First Personnel Services Ltd v Halfords Ltd, Court of Appeal - Chancery Division, December 20, 2016, [2016] EWHC 3220 (Ch)

Resolution Date:December 20, 2016
Issuing Organization:Chancery Division
Actores:First Personnel Services Ltd v Halfords Ltd
 
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Neutral Citation Number: [2016] EWHC 3220 (Ch)

Case Number: A30BM337

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

BIRMINGHAM DISTRICT REGISTRY

Priory Courts,

33, Bull Street,

BIRMINGHAM, B4 6DS

(Judgment handed down at:

The Rolls Building, Fetter Lane,

LONDON, EC4A 1NL)

Date: Tuesday, 20th, December 2016

Before:

MR JEREMY COUSINS QC

SITTING AS A DEPUTY JUDGE OF THE CHANCERY DIVISION

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Between:

FIRST PERSONNEL SERVICES LIMITED

Claimant

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HALFORDS LIMITED

Defendant

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Mr Edward Pepperall QC and Mr Mark Grant (instructed by Messrs Shakespeare Martineau, of No 1, Colmore Square, BIRMINGHAM B4 6AA) for the Claimant

Mr Aidan Casey QC and Mr Tom Poole (instructed by Messrs Pinsent Masons, of 3, Colmore Circus, BIRMINGHAM B4 6BH) for the Defendant

Hearing dates: 14th, 15th, 16th, 20th, 21st, 22nd, 23rd, 27th June, 18th, 19th and 25th July 2016

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JUDGMENT APPROVED

INDEX TO PARAGRAPHS IN JUDGMENT

INTRODUCTION 1

The litigation 6

THE WITNESSES 9

FPS' witnesses

Matthew Reddy 12

Linda Thornton 16

Mark Stant 18

Lewis Pepall 20

Halfords' witnesses

Stacey Lintern 22

Alison Muir 25

Ross Turner 28

Simon Gardner 29

FPS' CLAIM

Issue 1: Liability for transfer/introduction fees 31

Issue 1(a)

The submissions for FPS 37

The submissions for Halfords 47

Issue 1(b)

Halfords' submissions as to Issue 1(b)

Halfords' submissions as to Issue 1(b)(i) 60

Halfords' submissions as to Issue 1(b)(ii) 63

Halfords' submissions as to Issue 1(b)(iii) 67

FPS' submissions as to Issue 1(b)

FPS' submissions as to Issue 1(b)(i) 74

FPS' submissions as to Issue 1(b)(ii) 76

FPS' submissions as to Issue 1(b)(iii) 79

ISSUE 1: DISCUSSION 85

Issue 1(a) 89

Issue 1(b) 101

Issue 1(b)(i) 102

Issue 1(b)(ii) 107

Issue 1(b)(iii) 117

ISSUE 2: Quantum of transfer/introduction fees

Issue 2(i) - numbers of Workers transferring to Staffline 131

Issue 2(ii) - credits claimed by Halfords 139

Issue 2(iii) - calculation of fees 146

ISSUE 3: FPS' outstanding invoices 157

ISSUES 4 AND 5: Interest 158

THE COUNTERCLAIM

THE SHAPE OF THE DISPUTE BETWEEN THE PARTIES 170

The shape of the remainder of this judgment 174

MORE FACTUAL BACKGROUND 176

Mrs Lintern's evidence 186

Mr Reddy's evidence 193

THE CONTRACTUAL AND TORTIOUS COUNTERCLAIM ISSUES

ISSUES 7, 8, 9, 16, 17, 18, 24, 25, 26, 32, 33, 34: Liability for holiday pay etc.

THE PARTIES' SUBMISSIONS ON THE CONTRACTUAL AND TORTIOUS COUNTERCLAIM ISSUES

The submissions for Halfords 199

The submissions for FPS 210

THE CONTRACTUAL AND TORTIOUS COUNTERCLAIM ISSUES: DISCUSSION 219

THE QUISTCLOSE ISSUES

ISSUES 10, 19, AND 27 234

MISCELLANEOUS ISSUES

ISSUE 6: Accrued holiday pay paid to Staffline 237

ISSUE 11: Was WTD overcharged on overtime? 243

DISPOSAL 247

MR JEREMY COUSINS QC:

INTRODUCTION

  1. This case arises from a dispute relating to the arrangements, and their termination, for the supply of temporary workers by the claimant, First Personnel Services Limited (``FPS''), a recruitment agency specialising in the supply of temporary and permanent staff to industrial and retail clients, to Halfords Limited (``Halfords''), the well-known cycling and motoring retailer. FPS supplied such temporary workers (``Workers''), from the mid-1980s until December 2011. These services were provided subject to FPS' terms and conditions (latterly dated 2010, ``the Conditions'') for the supply of Workers; a copy of the Conditions is attached to FPS' Particulars of Claim. At trial, it was common ground, subject only to the issue of whether certain of the Conditions had not been incorporated because they were ``onerous and unusual'' (a point which I consider later), that the parties had traded upon the Conditions.

  2. During the years that the commercial relationship subsisted between the parties, there had been occasional discussion between them as to the rates at which Workers would be supplied by FPS. A point which was revisited particularly by the parties, over the years, was the issue of the basis for calculation of the employer's National Insurance (``NI'') element of the charges which FPS made for its services; that topic was a focus of considerable attention whilst oral evidence was given during the trial. Particularly relevant to this case are the discussions and exchanges which took place in late 2005 and early 2006, late 2009 (when there was a retendering process for the supply of Workers to Halfords), and during 2011 (when there was a further such process).

  3. It was the retendering process which was undertaken, during October and November 2011, that culminated in Halfords' decision to award the contract for the supply of Workers to another agency, Staffline Group plc (``Staffline''). FPS was notified of this decision on 22nd November 2011, with the original termination date set for 12th December 2011. This original termination date, was, however, extended to 22nd December 2011, from which date Staffline became Halfords' provider of Workers rather than FPS. Both parties accept, and it is common ground between them, that these new arrangements gave rise to a service provision change (``the Change'') within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (``TUPE''). By reason of the Change, most Workers who had been employed by FPS who had been supplied to Halfords were transferred over to Staffline.

  4. FPS maintains that in the circumstances which have arisen, and pursuant to the Conditions, it is entitled to transfer or introduction fees. The basis upon which any such fees, if payable, are to be calculated is in contention, but on FPS' case, they amount to £490,370.99, together with a further sum of £68,211.44 in respect of previously accrued unpaid trading invoices, and interest upon such sums, claimed at a rate of 2 per cent per month which is said to be the contractually applicable rate. Halfords disputes its liability to pay any transfer or introduction fees at all, and also, on the basis of its set-off, denies liability for the unpaid trading invoices. Halfords maintains that it is not liable to pay transfer or introduction fees because, it suggests, the Conditions do not apply to a transfer of Workers from one employment agency to another under a TUPE transfer; further, that if the Conditions do apply, then (i) they amount to unusual and onerous clauses that were not incorporated into the contract between the parties, (ii) they are unenforceable under Regulation 10 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (``the Conduct Regulations''), (iii) they are void for uncertainty, and (iv) in any event, the maximum sum in respect of which fees would be due would amount only to approximately £21,000.

  5. For its part, by its counterclaim, Halfords seeks to recover alleged overcharges in respect of holiday pay, holiday pay on overtime, and NI contributions, in relation to the latter of which a travel and subsistence scheme operated, in conjunction with HMRC, was in being. This counterclaim is pursued on the basis that, Halfords alleges, contrary to the arrangements made between the parties, FPS charged Halfords more than the actual costs incurred by FPS for those elements, and Halfords seeks to recover the difference between what was charged and the actual costs incurred by FPS. The assessment of the value of the counterclaim did not, as I shall explain later, form part of the trial with which this judgment is concerned. It is said to have a value in excess of £500,000. FPS denies all liability upon the counterclaim, because, it says, the parties had at all times agreed, and dealt, on the basis of composite rates, rather than rates calculated by reference to its actual costs plus some agreed margin.

    The litigation

  6. FPS began these proceedings with a claim form issued on 7th August 2014, and subsequently the particulars of claim were served. In response, Halfords served its defence and counterclaim, which was followed by FPS' reply and defence to counterclaim. All of these pleadings were subsequently amended, in some cases more than once. Both parties requested further information of the other, which was duly provided. Directions with a view to preparing this case for trial were given on a number of occasions in 2014, 2015, and 2016. Extensive witness statements were served on behalf of both parties. It was originally listed for the trial to commence in the week beginning Monday 6th, June 2016, but in anticipation of the need for further directions to be given, His Honour Judge Barker QC, sitting as a judge of the High Court, arranged for a further directions hearing in the week prior to the due date for the trial to begin. The case was then listed to be heard by me, but on the basis that I should first determine various issues which had arisen as to further amendment of Halfords' pleadings, and other matters which were the subject of my ruling given on 9th June, having heard extensive and detailed argument from counsel over the previous Tuesday and Wednesday. I made a consequential order, on 20th June, having heard further submissions from counsel as to its precise form, and also having allowed, following still further argument, amendment to the Particulars of Claim. It is not necessary for me to refer to these matters in any greater detail.

  7. By the time of the trial, the...

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