England and Wales Court of Appeal (Civil Division) Decisions

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

		Royal Courts of Justice Strand London, WC2
		14th May 2003

1. LORD JUSTICE ALDOUS: This is an appeal with permission of this court against the order of the Employment Appeal Tribunal ("EAT") of 12th July 2002 which dismissed an appeal of Consignia Plc (now Royal Mail Plc) against an order of the Employment Tribunal of 23rd January 2002. That order concluded that the respondent, Mr KJ Burkett, had been unfairly dismissed, but had contributed to his dismissal by 30%. The result was that Consignia (which I will refer to as the Post Office) were ordered to pay Mr Burkett £3,111.50.

The factual background

2. At the time of the incident which led to Mr Burkett's dismissal, Mr Burkett had been employed by the Post Office for nearly 10 years. He had no disciplinary record. On 25th August 1999 Mr Burkett used derogatory words about the vehicle he was due to use the next day. He suggested that there was something wrong with it and did not wish to take it out in the morning. It seems that on that day he overfilled the vehicle with oil, with the result that the engine block exploded before the vehicle left the depot causing about £6,000 worth of damage. Following a detailed investigation, Mr Burkett was asked by letter of 1st October 1999 to attend a formal conduct interview on the ground that he had wilfully damaged Post Office property by overfilling the vehicle with oil. The disciplinary hearing took place on 26th October 1999. The hearing officer concluded that Mr Burkett had deliberately overfilled the vehicle with oil with a view to putting it out of service because he did not wish to use it. Mr Burkett was in consequence summarily dismissed on 18th November 1999.
3. Mr Burkett appealed. The conclusion of the hearing officer was upheld on 25th April 2000. The reasons given were that in having decided, from examination of the dipstick that the vehicle needed lubricating oil, it was inconceivable that he did not check the oil level on the dipstick again when putting oil into the vehicle. It was also a conclusion that the evidence of the employees of the Post Office were to be preferred to that of Mr Burkett.

The Employment Tribunal decision

4. The Employment Tribunal set out in paragraph 3 of its judgment the applicable law under section 98(4) of the Employment Rights Act 1996. In particular, reference was made to British Home Stores v Burchell [1980] ICR 303. At page 304 Arnold J, giving the judgment of the Employment Appeal Tribunal, said this:

"What the tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the ground of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further. It is not relevant, as we think, that the tribunal would themselves have shared that view in those circumstances. It is not relevant, as we think, for the tribunal to examine the quality of the material which the employers had before them, for instance to see whether it was the sort of material, objectively considered, which would lead to a certain conclusion on the balance of probabilities, or whether it was the sort of material which would lead to the same conclusion only upon the basis of being 'sure', as it is now said more normally in a criminal context, or, to use the more old-fashioned term, such as to put the matter 'beyond reasonable doubt'. The test, and the test all the way through, is reasonableness; and certainly, as it seems to us, a conclusion on the balance of probabilities will in any surmisable circumstances be a reasonable conclusion."

5. It is the second element of the test propounded by Arnold J that is of importance in this case. It is, however, of some importance that the third test really should be considered prior to the second.
6. Arnold J went on (at page 308G) to deal with the task of the Tribunal. He said this:

"The tribunal also, it seems to us, became confused along the line between the two somewhat distinct tasks of investigating whether the conclusion of the employers was a reasonable conclusion on the basis of the material which they had before them and whether, in assembling that material, the employers had carried out the sort of investigation which a reasonable employer could have regarded as sufficient. At the end of the day, no doubt, the two things run close and parallel; but they are distinct."

7. The Tribunal made findings of fact in paragraph 2 of its decision:

"(a) The training system of the Respondents in relation to filling vehicles with oil had a weakness. Employees were not given any specific guidance about the volume of oil that vehicles took, nor about the dangers of overfilling. The training was limited as to how to read a dipstick.

(b) There were inadequacies in the arrangements for filling vehicles with oil: in particular at night staff were required to undertake these procedure in a poorly lit area using a jug that was frequently dirty and which did not have clear markers on it.

(c) The Applicant had nearly 10 years of service at the time of his dismissal, during which he had had no formal warnings under the disciplinary procedure. He had been manifesting signs of stress and depression from at least March 1999 when he began getting in contact with the Samaritans and showing forgetfulness at home. He had a particularly bad week in the period running up to the incident and his mind was not on the job during that week.

(d) Although the Applicant knew he was not well he delayed visiting his GP until September when the pressure of the impending disciplinary process became intolerable. Before then his reason for not visiting the GP had been a fear of officialdom and concern he would lose his children if he reported his inability to cope.

(e) In the altercation that occurred on the evening of 25 August immediately before the overfilling incident, the Applicant used derogatory words about the vehicle he was being asked to take out and suggested that something was likely to be wrong with it. The Tribunal's conclusion is that there were persistent problems of maintenance and reliability with vehicles and at the depot comments of that nature were normal and natural in the working environment and not sinister. There were not therefore good grounds for attaching great significance to the derogatory words in interpreting the subsequent overfilling event.

(f) The Applicant did significantly overfill the vehicle and the Tribunal accepted the evidence of management as to the extent of overfilling that they discovered. However the Tribunal concluded that the overfilling was accidental. They accepted the Applicant's evidence that his mind was not on the job, that he did not mean to overfill the vehicle, that the overfilling was not deliberate. The Tribunal also found that the Applicant had no concrete knowledge of the capacity of the vehicle tank or of the jug and he had no awareness of the potential damage that could occur to the vehicle from overfilling.

(g) The Tribunal found that the vehicle was seriously damaged: a hole was blown in the sump. However that occurred on the employer's premises so that there was no danger to the public from the incident in fact.

(h) The Tribunal concluded that the Respondents carried through their disciplinary procedures properly in investigating the incident and taking it to a hearing. They found that the decision to dismiss was based on two things: the Applicant's behaviour prior to the accident which was found to have been unacceptable and, in the light of that, a conclusion that the overfilling of the vehicle was deliberate with a view to putting it out of service. The Tribunal put weight on the fact that by the time the Respondents' Counsel made his submissions at the end of the hearing on liability he had retreated and stopped short of putting the Respondents' case as one of deliberate dereliction of duty by the Applicant.

(i) The Tribunal found that when the Applicant appealed, there was careful and thorough further investigation of the factual evidence, the engineering case and of the medical background, but that the conclusion was that none of the extra evidence justified interfering with the original decision. In particular the conclusion was drawn that the health problems occurred after the relevant incident on 25 August 1999 because the GP was not consulted until 16 September 1999."

8. It is noteworthy that those sub-paragraphs are said to be findings of fact. In part they are findings of primary fact, but there are also conclusions of secondary fact based upon the findings of fact made by the Tribunal. For example, in paragraph (f) the Tribunal concluded that "the overfilling was accidental". That was a conclusion of secondary fact, drawn by the Tribunal upon the primary facts set out in paragraph 7.
9. Although there was no explicit finding that the Post Office did believe that Mr Burkett had deliberately overfilled the vehicle to avoid having to take it out, that was implicit from the conclusions reached. Further, the Employment Tribunal held that the incident had been properly investigated and that when Mr Burkett appealed there was careful and thorough further investigation of the factual evidence. That is clear from paragraph 2(h) and from paragraph 6 of the decision. There it is stated:

"They [the Tribunal] were satisfied that as much investigation as was reasonable in all the circumstances was carried out."

Thus the first and third elements referred to in British Home Stores v Burchell were satisfied. The only issue before the Employment Tribunal was whether the employer, the Post Office, had in its mind reasonable grounds upon which to sustain that belief. As to that the Tribunal concluded:

"7. The Tribunal's concerns centred on the employer's belief in the misconduct relied upon in dismissing and the grounds for that belief. The Tribunal concluded that the Respondents' thinking was dominated by their concerns about the potentially serious health and safety consequences of an overfilled vehicle going out on the public road, exploding and causing damage. With this health and safety concern dominating their thinking, the management concluded that there had been a deliberate overfilling, and very specifically dismissed on the basis of this deliberate overfilling, when there was not evidence to support that conclusion of deliberateness. This was evidenced by the fact that in closing submissions before the Tribunal deliberate overfilling was not the Respondents' case. ...

9. Taking all those factors into account and applying the Burchell test, the Tribunal's unanimous conclusion was that the Respondents did not have reasonable grounds on which to sustain a belief that the Applicant deliberately overfilled his vehicle, the reason they relied on in deciding to dismiss. Therefore, applying section 98(4) of the Act, the decision to dismiss was not reasonable in all the circumstances and there was an unfair dismissal."

10. In essence the Tribunal's reasoning was that there was no evidence to support the conclusion that Mr Burkett had deliberately overfilled the vehicle. They specifically referred to the altercation on 25th August and considered that it was a normal incident in the particular environment and therefore could not have been relied upon as evidence of deliberate overfilling. They also had in mind the evidence of Mr Burkett's health. It was against that background that they unanimously concluded that the Post Office did not have reasonable grounds upon which to sustain their belief that Mr Burkett had deliberately overfilled the vehicle.

The Employment Appeal Tribunal decision

11. The main thrust of the appellant's submission before the EAT was that the Employment Tribunal had erroneously substituted their view for that of the employer when it concluded that the overfilling was accidental rather than deliberate. However the conclusion reached by the Post Office was as a consequence of a fair and reasonable process and was one of the two permissible options available to the Post Office in the circumstances. It was therefore not open to the Employment Tribunal to consider that conclusion as unreasonable merely because they would have opted for the alternative approach.
12. The Employment Appeal Tribunal expressed their view as to the issue at paragraph 13 in this way:

"13. So far as the submission as to substitution is concerned, the issue for this Tribunal is whether we can be satisfied that in expressing the view which the Tribunal did in the words:

'there was not evidence to support that conclusion of deliberateness'

The Tribunal was making its own assessment of the evidence as opposed to examining the appropriateness of the conclusion which the employers had reached from the standpoint of a reasonable employer."

13. The Employment Appeal Tribunal concluded that although the decision of the Employment Tribunal could have been expressed more clearly, the Tribunal had not evaluated the evidence for itself, but it had considered the question that it had proposed in paragraph 3 of its decision, namely whether the employer had reasonable grounds upon which to sustain the belief. It concluded that in those circumstances the approach had been right and dismissed the appeal.
14. Mr Winston Hunter QC, who appeared on behalf of the Post Office in this court, submitted that the Tribunal had asked itself the wrong question. If it had asked itself the right question, it could only have concluded that there was evidence upon which the appellant could have reasonably formed the belief that there had been deliberate overfilling. That was clear as the Tribunal had found that the Post Office had conducted proper investigations with the result that it was an irresistible inference, or an inference, that it had reasonably informed itself of the facts. Second, the Tribunal had also concluded that the Post Office genuinely and honestly held the view that Mr Burkett had acted deliberately, and had identified the evidence that had formed the basis of the Post Office's view. He submitted that if the Tribunal had applied the correct test, it could only have concluded that there was material upon which the appellant could have reasonably reached the conclusion which it honestly held. Any other conclusion would have been wrong.
15. Mr Hunter drew to our attention the matters that came before the employer after investigation. In particular the evidence was that the sump of the vehicle contained about 18 or 19 litres of oil after the incident. Thus allowing for leakage it was apparent that Mr Burkett had added about 18 or 19 litres of oil. If, as he said he had, he had re-dipped after filling, the oil level would have been 2½ inches (6.25cms) too high. Mr Hunter also referred us to the witness statements of Mr Donnellan and Mr Coleman. Mr Donnellan carried out the investigation which was held to be proper and appropriate. He said in paragraph 12 of his witness statement that he had asked Mr Burkett two questions, namely:

"How many plastic cans of oil did Mr Burkett put into the vehicle? He replied he was unsure but it could have been between 1.5 and 2.5 cans; and

Could he recall what was showing on the dipstick after filling the engine with oil? Mr Burkett said he was unsure but maybe it was half an inch over the full."

16. In paragraph 17 of his witness statement Mr Donnellan explained how he had made a number of enquiries, including discussing aspects of the case with the person who had investigated the accident, who confirmed that a hole had been blown in the engine as result of the engine being overfilled. The entry in the relevant document was "overfilled with oil by driver - engine blown".
17. In paragraph 18 Mr Donnellan explained that he arranged for the workshop manager to fill up the vehicle with 19 litres of oil. The purpose of this was to see what the reading would be on the dipstick.
18. In paragraph 19 Mr Donnellan explained that during the course of the disciplinary interview Mr Burkett claimed that the dipstick had been half an inch over, after he had filled the engine up with oil. However, the tests carried out showed that with 19 litres of oil in this engine the dipstick reading would have been 2½ inches over the top level mark. He said that it was important to note that on the day the engine blew up there was more than 19 litres of oil in the engine, and that figure was the figure for the oil that had been drained out of the engine.
19. He said in paragraph 21 of his witness statement that he had a telephone conversation with the Training Manager, who confirmed to him that when employees received training on security vehicles (which included the vehicle in question) they would have covered such matters as checking the oil, water and tyres.
20. Mr Hunter emphasised that the Employment Tribunal had come to the conclusion that they did without reference to the facts and without an analysis of the factual basis before the employer. In those circumstances, he submitted, the Employment Tribunal could not have decided whether the employer's decision was a reasonable response. It had reviewed the case and substituted its view for that of the employer and that had been done upon an incomplete consideration of the facts.
21. Miss Susan Doris, on behalf of Mr Burkett, submitted that the issues of whether there was a reasonable investigation and whether there was reasonable grounds for belief were separate and discrete. In doing so she relied upon the extract from Burchell which I have read. The question of whether the employer had reasonable grounds was not to be decided upon the view as to whether the decision was perverse. It was necessary to consider whether Mr Burkett had done it deliberately "at least more likely than not". She submitted that the Employment Tribunal and the Employment Appeal Tribunal had correctly addressed the only issue in the case which was whether the Post Office had reasonable grounds for sustaining the belief which they genuinely held. That was an issue which was open to the Tribunal to decide and there was good grounds for the conclusion that they reached, both upon fact and upon conclusion. As to the absence of any mention of the amount of the overfilling, that she submitted must have been in the Employment Tribunal's mind when they held, in paragraph 2(f), that the applicant had significantly overfilled the vehicle. The conclusion reached was, she submitted, correct.
22. In my view the crux of the conclusion of the Employment Tribunal was stated in paragraphs 7 and 9 of the decision. For convenience I set them out again:

"the management concluded that there had been a deliberate overfilling, and very specifically dismissed on the basis of this deliberate overfilling, when there was not evidence to support that conclusion of deliberateness."

23. Taking all those factors into account and applying the Burchell test, the Tribunal's unanimous conclusion was that the respondents did not have reasonable grounds on which to sustain a belief that the applicant deliberately overfilled his vehicle, the reason they relied on in deciding to dismiss. That was based on a finding of fact that there was no evidence to support the conclusion of deliberateness.
24. I accept for the purposes of the appeal that the conclusion reached in paragraph 7 of the Employment Tribunal's decision was directed to the evidence before the Employment Tribunal. However if the conclusion was right, that there was no evidence to support that conclusion, then it would seem that the decision to dismiss could not be fair.
25. In my view the conclusion of fact to which the Employment Tribunal came was not a conclusion open to the Employment Tribunal without considering all the facts that were before the employer. The findings of fact made by the Employment Tribunal indicate the facts on which they appear to have relied. I cannot read into the words "significantly overfilled" the facts which I have set out above, namely that 19 litres at least were added, and that the dipstick would have shown 2½ inches of overfill. In my view the findings of fact made by the Employment Tribunal contained glaring omissions. The facts to which I have referred were material and needed to be taken into account.
26. The Employment Tribunal also failed to give sufficient weight to its conclusion that the investigations by the employer were careful and proper. That being so, I would have expected the Employment Tribunal to have concentrated on the factual position before the employer when considering whether there were reasonable grounds on which the employer could sustain the belief that Mr Burkett had deliberately overfilled the vehicle. It is implicit upon the fact that the investigations were proper and careful that the facts before the employer were appropriate for the employer to consider. It followed that the crucial question was whether the employer's response to those facts was acceptable.
27. The approach of the Employment Tribunal was incorrect, in that they concentrated upon the facts as they found them, not upon the facts that were before the employer. The result is that this appeal should be allowed.
28. However, Mr Hunter went on and submitted that if the appeal should succeed, this court should hold that the employer had reasonable grounds and therefore should dismiss the application. I was tempted by his submissions, but I am conscious that this court has not been provided with all the evidence as to what was thrown up by the investigations. I have therefore concluded that this court should adopt the cautious approach and remit the case back to another Employment Tribunal.
29. I therefore would allow the appeal and remit the case back to the Employment Tribunal.
30. LORD JUSTICE SEDLEY: I agree that the Employment Tribunal did not adequately answer the question which it correctly posed for itself, namely whether the employer had acted reasonably in concluding that the employee had deliberately overfilled the vehicle with oil in order to damage it. It could do this only by addressing the employer's own findings and by explaining why, if it were the case, they did not lie within the range of reasonable assessments of the evidence open to the employer. All this must be done, moreover, by section 98(4)(b) of the statute, "in accordance with equity and the substantial merits of the case".
31. I readily accept that the Employment Tribunal was entitled to form and to set out its own findings of fact about the index event, but only in order to test whether the employer's findings, so far as they differed, were nevertheless tenable. They did the first, but not the second of these things.
32. I am unable to accept Miss Doris' submission that their reasons nevertheless contain enough relevant indicators to sustain their conclusion. It is no good to set out the Burchell tests unless it is apparent from the face of the reasons that these have been properly applied. But I do not accept the submission of Mr Hunter QC that the only answer to which the Employment Tribunal could properly have come was that the dismissal was fair. For the very reasons for which he is right on the main point, there are unresolved issues to which the answer is not yet clear. When attention is paid, as it must be, to the guidelines set out not only in British Home Stores v Burchell [1980] ICR 303, but in Iceland Frozen Foods v Jones [1983] ICR 17, at 24-25 (see Foley v Post Office [2000] ICR 1283 at 1287), it is not impossible that an Employment Tribunal could find that, because of overreaction to what was found by the Post Office's own investigation, it was not reasonable, or not fair, to conclude that Mr Burkett had deliberately overfilled the vehicle with oil in order to damage it and so earned summary dismissal.
33. I therefore agree with the proposed order for remission which my Lord, Lord Justice Aldous, proposes. The hearing, as I understand it, will have to be a hearing de novo.
34. LORD JUSTICE RIX: I agree with both judgments.
35. This is an appeal from the EAT about unfair dismissal and unfair dismissal is a matter about fair process. It is only in that context that the Employment Tribunal investigates the facts of the case. What such a Tribunal is primarily concerned with, pursuant to its duty under section 98(4) of the Employment Rights Act 1986, is whether the employer has acted fairly, pursuant to a reasonable and proper investigation which has led him to a reasonably grounded and honest belief. In expressing the matter in that way I am not intending to restate the law, but only to gloss the well-known passage in British Home Stores v Burchell to which my Lord, Lord Justice Aldous, has already referred. That passage has been repeatedly approved and applied in this court, most recently in Foley v Post Office [2000] ICR 1283 and Sainsbury's Supermarkets Ltd v Hitt [2002] EWCA Civ 1588.
36. In my judgment, it is impossible to read the extended reasons of the Employment Tribunal without forming the view that, despite the acknowledgement there of Foley v Post Office -- albeit the Tribunal said that a full report was not yet available to them of that case -- and despite reminding themselves of their obligation not to substitute their own decision for that of the employers, that is precisely what they proceeded to do, or indeed in effect had already done even before reaching the applicable law under paragraph 3 of their extended reasons. Thus already in paragraph 2 headed "Findings of Fact", the Tribunal had begun, for instance in sub-paragraph (a), by making a finding that the training system of the employers had been inadequate. In making that finding they do not make it clear whether they were basing themselves upon new evidence before the Tribunal or upon evidence relating to the employers' own investigation: but from what we have been shown of the material and evidence relating to that investigation, the finding would appear to be inconsistent with that evidence.
37. When one reaches sub-paragraph (f) of paragraph 2, to which my Lord has already made mention, one finds there, despite the acceptance of the fact of the significant overfilling of the vehicle with oil, that the Tribunal have made up their own minds on the critical question of whether that overfilling was accidental or deliberate, and have done so without a full consideration of the material before the employers. This was despite the fact that in paragraph 6 they made it clear that there was no criticism of the investigation process, a matter which they gave further detail on in sub-paragraph 2(i).
38. Turning to their conclusions on liability and their reasons for their decision, they state in paragraph 7 that "there was not evidence to support the conclusion of deliberateness". In that conclusion they were accepting the submission of the applicant, recited in paragraph 4, exactly to that effect. Although in paragraph 9 they put the matter in terms of the employers not having reasonable grounds upon which to sustain their belief in the applicant's deliberate conduct, that is of course consistent with, and would have to follow from, a finding of no evidence at all.
39. Similarly, in paragraph 8 they find, again it would appear from the material before this court that that was a finding made upon new evidence in the course of the hearing before them, rather than a finding deriving from the employers' own investigations, that the applicant's language, which the employers in effect said amounted to an implied threat, immediately before the act of overfilling, was simply a normal incident in an environment where colourful language was common.
40. Against this background, it is highly significant that it is only in paragraph 10 of their reasons, after deciding the critical question of the deliberateness or otherwise of Mr Burkett's conduct and in the context of the subsequent question of contribution, that the Tribunal mention for the first time that Mr Burkett had tested the level of the oil after filling and before leaving the depot, and had therefore driven off the vehicle "knowing it had been overfilled": even though that was a critical factor which should have been considered as part of any conclusion on liability.
41. In the light of these examples, it is clear to my mind that the Employment Tribunal in this case did substitute their own decision on the question of Mr Burkett's responsibility for the overfilling of the vehicle's engine with oil on the basis of new evidence as it appeared to them, whereas what they should have done was address the matter through the lens of the investigation and beliefs of the employers, applying the Burchell test.
42. It is also to my mind impossible for the Tribunal to say that there was no evidence on which a belief of deliberate conduct could be founded. That is hardly consistent with (a) material which could be regarded as an implied threat before the filling the vehicle, (b) overfilling with oil by 2½ inches as measured on the dipstick and (c) driving off in the knowledge that that was the case. In any event, the conclusion that there was no evidence on which the employers could reasonably have concluded that Mr Burkett's conduct was deliberate is not one which could be reached without, as my Lords have said, a careful consideration of the material which was before the employers, following what was accepted to be an investigation process about which no criticism could be made. Whether that evidence could reasonably ground a belief in deliberate conduct will ultimately be for a new Tribunal to decide.
43. In conclusion, I agree that this appeal should be allowed and the matter remitted de novo to a new tribunal.

ORDER: Appeal allowed and the case remitted back to a different Employment Tribunal; the respondent should pay the appellant's costs in the sum of £5,000 inclusive of VAT; permission to appeal to the House of Lords refused.

(Order not part of approved judgment)