Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

CASE REF: 1564/07

CLAIMANT: Noel McCann

RESPONDENT: Corus UK Limited

DECISION

The unanimous decision of the tribunal is that the claimant was not unfairly dismissed. His claim must therefore be dismissed in its entirety.

Constitution of Tribunal:

Chairman: Mr T Browne

Members: Mr Waite

Mr Welsh

Appearances:

The claimant was represented by Mr C Hamill, Barrister-at-Law, instructed by M M Kelly, Solicitors.

The respondent was represented by Mr D Jones, Solicitor.

Findings of Fact

In coming to its conclusions on the findings of fact, the tribunal has had regard to the written and oral evidence before it.

1. The claimant was employed by the respondent as Director Ireland within its Distribution and Building Systems Division, a position to which he had been appointed by the respondent, commencing in September 2006. He had initially commenced employment with the respondent in July 2003, then working in the respondent's Distribution and Building Systems Division (D&BS) as General Manager Strip Products Ireland. The respondent's D&BS Division was far and away the largest steel distributor in Ireland, and employed 136 people at a number of sites throughout the island of Ireland.
2. In his new role as Director Ireland the claimant's job in the terms of the initial job description, was "to lead and direct the sub-group", namely the D&BS arm of the respondent's business in Ireland, as a "stand-alone business". The claimant sought to establish at the tribunal hearing that his role as Director Ireland was very much a subordinate one, given the size of the respondent's international business. The tribunal found as a fact that, whilst he had to obtain the authority of more senior management figures outside the island of Ireland in certain key decisions, there was nobody within the island of Ireland who was senior to him. The tribunal found that he exercised a very high degree of autonomy regarding the day-to-day operation of the respondent's business in Ireland. The tribunal found that the claimant was subject to constraints on his ability to move outside the respondent's clearly defined rules on matters such as buying stock from outside the respondent's business, most notably in the plan put forward by the claimant as to the closure of one of the respondent's businesses in Cork.
3. The tribunal however accepted the evidence of Mr Theo Henrar, the claimant's immediate superior in the clearly defined management structure published by the respondent, that the claimant enjoyed a considerable degree of autonomy in the day-to-day running of the respondent's business within the island of Ireland. The tribunal found from the evidence that it was only if the claimant wanted to change anything of substance that he would need Mr Henrar's authority, but that the great majority of decisions would be taken by the claimant acting alone. The tribunal found that when it did come to matters of substance which had to be put to Mr Henrar, Mr Henrar was largely content to follow the advice of the claimant, upon whose judgment he greatly relied.
4. Whilst Mr Henrar would often robustly question the claimant as to his proposals, either in day-to-day business decisions or regarding the overall future strategy of the business, there was no evidence that he had ever overruled him or that he ultimately disagreed with his analysis of the way forward. Whilst the tribunal found that such reliance by Mr Henrar on the claimant's judgement reflected well on the claimant's abilities, it also underlined in the tribunal's opinion the high degree of trust and confidence placed on the claimant by the respondent, who was dealing on their behalf with a part of its business with a turnover of excess of one hundred million pounds per annum.
5. The claimant sought to put this in the context that, when compared with the respondent's overall turnover of some three billion pounds per annum, the business for which he was responsible was only three percent of the total turnover. The tribunal was of the view however that the claimant occupied a position which, whilst lower down the management chain of command, was, by his own concession, within the top three percent of the respondent's employees. The decisions he took on a day-to-day basis, and the very high degree of influence that he had, particularly regarding his accepted plan for the closure of the Cork plant, had huge implications for the profit margins of the respondent, and for the daily lives of those employed by the respondent.
6. In mid May 2007, it was brought to the attention of the respondent that the claimant in September 2005 had entered into a voluntary agreement with the Department of Enterprise, Trade and Investment to accept a disqualification undertaking for six years in respect of his conduct as a Director of a company. He was one of three such Directors of that Company to enter into such a disqualification agreement. One had been disqualified for eleven years, and the other had been disqualified for two years. Such disqualification agreement can be made within the Department to avoid a full hearing of the matter before a court. As a consequence of the claimant making a voluntary agreement to be disqualified, the Department, in its published announcement at the time, whilst considering the conduct to be of a serious nature, took into account what was described as the responsible attitude taken by the claimant in his willingness to enter the undertaking, in setting the period of disqualification of six years. The legislation governing such behaviour is the Company Directors Disqualification (Northern Ireland) Order 2002, which stipulates that where a Director is found to be unfit he must be disqualified for a minimum period of two years, up to a maximum of 15 years.

There appeared to the tribunal to be three bands of seriousness, ranging from disqualification for two to five years where cases (whilst disqualification was mandatory) were less serious; for more serious cases, the appropriate range is six to 10 years' disqualification, while the most serious unfit conduct attracts disqualification for more than 10 years. The tribunal found therefore that, using those bands of disqualification as an estimate, the claimant's conduct would appear to have been viewed by the DETI as falling within the lower range of the middle band of seriousness, but bearing in mind that the six years' disqualification was a mitigated period because the claimant had agreed to be disqualified. The news release issued by the Department of Enterprise Trade and Industry in November of 2005 is not conclusive proof of the actual conduct of the claimant. However, it was not disputed by the claimant at the time of publication or to the tribunal. In that news release, whilst by far the most serious conduct would appear to have been the behaviour of one of his co-directors, the type of conduct admitted by the claimant for those purposes relating to the failure of this business included: causing and permitting funding of the business by non-payment of debts properly payable as PAYE and National Insurance, and causing or permitting misuse of a bank account during which more than £27,000 of cheques were dishonoured. The stated aim of the Department is to bring disqualification proceedings against those Directors of failed companies who have abused the privilege of limited liability status through negligence, incompetence or lack of commercial probity.

7. At no stage during his employment from 2003 had the claimant revealed to the respondent that he had ever been a Director in this failed business, nor that he was under investigation by the DETI, and particularly that he had entered into a voluntary period of disqualification. This information only came to the respondent's attention when one of its employees noticed it on a website. When the claimant was tasked by the respondent with this newly discovered information, he stated that he had in fact mentioned the matter to at least two other members of management, but notably to Mr Stephen Norbury. When this was investigated, Mr Norbury e-mailed the Director of Human Resources for the respondent, confirming that the claimant had stated that he might not be able to take over from Mr George Lucas on the boards of a number of Irish companies due to his current and previous Directorships and that he would check and find out and come back to him, but he did not raise the matter again with Mr Norbury. Mr Norbury's e-mail clearly states that the claimant made no mention of the fact the he was disqualified from holding Directorships. Mr Norbury's recollection in that could not be tested at the tribunal because he did not give evidence, but it is substantially confirmed by the minute of the disciplinary hearing, in which the claimant told Mr Norbury that he would check, but the issue never arose again, thereby leading to the tribunal's conclusion that, even if he did check, he did not raise the matter again with Mr Norbury or indeed with anyone else.
8. Once it became known to the respondent about the claimant's disqualification, in or around 14 May 2007, Mr Henrar took immediate steps to clarify the respondent's situation and liabilities in law as well as those of the claimant, by seeking, through the respondent's Legal Department the advice of an experienced Employment Law Counsel. His initial advices were that the claimant was acting in breach of the undertaking that he had entered into with the DETI, and that consequently he and the respondent were potentially criminally liable. The tribunal is satisfied that the respondent was genuinely alarmed at the prospect of prosecution for permitting the claimant to continue working in what the respondent genuinely believed to be a breach of the law. The tribunal is further satisfied that Mr Henrar was shocked and disappointed that the claimant had concealed this information from him and from the respondent.
9. The tribunal is satisfied from the speed with which disciplinary proceedings were arranged and from the tenor of internal correspondence that the claimant was in deep trouble before the disciplinary proceedings even commenced. The tribunal is also satisfied that Mr Henrar's personal view of the claimant's conduct played a major part in his approach to those proceedings. It is also the view of the tribunal that Mr Henrar's feeling of the betrayal of trust and confidence between the respondent and the claimant accurately echoed those of the respondent's management.
10. It is clear from the evidence relating to what occurred at the disciplinary hearing that Mr Henrar let the claimant know very clearly that not only did he regard him as having been in breach of the law but that he also took an extremely dim view of the claimant's failure to inform either him or anybody else in the respondent's organisation. Mr Henrar clearly was shocked and disappointed and was quite open to the tribunal that he viewed the disciplinary hearing primarily as an opportunity for the claimant to establish, to Mr Henrar's satisfaction, that either he was not disqualified or that there was some misunderstanding about this entire episode. It was clear to the tribunal that these allegations genuinely shook the positive views of the claimant held by Mr Henrar to their very foundations, not least because of the disparity between the allegations and the claimant's proud boast at interview to Mr Henrar that he had in his previous business "made shed loads of money". Mr Henrar's view after the revelation of the claimant's disqualification was that for him to have been disqualified for six years in the terms of the DETI notice of November 2005 demonstrated dishonourable conduct by the claimant towards the investors in that earlier business, and towards the respondent in failing to reveal the disqualification.
11. It was therefore against the background of Mr Henrar's distaste for this alleged conduct that the disciplinary hearing took place. Broadly speaking, the claimant's attitude at the disciplinary hearing was that, on the legal basis, the respondent was worrying unnecessarily about the legal implications and that, in relation to the alleged breach of trust and confidence about failing to inform the respondent, the fact of his disqualification was in the public domain and that there was therefore no obligation on him specifically to draw it to the respondent's attention. The claimant's assertion regarding the legal implications was stated by him to be based upon legal advice which he had sought while his negotiations with the DETI were ongoing. The text of that legal advice was not produced at the tribunal, nor was it provided to the respondent either before or at the disciplinary hearing. Mr Henrar therefore decided to rely on the advice which he had been given from the respondent's own Legal Department, which in itself had included and was largely based upon the advice of counsel. It should be noted at this stage that it is not for this tribunal to determine the legal issues arising from the claimant's disqualification, and it must also be borne in mind that Mr Henrar has no legal qualifications. It also is worthy of note that at no stage does the claimant appear to have given any consideration to the possibility that his legal advice might have been incorrect, nor to the potential damage to the respondent if his own legal advisers had informed him that his actions were in fact unlawful.
12. The decision the tribunal must make is whether it was reasonable for the respondent to rely upon the advice which it had received.
13. Mr Henrar was satisfied that the initial allegation as to the claimant's disqualification and its potential legal limitations where well founded. It is clear both from his evidence to the tribunal and from the note of the disciplinary hearing that he made no attempt to conceal his revulsion at the claimant's behaviour and attitude. He made his views abundantly clear to the claimant at the disciplinary hearing. By exposing the respondent to potential prosecution and to adverse comment within the business community, Mr Henrar felt that the claimant had irretrievably damaged the relationship between the respondent and the claimant. He then immediately informed the claimant that he was to be dismissed.
14. The claimant availed of the appeal procedure and his appeal was dealt with by Mr Scott MacDonald on 3 July 2007, by which stage the claimant was in receipt of the written advice of his own senior counsel. That document had arrived with the claimant's solicitor on the day of the disciplinary hearing, but did not become available to the claimant until after the disciplinary hearing was over. It was put to Mr MacDonald at the tribunal hearing that this document had been made available to him during the course of the appeal hearing; Mr MacDonald had no recollection of the document ever being produced either to him or to Mr Cotterell. He agreed that, had he seen the document, it would have given him sufficient cause for thought not to continue with the hearing on that date but to seek further legal advice. It is clear to the tribunal from the contents of that document that, whilst no concluded view can be expressed by the tribunal as to which argument is correct, nor could Mr MacDonald be expected to reach such a conclusion. Mr MacDonald did concede at the tribunal hearing that he would not have made a decision on that day had he been aware of its contents.
15. The tribunal has concluded, on balance, that the document was handed in at the appeal hearing. On the one hand, the document was never produced to the respondent by way of disclosure, despite repeated requests for full disclosure, but was produced with a flourish at the tribunal hearing. The tribunal expressed its disapproval of this method of bringing it to Mr MacDonald's attention at the hearing, but cannot preclude the possibility that it might have been produced by the claimant at his appeal hearing to Mr Cotterell. In considering this, the tribunal notes that the correspondence was dated 22 May, in other words the day before the initial disciplinary hearing, and it seems to the tribunal at least possible that Mr Cotterell did not realise that that document had not been available to the original disciplinary hearing, mistakenly assuming from the date it bore that Mr Henrar had already seen it.

LAW AND CONCLUSIONS

16. The tribunal must determine whether the respondent has established the reason, or, if more than one, the principal reason for the dismissal, which must be a potentially fair reason, and, if so, whether the respondent acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the claimant. The tribunal is satisfied that the respondent has established that the reason for the dismissal in this case was for gross misconduct, conduct being a potentially fair reason for dismissal.
17. In determining the issue of reasonableness as to the selection by the respondent of dismissal as the appropriate sanction, in accordance with equity and the substantial merits of the case, the tribunal has had regard to the guidance afforded by the case of British Home Stores Ltd -v- Burchell [1980] ICR 303 which, broadly stated, is whether the employer genuinely held a reasonable belief as to the employee's guilt, that reasonable belief having been established after a reasonable enquiry. It is important to remember that employers cannot be expected to conduct either investigations or trials to the same standard required in the criminal courts. There must, however, be an acceptable standard of genuine enquiry as opposed to a rush to judgment.
18. In the present case, the tribunal considers that Mr Henrar was genuine when he stated that he would have adopted a completely different attitude to this incident had the claimant been able to show to him that he was not in fact the subject of disqualification. The tribunal is satisfied that Mr Henrar's hard-line approach was not merely his own view, but accurately reflected that of the respondent to conduct of this kind. The respondent was clearly genuinely alarmed by the legal advice which it had received from its own specialist Employment Law Section, copper-fastened by the advice which the respondent had sought from outside. It was this potential danger to the respondent which the tribunal is satisfied informed Mr Henrar's approach to the disciplinary hearing. The tribunal is also satisfied from the internal correspondence that this was viewed by the respondent, if established, as having only one probable outcome for the claimant, namely dismissal.
19. The tribunal finds such an approach to be similar to that of an employer who has a reasonable belief, for example, that an employee has been guilty of theft from that employer, which, as long as it is established to a reasonable degree, can justify summary dismissal. A similar situation applied to this case, where, having sought internal and external legal advice, the respondent satisfied itself that if the claimant was in fact disqualified, as alleged, he placed the respondent and himself in a potentially dangerous and damaging situation.
20. The tribunal found the claimant to be someone who is prepared to deceive even himself in order to justify his actions. This is exemplified in his original attempt to justify to the respondent, at the disciplinary hearing, his reasons for not informing the respondent of his disqualification, followed within a very short time at the appeal hearing with his concession that, in hindsight, he probably should have revealed the truth, culminating in his assertion to the tribunal that he stood by his original decision not to reveal the fact of his undertaking to the DETI. There may be an element of desperation in this attitude by the claimant, and the claimant may well believe that such is now his view. In the opinion of the tribunal the claimant has demonstrated the clear capacity to avoid or evade an inconvenient truth to suit his purposes. A further example of this is his assertion that he disclosed the information to the respondent, when the evidence clearly demonstrates that he only did so when he was confronted with it. Similarly, his assertion that the information was public and readily available demonstrates an attitude which seeks to deflect the blame away from himself and onto the respondent. The tribunal therefore finds that the respondent is entirely reasonable in viewing such a failure to disclose, regardless of the finer legal points, as extremely alarming as to his reliability and to his honesty.
21. The tribunal is of the view, however, that the respondent ought to have made some further enquiry as to the contents of the legal advice that the claimant had received himself, but the tribunal is satisfied that Mr MacDonald was probably unaware of the nature of that advice, perhaps, as stated above, because Mr Cotterell might mistakenly have believed that it had been available to the disciplinary hearing. More care should have been taken to finally resolve the positions of the parties, as opposed to reaching the definitive legal conclusion. This would have required only a short period of time, and whilst the tribunal accepts that the breakdown in communication at the appeal hearing was probably innocent on the part of the respondent, there was in the opinion of the tribunal a somewhat inappropriately shorthand procedure at the appeal hearing. The tribunal notes that the claimant did not avail of a second appeal, to which he was aware he was entitled, stating to the tribunal that he did not do so because he felt that his fate was already sealed. The answer to that will never be known, but again, the tribunal is satisfied that both Mr Henrar and Mr MacDonald genuinely relied on the legal advice that they had received, and that they both genuinely felt that the claimant had breached the trust of the respondent to the point where the relationship between them was irretrievably fractured. The question for the tribunal is whether they were reasonable in that belief and whether they were reasonable in reaching the conclusion that dismissal was the proper option.
22. There was, in the opinion of the tribunal, an appropriate and fundamentally fair procedure, which was in fact followed by the respondent in both the disciplinary hearing and in the appeal hearing. It is the opinion of the tribunal that the respondent genuinely held a sustainable and legitimate belief that the claimant was in breach of the law in carrying out the work that he was doing. The procedure whereby the respondent came to that conclusion is however, in the opinion of the tribunal, flawed. The tribunal is satisfied that the respondent was justified in viewing not only the potential legality of the claimant's behaviour but also his deceit in keeping it from the respondent as sufficient reason for dismissing him. Mr Henrar and Mr MacDonald, in the opinion of the tribunal, reasonably viewed the claimant's behaviour as being inconsistent with proper business ethics to the point where the respondent could justifiably state that it had lost all trust and confidence in him. The tribunal is also satisfied that such a view is not unique to either Mr Henrar or Mr MacDonald or to the respondent, but represents essential ingredients in a relationship between an employer and employee, and that breach of such was a reasonable ground for dismissal in this case.
23. As regards the defective procedure, the tribunal has applied the test in Article130A of the Employment Rights (Northern Ireland) Order 1996, and is satisfied that the respondent would still have dismissed the claimant even if that procedural defect had not occurred or had been remedied in time before the dismissal. It was highly unlikely, in the view of the tribunal, that there would have been any meeting of minds between the respective legal advisers, certainly in the absence of formal legal proceedings between them. Any adjournment for further legal advice therefore would more than likely have been just for the sake of completeness, but the poisonous atmosphere of mistrust of the claimant by the respondent would have remained.
24. It therefore is the view of the tribunal that the respondent would have continued to view the employment of the claimant as being inappropriate, and the tribunal has concluded that the respondent would have been wholly justified in taking that view. The claimant had demonstrated a clear capacity to the respondent for deception and overwhelming self-regard, without any apparent insight into the potential damage to the respondent. The tribunal therefore regards it as inevitable that the respondent would have dismissed the claimant.
25. The tribunal therefore concludes, the procedural defect notwithstanding, that the claimant was fairly dismissed and his claim must therefore fail in its entirety.

Chairman:

Date and place of hearing: 11 and 24 - 25 January 2008, Belfast.

Date decision recorded in register and issued to parties: