Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Salamis (Marine & Industrial) Ltd v. Forbes [2005] ScotCS CSIH_57 (14 July 2005)
URL: http://www.bailii.org/scot/cases/ScotCS/2005/CSIH_57.html
Cite as: [2005] ScotCS CSIH_57, [2005] CSIH 57

[New search] [Help]

Salamis (Marine & Industrial) Ltd v. Forbes [2005] ScotCS CSIH_57 (14 July 2005)

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Hamilton

Lord Reed

Lord Marnoch

[2005CSIH57]

XA54/04

OPINION OF THE COURT

delivered by LORD HAMILTON

APPEAL

under Section 37(1) of the Employment Tribunals Act 1996

SALAMIS (MARINE & INDUSTRIAL) LIMITED

Appellant;

against

DOUGLAS FORBES

Respondent:

_______

Act: Truscott, Q.C.; Simpson & Marwick (Appellant)

Alt: Napier, Q.C.; Lefevre Litigation (Respondent)

14 July 2005

[1] In April 1989 the respondent ("Mr. Forbes") commenced employment with the appellant ("Salamis") as an architectural project engineer. Thereafter he was promoted and further promoted. From 2001 he held the position of Manager Architectural/Electrical Services. The year 2001 proved to be a good one for Salamis and Mr. Forbes's department exceeded its target. However, by the end of that year Mr. Forbes was, as he described his condition, "stressed, tired and exhausted" - essentially as a result of lack of staff in his department. For some time he had been complaining to his employer about the shortage of staff. In the event Salamis engaged a joiner, whom Mr. Forbes regarded as not having the required skills, and then, without consulting Mr. Forbes, appointed a person, Stephen Walker, to a position senior to the respondent in the department. That appointment took effect from 11 March 2002. On 15 March 2002 Mr. Forbes was signed off with "work related stress". He subsequently resigned.

[2] The employment tribunal, to which Mr. Forbes later presented a claim that he had been unfairly dismissed, held (by a majority) that Salamis had conducted itself in a manner which destroyed the relationship of trust and confidence between it and Mr. Forbes and that Salamis was accordingly in fundamental breach of the contract of employment. That conclusion proceeded on the view that, although Mr. Forbes had in practical terms been responsible for the day to day operations of the department, Salamis had failed to seek and consider his opinion on matters related to the department, had engaged Mr. Walker (who had previously been considered for appointment to a position subordinate to Mr. Forbes) as head of the department in place of Mr. Forbes, had restricted Mr. Forbes's responsibilities and had done all these things without meaningful warning or consultation with Mr. Forbes. In these circumstances, the employment tribunal held, Mr. Forbes became entitled to terminate his contract of employment without notice by reason of Salamis's conduct. That conclusion is no longer in dispute.

[3] However, Mr. Forbes did not take immediate steps to bring the contract of employment to an end. Ultimately, on 27 August 2002, he wrote to Salamis intimating his resignation, confirming that position by letter of 12 September. He finally left Salamis's employment on 22 November 2002.

[4] A prerequisite to his claim was the need to demonstrate that he had been dismissed by Salamis. In the circumstances that required demonstration that section 95(1)(c) of the Employment Rights Act 1996 was satisfied. An issue arose as to whether, prior to intimation of his resignation, Mr. Forbes had "affirmed" the contract of employment, that is, had acted in such a way as to have departed from his right to terminate it by reason of his employer's conduct. The employment tribunal (by a different majority, which considered the issue to be "narrowly balanced") held that he had affirmed the contract. It accordingly held that he had not been constructively dismissed under section 95(1)(c) and that his application fell to be dismissed.

[5] Against that disposal Mr. Forbes appealed to the Employment Appeal Tribunal. Before it Salamis accepted that it had so breached the contract as to entitle Mr. Forbes to terminate it but insisted that the employment tribunal had, on the material before it, been entitled to hold that Mr. Forbes had affirmed the contract. The Employment Appeal Tribunal reversed the decision of the employment tribunal on the matter of affirmation, held that Mr. Forbes had been constructively dismissed and remitted to the employment tribunal to consider the question of remedy. Against that disposal Salamis has appealed to this court.

[6] The Employment Appeal Tribunal, having noted that the position of Mr. Forbes, as represented by his solicitor, was that the majority decision on the matter of affirmation was perverse and that the minority view was to be preferred, stated at paragraph 7:

"We do not consider this case raises any great question of law but we are concerned as to the conclusions drawn by the majority in the context of the evidence".

The Employment Appeal Tribunal then continued:

"8. It is abundantly clear that the appointment of Mr. Walker, which was admitted to have been a breach of contract as far as the appellant was concerned, was humiliating, and, in the process, offensive to the appellant, obviously triggering his illness which caused him to go off work. We do not consider that the drawing of sick pay over the relevant period which, in fact, exceeded his actual right, indicates affirmation but rather is neutral. We further do not consider under the letters to which we have made reference, that the various meetings that took place reflected affirmation by the appellant. The proper construction to put upon them is a negotiating position being adopted by the Company, who obviously wanted to keep the appellant, against his position of dissatisfaction and non-acceptance of the situation. It is highly significant to our mind, notwithstanding it was after the date of his resignation letter that the appellant offered to return to work once he discovered that Walker had left the Company. This seems to us to confirm as a matter of fact that in the mind of the appellant he was not accepting the situation once Walker had been appointed and never would.

9. In these circumstances, we have come quite clearly to the view that the decision of the Tribunal was in fact perverse in the sense that the conclusion of the majority is one which no Tribunal properly instructed could reasonably have reached upon the evidence. We recognise that at the time of the breach of contract or shortly thereafter, the appellant did not indicate that he was working under protest but we do not consider that the uncontrovertible evidence indicates that the appellant was behaving in a way inconsistent with an intention to treat the contract at an end. As we have indicated the taking of sick pay is neutral and the subsequent meetings that took place prior to the resignation were properly to be regarded as negotiations rather than affirmation. We therefore consider that all the evidence points one way, namely, to the fact that, at no time prior to his resignation, did the appellant act in such a way as to suggest that he was affirming the contract and was prepared to work with Mr. Walker.

10. For these reasons, which are purely determined on the issue of fact, and not under reference to authority, although some was given to us, we are of the view that this appeal must succeed ... ".

The letters referred to in paragraph 8 had been earlier mentioned in paragraph 4 where, after a brief summary of the history, including the circumstance that Mr. Forbes had gone off with a stress related illness which lasted for some time, the Employment Appeal Tribunal continued:

"Thereafter, upon the findings of the Tribunal, various discussions took place which are reflected in letters Nos. 92 and 107 of the bundle".

[7] The jurisdiction of the Employment Appeal Tribunal in an appeal to it from an employment tribunal is restricted to questions of law (Employment Tribunals Act 1996, section 21(1)). In Melon v. Hector Powe Limited 1980 S.C. 188 Lord President Emslie (with whom the other members of the court concurred) observed at page 198:

"The law is clear that where it cannot be shown that the tribunal of original jurisdiction has either misdirected itself in law, entertained the wrong issue, or proceeded upon a misapprehension or misconstruction of the evidence, or taken into account matters which were irrelevant to its decision, or has reached a decision so extravagant that no reasonable tribunal properly directing itself on the law could have arrived at, then its decision is not open to successful attack".

The last of these bases of legitimate challenge has sometimes been referred to as "perversity". The decision of this court was affirmed on appeal to the House of Lords (1980 S.C. (H.L.) 1). Lord Fraser of Tullybelton, delivering the leading speech, at pages 6-7 expressed himself in similar terms to the Lord President, and added:

"The fact that the appellate tribunal would have reached a different conclusion on the facts is not a sufficient ground for allowing an appeal".

[8] The issue before this court is whether the Employment Appeal Tribunal erred in law by allowing Mr. Forbes's appeal to it from the employment tribunal on a basis which went beyond the former's statutory power.

[9] To set that issue in context it is necessary to give only a short narrative of the evidential material, in so far as bearing on the issue of affirmation, which was before the employment tribunal. On 15 March 2002, as we have said, Mr. Forbes was signed off with "work related stress". He did not return to work until 25 September 2002 by which time he had tendered his resignation. During his six months absence from work he drew his full salary in the form of company sick pay. During that absence there were a number of communications with him. These included a telephone conversation on 30 April 2002 between Mr. Forbes and Salamis's human resources manager, Mr. Russell, a visit by Mr. Russell to Mr. Forbes's home on 9 May and a letter from Mr. Forbes to Mr. Russell dated 14 May. More importantly for present purposes, there were meetings on 25 July and again on 22 August between Mr. Forbes on the one hand and Mr. Russell and Mr. Saynor, Salamis's director and general manager, on the other at which conversations took place about Mr. Forbes's position, including whether he was ready and fit to return to work. The employment tribunal had before it oral testimony from these three persons as to what had occurred at these meetings, together with hand-written notes taken by Mr. Russell and correspondence which subsequently passed. The employment tribunal found that at the earlier of these meetings Mr. Forbes had indicated that he was ready to return to work and that at the later meeting he had agreed to return. Such a return would have been, as in the event it was, to a post subordinate to Mr. Walker. The employment tribunal also noted that Mr. Forbes had at no stage invoked Salamis's grievance procedure, although he was aware of it, nor said that he was working only under protest; that he had not registered with employment agencies or sought alternative employment until after he had left Salamis's employment; and that he had tendered his resignation immediately upon the expiry of his contractual entitlement to 26 weeks' sick pay at full salary. It further noted that, when in the course of working his notice Mr. Forbes learned that Mr. Walker had decided to leave, he (Mr. Forbes) immediately indicated to Salamis that he was prepared to continue working for it. The majority of the employment tribunal concluded that these

"were not the actings of an employee who had accepted a repudiation because he considered that his employers had conducted themselves in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between the employer and the employee" (tribunal's emphasis).

That is, whatever Mr. Forbes's unhappiness with the prospect of working with or under Mr. Walker, his actings were not indicative of someone whose intent was to bring his contract of employment to an end because he perceived that his employer had conducted itself in a manner which destroyed or seriously damaged that relationship of trust and confidence.

[10] While the issue of whether or not Mr. Forbes had affirmed the contract was narrowly balanced, it was a decision which turned essentially upon an evaluation of the evidence which the employment tribunal heard. It was and is, as the Employment Appeal Tribunal appears to acknowledge, an issue of fact. As such, it could legitimately be reversed by the Employment Appeal Tribunal on the grounds of perversity only if it were a decision "so extravagant that no reasonable tribunal properly directing itself on the law could have arrived at" (Melon v. Hector Powe). There is no suggestion that the employment tribunal misdirected itself on the law.

[11] The reasons which the Employment Appeal Tribunal gives do not, in our view, warrant the conclusion that the employment tribunal's decision was of such extravagance. First, the drawing of sick pay over a protracted period was not "neutral" in the sense of being something which fell wholly to be disregarded but a circumstance which, with other circumstances, the employment tribunal was entitled to take into account when addressing the critical issue of whether or not Mr. Forbes had affirmed his contract of employment. Secondly, the Employment Appeal Tribunal appears to have seen fit to put its own construction on the letters to which it refers. Questions as to the construction and effect of these letters, in so far as material to the critical issue, were, at least in so far as concerns a contention of perversity, matters for the employment tribunal. In that connection it may also be noted that the earlier of these letters (apparently written by Mr. Russell on 25 July following the meeting that day) was not the only, or indeed the primary, evidence of what transpired at that meeting, evidence of that having been given by the individuals present. The later of these letters (apparently written by Mr. Russell on 23 August following the meeting the day before), was again not the only material before the employment tribunal bearing on what transpired at the meeting; the interpretation of the terms and effect of that letter, in the context of the whole material before it, was essentially a matter of fact for the employment tribunal. Thirdly, the significance and the weight to be attached to Mr. Forbes's indication, on hearing that Mr. Walker was to leave, that he was prepared to continue working with Salamis was a matter of evaluation for the employment tribunal. That indication was certainly open to the interpretation that, while Mr. Forbes was unhappy about the prospect of working with and under Mr. Walker, his readiness to continue working as an employee of Salamis in the event of Mr. Walker's departure supported the view that Mr. Forbes did not regard his relationship with Salamis as destroyed or seriously damaged by its conduct. Regard being had to the whole evidence led before and evaluated by the employment tribunal, it cannot be said that its decision was perverse in the relevant sense.

[12] Mr. Napier, counsel for Mr. Forbes, drew our attention to the terms of the Notice of Appeal to the Employment Appeal Tribunal, lodged on Mr. Forbes's behalf, and to the Skeleton Argument which supplemented it. Particular attention was focused on the criticisms there made of the employment tribunal's findings in respect of the meetings on 25 July and 22 August. These criticisms were, however, made in the context of a contention before the Employment Appeal Tribunal that the decision as a whole was perverse. The only issue of law considered in the event by it was whether the conclusion of the employment tribunal was, on the material before it, perverse; not whether in respect of some fact or facts crucial to its conclusion on affirmation, the employment tribunal had made a finding without evidence to support it or had clearly misapprehended or misconstrued the evidence bearing on any such fact. No ground of appeal focusing an issue of the latter sort has been presented to this court, nor leave sought or obtained in respect of it.

[13] Mr. Napier also submitted that, as Salamis, the appellant to this court, had not placed before it the two letters referred to by the Employment Appeal Tribunal, this court was in no position to interfere with its decision. However, we are satisfied that, in the circumstances of this case, that submission is ill-founded. On the assumption (which we reject) that there was before the Employment Appeal Tribunal a properly focused contention that the employment tribunal had erred in law in misapprehending or misconstruing the evidence bearing on the meeting of 25 July or that of 22 August (and that such specific error or errors undermined its overall decision on the matter of affirmation), there is before this court sufficient material, in the form of the extended reasons of the employment tribunal as read with the Notice of Appeal and the Skeleton Argument, to allow it to appreciate the nature of the approach adopted by the Employment Appeal Tribunal on these matters. For the reasons given earlier that approach was erroneous in law.

[14] There is an abundance of authority in relation to the circumstances in which the Employment Appeal Tribunal may or may not interfere with the decision of an employment tribunal. It is perhaps in the present context worth noting certain observations made in these authorities. In Yeboah v. Crofton [2002] IRLR 634, Mummery L.J. at paragraph 93, referring to an appeal on the ground of perversity, said:

"Such an appeal ought only to succeed where an overwhelming case is made out that the employment tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence and the law, would have reached".

At paragraph 95 he added:

"Inevitably, there will from time to time be cases in which an employment tribunal has unfortunately erred by misunderstanding the evidence, leading it to make a crucial finding of fact unsupported by evidence or contrary to uncontradicted evidence. In such cases the appeal will usually succeed. But no appeal on a question of law should be allowed to be turned into a re-hearing of parts of the evidence by the Employment Appeal Tribunal".

Brooke L.J. and Sir Christopher Slade agreed.

[15] In McGregor v. Intercity East Coast Limited 1998 S.C. 440 Lord Penrose (delivering the Opinion of the First Division of this court) referred at page 442 to observations made by Lord Donaldson of Lymington M.R. in Piggott Brothers & Co. Ltd. v. Jackson [1992] I.C.R. 85 at page 92 about the role of the Employment Appeal Tribunal as an appellate court. What the Master of the Rolls there said was:

"It does not matter whether, with whatever degree of certainty, the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal was a permissible option. To answer that question in the negative in the context of employment law, the appeal tribunal will almost always have to be able to identify a finding of fact which was unsupported by any evidence or a clear self-misdirection in law by the industrial tribunal. If it cannot do this, it should re-examine with the greatest care its preliminary conclusion that the decision under appeal was not a permissible option and has to be characterised as 'perverse'".

In the present case there is no indication that the Employment Appeal Tribunal undertook any such re-examination.

[16] While we accept that the question whether or not Mr. Forbes had affirmed his contract of employment, so as to disable him from successfully maintaining that he had been constructively dismissed, was difficult and might have been answered either way, it was not open to the Employment Appeal Tribunal of new to address that question upon its own evaluation of the documentary material, which in this case in any event constituted only part of the evidence before the employment tribunal. What in substance the Employment Appeal Tribunal did was to enter upon such an evaluation. In these circumstances it erred in law.

[17] We shall accordingly allow this appeal and restore the decision of the employment tribunal dismissing the application.