R (Palmer) v Northern Derbyshire Magistrates' Court [2023] UKSC 38
The Supreme Court considered whether the administrator of a company appointed under the Insolvency Act 1986 (IA 1986) was an 'officer' of the company within the meaning of s 194 Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA 1992). The appellant, Robert Palmer, was appointed as one of three joint administrators of West Coast Capital (USC) Ltd (USC) on 13 January 2015. The following day, employees at one of USC's warehouses were made redundant by a letter signed by Mr Palmer. No notice of the redundancies was given to the Secretary of State until the relevant form, signed by Mr Palmer, was emailed on 4 February 2015. In July 2015, criminal proceedings were commenced against Mr Palmer under s 194. S 193(1) and (2) TULRCA 1992 provide that where an employer proposes to dismiss at least 20 employees as redundant within 90 days it is required to give notice to the Secretary of State at least 30 days before those dismissals take effect, and where the employer is proposing to dismiss 100 or more employees as redundant within 90 days, it must give notice of at least 45 days. Failure to provide this notice, where the offence is proved to have been committed by a body corporate with the consent or connivance of, or attributable to neglect on the part of 'any director, manager, secretary or other similar officer of the body corporate', constitutes an offence under s 194(3). Mr Palmer denied that he had committed an offence on the grounds that an administrator appointed under the IA 1986 is not an 'officer' for the purposes of s 194(3). The magistrates' court had held that Mr Palmer was such an officer and the Divisional Court dismissed his subsequent claim for judicial review (R (Palmer) v Northern Derbyshire Magistrates' Court [2021] EWHC 3013 (Admin)). Mr Palmer appealed to the Supreme Court.
The Supreme Court allowed the appeal, holding unanimously that an administrator of a company appointed under the IA 1986 is not an 'officer' within the meaning of TULRCA 1992. Lord Richards (giving the judgment) found that the relevant provisions of the IA 1986 (such as ss 212 and 251 and Schedule B1 IA 1986) provided a clear picture that the legislation, in creating the process of administration, did not classify an administrator as an officer of the company in administration. Considering the relevant case law cited in the Divisional Court, the Supreme Court held that neither Re Home Treat Ltd [1991] BCC 165 nor Re Powertrain Ltd [2015] EWHC 3998 (Ch) had considered the clear distinction drawn in the IA 1986 between administrators and liquidators on the one hand and a company's officers on the other hand and, in holding that the former were officers of a company for the purposes of s 1157 Companies Act 2006 (and its statutory predecessor), they were wrongly decided. The Divisional Court had erred in placing the weight it did on these decisions. Although s 194(3) contained a reference to an 'other similar officer', the court did not see fit to give an extended meaning to this term: nothing in the language of the section suggested that an expansive interpretation should be given to this term and the restriction to an officer who can be said to be 'similar' to a director, manager or secretary militated against such an interpretation.
Considering the second respondent's policy argument that excluding administrators from s 194(3) would create a vacuum in responsibility with no mechanism to deter non-compliance, the court held that there was no support for the functional test for determining the category of 'other similar officers' which the Divisional Court had adopted with the policy argument in mind. S 194(4) expressly widened the scope of s 193(3) to include members of a body corporate where 'the affairs of the body corporate are managed by its members'. Had Parliament intended to create the functional test favoured by the Divisional Court, these general words would have been included in s 194(3) and s 194(4) would have been unnecessary. The court therefore held that the question of whether a person is an 'officer' of a body corporate in the context of s 194 and other similar provisions is to be determined by asking whether the person holds an office within the constitutional structure of the body corporate. In applying this constitutional test, the court emphasised that 'officer' was to be given its normal meaning, which the IA 1986 provisions emphasised by the prior reference to directors, managers and secretaries, all of whom are officers in the conventional sense, together with the words 'other similar' before 'officers'. The appeal was therefore allowed and the District Judge's decision that Mr Palmer was an officer of USC was quashed.
See Redundancy, Q&A here for more details on the requirement to notify the Secretary of State about collective redundancies. Redundancy/Collective consultation considers employers' collective consultation requirements under s 188 TULRCA 1992 generally.
First published on the Employment News Service on 3 November 2023.
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