FAIRHURST WARD ABBOTTS v BOTES BUILDING Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice May,Lord Justice Pill,LORD JUSTICE PILL |
| Judgment Date | 13 February 2004 |
| Neutral Citation | [2004] EWCA Civ 83,[2004] EWCA Civ 185 |
| Docket Number | Case No: A1/2003/0804,A1/2003/0804 |
| Date | 13 February 2004 |
| Court | Court of Appeal (Civil Division) |
[2004] EWCA Civ 185
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
Royal Courts of Justice
Strand
London, WC2
Lord Justice Pill
Lord Justice Mummery
Lord Justice May
A1/2003/0804
MR JONATHAN SWIFT (instructed by Clarkson Wright & Jakes) appeared on behalf of the Appellant
MR DAMIEN BROWN (instructed by DLA) appeared on behalf of the Respondent Botes Building Ltd
MR ANDREW GUMBITI-ZIMUTO (instructed by OH Parsons & Partners) for the Respondent employees on the appeal and for Mr Fevzi Salih on the cross-appeal
RULING RE COSTS
Apart from the deletion of the word "appellants" and the insertion of the word "respondents" in paragraph 4 of the draft order, two points arise. The first is in relation to the position in costs as between the appellant and the ninth respondent, Mr Salih. We have considered the submissions of counsel. We note that even though paragraph 5 has not been put in issue counsel—both for the appellant and the ninth respondent—agree that if, on the merits, the court took the view that a global order was appropriate and that it should not involve the ninth respondent paying the costs of the appellant on the cross-appeal then paragraph 5 can be re-opened and global order made as between the appellant and the 9th respondent. We have regard to Mr Swift's point that in the pre-hearing documentation the ninth respondent was concerned only with his cross-appeal and also that in the event counsel for the ninth respondent had little to say about the appeal, the heat of the day being taken by Mr Brown on behalf of the first respondent. We also bear in mind that it was only by leave granted at the hearing that the ninth respondent's notice was amended to allow a claim for relief against Fairhurst. However we also have regard to the fact that on the appeal the ninth respondent has been successful. We have regard to the underlying position of the ninth respondent which, as emerges from the judgment, as matters now stand, he is going to succeed either against the appellant or against the first respondent. His entire position in this litigation should be borne in mind.
In all the circumstances the view we take is that there should be no order for costs overall as between the appellant and the ninth respondent. That will involve a re-drafting of a part of the order. Paragraph 2 (b), which is in brackets, in the ninth respondent's favour will be deleted and similarly paragraph 5 (a) will be deleted. They will be replaced by a clause which provides that as between the appellant and ninth respondent there shall be no order for costs on the appeal or on the cross-appeal.
Mr Swift seeks leave to appeal to the House of Lords. We have considered his submissions. We consider that this is a matter for their Lordships, if it is to be pursued, and leave is refused by this court.
We would be grateful if counsel would submit the re-draft to the associate as soon as possible.
[2004] EWCA Civ 83
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT
APPEAL TRIBUNAL (HHJ J BURKE QC)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Pill
Lord Justice Mummery and
Lord Justice May
Case No: A1/2003/0804
MR JONATHAN SWIFT (instructed by Clarkson Wright &-Jakes) for the Appellant
MR DAMIAN BROWN (instructed by DLA for the Respondent Botes Building Ltd
MR ANDREW GUMBITI-ZIMUTO (instructed by OH Parsons & Partners) for the Respondent employees on the appeal and for Mr Fevzi Salih on the cross appeal.
The Legal Background
This appeal turns on the interpretation of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) and their application in a contracting out situation to a claimed transfer of "part of an undertaking." The case involves an excursion into a relatively unexplored corner of the much litigated provisions of TUPE and of the Acquired Rights Directive EC/187/EEC (the Directive) . It raises a difficult point on which there is no direct decision of the European Court of Justice or of the English courts and tribunals.
The overall purpose and general principles of the Directive and of the implementing provisions in TUPE are well known. They were recently re-stated by the Court of Justice in the following passage taken from the judgment in a case of one company in a group sub-contracting work to another company in the same group. Allen v. Amalgamated Construction Co Ltd [2000] IRLR 119 at 134 paras 23–27 is central to the arguments advanced in support of this appeal.
"23 The aim of the Directive is to ensure continuity of employment relationships within an economic entity, irrespective of any change of ownership. The decisive criterion for establishing the existence of a transfer within the meaning of the Directive is whether the entity in question retains its identity, as indicated inter alia by the fact that its operation is actually continued or resumed ( case 24/85 Spijkers [1986] ECR 1119, paragraphs 11 and 12, and case C-13/95 Suzen [1997] IRLR 255, paragraph 10) .
24 First of all, in order for the Directive to be applicable, the transfer must relate to a stable economic entity whose activity is not limited to performing one specific works contract ( case C- 48/94 Rygaard [1996] IRLR 51, paragraph 20) . The term "entity" thus refers to an organised grouping of persons and assets facilitating the exercise of an economic activity which pursues a specific objective (Suzen, cited above, paragraph 13) .
25 It is for the referring court to establish, in the light of the interpretative criteria set forth above, whether the driveage work carried out by ACC at the Prince of Wales Collieries was organised in the form of an economic entity before that undertaking sub-contracted that work to AMS.
26 Second, in order to determine whether the conditions for the transfer of an economic entity are met, it is necessary to consider all the facts characterising the transaction in question, including in particular the type of undertaking or business, whether or not its tangible assets, such as buildings and movable property, are transferred, the value of its intangible assets at the time of the transfer, whether or not essential staff are taken over by the new employer, whether or not its customers are transferred, the degree of similarity between the activities carried on before and after the transfer, and the period, if any, for which those activities are suspended. However, all those circumstances are merely single factors in the overall assessment which must be made and cannot therefore be considered in isolation (see, in particular, Spijkers, paragraph 13, and Suzen, paragraph 14) .
27 So the mere fact that, in the instant case, the service provided by the undertaking holding the contracts for driveage work and then by the undertaking to which the work was then subcontracted is similar does not warrant the conclusion that an economic entity has been transferred between the first and the second undertaking. Such an entity cannot be reduced to the activity entrusted to it. Its identity also emerges from other factors, such as its workforce, its management staff, the way in which its work is organised, its operating methods or, indeed, where appropriate, the operational resources available to it (Suzen cited above, paragraph 15, joined cases C-127/96, C-29/96 and C-74/97 Hernandez, Vidal and others [ 1999] IRLR 132, paragraph 30, and joined cases C-173/96 and C-247/96 Hidalgo and others [1999] IRLR 136, paragraph 30."
The national court is under an obligation to apply those principles in discharging its duty to interpret the provisions of TUPE, if it is possible to do so, so as to be compatible with the provisions of the Directive, as interpreted by the Court of Justice. Thus, in determining whether there is a transfer of an "undertaking" or of "part of an undertaking" the English courts and tribunals must give effect to the description of the essence of an undertaking by the Court of Justice as the carrying on of work organised in the form of "a stable economic entity" before the contracting out of that work has taken place. (The relevant jurisprudence of the Court of Justice on this issue is now reflected in Article 1 (b) of the amending Directive 98/50/EEC.)
It is not in dispute that the provisions of the Directive and TUPE apply to the transfer of "part of an undertaking." That is made clear by article 1 of the Directive and by regulations 2 (1) and 3(1) and (4) of TUPE. The principles stated in Allen above apply to the transfer of part of an undertaking, as well as to the transfer of the entirety of an undertaking.
It is common ground that (a) the provisions and principles set out in Allen are capable of applying to the contracting out of services by public authorities (see, for example, RCO Support Services v. UNISON [2002] IRLR 401 and the cases cited therein) ; and (b) the persons protected by the provisions are those who were employed under a contract of employment by the transferor in the undertaking, or the part transferred by a relevant transfer, immediately before the transfer: see article 3 of the Directive and regulation 5 (1) and (3)...
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