Adeline, J
- This is an appeal against the judgment of the Employment Tribunal delivered on the 8th July 2022, commenced by way of a Notice of Appeal pursuant to Rule 6(1) read with rule 6 (2) – (5) of the Appeal Rules (Statutory Instrument 11 of 1961 dated 27th February 1961) (“the Rules”). In accordance with Rule 11 read with Rule 12 of the Rules, the Applicant has since filed its Memorandum of Appeal. The history of this appeal up to this date is well documented on records pertaining to case ET/38/21 filed in the Employment Tribunal on the 3rd August 2021.
- Briefly, the Applicant one Marie-Claudette, Bamboche (now the Respondent) had registered a grievance at the Employment Department of the Ministry of Employment and Social Affairs (“the Deparment”) pursuant to Section 2 of Part II of the Employment Act 1995 (“the Act”) initiating the grievance procedure under Section 61(1) (a) (II) of the Act. In accordance with Section 6 1(1A), the compentent Officer in the Department had sought to bring about a settlement of the dispute between the parties by way of mediation without success.
- Mediation having been unsuccessful, pursuant to Section 61(1D) of the Act, the Applicant (now the Respondent) was issued with a certificate, and within the prescribed time limit from the date mediation concluded but failed to achieve a settlement, in accordance with Section 62 (1E), the Applicant registered a case before the Employment Tribunal on the 3rd August 2021 claiming some terminal employment benefits for what she terms as “unfair dismissal”.
- In answer to the Applicant’s application before the Employment Tribunal, the Respondent pleads as follows;
“1. The Respondent avers that, it never employed the Applicant.
2. Further, the Respondent, in respect of which the mediation certificate was also issued, does not have any legal personality.
3. In the alternative to paragraph 1 and 2 above, it is averred that, the Applicant was not unjustifiably terminated and is not entitled to any annual leave, unpaid salaries and or compensation”.
- The Applicant prays this court to dismiss the application.
- The Employment Tribunal presided by the then Vice Chairperson, Ms Kelly Louise, delivered its judgment on merit, and in the process, addressed the points raised by learned counsel for the Appellant (previously the Respondent) on the 8th July 2022. On merit, the Employment Tribunal entered judgment in favour of the Applicant (now the Respondent) on a finding that the Applicant (now the Respondent) “was unfairly and unjustifiably dismissed” in her employment.
- As a consequence thereof, the Employment Tribunal ordered the Respondent (now the Appellant) to pay the Applicant (now Respondent) the following;
“I. Salaries from 1st April 2021 up to date of lawful termination being today 8th July 2022 being SCR 102,000.000
II. One month salary in lieu of notice being SCR 6,800.00
III. Annual leave for the period from 21st April 2021 to date subtracting 14 days annual leave as taken by the Applicant being SCR 5,972.50
IV. Compensation for length of service being SCR 56,833.33, and
V. All of this less SCR 2,000.00 that was paid to the Applicant by the Respondent”.
- On the points of law raised by learned counsel for the Respondent (now Appellant) at paragraph 9 of the judgment, the Employment Tribunal has this to say;
“First, the Respondent through her counsel, Mr Hoareau, raised a plea that “Knickers Right” has no legal personality and therefore could not employ the Applicant, and further, is not the proper Respondent to this matter. Upon further digging by the Tribunal after the initial denial by the Respondent’s representative Marcia, Julie Geffroy, she did admit to the tribunal that she had registered “Knickers Right” herein the Respondent, as a trade name pursuant to the Registration of Business Names Act 1972. So as far as corporate vehicles go, the business is seemingly a sole-tradership owned by Marcia, Julie, Geffroy who at all material times was trading as “Knickers Right”. We further note exhibit A4 where this is clearly laid out on the top right corner of the letter and at the bottom of the signee’s name. We don’t accept the submission of counsel for the Respondent that because the business does not have a separate legal personality that it cannot be the subject matter of this suit. It is clear that the suit is against “Knickers Right”, the business and those person trading as “Knickers Right” are liable for the debts of the same as business has no limited liability as a consequence of the business having no legal personality of its own see (Salomon v Salomon and Co Limited [1896]”.
- In its Memorandum of Appeal dated 11th October 2022, filed in court on the 25th October 2022, the Appellant (previously the Respondent) through counsel, raises the grounds of Appeal that read as follows;
“1. The Employment Tribunal erred in law and on the evidence in failing to hold that the Respondent had wrongly instituted the Application against a non-existent person.
2. The Employment Tribunal erred in law and on the evidence in failing to hold that since the Appellant had no legal personality the application before the Employment Tribunal was not valid and could not be legally maintained”.
- As relief, the Appellant (previously the Respondent) prays this court “to allow its appeal and to quash the decision of the Employment Tribunal, and to consequently dismiss the application of the Respondent”.
SUBMISSION OF COUNSEL FOR THE APPELLANT
- Addressing the court on the grounds of appeal as featured in the memorandum of appeal, learned counsel began by stating that, both in law and on account of the evidence laid before it, the Employment Tribunal failed to hold that the Applicant/Respondent had wrongly instituted the application, in that, it is an application filed against a non-existent person. Learned counsel explained, that this legal point calls for consideration of whether the Appellant, the Respondent in the case before the Employment Tribunal, had legal status or legal personality to be made Respondent.
- Learned counsel also explained that, the Applicant/Respondent instituted the case against “Knickers Right” which she claims has been her employer, and that it was in the course of the proceedings, in examination in chief and cross examination, that it came to light that, “Knickers Right” is merely a business name. Learned counsel refers the court to the testimony of Marcia Geffroy who in her answer to the question put to her in cross examination, confirmed that, the Business name “Knickers Right” is hers. Learned counsel proceeded to add that, Ms Marcia Geffroy, did state, in answer to questions put to her for the record, that she registered “Knickers Right” as a business name under the Registration of Business Names Act at the Registration Office, and therefore, as to its status, it is not the name of an individual, nor the name of a company or a partnership.
- Learned counsel refers this court to paragraph 9 of the judgment of the Employment Tribunal, contending that, the Respondent/Appellant may have really employed the Applicant/Respondent, but for the purpose of the proceedings before the employment Tribunal, the issue is that proceedings should not have been brought against “Knickers Right”, and therefore, the fact that she did admit before the Employment Tribunal that she had registered “Knickers Right” cannot render her liable for the claims made by the Applicant/Respondent.
- Learned counsel explained that, by law, Marcia Geffroy was effectively a sole trader trading under the business name of “Knickers Right”, and that she was the person who had legal capacity to be sued. Learned counsel submitted, that the Employment Tribunal got it utterly wrong by saying that “the business does not have a separate personality and that it cannot be the subject matter of this suit”, although, admittedly, the person who trades as “Knickers Right” are liable for the debt of the business because they have no limited liability.
- Learned counsel referred this court to Section 47 of the Commercial Code Act, that prescribes for the kinds of legal persons that are recognised by law, contending that, they are physical or natural person or human being, a company, an association, a partnership and a commercial partnership. To further illustrate her point of contention, learned counsel said that the case against “Knickers Right” is analogous to a case filed against a dead person, arguing that, both does not exist, and added, that in a case of a dead person, when the judgment creditor would seek to enforce its judgment by execution, that would not be possible because the dead person would not exist. Learned counsel submitted, that the issue of execution in this case also arises because the judgment of the Employment Tribunal cannot be executed against “Knickers Right”, nor against Mrs Marcia Geffroy who was not made a party to the case.
- Learned counsel concluded its submission by emphasising that, this court is a court of law, and that, it is imperative for the court to apply the law. Learned counsel cited the case of Allock v D’offay [1978] 82, in which case, the court of Appeal had stated the following;
“this is a court of law and we apply the law. We will not rely on morality”
SUBMISSION OF COUNSEL FOR THE RESPONDENT
- In its oral submission in reply, learned counsel for the Respondent/Applicant began by stating that, learned counsel for the Appellant/Respondent’s grounds of appeal flows from one to another. He refers this court to paragraph 9 of the judgment of the Employment Tribunal that makes it clear that, “Knickers Right” is a trade name owned by Marcia Julie Geffroy and made the point, that the case was instituted against “Knickers Right” and, the person trading as “Knickers Right”, that is, Marcia, Julie Geffroy who is liable for the debt. Learned counsel submitted, that those grounds of appeal were raised and addressed as issues in the case before the Employment Tribunal, and that the Tribunal’s position was that there were communications from the Respondent where Marcia, Julie Geffroy was addressed as trading as “Knickers Right”.
- Learned counsel explained that, “this was something which the Employment Tribunal identified and made references to in order to arrive at the conclusion that the complainant that instituted the matter before the Employment Tribunal, was the one that was directed against Ms Marcia, Julie, Gefrroy trading as “Knickers Right”. Learned counsel referred the court to page 7 of the proceedings with special emphasis to the cross examination of the Respondent/Appellant who under cross examination, had confirmed that, she knows the Applicant/Respondent because she employed her and paid her salary, and confirmed that, “Knickers Right” is her business registered at the Registrar’s office.
- Learned counsel also calls on this court to consider the way the Employment Tribunal is set up as well as the manner it conducts its proceedings. Learned counsel urges this court to take into account the way the Employment Tribunal was conceived, particularly, the fact that it is meant to offer quick redress and or reliefs, and the fact that the employee is the one who is more likely to require the services of the Employment Tribunal to resolve its grievances.
- Learned counsel also urges the court to consider the fact that the Respondent/Applicant was represented before the Employment Tribunal by one Mr Robinson who is not a lawyer because the set up of the employment tribunal as well as the rules of proceedings allow him to, whereas, the Appellant/Respondent was represented by a qualified lawyer. Learned counsel emphasises that, the set up of the Employment tribunal and the manner its proceedings are conducted, is intended to accommodate the fact that some employees may not have the means to secure legal representation before the Employment tribunal, and are therefore disadvantaged.
DISCUSSION OF THE LAW
- This court has given due consideration to the submission of learned counsels representing both parties in this appeal in the light of the grounds of appeal upon which the appeal is being pursued. Having heard counsels’ argument, this court holds the view that, the legal issues raise in this appeal are boided down to a discussion around the concept of “separate legal entity”. The notion “separate legal entity”, is a fundamental concept in law that underlines business law and legal liability. It is a notion, that if someone doesn’t get it right several consequences may follow. For example;
- One may trade in a way that makes him personally liable for the activities of a company rather that the company itself.
- Signs and entered into contracts which make you jointly and severally liable under a contract when this was not what you intented to, and
- Sign a contract with a non-existent legal entity, and makes the contract unenforceable.
- It is trite law, that a separate legal entity is a person recognise by law as a legal person. As such, the entity has its own legal rights and obligations. These rights and obligations are separate to those running and or, owning the entity. In law, that person may either be a company with limited liablity, a partnership or a sole trader. Therefore, if it is a company, it is an incorporated entity which is a separate legal entity in its own right.
- In the English case of Bolton Engineering Co Ltd vs TJ Graham sons Ltd [1957] 1 QB 159 Denning LJ had this to say about companies;
“A company may, in many ways be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which holds the tools and a act in accordance with directions from the centre. Some people in the company are mere employees who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of those managers is the state of mind of the company and is treated by law as such”.
- Hence, the hallmarks of a separate legal entity are that it can buy, sell and own property of any kind in its own name, agree to legally binding contracts, and sue and be sued in its own name. Therefore, when one speaks of separate legal entity, it means the samething as separate legal person, separate legal existence. In fact, that in effect, makes companies an attractive mode of doing business, and that is the most popular mode.
- A company is identified by its company registration number, and liability in law is attributed to the company rather than its shareholders, or directors or other company officers. It can be said, therefore, that a company which is a separate legal entity, protects the individuals participating in the business from personal liability. It is worth noted, that the two types of companies we have in this country are, proprietary limited (Pty) ltd and limited companies (Ltd). In other countries like the UK, for example, they also have public companies (PLC).
- The concept of a separate legal personality was first introduced by case law in the cae of Salomon v A Salomon Co Ltd decided in 1897. The House of Lords commented as follows;
“Once a company is incorporated, it has a separate legal existence to the share holders of the company… [the company] must be treated like any other independent person with its rights and liabilities appropriate to itself… whatever may have been the ideas or schemes of those who brought it into existence”.
In fact, in the case of Prest v Petrodel Resources Ltd in 2013, the court reaffirmed this principle.
- When someone trades as an individual, he or she is said to be “a sole proprietor or a sole trader”. On the facts of the instant case, clearly, Marcia, Julie, Geffroy is a sole trader. She does business in her own name as a sole proprietor. She trades as “Knickers Right”. She is the legal entity who owns the business and runs the business. She employs people. On the facts of the instant case as transpired in evidence and on the records of the proceedings, she did employ the Applicant/Respondent, Marie-Claudette, Bamboche.
- If in the course of doing business something has gone wrong such as a breach of an employment contract, or an unjustified termination of her employee’s contract of employment as alleged, she, as the legal entity, is personally liable to pay the terminal benefits due under the terms of the contract of employment as well as those prescribed by law which are implied in the Applicant/Respondent’s contract of employment. This is because her liability is unlimited. That being the case, therefore, her personal assets are at stake.
- Therefore, “Knickers Right” is not a legal entity. It is a trading name or a business name. It is a name used by a business which is not its real name. It’s my considered opinion, that it’s an alias for the legal entity. It’s analogous to a nickname for a natural person. For these reasons, therefore, I have to agree with learned counsel for the Appellant/Respondent, that the application filed before the Employment Tribunal is not maintainable because although it did come out in evidence that “Knickers Right” is a business, or trading name owned by the Appellant/Respondent Ms Marcia, Julie, Geffroy, she cannot be held liable for the unlawful or unjustified termination of the Applicant/Respondent’s contract of employment as claimed. This is because effectively, the Applicant/Respondent instituted proceedings before the employment tribunal against “Knickers Right”, a non-legal entity, a non-existent person thus failing short of the provisions of Section 47 of the Commercial Code.
- In essence, the lesson to the drawn from this Appeal, is that, there are implications in law when court proceedings are instituted against a non-legal entity or a non-legal person as in the instant case. One of those implications, is that the case at first instant or on appeal is likely to be dismissed. Another implication, as correctly argued by learned counsel for the Appellant/Respondent, is that, in seeking to enforce the judgment by execution, the winning party would be unable to do so because of the non-existence of the judgment debtors as in the present case. Futhermore, to seek to enforce the judgment against the Appellant/Respondent will equally prove to be difficult given that the Appellant/Respondent was not a party to the application.
- Therefore, it is not a convincing argument for learned counsel for the Respondent/Applicant to argue that, because the evidence shows that “Knickers Right” is registered in the name of the Appellant/Respondent who accepted that fact in the course of the proceedings, she ought to be made liable for the Respondent/Applicant’s claim that she was “unfairly dismissed” in her job. This is because, in the first place, proceedings were instituted against a non-existent person.
- In the final analysis, therefore, for the reasons discussed in the preceding paragraphs of this judgment, the decision of the Employment Tribunal is hereby quashed, and accordingly, the Appeal is allowed dismissing the Applicant/Respondent’s application. Having disposed of this appeal on the points of law, I find no necessity to decide this appeal on its merits.
Signed, dated and delivered at Ile du Port 23 February 2023.
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B Adeline, J