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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Ask Security Ltd v Foote & Anor [2006] UKEAT 0433_06_0211 (2 November 2006) URL: http://www.bailii.org/uk/cases/UKEAT/2006/0433_06_0211.html Cite as: [2006] UKEAT 0433_06_0211, [2006] UKEAT 433_6_211

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APPEARANCES

 

For the Appellant	Mr Martyn West (Representative) Peninsula Business Services Ltd Riverside New Bailey Street Manchester M3 5PB
For the Respondents	(1) Miss Foote (The Respondent in Person) (2) No appearance or representation by or on behalf of the Respondent


 


Summary

Practice and Procedure

Amendement - procedural irregularity

The Claimant obtained a default judgment against her employer which ceased to trade. On review, the Chairman substituted the Appellant for the old employer but did not provide for it to give a Response or evidence as to why it was not liable. The Chairman correctly pierced the corporate veil but his judgment was set aside so that the Appellant could in justice be hard at a remitted hearing.


 


HIS HONOUR JUDGE McMULLEN QC

1. This case is about procedure at an Employment Tribunal where a review judgment was entered by a Chairman alone, Mr G R Little, sitting at Sheffield with reasons on 26 May 2006. I will refer to the parties as the Claimant and the Respondent.
2. The Claimant was in possession of a default judgment against Kam Security. She had difficulty enforcing against it. She indicates to me that there is no evidence that it is in liquidation, but Mr West who appears for Ask Security, whose position I will describe in a moment, contends that Kam is in administration. The practical utility of the order made against Kam is worthless because the Claimant is unwilling to spend more money to enforce the order since Kam entered no appearance and did not attend. She took a different route. She asked for a review of the default judgment and the Chairman accepted at his hearing that although the application was made out of time there were reasons for allowing it and there has been no challenge today.
3. Secondly the Chairman decided that Kam and Ask, although separate legal entities, were effectively the same because the Chairman pierced the corporate veil to look behind the corporate structures and find the controlling mind. On appeal there is no challenge to the correctness of the Tribunal's approach in piercing the veil. Authorities were cited and it is accepted by Mr West that the Chairman had the power to take the approach that he did and to come to a conclusion. However, the conclusion he reached was one which is the subject of two separate challenges. The first is that no proper opportunity was given to Ask to enter a Response and to defend the claim against it; and secondly, that the conclusion of the Chairman that the persons were the same and that they were to all intention purposes the same company, was wrong.
4. The practical outcome is one which I have canvassed with both Mr West and Miss Foote herself. It seems to me that Mr West is right in his contention that natural justice requires that before liability be imposed upon Ask, it be given the opportunity to submit a response form and to present evidence to challenge the Claimant's case. Thus it is not necessary for me to make a determination on material which has been produced by Miss Foote today indicating a different perspective on the constitution of Ask and the dissolution, if that is what it is, of Kam. The Chairman in a confusing passage said this:-

"I do not consider that by granting the application I am in effect adding a new Respondent in the ordinary sense of that phrase…I therefore add Ask Security as an additional Respondent."

I do not understand how he could say both things. The outcome has been that there has been a substitution of Ask for Kam with the result that the order made against Kam is now against Ask. That procedure, it seems to me, raises a number of legal issues. The Tribunal is entitled to add another party as Mr West accepts and what appears from the record now is that both Kam and Ask are parties to this litigation. On appeal it is correct to cite all the parties who were parties below and the addition of Kam as a second Respondent on the appeal is also correct.

5. What I propose to do therefore, is to allow the appeal and to maintain the order of the Tribunal that an appearance was not entered by Kam. It can have liberty to apply to the Tribunal on proper grounds if it seeks to remain and be heard at the hearing. Ask will be served with the material and may put in a Response and then there will be a hearing. For the avoidance of doubt it is claimed by the Claimant that there was a transfer of an undertaking or a part of an undertaking from Kam to Ask. It is also open to the Tribunal to pierce the corporate veil and to consider whether in reality Ask is the same as Kam. I have made it clear that if the outcome is the same and no new material is adduced whether on liability or on the amount of the award, Miss Foote may well make an application to the Tribunal for what she has had to pay in coming to the EAT and to the Employment Tribunal at a later stage, though that is not a matter for me. Mr West has still not got clear instructions but I will take it from him that there is material upon which a challenge could be made to an order against Ask and, if an order is made, to the quantum.
6. Appeal allowed. Remit to the Employment Tribunal. Ask is a party to the proceedings and is required to submit a response form. The Employment Tribunal will then send out a notice. The judgment on the review is set aside.