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Cite as: [1992] UKEAT 149_90_2002

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BAILII case number: [1992] UKEAT 149_90_2002

Appeal No. EAT/149/90

EMPOLYMENT APPEAL TRIBUNAL

4 ST. JAMES'S SQUARE, LONDON, SW1 4JU

At the Tribunal

On 20 February 1992

Before

THE HONOURABLE MR JUSTICE PILL

MR P H PHIPPS

MRS P TURNER OBE

MR G A DABELL APPELLANT

NOFOTEC CO LTD RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellant Mr Jeremy McMullen

(Of Counsel)

Messrs Warren & Allen

Solicitors

24 Low Pavement

Nottingham

NG1 7ED

For the Respondents Mr A Berrisford

(Of Counsel)

Messrs Tallents Godfrey & Co

Solicitors

Leighton House

15 George Street

Nottingham

NG1 3BL

MR JUSTICE PILL: This is an Appeal against the decision of an Industrial Tribunal held at Nottingham on 15 and 16 November 1989, Mr M Scott presiding.

The unanimous decision of the Tribunal was that the Applicant Mr G A Dabell had not been unfairly dismissed by way of constructive dismissal by his employers Nofotec Company Ltd. Mr Dabell was employed by a company known as Vale Industrial Services Ltd in 1977. In 1985 he was transferred to the Respondent company Nofotec, a company engaged in precision engineering.

The employment with Nofotec began on 1 September 1985 and two other employees formerly employed by Vale began work at the same time. A number of differences soon arose between Mr Dabell and his new employers and as soon as the 23 September he wrote a letter of resignation. He claimed to have been constructively dismissed. The case before the Industrial Tribunal was put first on the basis of unfair dismissal and second, on the basis of the Transfer of Undertakings (Protection of Employment) Regulations 1981 Statutory Instrument 1981 No 1794.

The Tribunal heard evidence and submissions from Counsel for both parties and reached the conclusion which we have indicated. It is relevant only by way of background but a previous application had been made in April 1986. On that occasion a Tribunal found that there was a relevant transfer under the regulations. That decision was reversed in the Employment Appeal Tribunal but was restored by decision of the Court of Appeal on 5 July 1988.

The Tribunal considered in some detail the differences which had arisen during September 1985 between Mr Dabell and his new employers. They made findings of fact, summarised the submissions of counsel and their conclusions are set out at paragraphs 9-12 of their Reasoned Decision. The first point taken in the Appeal was that the Chairman of the Tribunal had in his conduct of the hearing shown an appearance of bias. Such an appearance was created by his conduct it is submitted. It is expressly not alleged that actual bias was involved. In support of that submission we have an Affidavit from Mr Simon Timothy Robinson, Mr Dabell's solicitor who was present at the hearing, and grounds settled by Counsel the accuracy of which, so far as they set out matters of fact, is confirmed by Mr Robinson.

It is submitted that following his examination by Counsel in the usual way and after re-examination the Chairman questioned Mr Dabell for 13 minutes. It is said that he asked leading questions in a form hostile to Mr Dabell. Counsel for Mr Dabell, Mr McMullen who also appears for him before this Tribunal, then sought leave to re-examine on matters arising from the Chairman's questions. Permission was refused. Mr McMullen renewed that application and supported it by the reason that fresh matters had arisen in the course of the lengthy questioning of Mr Dabell by the Chairman. The renewed application was refused on the ground that in that Tribunal advocates were not permitted to have a second chance to re-examine.

It is also submitted that the Chairman asked questions of an employer's witness after cross examination which led to inferences adverse to Mr Dabell and unfairly so because they did not deal with the actual facts but with facts which might have been present but were not present. Mr McMullen realistically did not make an application to cross-examine that witness again.

Mr Robinson in his Affidavit states, as illustrations of what he regarded as conduct by the Chairman which a reasonable person at the hearing might have thought was unfair to the Applicant Mr Dabell, a comment by the Chairman that:

"Like a lot of other employers he never gave you a piece of paper".

and leading questions which were unfair having regard to the time they were asked. We accept in general terms the contents of Mr Robinson's Affidavit though it is of course a matter for this Tribunal to consider whether, in all the circumstances, an appearance of bias was created such that the decision of the Tribunal should be set aside on that ground.

In accordance with the usual practice the Learned Chairman was given an opportunity to comment upon the Grounds of Appeal insofar as the appearance of bias was involved. We have not seen the letter in which he was invited to comment but are bound to say that we do not find the Chairman's remarks altogether helpful. First he expresses:

"mild surprise"

at the fact that Counsel mentioned that the question of compensation would be brought up. That remark by the Chairman has no bearing whatever upon the points raised in relation to the conduct of the case and we can see no reason why the Chairman should have mentioned it at all in his note for our use.

It is also somewhat difficult to follow his comments upon his refusal to allow further questioning and the nature of his own questions. We are in no doubt that there can be no rule of law or rule of procedure whereby Counsel is forbidden to ask questions following questions from the Chairman. There will sometimes be cases where points arise in the course of the Chairman's questioning upon which, if there is to be a fair trial, the witness' Counsel should have the opportunity to explore the matter further. There may be cases where Counsel on the other side ought also to have the same opportunity. It is to be hoped that such a situation will arise only infrequently because normally a Chairman's questions will be directed only to obtaining clarification upon matters already in evidence.

What the Chairman says in his note is first that he was "..not aware of any novelty in matters he canvassed with the applicant." Later in his note he underlines that the Applicant had never previously given evidence before the Tribunal. He makes in parenthesis a reference to the earlier proceedings and adds that what Mr Dabell said at the current hearing was "thus all new."

The Chairman notes that Mr Dabell came under challenge by the Respondents and that he:

"..wished to establish the truth about the reason for resigning and other relevant items."

This is perhaps difficult to reconcile with his earlier statement in relation to the "lack of novelty" in matters which he raised. It is of course difficult for us to obtain the flavour of what happened at the Tribunal and in particular the nature of the Chairman's questioning. We have no transcript. In spite of their best endeavours, Counsel are naturally unable after this length of time to remember precisely the form of the questions complained of and whether Mr Dabell reluctantly agreed or on the other hand made clear by his own words that he agreed with the point put to him.

We have said that there is no allegation of actual bias. It seems to us that the refusal to allow Counsel to re-examine is a matter which goes to the fairness of the Trial as a matter of substance rather than to any appearance of bias. The danger is that by not allowing further questions the Applicant does not have a proper opportunity to put his case and it is fundamental that he should have such an opportunity. That however has not been the basis of the Notice of Appeal though Mr McMullen did at the close of his submissions on this point suggest that the Notes of Evidence do show matters upon which he would have wished to ask further questions. However, while disapproving of the so-called rule applied by the Chairman, we do not come to the conclusion that this Trial was unfair.

Further, while we do have misgivings (subject to reservations made) about the nature of the questioning by the Chairman, we do not conclude that on the material before us there was such an appearance of bias that the decision of the Tribunal should be reversed on that ground.

With his comments upon the alleged appearance of bias the Chairman submitted to this Tribunal detailed comments upon the Notice of Appeal which by then had been submitted on the merits of the case. That was inappropriate. The Chairman of this Tribunal has not read the submissions made by the Chairman of the Industrial Tribunal but it has emerged at this hearing that the Chairman has in certain respects sought to elaborate upon and explain the reasons upon which the Industrial Tribunal came to the decision they did.

Counsel are agreed that we should have no regard to the Chairman's note and submissions on those points. The lay members had read them without realising their significance, but we are of the view that no harm arises from that. This point arose in KESKAR v GOVERNORS OF ALL SAINTS CHURCH OF ENGLAND SCHOOL [1991] ICR 493 a decision of this Tribunal Mr Justice Knox presiding. We respectfully agree with Mr Justice Knox's statement at page 500B. The notice in this case, like the letter in that case, was:

"..both unnecessary and unfortunate because he made comments on the validity or invalidity of various other grounds of appeal, and although chairmen of course, are entitled to their views, it is not, on balance, helpful for this appeal tribunal to have comments on the matters which are to be the subject of argument on the issue whether or not there was an error of law in the decision of the industrial tribunal."

Without knowing the contents of the Chairman's note I make no comment save to say that it is not open to a chairman, or to a tribunal as a whole, to supplement findings of fact or reasoning by a further submission of this kind.

At paragraph 3 of the Reasoned Decision the Tribunal set out the points of dispute between Mr Dabell and his employers. We summarise them only very briefly. They were described at paragraph 3(c) by the Tribunal as:

"..a gradual accumulation of irritants."

These included a requirement with the new employers to clock-in with penalties attached to lateness, a failure to pay Mr Dabell for two separate days off which he had taken as a matter of necessity, a notification to him that it would be some months before a holiday, to which he felt he was entitled, could be arranged, a dispute as to what his finishing time in the afternoon was and a feeling that he was not getting the help that he expected in his work and in particular in relation to the supply to him of adequate drawings for detailed work on a machine. The further point made on his behalf was in relation to sick pay and we refer to that in a little more detail.

The Tribunal found that by the 20 September Mr Dabell felt sufficiently irritated that he had to go. It was agreed between him and Mr Cooper, his foreman, that the matter should be left for the weekend. On Monday morning 23 September Mr Dabell stated that he was of the same mind and submitted a letter of resignation.

As we have indicated the case was put first on the basis of unfair dismissal under the Employment Protection (Consolidation) Act 1978, Section 55 and second on the basis of the 1981 Regulations. The first submission is that in their consideration of the issues the Tribunal had failed to distinguish between those two issues which depend upon different considerations. We have been referred to a statement of Mr Justice Wood in SERVICEPOINT LTD v V E CLINES (EAT/154/88) Transcript 14 March 1989 where the learned President stated obiter that:

"..the Regulations should be read as a whole and that where the regulations have clear wording, then they should be applied, without necessary reference to the principles of constructive dismissal."

It is submitted that the Tribunal have confused consideration of unfair dismissal with dismissal under the regulations. It is also submitted that the Tribunal have failed properly to apply the test as to constructive dismissal under the Act laid down in LEWIS v MOTORWORLD GARAGES LTD [1985] IRLR 465.

We do not accept that submission and consider that the Tribunal were aware of the correct test and applied it. The fact that at paragraph 4(e) they referred to a series of

"breaches of contract"

instead as they should have done to the cumulative effect of a series of acts which together constitute a breach, does not in our view demonstrate that the Tribunal failed to understand or to apply the correct test for unfair dismissal.

Regulation 5 of the 1981 Regulations provides in paragraph 5(1):

"A relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee."

That has been described as a statutory novation of the contract of employment.

Paragraph 5(5) provides:

"Paragraph (1) above is without prejudice to any right of an employee arising apart from these Regulations to terminate his contract of employment without notice if a substantial change is made in his working conditions to his detriment; but no such right shall arise by reason only that, under that paragraph, the identity of his employer changes unless the employee shows that, in all the circumstances, the change is a significant change and is to his detriment.

Regulation 8(1) provides:

"Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of Part V of the 1978 Act and Articles 20 to 41 of the 1976 Order (unfair dismissal) as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal."

In BERRIMAN v DELABOLE SLATE LTD (Court of Appeal) 1985 ICR 546 Lord Justice Browne-Wilkinson, as he then was, described the combined effect of the regulations in this way:

"..On the transfer of a business, the employees of the transferor become the employees of the transferee. An employee has the right to treat himself as constructively dismissed by any detrimental change in his working conditions (regulation 5(5)) but the question whether his dismissal is fair is dealt with by regulation 8. Under regulation 8(1), if any employee is dismissed in connection with the transfer, the dismissal is unfair unless the reason or principal reason for dismissing the employee is an "economic, technical or organisational reason entailing changes in the workforce." In this event the case is taken out of the automatic unfairness provisions of regulation 8(1).

We need not continue with the reference because regulation 8(2) was not relied upon by the employers in this case.

We do not find the regulations easy to interpret and we have heard interesting submissions, if I may call them that, from Mr Berrisford on behalf of the employers, and from Mr McMullen. For present purposes we propose and need only to follow the guidance given by Lord Justice Browne-Wilkinson. That acceptance for present purposes does not of course, affect the right of either party to make further submissions upon the regulations if and when the need arises.

In paragraphs 10 and 11 the Tribunal first consider the points of dispute which had arisen between the employers and Mr Dabell and we remind ourselves that they are the Tribunal of fact, they had an opportunity to assess the witnesses and their evidence and the circumstances in which we should interfere with their findings of fact are extremely limited.

In the course of paragraph 11 the Tribunal stated:

"..The respondents here have not deployed the defence of the exception in Regulation 8 as mentioned earlier. But in the tribunal's view the two matters we are now considering, do not constitute "reason or principal reason": within Regulation 8, so as to ground a claim that an "unfair dismissal" had resulted."

The Tribunal have ignored two of the points of difference which arose. The first was the absence of adequate drawings and the second, which they have ignored in this part of their findings, is the question of sick pay. In our judgment they were not entitled to ignore those two matters. Mr Berrisford submits that the question of drawings was of no real significance and the decision should not be impugned by reason of a failure to mention it.

We do not agree. Further, it appears to us that the Tribunal failed to appreciate the issue which had arisen as to sick pay. They dealt with that at paragraph 7 and at the end of paragraph 9. At paragraph 9 they state:

"..The sick-pay arrangement, or lack of arrangement, was certainly something that would astonish Mr Dabell, and I have indicated that Tribunal's reaction, but that problem had not arisen on the 23 September."

It is common ground that there was a material change in the terms of employment in relation to sick pay. The Tribunal appear to be finding that it was not material to their decision because Mr Dabell was unaware of that difference at the relevant time and their use of the word "astonish" at paragraph 9 and of Mr Dabell's "surprise" at paragraph 7 would appear to support their belief that Mr Dabell, when he decided to resign, was unaware of that change. However, it is clear from the evidence before them, and this is common ground, that before his resignation Mr Dabell had been in discussion with Mr Cooper on the question of sick pay. The Tribunal were not entitled to ignore that evidence. Their use of the word "astonishment" would appear to indicate that had Mr Dabell been aware of it he would have regarded it as an important matter. The evidence shows that he was aware of it.

We return to the central point made by Mr McMullen which is the confusion he alleges between consideration of unfair dismissal and of dismissal under the regulations. Mr Berrisford rightly makes the point that in two places in their reasoning the Tribunal ask themselves two separate questions - "Was there a fundamental breach?" and "Was there a significant change to his detriment within the meaning of regulation 5?". That might be sufficient support for finding that they did indeed apply separate tests to the two issues. However, it is difficult to understand why, in their final paragraph, paragraph 12, the Tribunal stated:

"In all the circumstances ...the Tribunal unanimously find that there was not a fundamental breach by this employer which entitled this applicant to resign on the 23 September 1985."

That suggests that they had misunderstood the test to be applied under the regulations. In an earlier paragraph 4(j) having set out the statutory provisions they say:

"Finally we cannot overlook that in these cases it is the employee who opens the case and seeks to persuade the Tribunal of the breach which led to his resignation."

That too might indicate that they have not applied the tests which the regulations require.

We have already referred to the central part of the Tribunal's reasoning where they refer to regulation 5 and then immediately go on to say that the two matters did not constitute the "reason or principal reason" under regulation 8. Mr Berrisford conceded that on the facts, if Mr Dabell brought himself within paragraph 5 he would be entitled to a finding in his favour on paragraph 8. The Tribunal however, rather than finding, as one might have expected following their earlier statements, that the Applicant had failed to bring himself within paragraph 5, appear to have run together paragraphs 5 and 8 in their approach to the question. That also indicates to us a failure to apply the correct test required by the regulations.

In a further submission upon the regulations Mr McMullen submits that the appropriate test under regulation 5(5) is "substantial" and not "significant". It may be that the mistaken use, as he puts it, of the word "significant" was in his favour when applied to the facts but he submits that the use of the wrong word reinforces the view that the Tribunal have not applied the correct test.

We should say that provisionally, and I use that word because our decision does not turn upon the point, we agree that the word "substantial" is the appropriate one for considering in present circumstances a breach of regulation 5. The latter part of the regulation where the word "significant" appears does not appear to us to be relevant to the present facts.

Mr McMullen further makes the point that by its own terms a misdirection appears in paragraph 11, second part, because having applied the test of "significance" the Tribunal went on to say that they did not hold that the two points which they considered were:

"either insignificant or trivial"

Having made that finding, he submits, they should in the terms of their own reasoning have reached a different conclusion.

In our judgment there are misdirections in the reasoning of the Tribunal and also there is a failure to have regard to evidence to which the Tribunal were obliged to have regard. In the circumstances we propose to allow this Appeal. The matter will be remitted to an Industrial Tribunal for reconsideration. Having regard to the background which we have indicated and the points raised upon this Appeal we consider that the remission should be a differently constituted Tribunal.