United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 109_94_2904

Appeal No. EAT/109/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 29 April 1994

THE HONOURABLE MR JUSTICE MORISON

MR K M HACK JP

MS D WARWICK

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THE CANADA LIFE ASSURANCE CO          APPELLANTS

MR D TREGONING          RESPONDENT

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Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised


 


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APPEARANCES

For the Appellants MR P GOULDING

(OF COUNSEL)

Messrs Frere Cholmeley

Bischoff

4 John Carpenter Street

London EC4Y ONH


 


MR JUSTICE MORISON: Mr Desmond Tregoning was employed by the Canada Life Assurance Company from February 1983 as a sales representative initially, being promoted over the years to hold the position of executive consultant. Throughout the whole of his employment he was responsible for selling the Respondents' life assurance policies to members of the general public and giving financial advice in relation to those products.

The Canada Life Company, the employers, are members to whom the LAUTRO Rules apply. Members such as Canada Life are authorised by those Rules to carry out investment business, and without such authorisation the employers could not continue to be engaged in the business of selling life insurance. The LAUTRO Rules, applying to members, also imposes upon them certain responsibilities in relation to the recruitment and employment of consultants, or representatives, or agents, or whatever they may be called, who are engaged like the employee in this case, in the selling of their financial services products in the financial services market.

Rule 3.5A(i) of those Rules provides that:

"A person shall not be appointed as, or be permitted to continue to work as a company representative unless the member is satisfied on reasonable grounds, that he is of good character and of the requisite aptitude and competence for that appointment."

As a result of a police investigation there was an allegation that a Mr Thomas had been involved in mortgage frauds, together with other people. One of the potential witnesses for the prosecution was to be Mr Tregoning. At the Crown Court, on the day I think that the case was due to start against Mr Thomas, the prosecution and the defence had certain discussions arising out of a particular letter, which is referred to the Tribunal decision as the "Cole" letter, which indicated to them that Mr Tregoning may have been implicated in the mortgage frauds.

Having been alerted to this, Canada Life then proceeded to carry out their own investigation based upon various pieces of information and material coming to their attention, including what was said at the Trial and when the defendants were sentenced, including what was said by Counsel for the prosecution, the way he put his case, what was said by the Judge when passing sentence and what was said by the Police, and what was said as a result of various other enquiries and investigations that they carried out.

Following those enquiries and investigations, and following three disciplinary interviews, Mr Tregoning was dismissed on the 4 November 1992 and he made a complaint to an Industrial Tribunal in form IT1, and that complaint which was received by the Tribunal in January 1993, was heard and determined, with each party represented by Counsel. The matter came before the Tribunal on Monday 1 November and concluded at the hearing stage on Tuesday 9 November, subject to a weekend intervening. The Tribunal concluded unanimously that the dismissal was unfair. The Tribunal's decision was reserved and is to be found in a written decision entered in the Register on the 9 December 1993, to which we have paid great attention.

We would like to say first that it is, in our judgement, a well set out decision, which appears to us to have been carefully constructed and well reasoned. The essence of the Tribunal's conclusion is to be found in paragraph 38 where they say this:

"We find, however, that the respondents did not act reasonably in their application of the rule (I interpret the LAUTRO rule which I have read out) so interpreted. The interpretation required the removal of all "reasonable" doubt. We accept that the respondents did genuinely have doubts which arose out of the court hearing, but we find that no reasonable employer, had he seriously questioned the various bases for those doubts, could have concluded that they were reasonable. In our view, in order to be "reasonable" a doubt must have some sort of sound evidential basis. In the present case there was none."

By a Notice of Appeal, the employers wish to argue two points: one, that the Tribunal applied the wrong test, and secondly, that their conclusions on the facts were perverse. We have had the benefit of a lengthy Notice of Appeal, together with a shorter skeleton argument provided by Counsel, and we have had the benefit of Mr Goulding's oral submissions. The purpose of this preliminary hearing has been to determine whether the matters raised in the Notice of Appeal constitute an arguable case on a point of law which should go to a full hearing.

As to applying the wrong test, what is submitted by Counsel is that the correct test is whether the Appellant, the employer, having carried out a reasonable investigation genuinely had doubts which it considered, that is "it" the employer considered, to be reasonable about the Respondent's good character. Had the Tribunal applied the correct test it would have found that the dismissal was fair as appears from the matters set out below. We were referred to the dissenting speech of Lord Atkin in Liversidge v Anderson but it is to be observed that that speech was given prior to the development of judicial review, and also of course it goes without saying, prior to the interposition of social legislation of the kind represented by the Employment Protection (Consolidation) Act which imposes duties on Industrial Tribunals when examining complaints of unfair dismissal.

In our judgement there are no grounds for believing that the test applied by the Tribunal as set out in this judgement was in any way wrong. They have not sought to substitute their judgement for that of the employers. They have applied the proper test set out in the statute and have asked themselves whether it could be said in this case that the employers had any grounds for the reasonable doubt which they were relying on as being the ground for the dismissal. In our judgement they were entirely justified in asking the question whether there was any sound evidential basis for the alleged doubt, because if there was no evidential basis for such a doubt, such a doubt could not be reasonable and if the employers did not have any basis for being satisfied that there was a reasonable doubt then the Industrial Tribunal were entitled to conclude that the dismissal was unfair.

It seems to us, therefore, that the test proposed by Counsel in paragraph of the Notice of Appeal, to which I have drawn attention, leaves out of account the important process which the Industrial Tribunal itself must apply to the decision which any employer must make. We recognise that where the LAUTRO Rules apply, Industrial Tribunals must be careful not to put an employer into a position where effectively he himself is at risk for losing his LAUTRO licence; but it seems to us that the Tribunal have been careful in the way they have approached this case because they have adopted for the purposes of their decision despite, I think, some misgivings, the most favourable construction of the LAUTRO authorisation that I have referred to, as urged upon them by the Respondents. In other words, they have taken the LAUTRO Rules in the way most favourable to the employers.

Accordingly, in our judgement, there is nothing on the first point which should lead us to say that the appeal should go to a full hearing. As to the second point, there is an intellectual difficulty about holding a preliminary hearing where there is an allegation of perversity, at a time when the notes of evidence are not before the Tribunal. The allegation of perversity is no more than a statement that there was no evidence to support various findings of fact and conclusions, which the Tribunal have arrived at. Without the notes of evidence, strictly speaking, it would not be possible for any of us to say whether there was or was not such evidence. However, that difficulty is more apparent than real, because as it seems to us without in any way pre-judging the matter in an unacceptable way, we can look at the totality of the Tribunal decision and see for ourselves the arguments which the parties canvassed during the hearing as to what the evidence did and did not establish, and what conclusions should, or should not be drawn.

Accordingly, in our judgement, having looked at the matter with care, we are not persuaded that the perversity argument in this case has any degree of merit such as would persuade us that it would be appropriate for the case to go for a full hearing on that point either. What the Tribunal has done in the paragraphs following paragraph 38 onwards, was to apply their mind to all the bases of evidence on which the employers said they were entitled reasonably to conclude that there was a genuine doubt about the integrity of their employee. Although their decision is in short form in relation to each of their findings, it seems to us that the Tribunal's decision, is sufficiently detailed and well reasoned to cause us no doubt about the validity of their conclusions on the facts.

As a result, it seems to us that this is not a matter which should go for an appeal to a full hearing. We should add, in case it would be thought of importance by the employers, that appeals on perversity even when they go to a full hearing very rarely succeed. Essentially, this was a full blown well argued and hotly disputed case and in our judgement the Industrial Tribunal were entitled to reach the conclusions they did however unpalatable they may be. Accordingly, we dismiss this appeal.