Rose v Dodd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery |
| Judgment Date | 27 July 2005 |
| Neutral Citation | [2005] EWCA Civ 957 |
| Docket Number | Case No: A2/2004/2674 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 July 2005 |
[2005] EWCA Civ 957
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE EMPLOYMENT APPEAL TRIBUNAL
(HHJ SEROTA QC)
UKEAT/05/17/04/ILB
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Phillips of Worth Matravers, Mr
Lord Justice Waller and
Lord Justice Mummery
Case No: A2/2004/2674
MR CLIFFORD DARTON (instructed by Messrs Edward Harte & Co) for the Appellant
MR PHILIP THORNTON (instructed by James Mead) for the Respondent
MR ANDREW PEEBLES (instructed by Messrs Russell-Cooke) for the Law Society
This is the judgment of the court.
The issues
What effect does an intervention in a solicitor's practice by the Law Society have on the employment of staff in the firm? Are the firm's employees entitled to redundancy payments under the Employment Rights Act 1996 (the 1996 Act)? Are they entitled to employment protection on a transfer of the firm's practice to another firm of solicitors? These questions are of practical concern to solicitors, to their employees and to the Law Society as the body responsible for the regulation of the solicitors' profession.
The answers depend on the interpretation of section 35 and Schedule 1 to the Solicitors Act 1974, as amended, (the 1974 Act); on their application to the relevant employment and partnership relationships; and on the determination of the scope of employment protection conferred on employees of the firm by the 1996 Act and by the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE).
The precise issue on this appeal is whether there is an error of law in the decision of the employment tribunal (in their extended reasons registered on 14 April 2004) that Mrs Joanne Rose, the appellant, was not dismissed from her employment as a conveyancing secretary in consequence of the Law Society's intervention in the firm of Dodd & Reynolds. Mr Ian Dodd, the respondent, was the sole principal in the firm. Mrs Rose was employed by him.
Although this case is about an employee of a sole practitioner, our judgment will also deal with the position of staff employed by a partnership, in which there has been an intervention. The issues are different. In the case of a sole practitioner, such as Mr Dodd, the issue is whether the intervention terminated contracts of employment with the sole practitioner. In the case of a partnership the issue is whether the dissolution of a partnership brought about by the intervention terminates contracts of employment with the partnership.
The appeal
The tribunal dismissed Mrs Rose's claim against Mr Dodd for redundancy payments, notice pay and unpaid wages. Similar claims against Mr Dodd by four other employees were also dismissed. Only Mrs Rose appealed.
Mrs Rose's appeal to the Employment Appeal Tribunal (HHJ Serota QC presiding) was dismissed on 30 November 2004 on the ground that there was no error of law in the decision of the employment tribunal.
Mrs Rose appeals to this court with the permission granted by Maurice Kay LJ on 18 January 2005.
At the invitation of the court the Law Society supplied to the court written submissions and a bundle of legal materials relating to the general question whether an intervention under the 1974 Act automatically terminates contracts of employment of staff working for the firm in question. Counsel also made oral submissions on its behalf. Mr Peebles appeared for the Law Society, Mr Darton for Mrs Rose and Mr Thornton for Mr Dodd.
The facts
Mrs Rose was employed by Mr Dodd, practising as Reynolds & Dodd. She had been employed in a predecessor firm, in which there had been a Law Society intervention following which the practice was transferred to Reynolds & Dodd. The practice was mainly conveyancing and non-contentious work. The firm had offices in Hove and Shoreham.
On 9 December 2002 the Law Society, acting through the Adjudication Panel of the Compliance Board and without any warning, intervened on the ground of suspected dishonesty. Messrs Russell-Cooke were appointed as the Law Society's agents to effect the intervention. The operation of Mr Dodd's practising certificate was automatically suspended: section 15A of the 1974 Act. Messrs Russell-Cooke told Mrs Rose and the other staff on 9 December that they were redundant. Messrs Russell-Cooke took possession of practice files and held them in the office of the intervened practice. Files urgently required by clients were released in accordance with clients' instructions and authorities.
The practice was not taken over by the Law Society nor was it closed down for good. As will be seen, within a few weeks of the intervention the practice was transferred as a going concern to another firm of solicitors formed by two solicitors previously employed by Mr Dodd.
Mr Dodd immediately challenged the intervention in the High Court under paragraph 6(4) of Schedule 1 to the 1974 Act. He sought, as a matter of urgency, to reverse the consequences of the intervention by having it set aside, so that he could have his practising certificate reinstated, obtain the return of client monies and files and resume practice as a solicitor. The firm's employees, including Mrs Rose, were aware of the challenge and of the interest of two solicitors employed in the firm (Mr Theaker and Mr Loadsman) in acquiring the practice. Mr Dodd's employees were willing to await developments, at least for a short period. They all had experience of the earlier intervention. Mrs Rose in fact continued to work in the firm's office in Hove between 9 December and 24 December 2002, for which she was paid £400 by Mr Dodd.
The proceedings brought by Mr Dodd to challenge the intervention were compromised with the Law Society on 20 December 2002. Mr Dodd entered into a written agreement to sell the practice and goodwill for £1 to Mr Theaker and Mr Loadsman. Three days later Messrs Theaker & Loadsman notified Mrs Rose and other staff employed in the practice of Reynolds & Dodd that they had been made redundant on 9 December 2002 and that any claim should be made against Mr Dodd, who was trying to arrange funds to pay their salaries for December, which he in fact did.
The proceedings
In March 2003 Mrs Rose presented an Originating Application to the employment tribunal claiming redundancy payments and pay in lieu of notice against Mr Dodd. She stated that her employment ended on 9 December 2002. She also claimed that she had been underpaid and that further sums were payable to her by Mr Dodd.
The employment tribunal held that Mrs Rose's employment by Mr Dodd had not been terminated by operation of law or otherwise before the transfer of the practice to the new firm of Messrs Theaker, Loadsman & Reynolds. There was a TUPE transfer. Her employment and that of other employees was transferred to the new firm, which began practising on 6 January 2003.
In fact, unlike the other applicants, Mrs Rose chose not to work for the new firm. She left of her own volition. She found another job in Brighton with a different firm, for whom she began to work on 10 February 2003. In those circumstances she made no claims against the new firm.
There was no dispute in the employment tribunal that (1) the practice of Reynolds & Dodd was an "undertaking" within TUPE, being an identifiable economic entity, or that (2) there was a "transfer" of the undertaking of Reynolds & Dodd to the new firm. The issue was whether Mrs Rose was transferred with the undertaking. That depended on whether she was employed in the undertaking of Reynolds & Dodd "immediately before" the transfer: paragraph 5(3) TUPE. If, as she contended, she was automatically dismissed by the act of intervention on 9 December 2002 and was not re-employed in the undertaking by Mr Dodd, her redundancy claim was against Mr Dodd. If, however, as Mr Dodd contended and as the employment tribunal held, she was not automatically dismissed by the intervention and had not ceased to be an employee of the firm at the time of the transfer to the new firm, she has no claim against Mr Dodd for redundancy pay and other payments, his liabilities in connection with her contract of employment having been transferred to the new firm by virtue of TUPE: paragraph 5(2) TUPE.
Termination of contract of employment
The case thus turns on whether Mrs Rose's employment by Mr Dodd was terminated. Mrs Rose's case is that her contract of employment terminated on 9 December 2002. She did not allege that she was given notice of dismissal by Mr Dodd, or that he summarily dismissed her, or that she was constructively dismissed. On the contrary, the employment tribunal held that—
"12. It is clear Mrs Rose regarded herself as employed by the Respondent after the 9 th December as she accepted payment from Mr Dodd for work performed both before and after that date and by the fact that she brings a claim asserting an underpayment of wages for this period. Her originating application includes a claim for "salary due" which implies an employment relationship."
The only way that the contract of employment with Mr Dodd could have terminated prior to the transfer was either by the Law Society's intervention itself or by an act of its agents in the intervention.
In our judgment, the core question is whether, as a matter of law, the intervention itself was an event which operated to terminate her contract of employment, so as to be taken as dismissal by Mr Dodd. Section 136(5) of the 1996 Act provides, in relation to rights on dismissal by reason of redundancy, that
" (5) Where in accordance with any...
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