Montgomery v Johnson Underwood Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Buckley,Lord Justice Longmore,Lord Justice Brooke |
| Judgment Date | 09 March 2001 |
| Neutral Citation | [2001] EWCA Civ 318 |
| Docket Number | Case No: A1/2000/2085 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 March 2001 |
[2001] EWCA Civ 318
Lord Justice Brooke
Lord Justice Longmore and
Mr Justice Buckley
Case No: A1/2000/2085
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT
APPEAL TRIBUNAL
Royal Courts of Justice
Strand, London, WC2A 2LL
Charles Samek (instructed by Eyton Morris Winfield for the Appellant)
Ramby de Mello (instructed by Murria Solicitors for the Respondent)
Mr. A Barry attended in place of Mr. De Mello at the Judgment
This is yet another case raising the troublesome question whether an individual was employed under a contract of employment.
In early 1995 Mrs Montgomery, the Respondent to this appeal, telephoned the Appellant, Johnson Underwood Ltd. (JU), an employment agency. She was looking for a part-time job as Receptionist/Telephonist and had seen the agency's advertisement in the Daventry Express. She told them she was looking for something more permanent than the two week position, as it turned out to be, that had been advertised and sent her CV in order to register.
On 30th May 1995 a Carla Panter of JU telephoned her and said she had a suitable position with a local company, Orenstein & Kopple Ltd (O&K). Hours of work and rate of pay were discussed and agreed. The next day Mrs Montgomery received JU's letter of confirmation and printed terms and conditions. In return she sent her P.45 and bank details. On 1st June 1995 she started work at O&K. Thereafter JU caused payment for hours worked to be made directly into Mrs Montgomery's bank account. The amount was calculated in accordance with time sheets approved by O&K.
Mrs Montgomery worked on weekday afternoons and all was well for almost 2 1/2 years until late 1997. By then it seems that O&K was unhappy with Mrs Montgomery's use of its telephone for personal calls and asked JU to terminate the assignment. Mrs Johnson, a director of JU, duly attended O&K's office on 12th November 1997 and told Mrs Montgomery that it was over. She was offered another position but, so far as I am aware, did not pursue it. None of this is contentious.
The Proceedings
Mrs Montgomery lodged an Originating Application with the Bedford Industrial Tribunal dated 19th November 1997. In it she claimed compensation for unfair dismissal and named JU as the employer, subsequently adding O&K. Both Respondents put in Appearances and each denied that Mrs Montgomery was its employee. A preliminary issue was ordered and heard by the Tribunal on 20th February 1998. In effect, the question was whether Mrs Montgomery was an employee of either of the Respondents and thus whether either would be a proper Respondent for the purpose of an unfair dismissal hearing.
The Tribunal unanimously decided that:
"There was no basis upon which we could hold the Applicant to have been an employee of the Second Respondent.(O&K)."
and that:
" We are satisfied that the Applicant was an employee of the First Respondent (JU)."
The Tribunal's Extended Reasons were promulgated on 5th March 1998.
JU and Mrs Montgomery appealed. JU against the Decision that Mrs Montgomery was its employee and Mrs Montgomery against the Decision that she was not employed by O&K. All three parties appeared before the Employment Appeal Tribunal (EAT) on 10th November 1999. Judgment was delivered on 18th April 2000. The Decision was:
"We have reached the following decisions on the appeals:
a. A unanimous decision that Mrs Montgomery's appeal should be dismissed, and
b. A majority decision that JU's appeal should be dismissed.
It follows that the Decisions of the Employment Tribunal in each of the cases under appeal stand."
Dr Grieves CBE and Mr Willis agreed. Charles J gave full reasons for his minority view.
An appellant's Notice on behalf of JU was filed on 16th May 2000 and the EAT granted permission on 25th May 2000.
O&K took no part in the appeal to this court and the only issue was the Industrial Tribunal's Decision, supported by the majority of the EAT, that Mrs Montgomery was employed by JU.
Approach of this Court
The parties agreed and I accept, that in common with the EAT's position in relation to the Industrial Tribunal, this court can only interfere if the Decision involved an error of law or was perverse. Mr Samek, for JU, urged that if we decided to allow the appeal we should hold that Mrs Montgomery was not employed by JU rather than send the case back to the Tribunal. Mr de Mello, for Mrs Montgomery, accepted that and in the circumstances of this case I agree.
In the recent appeal Carmichael v National Power plc (HLE) [1999] 1 WLR 2042 in which the leading speech was delivered by Lord Irvine of Lairg, Lord Chancellor, Lord Hoffmann added:
"A few words only on the troublesome distinction between questions of fact and questions of law. p. 2048 D."
While accepting that the construction of documents is a question of law and that consequently if a contract is contained solely in a document or documents its meaning and effect is a question of law Lord Hoffmann pointed out that the rule does not apply:
"Where the intention of the parties, objectively ascertained, has to be gathered partly from the documents but also from oral exchanges and conduct. In the latter case, the terms of the contract are a question of fact."
From his citation of Moore v Garwood (1849) 4 Ex 681, it is clear that in such a case he was endorsing the view that:
"The real intention and meaning of the parties ……"
is a question of fact.
In Clifford v Union of Democratic Mineworkers [1991] IRLR 518, Mann LJ, with whose judgment Lord Donaldson MR and Woolf LJ agreed, adopted a slightly different approach but, happily, reached the same conclusion. He noted that where the only relevant material was documentary the question whether A is employed by B or C is a matter of law but otherwise is a mixed question of law and fact. At paragraph 7 on page 520 he said this:
"This description (a mixed question of law and fact) does not, however, in my judgment mask the reality that the answer to the question is determined by the determination and evaluation of the relevant material. This is the task of the Industrial Tribunal and is not for either the Appeal Tribunal or this Court. Neither can interfere with the resolution of an issue of fact unless the resolution contains an explicit or implicit misdirection in law…… In the present case therefore the question is not whether the Industrial Tribunal were "wrong" but whether their conclusion betrays a self-misdirection."
This case was not cited to us, but since the conclusion is not contrary to either Counsel's position, I have taken the liberty of quoting briefly from it.
Thus in a case such as the present one in which the contract, if any, between JU and Mrs Montgomery is to be found partly in the standard conditions but also the objective inferences which can reasonably be drawn from what the parties said and did not just at the end of May 1995 but subsequently, it was for the Industrial Tribunal to decide whether JU employed Mrs Montgomery. It is for this court to decide whether the majority judgment of the EAT was correct in concluding that the Tribunal had correctly directed themselves in law. I include subsequent words and conduct as a legitimate source from which inferences may be drawn as to the parties' intentions, because the Tribunal here seemed to have tapped that source, in particular the fact that Mrs Montgomery worked at O&K for 2 1/2 years. That such inclusion is proper is plain from the speech of the Lord Chancellor in Carmichael's case with which all their Lordships agreed and also Lord Hoffmann's speech at p.2051:
"Evidence of subsequent conduct, which would be inadmissible to construe a purely written contract (see Whitworth Street Estates (Manchester) Ltd. v James Miller & Partners Ltd [1970] AC 583) may be relevant on similar grounds, namely that it shows what the parties thought they had agreed. It may of course also be admissible for the same purposes as it would be if a contract had been in writing, namely to support an argument that the terms have been varied or enlarged or to found an estoppel."
Notwithstanding the above considerations, whether the presence or absence of any specific term, once established as a matter of fact, has a particular legal effect is obviously a question of law. That becomes important in this case. I am not intending to detract from the Tribunal's task of generally weighing the evidence, ascertaining the true intention of the parties and thus deciding by whom a particular individual was employed. But in carrying out that process the Tribunal must correctly direct themselves if the law attaches a particular significance to any aspect of the agreement. Mr Samek, in effect, submitted that the Tribunal failed to do that with respect to two terms or facets, in particular, of the arrangement between JU and Mrs Montgomery. He referred to the "mutuality of obligation" and the concept of "control".
I consider the safest starting point to be the oft quoted passage of MacKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pension and National Insurance [1968] 2 QB 497 at 515:
"I must now consider what is meant by a contract of service. A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be...
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