England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

		Royal Courts of Justice
		14th November 1989

LORD JUSTICE McCOWAN: This is an appeal by employers from a decision of the Employment Appeal Tribunal given on 6th December 1988 to allow an appeal of an employee from a decision of an Industrial Tribunal that he had been fairly dismissed, and to remit the matter for hearing before a freshly constituted Industrial Tribunal. The Employment Appeal Tribunal refused leave to the employers to appeal against its decision, but such leave was granted by Lord Justice Neill on 7th March 1989. The employers in this case were British Telecommunications Pic and the employee was Robert John Sheridan.

The chronology of the matter is as follows. On 5th January 1970 Mr Sheridan was first employed by the employers. He became an employee at Luton on a Technician 2A grade. In March 198 6 he was transferred from Luton to Bedford. In October 1986 he was temporarily promoted to Technical Officer with effect from March 1986 and placed on the Technical Officer-In-Training panel. On 13th November 1986 he was the subject of a biennial appraisal by his line manager, Mr Dumpleton.

In preparation for that appraisal, Mr Dumpleton handed him his personal file. When he read it, the employee learned that he had been put on training some six months before but had never been told about it. He further read comments critical of himself with which he did not agree. He therefore wrote to Mr Lynch, a level 4 manager, by letter dated 17th November 1986, complaining of the way that he had been treated since his move to Bedford.

An important event occurred on 15th November 1986. That was a Saturday and he was working overtime. There is no clocking-in system for his category of employee. What he had to do was to sign a slip stating the period for which he had worked that day and by that means he would receive overtime payments. The work sheets were collected and seen by Mr Dumpleton. A report was made to management by two fellow employees of Mr Sheridan called Presland and Dennis that although Mr Sheridan had stated on his overtime slip that he had worked that morning until 11:45, in fact he had left at 10:30.

On 19th November Mr Sheridan had a meeting with Mr Dumpleton: this was a counselling interview. During the course of it Mr Dumpleton referred to the letter written by Mr Sheridan to Mr Lynch and threatened to take him off the Technical Officer- -in-Training panel unless he withdrew it.

On 21st November Mr Dumpleton had before him a report by Messrs Presland and Dennis that the applicant had left at 10:30 on the Saturday morning. That very day Mr Dumpleton made a written request to Mr Sheridan for a written explanation for booking incorrect hours of work on his timesheet. The same day Mr Sheridan replied in writing denying the allegation. Later that day, the two men met and at that meeting Mr Dumpleton alleges and Mr Sheridan disputes that Mr Sheridan admitted leaving at 10:30 a.m. rather than 11.45 a.m. as booked.

On 25th November a serious disciplinary charge was laid of falsification of a time sheet and Mr Sheridan was given written notice of the charge. On 11th December there was a disciplinary hearing conducted by a level 3 manager called Powell. On 15th December Mr Powell gave a decision in writing that Mr Sheridan had committed a serious disciplinary offence by falsely entering his departure time on his time sheet and that he would be penalised by, first, reversion to his substantive grade of Technician 2A and secondly by removal from the Technical Officer- -in-Training panel.

On 5th January 1987 an appeal hearing was conducted by level 4 manager Mr Lynch. Next day he gave a written decision, rejecting Mr Sheridan's appeal and upholding Mr Powell's decision. On 23rd February there was a review decision by the personnel manager, Mr Geldhart, that the managers had acted reasonably in coming to their decision.

On 25th February Mr Sheridan put in a letter of resignation. On 8th May 1987 he made application to the Industrial Tribunal. That Tribunal gave what it called its summary reasons for its majority decision to dismiss Mr Sheridan's application on 16th October 1987. The majority was formed by the Chairman and another. I look first at those summary reasons.

At paragraph 15 this is said.

"This is what is known as a case of alleged constructive dismissal. The respondents have disputed dismissal. Therefore in order for the applicant to succeed he must show that the respondents broke a fundamental term of the contract of employment. Although various points have been made by the applicant the thrust of the argument is that he was treated so badly that an implied term of trust and confidence was broken and thereby he was entitled to leave. All 3 members are agreed that if the respondents treated the applicant over the time charge unfairly to the extent that finding of a serious offence was not warranted then there would be a breach of a fundamental term.

16. However, also all 3 members of the tribunal are agreed that whilst the applicant did have legitimate cause for complaint concerning the counselling and the appraisal, his complaints in this respect were not so weighty as to amount to a fundamental breach on the part of the respondents. The critical part of the case is whether or not the respondents properly came to a conclusion concerning a finding by the respondents that he had improperly booked time. It is over this issue that the tribunal is divided.

17. The reasoning of the majority is that we are satisfied that the respondents could properly decide that the applicant had over-booked time on the Saturday in question. In coming to this finding we are satisfied, firstly, that there was material before them to enable them to come to that conclusion. They had the statements of Mr Presland and Mr Dennis; they had the further statement by Mr Dumpleton. Against that they had the applicant's denial. The respondents in these circumstances had material to enable them to come to that conclusion."

I need read no more of paragraph 18 than to say that it stated that the majority were satisfied that Mr Sheridan had in fact over-booked.

Then paragraph 19 reads:

"We then are satisfied that the penalty was a reasonable one in the circumstances, it was within the range of reasonable responses. Some management might have dismissed, others might conceivably have awarded a lesser penalty. It was a reasonable one."

Then I read in part paragraph 23.

"If we were wrong in our analysis and there was a fundamental breach, in connection with the way the applicant was dealt with over the appraisal and the counselling, nevertheless, we would still find against the applicant. The reason is that we are not satisfied that he had left because of this breach. It was the question of the finding of a serious offence in connection with the overtime booking which was the effective reason of the applicant handing in his notice."

Paragraph 24 I read in full, because it is of crucial importance to the argument in this case.

"The reasoning of the minority member, Mr Slessor, is that he accepts that the handling of the serious offence charge concerning the overtime claim is the critical matter. His reasoning as to why the respondents could not properly find that the applicant had overbooked is that one must look at the background to the case. The applicant is a person who had a good record coming from Luton. He came to an office where there was clearly some personal hostility towards him, he and Mr Presland had had rows in the past. Furthermore, he would be working different hours and would be in receipt of an away duty allowance which would cause envy. Mr Dumpleton has proved that he had been a poor manager in the way in which he handled the applicant's training and appraisals. In these circumstances the respondents needed something more before they could properly find the applicant had committed a serious offence. For instance, there was the conflict in the statement between Mr Dumpleton and the applicant as to whether or not the applicant had made any admissions. In view of Mr Dumpleton's record as a manager, in his handling of the applicant, Mr Powell could not properly have paid any attention to what was said in this statement. Furthermore, the statements by Mr Presland and Mr Dennis are insufficient in detail. There is no evidence that the applicant said to anyone "I'm going now" or anything of that nature, it is just that he was not seen after 10:30 am. He could have been in the toilet, he could have been in the ninth floor. There was insufficient evidence so as to put sufficient before the respondents. Mr Powell on any reasonable view of the matter could not have found the applicant had committed a serious offence. That being so, the reversion of the applicant to his subsequentive position of a Tech 2A was improper. The applicant in these circumstances was entitled to find that the implied term of mutual trust and confidence had been broken through the respondents reverting him improperly and destroying his prospects with the company."

Then in paragraph 25 the argument continues,

"The applicant was therefore entitled to leave and for it to amount to a constructive dismissal."

However, this is said in paragraph 27:

"The majority prevail, and the complaint is dismissed for the reasons set out herein."

The summary reasons are, it seems to me, very full, covering as they do five and a half pages and 27 paragraphs. The full reasons given by the Tribunal at the request of Mr Sheridan do not seem to me to add anything to the summary reasons and I do not therefore refer to them.

The decision of the Employment Appeal Tribunal to allow Mr Sheridan's appeal was a unanimous one. I turn to the judgment given by Mr Justice Garland to seek to discover the reasons for it. On page 3 of that judgment, at letter C I read,

"Mr Dumpleton was the person largely responsible for the Applicant's sense of grievance about the whole question of his status as a Technical Officer in Training, appraisal and counselling and, as I have said already, the Tribunal held that he had a legitimate cause of complaint and the person responsible for it was Mr Dumpleton."

On page 5 at letter E, this appears:

"Without going into the matter any further, we take the view that this was a case where the Applicant had at least two matters that were very present in his mind as laying the foundation for constructive dismissal. He was saying that these matters considered cumulatively rather than separately, constituted a breach of an important term - a fundamental term of his contract of employment."

At letter H the learned judge continued:

"We are taking the view that the implied term of trust and confidence can be breached by conduct either singly or cumulatively which destroys the necessary trust and confidence between an employer and employee to the extent that the employee is entitled to say 'That is a breach of an important term of the contract which I treat as a repudiation of your obligations to me; you have constructively dismissed me.'"

The judgment continues at D on page 6:

"We take the view that there was much force in the observations of the minority member who dissented from the majority, who took the view that the whole matter of the disciplinary proceeding could not be altogether divorced from what had gone before because one of the principal witnesses and actors in the disciplinary proceedings was Mr Dumpleton, whose conduct in relation to the Applicant's status as a Technical Officer in Training, appraisal and counselling, they had condemned. We do not seek to prejudge the matter in any way but we would equate conduct amounting to incompetence or extreme insensitivity with what is arbitrary and capricious, as laying the foundation - and we say no more than that - for an arguable breach of the implied term of trust and confidence.

We do not feel it is necessary to go further than that in discussing the facts of the matter or in outlining the relevant considerations of law but we were left in no doubt whatsoever that this matter should be considered again in the light of what we have said and, of course, by a wholly differently constituted Tribunal."

I am bound to say I do not find it easy to discover from the judgment on what basis the Employment Appeal Tribunal was allowing the appeal. They certainly did not say that the Industrial Tribunal had been guilty of any error in law and indeed I can find no such error. Neither can I read the judgment as meaning that the decision was perverse, having regard to the words used at F on page 6 of the judgment, namely that they were saying no more than that there was a foundation for an arguable breach of the implied term of trust and confidence.

The suggestion made by Mr Wilkie for Mr Sheridan is that the Employment Appeal Tribunal held that the majority members of the Industrial Tribunal had misunderstood or misapplied the facts, in that they did not appreciate that Mr Sheridan's case was that the two matters of his counselling/appraisal and his disciplinary offence operated cumulatively, so as to amount to grounds for claiming that he had been constructively dismissed. It is further argued that the minority member of the Industrial Tribunal understood that, as Mr Wilkie puts it, this dimension was crucial and it underlay his reasoning at paragraph 24 of the summary decision. Assuming that there was such a misunderstanding or misapplication of the facts, would that in any event suffice? Mr Wilkie submits that it does, relying on the case of Watling v. William Bird & Son Contractors Limited [1976] 1 I.T.R. 70. The particular passage he relies on is to be found in the judgment of Mr Justice Phillips at page 71 of that report, beginning at letter G:

"There is only an appeal to this court on a point of law and that is the difficulty in his way. The authorities on what is a point of law are endless, and they express the matter in all sorts of different ways, but it all in the end comes down to the same thing. An appellant who claims that there is an error of law must establish one of three things: he must establish either that the Tribunal misdirected itself in law or misunderstood the law, or misapplied the law; or, secondly, that the Tribunal misunderstood the facts, or misapplied the facts; or, thirdly - and this again was put in all sorts of different ways - that although they apparently directed themselves properly in law, and did not mis-state, or misunderstand, or misapply the facts, the decision was "perverse", to use a word which to modern ears sounds harsh, or (which is another way of saying the same thing) that there was no evidence to justify the conclusion which they reached."

I have no difficulty in understanding and accepting the first and third, but I am bound to say for my part I have difficulty in accepting the second as a separate category. Either the second means nothing more than the third, or it means something less. If the latter, I would respectfully doubt if it can be right, since this would suggest that the Employment Appeal Tribunal is entitled to allow an appeal if it takes a different view of the facts from that of the Industrial Tribunal. But whether or not I am right about that I am unable to interpret paragraph 24 of the Industrial Tribunal's summary of reasons, a paragraph which I have read in full, in the way that Mr Wilkie asks this court to read it. All that the minority member was there arguing was that because of Mr Sheridan's unpopularity at the Bedford office, and in particular the hostility towards him of Mr Presland and Mr Dumpleton, and because the mishandling of his counselling and appraisal had been by Mr Dumpleton, the evidence of Messrs Presland and Dumpleton did not provide a safe basis upon which to find that Mr Sheridan had falsified his time claim.

Mr Wilkie submits that the majority never took on board that argument at all. I find it quite impossible to accept that. It is true they did not in terms say "We considered that argument and we disagreed with it", but it is perfectly obvious in my judgment that they must have done so. Having considered Mr Slessor's argument, the majority came to the conclusion, as they were entitled to do, that Mr Sheridan had falsified his time claim.

Moreover, as it seems to me, Mr Wilkie's argument leaves out of account the following findings of fact by the Industrial Tribunal. First, it was the view of all three members of the Tribunal that although Mr Sheridan had a legitimate cause for complaint concerning his counselling and appraisal by British Telecommunications, his complaints were not so weighty as to amount to a fundamental breach of contract by the company. Secondly, the majority found that those matters were not in any event causative of his resignation. Those were findings of fact which the Industrial Tribunal was in my judgment wholly entitled to reach. It would be quite impossible to say that they were findings which no reasonable Industrial Tribunal could have arrived at on the evidence before them.

In those circumstances, in my judgment, what the Employment Appeal Tribunal was in effect here doing was to substitute its own view of the evidence for that of the Industrial Tribunal. That it was not entitled to do.

I would therefore allow this appeal.

LORD JUSTICE RALPH GIBSON: I agree. As my Lord has pointed out, Mr Wilkie relied upon the passage in the judgment of Mr Justice Phillips in the case of Watlinq v William Bird & Son Contractors Limited [1976] 1 L.T.R. 70. My Lord has read the passage out. It was in substance submitted that what the Employment Appeal Tribunal was doing was employing principle B, namely to find that the Industrial Tribunal had misunderstood the facts or misapplied the facts, although the Employment Appeal Tribunal had not clearly expressed itself in that way.

For my part I agree that the concept of misunderstanding or misapplying facts may amount to an error of law, although when it does it may be, as my Lord has suggested, that such a case is capable of being assigned to the third category of case where there is no evidence to support the conclusion. In the context of a jurisdiction where Parliament has created a right of appeal only on a point of law and not on issues of fact, such a concept must be applied with care to see that it is not used to reverse decisions of the Industrial Tribunal because the appellate court disagrees with its conclusions of fact.

Misunderstanding or misapplying the facts may, in my view, amount to an error of law where the Tribunal has got a relevant undisputed or indisputable fact wrong and has then proceeded to consider the evidence and reach further conclusions of fact based upon that demonstrable initial error. Such may be an error of law because the Tribunal is required by law to consider the case in accordance with agreed or undisputed facts. Where, however, the alleged misunderstanding of fact depends upon a decision of fact open to the Tribunal to make, and which it did make, then an attack on that finding cannot be converted into an error of law unless it can be shown that there was no evidence to support it, or that the conclusion was perverse.

Mr Wilkie, in a skilful and tenacious argument, has in my judgment failed wholly to show that there was any misunderstanding or misapplication of the facts on the part of this Industrial Tribunal in that sense, which could have justified the Employment Appeal Tribunal in setting aside its decision. This was undoubtedly an exceedingly difficult case for the Tribunal on the facts. It is plain that they saw it as a difficult and anxious case, and it is also plain that all members of that Tribunal took all possible care. The minority member reached a conclusion which was open to him on the evidence. The majority however also in my judgment reached a decision which was open to them on that evidence. I see no sign whatever that the majority failed to understand or to consider the point of Mr Sheridan's case or that they failed to understand or to apply properly any agreed or undisputed or undisputable fact.

For the reasons which my Lord has given I agree that this appeal should be dismissed.

THE MASTER OF THE ROLLS: I agree. Any court with the experience of the members of the Employment Appeal Tribunal, and in particular that of the industrial members, will in the nature of things from time to time find themselves disagreeing with or having grave doubts about the decisions of Industrial Tribunals. When that happens, they should proceed with great care. To start with, they do not have the benefit of seeing and hearing the witnesses, but, quite apart from that, Parliament has given the Employment Appeal Tribunal only a limited role. Its jurisdiction is limited to a consideration of questions of law.

On all questions of fact, the Industrial Tribunal is the final and only judge, and to that extent it is like an industrial jury. The Employment Appeal Tribunal can indeed interfere if it is satisfied that the Tribunal has misdirected itself as to the applicable law, or if there is no evidence to support a particular finding of fact, since the absence of evidence to support a finding of fact has always been regarded as a pure question of law. It can also interfere if the decision is perverse, in the sense explained by Lord Justice May in Neale v. Hereford & Worcester County Council [1986] I.C.R. 471 at 483.

But that is not the case here. The Employment Appeal Tribunal does not appear to have identified any error of law and they certainly have not held that the finding was perverse. Mr Wilkie, as my Lords have pointed out, has sought to uphold its judgment on the footing of the second category of jurisdiction adumbrated by Mr Justice Phillips, sitting in the Queen's Bench Division, not the Employment Appeal Tribunal, in Watling v. William Bird & Son Contractors Limited [1976] 1 L.T.R. 70, when he said that an appellant who claims that there is an error of law must establish one of three things, the second of which was that the Tribunal misunderstood the facts or misapplied the facts. Unless the misunderstanding or misapplication amounts to an error of law, there is no such jurisdiction in my judgment.

This case, I think, should not be followed in future insofar as the second category is concerned.

For those reasons, which are exactly the same as my Lord's and merely reiterated by way of emphasis, I too would allow the appeal.

Order: Appeal allowed, with costs to be taxed if not agreed.