United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 229_93_1207

Appeal No. EAT/229/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 12 July 1994

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MR J A SCOULLER

MR G H WRIGHT MBE

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MR A BUTCHER          APPELLANT

BRITISH STEEL PLC          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR T D HUCKLE

(of Counsel)

Messrs Derek James & Vaux

119/121 Chepstow Road

Maindee Square

Newport

Gwent NP9 8XG

For the Respondents MR JOHN CAVANAGH

(of Counsel)

Messrs Eversheds Phillips & Buck

Fitzalan House

Fitzalan Road

Cardiff CF2 1XZ


 


MR JUSTICE MUMMERY (PRESIDENT): This is an appeal from the decision of the Industrial Tribunal held at Cardiff on 24 and 25 November 1992. For the reasons stated in the decision notified to the parties on 5 January 1993 the Tribunal unanimously decided that the complaint of unfair dismissal made by Mr Alan Butcher against his former employers, British Steel Plc, failed.

Mr Butcher was dissatisfied with the decision and he therefore appealed to this Tribunal by notice of appeal dated 12 February 1993, amended on 17 March 1993.

In order to understand the submissions made by each party of this appeal, it is necessary to look at the history of the proceedings and the origins of the dispute. Mr Butcher worked for British Steel for over 30 years. His employment began on 29 August 1960 and ended on 24 March 1992. At the date of the termination of his employment he occupied the position of a quality assurance section manager at the Whitehead Works, Newport, Gwent.

The circumstances in which his employment terminated led to an originating application brought by him against British Steel and presented to the Tribunal on 23 June 1992. The complaint was that he had been supposedly dismissed for theft of corporation property in breach of rule 16 of the Works Rules. His contention was that no reasonable employer could have concluded that he did steal corporation property, taking into account his long service, the nature of the property concerned, the circumstances in which the property was returned to the corporation and the explanations proffered. It was further argued that, although the removal of property to his home was arguably in breach of that rule, it was done in furtherance of the corporation's business and in good faith. The corporation had long sanctioned tacitly, if not expressly, such action by senior and managerial employees. It was also contended that even if the inference of theft was one which a reasonable employer might have drawn, no reasonable employer would, in all the circumstances of the case, have taken the view that dismissal was appropriate, particularly having regard to the circumstances surrounding the alleged theft: the fact that Mr Butcher was due to be made redundant 7 days after the date of dismissal, that he had worked diligently and honestly for the corporation for 31 1/2 years, that the items which he had taken to his home were, with few exceptions, materials used by him in the course of work and of little use to him otherwise, that in the case of the few exceptions the items were of little value and that in the circumstances retention of the items, even if intended to be permanent, was not so as to go to the root of the trust reposing between him and his employer.

The claim was contested by British Steel in a notice of appearance dated 23 July. We refer to this because, on the completion of the exchange of the IT1 and IT3, the issues between the parties for resolution by the Tribunal were clearly identified. British Steel said in their notice of appearance that Mr Butcher had, through his trade union, requested to be made redundant rather than being redeployed when his post ceased to exist. Management acceded to that request and he had made it known that his intention was to set up in business as a quality assurance consultant. Prior to being made redundant he had indicated to a member of staff that he intended to acquire an item of desk furniture for his office at home. The equipment was subsequently removed from the works without the permission of the management and was later returned by Mr Butcher after he had been challenged by the group's security officer. Mr Butcher also returned two boxes of 47 items from his home and a further box found in his office contained 7 items. Mr Butcher subsequently returned 4 other items. The value of the items was estimated between £300-£350.

With regard to those alleged offences, British Steel contended that the circumstances had been thoroughly investigated by management prior to disciplinary action being taken. The disciplinary procedure was fully followed. Mr Butcher was represented by his union. The appeal heard on 1 April 1992 failed and his dismissal took place.

The Tribunal had to resolve those issues. They had a difficult decision to make. Unusually, we start by referring to the last paragraph of the Tribunal's decision. The Tribunal said:

"This is a distressing case. If we were a magistrates court the verdict might well be not guilty; but we are not; and the considerations which we have to weigh are entirely different. It is sufficient for us to conclude that the employers in this case - whose conduct we have scrutinized - have passed the Burchell test. In that event the application fails. We reach this conclusion without any enthusiasm. We have no reason to suppose that the employer found the decision any more appetizing."

That paragraph contains words of truth which go to the heart of this difficult case.

Before we go to the facts found by the Tribunal and the reasons they gave for their decision, it is important to have in mind the limited scope of this Tribunal's jurisdiction on an appeal. The essential ground of Mr Butcher's appeal is that the decision of the Tribunal was perverse. That means, in this context, that no reasonable Tribunal, with a proper appreciation of the facts and the relevant law, would have come to the decision to dismiss his claim. This is a recognized ground of law for appealing to this Tribunal. We are a body whose jurisdiction is limited to appeals on questions of law. It is helpful to remind ourselves and those engaged in this case of are the limits of perversity as a ground of appeal. Both Counsel, for whose submissions we are greatly indebted, agreed that a recent decision contains a helpful review of the relevant principles, this Tribunal's decision in East Berkshire Health Authority v Matadeen [1992] ICR 723. After a review of the authorities in chronological order, including decisions of the House of Lords and the Court of Appeal, Mr Justice Wood, who gave the decision of the Tribunal, stated at page 738A as follows:

"Thus, even on factual findings of an industrial tribunal, the appeal tribunal can interfere if the members are completely satisfied in the light of their own experience and of the sound practices in the industrial field that the decision is 'not a permissible option', per Lord Donaldson of Lymington M.R.: 'a conclusion which offends reason or is one to which no reasonable industrial tribunal could come' or 'so very clearly wrong that it just cannot stand', per May L.J., or to paraphrase Lord Diplock in the G.C.H.Q. [1985] ICR 14, the decision was so outrageous in its defiance of logic or of accepted standards of industrial relations that no sensible person who had applied his mind to the question and with the necessary experience could have arrived at it."

Later on the same page, between E and F, Mr Justice Wood said:

"I have cautioned the members against interfering with decision of industrial tribunals. They cannot interfere merely because they disagree. They cannot interfere even if they feel strongly that the result is unjust, though in the latter case it may be that on a careful analysis of the true reason lying behind such a view is that the decision flies in the face of properly informed logic."

It was in the light of that decision that Mr Huckle, in his helpful submissions, accepted in the first few minutes of opening this appeal, that he faced a different hurdle to surmount. In order to succeed on this appeal he has to persuade us that no reasonable Tribunal could have reached a decision that this dismissal was fair. He had to persuade us that the Industrial Tribunal were perverse in coming to the conclusion, on the evidence before them, that British Steel had reasonable grounds for believing that there had been dishonesty, that those grounds had been properly investigated and that the appropriate way of deciding the matter was to dismiss Mr Butcher from his employment rather than any other option. In the face of those difficulties, Mr Huckle has presented a clear and cogent argument for Mr Butcher. In order to test the argument, we next have to look at the decision on the facts and the reasons for the conclusion.

The Tribunal decision was exceptionally detailed, running to 14 pages and 28 paragraphs. The Tribunal began by giving an account of Mr Butcher's employment history and the circumstances in which it was proposed that he should be made redundant. It is unnecessary to go into all the details of that. We go straight to the circumstances in which Mr Butcher found himself suspected of acting dishonestly in breach of the Works Rules. The relevant rule 16 is set out in paragraph 6 of the decision:

"Misappropriation of company property - theft. You are not allowed to remove any material or item or any equipment from the works without receiving written authority from the work's personnel department. The removal from the works of any property by any employee without written authority will result in dismissal and may also lead to prosecution."

Later in the decision the Tribunal dealt with the scope of that rule. The Tribunal referred to the conclusion of the disciplinary body that Mr Butcher had acted in breach of rule 16. It had been argued that the rule was unclear, was not observed in practice and was applied as a blanket policy. In dealing with those submissions, the Tribunal stated their view that the rule was directed and was understood to be directed against dishonest handling of the employers' property. It was not intended to penalize a technical breach, that is, securing oral instead of written permission. The Tribunal thought that the rule was sufficiently well-defined in the heading "Misappropriation of company property - theft" and commented:

"No-one needs an explanation of that."

The Tribunal set out the circumstances concerning the removal of British Steel property from the premises to Mr Butcher's home, itemizing the objects in question and dealt in detail with the investigations and the decision to inform Mr Butcher that he had been guilty of gross misconduct in breach of the rules. He was informed that he had the right of appeal against the decision that he was considered to have misappropriated company property. He exercised the right of appeal. The Tribunal dealt in detail with the conduct of the appeal, the evidence given and the arguments made. They went out of their way to deal with a point that has not surfaced on this appeal, that is, the procedure followed. The Tribunal were satisfied that there had been no unfairness in the procedure adopted.

The appeal was unsuccessful. The Tribunal dealt with the submissions made to them in paragraph 21 onwards. The Tribunal recorded that it was common ground before them, as it is before us, that it was for the employer to show the reason for the dismissal and that it was a substantial reason, such was one relating to conduct. The Tribunal said:

"Once that has been done we have to consider whether the employers acted reasonably or unreasonably in treating that as a sufficient reason to dismiss."

The Tribunal referred to the test laid down in the well-known case of British Homes Stores v Burchell and summarized it in a way which has not been criticised in this Tribunal. They said the question was:

"Did the employers reach an honest conclusion for which they had reasonable grounds following a sufficient enquiry?"

And the next question:

"Did the penalty imposed fall within that range of responses which were available to a reasonable employer?"

The Tribunal, before it dealt with the further detailed submissions, referred to a possible explanation of Mr Butcher's dismissal, that there might be a wish to save a £15,000 redundancy payment if he was dismissed, in the following way. They said (paragraph 21):

"We are bound to say however that nothing that was said or done at the hearing gave us any reason to conclude that any of the four managers had an ulterior motive. We did not suspect that they reached their decision with any relish. We think they acted honestly. We are certain that the reason and the only reason for their decision was the view which they took of the applicant's handling of the items we have mentioned above."

The Tribunal dealt with the arguments concerning misappropriation and reminded themselves that they had to deal with the issues having regard to the equity and substantial merits of the case. They stated that it appeared that the employer appreciated that a simple finding of breach of rule 16 would not justify the categorization of gross misconduct and would not justify dismissal without a warning. They added that it was abundantly clear from the minutes and from the evidence of Mr Boyles and Mr Anderson that they were concerned to decide whether Mr Butcher had been guilty of dishonesty. They regarded his explanations as difficult to reconcile. The fact that they were investigating his reasons for taking home the various items showed, the Tribunal thought, that they were looking at the motive for his action.

The Tribunal then correctly asked themselves:

"Did the employers have reasonable grounds for their conclusion"

about Mr Butcher's actions in relation to the misappropriation of the British Steel property?

The Tribunal summarized the submissions and they again said, correctly:

"In our view it was for the employer to weigh in the scales the evidence ..."

They referred, in particular, to the evidence which was given by Mrs Crowther:

"and to decide whether it was credible or not."

They reminded themselves of an important matter (paragraph 23 of the decision):

"It is not for us to substitute our judgment. It would be different if there was evidence that belief in her (Mrs. Crowther) account was unreasonable or unsustainable. We think that a reasonable employer ... might well accept that she was telling the truth. Mr Huckle's arguments (impressive as they are) do not persuade us to the contrary. The same considerations apply to the other matters on which the employers relied. It was for them to assess their worth. They were entitled to find that the books or some of them belonged to British Steel and would be of value to Mr Butcher in his new career. Their number was consistent with that interpretation. It seemed unlikely he would accumulate these by merely working at home. The tray [that refers to one of the items about which there was a great deal of contention] seemed an inappropriate method of carrying files etc home. The fact that he took it home fitted Mrs Crowther's account exactly. We are reminded of the injunction contained in the judgment of Arnold J. in the Burchell case '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 a 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 it seems to us a conclusion on the balance of probabilities will, in any surmisable circumstances, be a reasonable conclusion.'"

The Tribunal stated in paragraph 24 that:

"If an employer is honestly and reasonably satisfied that there has been dishonesty he is entitled to consider dismissing however long the employee has been in service ..."

That comment was in reference to a submission that insufficient or no account had been taken by the employers of Mr Butcher's long and loyal service.

Having then dealt with procedural matters, the Tribunal came to the paragraph in their Decision which has been the subject of most of the argument today. I should, therefore, read it in full:

"27. That leads us to the final consideration namely whether the penalty imposed was a fair sanction. Mr Huckle has mounted an impressive argument at page 18 onwards."

Page 18 is part of a very lengthy written submission put to the Tribunal after the conclusion of the evidence.

We have already adverted to his argument that the employers applied a blanket policy. The first point to make is that where there is an offence of dishonesty clearly the most likely penalty is dismissal. That option is bound to arise. It applies in the case of a middle manager holding a responsible position. The second point is that an employer has to be consistent in applying penalties. If he were capriciously to dismiss one but retain another for equal offences of dishonesty he would have difficulty in justifying any dismissal on that account. On the other hand each case must depend on its own facts. It must not be a tariff approach. Should we deduce that there was, on the basis of arguments such as ..."

There follows a quotation from the written submissions. The Tribunal went on:

"The employer considers the matter in the round. When an employer says he has no alternative but to dismiss he does not mean that he is unaware that there are other options. It means that having considered all the options he finds himself compelled by facts and circumstances to follow a particular course of action ie dismissal. Moreover as has been said on many occasions there are situations where one reasonable employer would impose on sanction; another reasonable employer a different sone. That does not entitle us to say that the dismissal was a penalty outside the bounds of fairness. In this case we do not think it was. It may not have been the penalty we would have imposed; that however is nothing to the point. We are not even entitled to express an opinion."

In the paragraph the reference to an employer having no alternative but to dismiss needs a little more explanation. That is a reference back to the Tribunal's account of the evidence of management contained in paragraph 10 of the decision when the Tribunal said this:

Management believed that the items detailed were removed without authority and that they had reservations about Alan's intention to return these items. The matter was considered misappropriation of company property. In accordance with the Works Rules this was considered to be gross misconduct which means that management had no alternative but to dismiss."

That was the passage relied upon for the submissions in relation to the reasonableness of the employer's actions in opting to dismiss Mr Butcher.

The question we have to ask ourselves on this appeal is a narrow one: what in law is wrong with this decision? Mr Huckle submitted that there are two respects in which the decision is legally flawed. His main submission was that the decision was perverse. He submitted no reasonable employer would have dismissed Mr Butcher, even on the basis of the finding that he had been guilty of misappropriation of company property in breach of company rules and, therefore, guilty of gross misconduct.

Secondly, he had a more specific criticism of the wording of paragraph 27. He submitted that the Tribunal confused the question as to what options were considered by British Steel with the action which might have been taken by a reasonable employer. He submitted that the use of the expression "no alternative but to dismiss" indicated that the employer in this case felt impelled to come to a particular decision. The relevant matter to consider was whether the decision to dismiss was one to which a reasonable employer could have come.

We have considered both of these submissions with care. We can say at once that we find the submission on the wording of paragraph 27 unpersuasive. It is clear that, when that paragraph is read as a whole, the Industrial Tribunal were applying the correct approach to the question whether a reasonable employer would have chosen dismissal as a way of dealing with the situation before it. It is clear in the words following the passage criticised that the Tribunal were fully aware of the correct test, which was to ask themselves whether it was within the range of reasonable responses to dismiss in these circumstances. They appreciated this, in considering the position of how one reasonable employer might impose one sanction and another reasonable employer another. They said that that did not entitle the Tribunal to say that dismissal was a penalty outside the bounds of fairness. They made it clear that, in this case, they did not think it was, though they observed they might not have come to the same decision themselves if they were the employers. The point is, of course, that they were not the employers. They were the judges of the employer's actions by applying the objective standard of the reasonable employer.

We have been more concerned with the argument on perversity. Mr Huckle presented an attractive case on this ground. He relied, in particular, on the following facts in support of the submission: that the reaction of this Tribunal on reading this decision is to say, "My goodness, that cannot be right". He said we should be astonished by the decision that held that Mr Butcher's dismissal was fair. He pointed to these factors: that Mr Butcher had worked for British Steel for 31 1/2 years, without receiving any warning in respect of his conduct; he was due to take redundancy within a week of the effective date of termination; the value of the item in respect of which there was direct evidence suggesting dishonest misappropriation - the filing tray rack - was very small. The Tribunal's decision recorded that one of the witnesses estimated the worth of the item at 50p. He asked us also to take into account the assertion of Mr Butcher, in evidence, that the remainder of the items which might properly be considered to be the property of British Steel and which he had retained at home, were of little use or value to him in his intended career as a consultant. That evidence was not challenged by evidence called by British Steel, either at the disciplinary hearing or at the Tribunal hearing.

Those were the main points relied on by Mr Huckle in submitting that the Tribunal's decision that the dismissal was fair was not a permissible option.

Mr Cavanagh, in his submissions for British Steel, warned the Tribunal about the limits of its powers on an appeal. He probably detected in this Tribunal considerable sympathy for Mr Butcher. Mr Cavanagh correctly reminded us about the jurisdictional limits within which this Tribunal operates. His main submission, based on passages in the case of Matadeen, and also in the Court of Appeal decision, Piggott Bros v Jackson [1992] ICR 85, was that, if the law is properly applied by this Tribunal, there will be very rare occasions on which we can interfere with the decision of an Industrial Tribunal on the perversity ground. He correctly reminded us that the Industrial Tribunal has advantages that we do not have in deciding cases. They see the witness give their evidence. They see them cross-examined and re-examined. They hear opening submissions and they hear closing submissions. Our function involves looking at the matter less in the round and in a more concentrated way examining the reasoning of the Tribunal to see whether or not it contains a legal flaw. Mr Cavanagh submitted that you cannot find a legal flaw in this decision. The Tribunal's decision correctly applied the tests laid down in Burchell, in the case of dismissal for misconduct. They correctly applied the test of the range of reasonable responses. On the application of that test, how could this decision be held to be perverse? Mr Butcher was a manager. The corporation had believed, on reasonable grounds and after proper investigation, that he had removed items for a dishonest purpose. In those circumstances it was open to an Industrial Tribunal to find that it was within the range of reasonable responses to dismiss him from his employment.

Recognizing the strength of the case that Mr Huckle had built up in his submissions, Mr Cavanagh went on to deal with the particular factual considerations mentioned. As to the length of service, he said that length of service alone would not convert what would otherwise be a fair dismissal into an unfair dismissal. He questioned the relevance of the consideration that Mr Butcher was due to take redundancy within a week. He submitted that if a person is guilty of misconduct, which would justify his dismissal on an objective test, what did it matter how long he would have remained in employment if he had not been dismissed for disciplinary reasons. The fact that Mr Butcher was very shortly to be made redundant would have been relevant when the Tribunal considered whether misconduct was the real reason for his dismissal or just a pretext designed to avert the need to pay £15,000 redundancy payment. The suggestion of the alleged misconduct was not the real reason for dismissal was not pursued before the Industrial Tribunal. We have already quoted the passage in the decision in which the Tribunal considered that there was no evidence of such an ulterior motive. As to the small value of the stacking tray, Mr Cavanagh pointed out that the evidence was that, if the tray had been sold as a redundant item, it would have been valued at something in the order of 50p but the witness, Mrs. Williams, added that the tray was not a redundant item so, presumably, its value would have been something more than that. He also said one must take into account the value of the periodicals and the books removed. In any event, he added, the value of the items was not a significant point. The important point was that, if a person in a position of responsibility dishonestly appropriates material belonging to his employer, dismissal falls within the bound of reasonable responses, open to a reasonable employer, whatever the value of the materials. There was no indication in the decision that the Tribunal had overlooked the value. In fact, in the passage quoted, they noted the small value given to the tray by one of the witnesses.

Mr Cavanagh finally made submissions about the arguments on paragraph 27. We need not go into those in detail. We agree with him, for the reasons already mentioned, that there is no substance in that criticism of the decision once the whole of the paragraph is read and not just one or two sentences singled out for criticism out of context.

Like the Industrial Tribunal we have not found this an easy case. Like the Industrial Tribunal, we have no particular enthusiasm for the result. The result, however, must be that this appeal is dismissed. Like the Industrial Tribunal, who dealt with the matter in a conscientious way, we must act within the confines of jurisdiction and settled legal principles. As jurisdiction is confined to points of law, we cannot interfere with this decision unless we find a legal error in the Tribunal's decision. The Tribunal have done their job so carefully and conscientiously, taking into account everything everything said on each side, that it is impossible to detect any error in this decision. If we cannot detect any error in the decision, we must not allow our own personal sympathies to sway us to a decision which cannot be legally justified.

For all those reasons, this appeal is dismissed.