Seahorse Maritime Ltd v Nautilus International
| Jurisdiction | England & Wales |
| Judge | Lord Justice Underhill,Lord Justice Lindblom,Sir Andrew McFarlane |
| Judgment Date | 13 December 2018 |
| Neutral Citation | [2018] EWCA Civ 2789 |
| Docket Number | Case No: A2/2017/1998 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 December 2018 |
[2018] EWCA Civ 2789
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EMPLOYMENT APPEAL TRIBUNAL
SLADE J
Royal Courts of Justice
Strand, London, WC2A 2LL
The President of the Family Division ( Sir Andrew Mcfarlane)
Lord Justice Underhill
(Vice-President of the Court of Appeal (Civil Division))
and
Lord Justice Lindblom
Case No: A2/2017/1998
Mr John Cavanagh QC and Mr Marcus Pilgerstorfer (instructed by Thomas Cooper LLP) for the Appellant
Mr Christopher Stone (instructed by Bridge McFarland Solicitors) for the Respondent
Hearing date: 26 July 2018
Approved Judgment
INTRODUCTION
This appeal concerns the obligation of an employer under Chapter II of Part IV of the Trade Union and Labour Relations (Consolidation) Act 1992 to consult representatives of its employees about proposed redundancies. The operative provision is section 188. For present purposes I need only set out sub-section (1), which reads:
“Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.”
It will be seen that the trigger for the employer's obligations is a proposal to make redundant twenty or more employees at one “establishment”. By section 189 claims that an employer has breached its obligations under section 188 may be brought in the employment tribunal by the “appropriate representative”, typically a trade union. If such a finding is made the tribunal will under section 189 (3) make a “protective award” requiring the employer to make payments to the employees in respect of whose dismissals it should have consulted, and the employees in question can bring proceedings if the payments in question are not made: see section 192.
The present case concerns employees of the Appellant company, Seahorse Maritime Ltd (“Seahorse”), who work on a fleet of support ships (“the TOISA fleet”) mostly operating abroad, and in respect of whom the Respondent (“Nautilus”) is the recognised trade union for collective bargaining purposes. In 2015 the decision was taken to lay up some of the ships in the fleet, which was liable to lead to redundancies in the workforce. Nautilus has brought proceedings under section 189 of the 1992 Act claiming that Seahorse was in breach of its obligations under section 188.
A preliminary hearing took place in the ET in June 2015 to decide two issues of principle raised by Nautilus's claim, formulated as follows:
(1) whether, by virtue of a connection with Great Britain, which is at least partly a connection with England, the employment tribunals of England and Wales have jurisdiction to determine a claim presented by the claimant (“the territorial jurisdiction issue”); and
(2) whether the ships of the fleet on which employees of the respondent were employed are one establishment or whether each ship is a separate establishment (“the establishment issue”).
The importance of the establishment issue is that if each ship is a separate establishment it is very unlikely, though the facts have not yet been found, that at least twenty Seahorse employees would be liable to be made redundant on any one ship.
By a judgment sent to the parties on 19 August 2016 Employment Judge Allen held that the tribunal did have jurisdiction to entertain the claim and that each ship did not constitute a separate establishment. By a judgment handed down on 30 June 2017 the Employment Appeal Tribunal (Slade J sitting alone) upheld the ET's decision on both points. This is Seahorse's appeal, with the permission of Slade J, against that decision.
Seahorse was represented before us by Mr John Cavanagh QC and Mr Marcus Pilgerstorfer; in the ET and the EAT it was represented by Mr Pilgerstorfer on his own. Nautilus was represented before us by Mr Christopher Stone, who appeared in both the ET and the EAT.
Although it might seem logical to take the territorial jurisdiction issue first, Mr Cavanagh submitted that if he succeeded on the establishment issue he would in practice succeed on jurisdiction also and he structured his submissions accordingly. While not accepting Mr Cavanagh's submission, Mr Stone likewise took the establishment issue first; and in those circumstances I will do the same. But I will first summarise the relevant facts.
THE FACTS
The ET made clear and economical findings of fact. The Judge confined himself to matters which were relevant to the preliminary issues, and it is common ground that if the proceedings are to continue further factual findings will be needed.
A Bermuda company called Sealion Shipping Ltd (“Sealion”) operates a fleet of support vessels (owned by another Bermuda company called TOISA Ltd) which are chartered to clients in the energy and telecoms businesses all over the world. Sealion has an office in Farnham in Surrey. At the material time it operated 25 such ships, registered under the flags of a number of different nations. The fleet included many different kinds of vessel and they were chartered under a variety of different arrangements, some of them involving charters for periods of many months or more. Typically, for the currency of a charter a ship would be stationed in a particular location or limited area outside Great Britain: the tribunal found that in the previous eighteen months TOISA ships had been stationed in eleven different countries, all but two of them outside Europe – in South-East Asia, the Caribbean, Latin America and and Africa. They were largely static while on duty, being moored at or near the installations which they served 1, though it seems that, as one would expect, they visited nearby ports from time to time. Six vessels were involved in the “spot market cargo run” from Aberdeen to the North Sea oil rigs, but it was common ground that those vessels are not relevant for the purpose of the appeal.
Sealion does not employ the crews for the ships in the TOISA fleet. Instead they are supplied by other companies, including (but not limited to) Seahorse and a sister company called Seahorse Maritime (Auckland) Ltd (“Auckland”). Seahorse is incorporated in Guernsey and has a small office there from which some functions, including payroll administration, are performed. But it has a UK agent called Farnham Marine Agency Ltd (“FMA”), based at the same address in Farnham as Sealion itself, which performs other functions in relation to Seahorse's employees: it was, for example, FMA which handled the redundancies which give rise to the present claim. Seahorse does not supply crew for anyone else besides Sealion. We were told that they are not associated companies for any statutory purposes, though Mr Stephen Marshall, who gave evidence for Seahorse in his capacity as a director of FMA, is also a director of Sealion.
The standard-form Employment Agreements for the relevant employees identify the individual employee, the “Ship Name (if known)”, the employer (being Seahorse), the agent (being FMA), and the “Client (‘Shipowner’)” (being Sealion). The box marked “Place of Work” states: “may be on any vessel owned, managed or chartered by the Shipowner [i.e. Sealion]”. The Employment Judge helpfully summarised the other relevant terms at para. 12 of his Reasons as follows:
“Each day worked earns one day of leave. Clause 7.1 states that service counting towards leave ‘will commence on the day of leaving home to join the vessel and will finish on the date of signing of the Ships Articles of Agreement or arrival in your country of residence, whichever is the later’. In oral evidence, Steve Marshall agreed that the Respondent either reimburses the employees for travel or FMA organises travel for the employees itself and he agreed that part of the duties of the crew included getting to the ship. At clause 29 of the Conditions of Employment, employees are directed to FMA … with any queries about administrative matters such as leave, pay, documentation or travel arrangements. Clause 34 states ‘The Terms and Conditions of Employment set out in this document will be governed by and construed in accordance with English Law and the parties submit to the jurisdiction of the English Courts’. Paragraph 40 of the Code of Conduct at Appendix 3 to the Conditions of Employment states ‘Nothing in this Code shall affect any seafarer's right to bring a claim to an Employment Tribunal’.”
The working arrangements for the Sealion crew employed by Seahorse are described by the Employment Judge as follows:
“11. Aside from the spot market vessels, the crew join and leave the ships stationed offshore by helicopter or crew boat (unless the ship happened to be berthed in port) and then they live on board. A rotation typically lasts for 4 to 6 weeks.
12 …
13. In reality most employees tend to return to the same ship for periods of time – although transfers between ships can and do take place and at least during the period leading up to the redundancies, employees were transferred between ships and a ‘riding squad’ of a small number of mobile workers was established who worked on different ships as and when needed.
14. The crews are of a variety of nationalities. The Respondent's evidence was that the total number of employees fell from about 800 to under 500 between 2014 and 2016 and that the number of UK employees fell from 213 to 118 over the same period.”
The reference in para. 14 of the Reasons to “UK employees” may not, despite the opening sentence, be to the nationality of the employees in question but to whether they were “UK based”, which is a term used elsewhere in the...
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