Crofts and Others v Cathay Pacific Airways Ltd and Others

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Waller,Lord Justice Maurice Kay
Judgment Date19 May 2005
Neutral Citation[2005] EWCA Civ 599
Docket NumberCase No: A1/2004/1485
Date19 May 2005

[2005] EWCA Civ 599

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

[UK/EAT/0367 & 8/03/DA]

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Lord Phillips of Worth Matravers, Mr

Lord Justice Waller and

Lord Justice Maurice Kay

Case No: A1/2004/1485

Between
Crofts & Ors
Appellants
and
Cathay Pacific Airways Ltd & Ors
Respondents

David Griffith-Jones QC & Joanna Heal (instructed by Messrs Simpson Millar) for the Appellants

Christopher Jeans QC & Anya Proops (instructed by Messrs Eversheds) for the Respondents

LORD PHILLIPS, MR :

Introduction:

1

These are appeals from decisions of the Employment Appeal Tribunal ('EAT') delivered in a single judgment by His Honour Judge Peter Clark on 24 June 2004. The decisions dealt with preliminary issues as to whether an Employment Tribunal ('ET') had jurisdiction to entertain the appellants' claims. The appellants ('the pilots') are air pilots. They contend that they currently live in this country. They were employed, under contracts of employment with companies registered in Hong Kong (collectively 'the employers'), to pilot aircraft owned by Cathay Pacific Airways Limited ('CPA'). They were dismissed. They claim that their dismissal infringed section 94(1) of the Employment Rights Act 1996 ('the ERA'), which provides:

"An employee has the right not to be unfairly dismissed by his employer"

The first issue that we have to resolve is whether the pilots enjoyed the right conferred by that sub-section.

2

The pilots allege that their dismissals infringed the terms of their contracts of employment. They contend that an ET in this country has jurisdiction to entertain their claims for wrongful dismissal. In the case of some of them, that contention is disputed and we must resolve that dispute. There was once a further issue as to whether the ET was entitled to decline to exercise its jurisdiction on the ground that England was not the appropriate forum. That issue is academic as it is common ground that the ET now has that power. There remains an issue, however, as to whether it should use it on the facts of the individual cases.

The facts

3

Cathay Pacific is Hong Kong's major airline. It flies all over the world. Cathay Pacific aircraft are all registered in Hong Kong. Until the early 1990s all Cathay Pacific pilots were employed by CPA. There was then a change of policy, which was designed to enable some of the pilots to live in countries other than Hong Kong. This was attractive both to some of the pilots and to CPA, which could thereby avoid the expense of paying salaries and allowances that reflected the high cost of living in Hong Kong. Under the new policy, pilots could be allocated a Base Area outside Hong Kong from which their flight cycles would start and at which they would end. Base Areas included Europe and North America. Within the Base Area was a 'Home Base' where the individual cycles would normally begin and end. One such Home Base was London Heathrow.

4

Pilots for whom Europe was the Base Area entered into contracts of employment with Veta Limited ('Veta'), in place of CPA. Pilots for whom North America was the Base Area entered into contracts of employment with USA Basings Limited ('USAB') in place of CPA. Veta and USAB are subsidiaries of CPA and all three companies are registered in Hong Kong. The subsidiaries are little more than shell companies. They supply pilots to CPA under service contracts governed by Hong Kong law. CPA operates the aircraft and gives managerial instructions to all the pilots. CPA has an administrative centre in the United Kingdom; the subsidiaries have no independent presence here. At the centre the only person who had regular contact with the Veta Pilots was the base co-ordinator. Her role was administrative and not managerial.

5

Of the twelve appellants, five were Veta Pilots, six were CPA pilots and one, Mr Parrock was a USAB pilot. Mr Parrock had wanted to be a Veta pilot, but it had not proved possible to accommodate this wish. He lived in England and flew to New York at his own expense to start his flight cycles, although on occasion it proved possible to start or finish these at Heathrow in order to accommodate him. He did not possess the 'green card' that accords to the holder the right to work in the United States. The contracts of employment of all the pilots were governed by Hong Kong law. Their salaries were paid into Hong Kong bank accounts. They held Hong Kong professional pilots' licences. Their personnel files were kept in Hong Kong. All training was devised and carried out in Hong Kong. All disciplinary and grievance procedures took place in Hong Kong. Flight instructions were issued from Hong Kong.

6

The pilots were amongst 49 Cathay Pacific pilots who were dismissed by letter from Cathay Pacific Management as a result of a senior CPA decision taken in Hong Kong. 21 of these, including some of the Veta and CPA pilots, have started proceedings for breach of contract before the Hong Kong Labour Tribunal. It is not disputed that this Tribunal has jurisdiction over those claims. The claims that the pilots have sought to bring before the ET are for:

i) Unfair dismissal under Part X of the ERA;

ii) Failure to give written reasons for dismissal under Part IX of the ERA;

iii) Breach of contract in failing to comply with disciplinary procedures for dismissal.

7

The ET, which sat at London South, was chaired by Mr AM Snelson, who sat with Ms S Dean and Mr A Jinkinson. The Tribunal promulgated its decision on March 10 2003. The summary of the facts and the application of the law, as it then stood, to those facts were of the highest quality. The Tribunal held as follows:

i) It had jurisdiction to entertain the ERA claims of the Veta pilots as their employment had a 'substantial connection' with Great Britain and Heathrow was to be regarded as their principal place of work;

ii) It did not have jurisdiction to consider the ERA claims of the CPA pilots or Mr Parrock;

iii) It had jurisdiction to consider the contractual claims of the CPA and Veta pilots, but not that of Mr Parrock;

iv) The contractual claims of the CPA pilots should be stayed on the grounds of forum non conveniens but those of the Veta pilots should not.

8

The CPA pilots and Mr Parrock initially appealed to the EAT both against the ET's determination on ERA jurisdiction and against the adverse determinations in respect of jurisdiction in relation to the contract claims. Veta appealed against the decision on ERA jurisdiction and against the decision to entertain the contract claims.

9

Before the date of the hearing in the EAT, this court gave judgment in Lawson v Serco Ltd ('Serco') [2004 EWCA Civ 12]; [2004] ICR 204. That decision addressed the ambit of application of section 94(1) of the ERA. It led, I believe, the CPA pilots to abandon their challenge to the ET's decision that it had no jurisdiction in relation to their ERA claim. I shall consider Serco in detail in due course. At this point it suffices to say that it does not provide an easy answer to the issues raised on this appeal.

10

The EAT dismissed Mr Parrock's appeal in relation to his ERA claim. It also dismissed all appeals in relation to jurisdiction in respect of the contract claims. Applying Serco, it decided that the Veta pilots' case on the application of the ERA was on the borderline and should be remitted to a different ET for a fresh hearing. That ET should also consider whether the Veta pilots' contract claims should be stayed on the ground of forum non conveniens.

11

The pilots appealed against all findings adverse to them. Veta cross-appealed against the EAT's decision to remit the Veta pilots' claims to the ET. Veta contends that the EAT should have ruled that the ET had no jurisdiction to entertain the Veta pilots' ERA claims or their contract claims. Alternatively the EAT should have ruled that the ET was not the appropriate forum to entertain the Veta pilots' contract claims.

12

The parties were agreed that we should, if possible, resolve all issues between them. I believe that it is possible to do so. I propose to start with the ERA claims.

The claims for breach of section 94(1) of the ERA

13

Section 94(1) of the ERA forms part of Part X of the ERA, which is concerned with 'unfair dismissal'. That Act consolidated a number of different statutes, many of them themselves consolidating Acts, dealing with employment rights. The rights in question are employees' rights; the ERA imposes statutory obligations on employers. Some of the rights and obligations imposed by the ERA can only sensibly apply to protect employees who are working within Great Britain. Others are capable of applying whether the employee is working in Great Britain or abroad. Most, if not all, of the Acts which were consolidated by the ERA had an express provision governing the ambit of their application. These provisions were consolidated in a single section of the ERA, section 196. It provided as follows:

"(1) Sections 1 to 7 and sections 86 to 91 do not apply in relation to employment during any period when the employee is engaged in work wholly or mainly outside Great Britain unless—

(a) the employee ordinarily works in Great Britain and the work outside Great Britain is for the same employer, or

(b) the law which governs his contract of employment is the law of England and Wales or the law of Scotland.

(2) The provisions to which this subsection applies do not apply to employment where under the employee's contract of employment he ordinarily works outside Great Britain.

(3) Subsection (2) applies to—

(a) in Part I, sections 8 to 10,

(b)...

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12 cases
  • Lawson v Serco Ltd; Botham v Ministry of Defence; Crofts v Veta Ltd
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    • House of Lords
    • 27 January 2006
    ...followed by the Employment Appeal Tribunal and the Court of Appeal in Botham. In Crofts, however, the Court of Appeal (by a majority) [2005] EWCA Civ 599; [2005] ICR 1436 decided that Mr Crofts's basing in Great Britain was sufficient to enable the Employment Tribunal to treat section 94(......
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    ...2 Lloyds Rep 461 at 470–471; Donohue v Armco Inc [2001] UKHL 64, [2002] 1 Lloyds Rep 425 at [28], [33]–[34], [36], [75]; and Crofts v Cathay Pacific Airways Ltd [2005] EWCA Civ 599, [2005] ICR 1436 at [51]. 96 Counsel for Actavis argued that in the present case it was advantageous for all......
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