Willoughby v CF Capital Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rimer,Lord Justice Hooper,Lord Justice Laws |
| Judgment Date | 12 October 2011 |
| Neutral Citation | [2011] EWCA Civ 1115,[2011] EWCA Civ 217 |
| Docket Number | Case No: A2/2010/1924 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 October 2011 |
[2011] EWCA Civ 1115
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
His Honour Judge Richardson, Mr M. Clancy and Mr T. Motture
Royal Courts of Justice
Strand, London, Wc2a 2ll
Lord Justice Laws
Lord Justice Hooper
and
Lord Justice Rimer
Case No: A2/2010/1924
Ukeat/0503/09/La
Mr James Boyd (instructed by Bermans LLP) for the Appellant
Mr Fred Banning (of Clarke Mairs LLP) for the Respondent
Hearing date: 18 July 2011
Introduction
This appeal by C.F. Capital Plc ('CFC') is against an order of the Employment Appeal Tribunal ('the EAT') made on 13 July 2010. The EAT thereby allowed an appeal by the respondent, Catherine Willoughby, against a judgment of the Newcastle-upon-Tyne Employment Tribunal ('the ET') that was sent (with reasons) to the parties on 7 September 2009. Ms Willoughby had brought a claim for unfair dismissal against CFC which the ET held to be unfounded on the basis that she had not been dismissed but had resigned. The EAT, on appeal, held that she had been dismissed and ordered a remission of the proceedings to a differently constituted tribunal for the determination of her consequential claims. The ET panel comprised Employment Judge Morris, Mrs M. Kelly and Mr J.B. Wright. The EAT panel comprised His Honour Judge Richardson, Mr M. Clancy and Mr T. Motture.
By its appeal, brought with the permission of the President of the Family Division, CFC challenges the EAT's order and seeks the restoration of the ET's judgment. James Boyd (who appeared in both tribunals below) represented CFC. Fred Banning (who appeared in neither) represented Ms Willoughby. To explain the issue, I must summarise the facts found by the ET.
The facts
CFC is a medium sized business that, at the material time, had about 55 employees. It acts as an intermediary between seekers and lenders of finance for the purchase of capital equipment. Ms Willoughby started employment with it on 17 March 1990. She had various roles, her latest being that of account manager in the sales team. Her line manager was Mr Keeley, a CFC director. They had a good relationship.
The banking crisis of 2008 created difficulties for CFC. It recognised the need for costs savings and considered reducing its staff. On 20 November 2008 it dismissed six employees on the grounds of redundancy. It formed a proposal to dismiss a further 18 employees in various departments. It also assessed the sales team as under-performing, although not in identifying potential customers so much as in securing finance for them. It identified a need to reduce the sales team's overheads. Whilst it foresaw that in time there might be redundancies, it recognised that it would continue to need people to sell its products. It decided to hold meetings with the members of its sales team to see if any of them would move from being an employee to becoming self-employed. The meeting with each individual was to be conducted by the director with particular management responsibility for him or her. Mr Keeley was, therefore, to conduct the meeting with Ms Willoughby.
The two of them met on 1 December 2008. Mr Keeley explained the problems and the need to save costs. He told Ms Willoughby that one option being considered was to make redundancies within the sales team but that no firm decision had been made. He told her that 11 employees in other teams were to be made redundant, as was to be announced that day. He explained that a possible alternative to redundancies amongst the sales team was for sales staff to become self-employed. CFC would pay a retainer of about £1,000 to £2,500 a month and commission of 50% of gross profit.
Ms Willoughby was interested and asked about the tax implications and other terms of such a change. Mr Keeley advised her to speak to Mr Hazel about tax and said that he would provide her in writing with the detailed terms of a move to self-employment. Ms Willoughby indicated to Mr Keeley that she would be prepared to become self-employed but only on terms acceptable to her; and that she would consider this option upon receipt of the detailed terms. The ET found that the only option considered with her was the possibility of her becoming self-employed: CFC had made no decision regarding the possibility of dismissing any of its sales team on redundancy grounds.
Whereas the ET found that Ms Willoughby had indicated no more than a willingness to consider the self-employed option upon receipt of the detailed terms, it found in paragraph 11.19 that Mr Keeley perceived the discussions as having gone further: it there found that '[h]e thought that an agreement had been reached whereby [her] employment would end and she would be re-engaged on a self-employed basis.' The ET found, therefore, in paragraph 11.20, that there was a significant misunderstanding between Mr Keeley and Ms Willoughby as to what had and had not been agreed, although it also found that each was genuine in his/her understanding of the outcome of the meeting. The ET noted that the existence of such misunderstanding would have been identified if Mr Keeley had provided Ms Willoughby with a note of their meeting. He did not, however, do that. What he did do was to ask Mr Wilding (CFC's HR and IT manager) to produce the paperwork necessary to change Ms Willoughby's status from employed to self-employed.
Following the meeting, Ms Willoughby pressed for the provision of the details of the terms that Mr Keeley had promised. She rang him on 5 December to be told that Mr Wilding was dealing with it. She rang Mr Wilding on 12 December to be told that he was on holiday and that he would be back on 15 December. She rang Mr Wilding on 17 December to be told that the paperwork would be sent to her soon.
On 22 December Mr Keeley wrote Ms Willoughby the critical letter upon which all turns. She received it the following day. Equivalent letters were sent on the same day to three other sales employees. The letter read:
'I refer to our meeting of 2 December 2008.
As discussed during our meeting the Company has been subject to a market conditions reflected by the current difficulties within the economic climate and as a result we have experienced a downturn in business transacted.
Despite the economic downturn we have been able to mutually agree to a change in your employment status and our working relationship will continue by your move into self-employment.
The termination of your existing employment contract will be effective from 31 December 2008.
Your Agency Agreement will commence 1 January 2009, which is enclosed for your consideration and signature. It reflects our confirmation that a retainer in the sum of £1,000 will be paid to you on a monthly basis, which is reviewed annually on the anniversary of the Agreement. This retainer is to be deducted from commissions earned on the percentage splits agreed from time to time.
Please find enclosed two copies of this letter and the Agency Agreement. I shall be grateful if you would sign both of each, keeping one and returning the other ones to me.'
On its face, therefore, that letter terminated Ms Willoughby's employment on 31 December. I set out what the ET said about it in paragraph 11.26:
'Even on the basis of Mr Keeley's perception of the upshot of the meeting on 1 December, his letter of 22 December goes far further than was appropriate. His evidence was only that [Ms Willoughby] had been keen "to discuss the self employment proposal further" (paragraph 14 of his statement) and that her later decision not to become self-employed "was somewhat at odds with the interest she had shown during" their meeting on 1 December (paragraph 27). At that meeting Mr Keeley had only provided possibilities regarding the amount of the retainer and had not discussed, let alone agreed, the date on which the transition would take place and neither had he discussed with [Ms Willoughby] any of the detailed terms of the Agency Agreement that was offered to her (pages 90 to 102) which are detailed and some of which could be said to be onerous. An appropriate letter at this stage would have advised [Ms Willoughby] of the proposed terms for self-employment (as she had herself requested) and sought to obtain her agreement to those terms including by way of further discussions if she wished. Mr Keeley said in evidence that the intention behind the letter was to give [Ms Willoughby] "an opportunity to reflect on matters and change her mind if she wished". That is not what the letter states.'
I make two comments. First, I interpret the second sentence as reflecting the ET's finding as to Mr Keeley's understanding at the conclusion of the meeting of 1 December, although it is manifestly at odds with its findings in paragraph 11.19 referred to in paragraph [7] above. Taking the paragraph 11.26 finding as the relevant one (as Mr Boyd, for CFC, was content to do), it is not apparent to me that there was any significant misunderstanding between Ms Willoughby and Mr Keeley at the end of the meeting of 1 December. Her position was that she wanted to consider the self-employment proposal further; and that was his understanding of her position. Second, it follows that, in writing the letter of 22 December, Mr Keeley might, on one view, be regarded as having made an egregious mistake: because, until Ms Willoughby had been given the details of the proposed self-employment arrangement and had gone firm with CFC that that was the road down which she wished to travel, the letter was premature.
Following the receipt of the letter,...
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