of Heybrook, necessarily implies that the employee concerned would be treated as of the status of a director, or at least the status of a senior employee, then any requirement to conduct himself or herself in a manner which seriously undermined his or her status, otherwise to be expected, could well be, and perhaps normally would be, regarded as repudiatory conduct.  If accepted as such, then the contract would be terminated.  

7	The Tribunal said that they found it difficult to understand the Applicants’ objections to the statement that they were expected to perform clerical tasks, and noted that it reflected the decisions of the board in May 1998 to which they were party.  It is not obvious, from the Tribunal’s recitation of those Reasons that this is so; they deal with the May 1998 meeting at paragraphs 7 and 8, and it is at least arguable that the two and a half months that followed between that and the departure of the Boughtons, was marked by a failure, on their part, to accept what they saw as a diminution in their status.  Such a diminution would, we think, arguably amount to repudiatory conduct.  

8	It may be thought, and indeed at one stage we did think, that this had been considered by the Employment Tribunal.  In paragraph 20, they identify the treatment as junior members of staff, rather than as directors, as being a ground for complaint and proceed to deal with it in paragraph 26.  	However, what is said at paragraph 26.1 does not deal with the meeting of April 1999, because there is within the paragraph no obvious recognition that the reduction to the status of clerical officer, working in the office, was the last straw, or arguably the last straw for the Boughtons.  If one looked at the case on the basis that there was a continuing obligation on the part of the employer to provide duties and treatment commensurate with directorship, or at least senior employee status, then it is arguable that a Tribunal was bound to regard the events of April 1999 as repudiatory, and arguable that that repudiation was not acquiesced in.

9	It is also arguable that if it was not in itself considered sufficiently serious a breach to be repudiatory, nonetheless, there is no clear indication, it may be said, that the Employment Tribunal looked at the combination of circumstances, rather than events in isolation.  It may be, and as I say, we do not determine this at this stage, that having decided that the Boughtons had affirmed the contract, following the breach of the Respondents, the Tribunal proceeded on the assumption that the contract thereafter was the contract as varied, so that the Boughtons were no longer to be treated as directors and were no longer entitled to senior status, but had by their conduct, accepted a demotion to a lesser role.  If that assumption is justified, then the Employment Tribunal Decision would seem to follow, if it is not justified, then it is at least arguable that the Employment Tribunal Decision was reached upon a false premise.  

10	That, therefore, leads to our conclusion: that Mrs Boughton has a complaint of unfair dismissal, which she may pursue.  It also leads to the conclusion that insofar as both Mr and Mrs Boughton had an application in respect of breach of a fixed term contract of employment, that both of those claims are capable of continuing argument, and I am sorry to have implied, at the commencement of this judgment, that Mr Boughton had no claim which we would give leave to proceed on.  But it does leave the question of Mr Boughton’s complaint of unfair dismissal.  He was older than 65.  The Employment Tribunal concluded that it had not been shown to them that there was a normal retiring age for an employee holding the position held by the employee; it is not difficult to understand why, since he was, I think probably, the only employee occupying that position, at least so far as Heybrook was concerned, and one of few only, so far as AGI was concerned, and that therefore the default age of 65, provided for by section 109(1)(b) of the Employment Rights Act 1996 should apply.  

11	Encouraged by Mr Henny, of the ELAAS scheme, who has sat behind them as adviser, and for whose Skeleton Argument we are particularly grateful, he sought to argue that there had been no justification provided by the UK, for the age limit of 65 and that therefore the answer given by the European Court of Justice to the fifth question posed in the Seymour Smith case would have the consequence that the age limit should be disapplied.  He was, after discussion, constrained to accept that that would require evidence of disparate impact as between men and women, which evidence, if available, was not led before the Tribunal.  In any event it is difficult to see why a particular age should have a disparate impact, when it is one age prescribed for both sexes.  We do not think there is anything in that point, and that was, in effect, the only arguable point suggested to us, other matters being those of fact.  There is, in our view, no arguable prospect of success on his appeal in respect of the unfair dismissal complaint.  

12	Accordingly, we permit this appeal to go forward.  We have explained our reasoning at rather greater length than usual on a preliminary hearing for the assistance of the Tribunal which subsequently comes to hear the case, and suggest that the argument be confined within the limits that we have suggested.  I do not think it is necessary to refine the Notice of Appeal, so long as it is understood that the argument will be limited to the points which we think give rise for argument.  It should take no more than half a day.  Skeleton Arguments, please, no less than two weeks before the case that comes for hearing, and if any authority is to be relied upon, could copies please be provided seven days beforehand.