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Cite as: [1994] UKEAT 435_92_2207

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BAILII case number: [1994] UKEAT 435_92_2207

Appeal No. EAT/435/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 22 July 1994

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MR D E DAVIES

MR K M YOUNG CBE

MR L MORELAND APPELLANT

DAVID NEWTON [T/A ADEN CASTINGS] RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellant MR T KIBLING

(Of Counsel)

Messrs Nelsons

Pennine House

8 Stanford Street

Nottingham

NG1 7BQ

For the Respondents MR P OLDHAM

(Of Counsel)

Messrs Hunt Dickins

Express Buildings

17-29 Upper Parliament

Street

Nottingham

NG1 2AQ

MR JUSTICE MUMMERY (PRESIDENT): This is an appeal against a decision of the Industrial Tribunal held at Nottingham on 27 March 1992 at a hearing at which both parties represented themselves. The Industrial Tribunal sent full reasons for their decision to the parties on 14 May 1992. For those reasons the Tribunal unanimously decided that the Applicant, Mr Moreland, was unfairly dismissed, but went on to hold that he was not entitled to any compensation because he had contributed 100% to his dismissal.

Mr Moreland was dissatisfied with that decision and appealed by a Notice of Appeal dated 25 June 1992. The Respondent to the Appeal is Mr David Newton, trading as Aden Castings.

On the hearing of the Appeal both Appellant and Respondent had been ably represented by Counsel. This Tribunal is indebted to them for their submissions and guidance in an unusual case. This dispute has been going on since October 1990. It originated with a letter signed by Mr Newton on Aden Castings notepaper dated 19 October 1990. He wrote to Mr Moreland as follows:

"Since taking up employment with us I must point out the amount of time that you have taken off. In the 20 days since starting employment you have only attended 13 times and as at todays date have been absent for 6 consecutive days.

I am afraid this is not acceptable and as a result your employment is terminated from Friday 19th October 1990".

As a result of receiving that letter Mr Moreland presented an application to the Industrial

Tribunal on 10 December 1990 complaining of unfair dismissal and redundancy. In the Originating Application he stated that he had been employed in the firm since 1978. His original employer was Mr Roger Bagg. He is named as the Second Respondent. He is called Robert Bagg in some of the papers, but his Christian name does not matter.

Mr Bagg ceased trading on 21 September 1990. The tools and equipment of the firm which carried on business supplying locomotive name plates to British Rail, was purchased by the First Respondent, Mr Newton, and on 21 September he had offered employment to Mr Moreland from 24 September at an agreed remuneration.

Mr Moreland was employed as a foundry worker. His complaint about the circumstances in which he was dismissed was that he accepted the offer in the letter of 21 September, but on 20 October he received the letter of 19 October advising him that his employment was terminated.

Mr Moreland admitted that he had been absent from work on 9, 12 and from 15 to 19 October. He said that his absences on the 9th and 12th were authorised absences for which prior permission had been obtained. His absence between 15 and 19 October was due to unforeseen circumstances which were explained in full to his supervisor and permission was given. He summed up his feelings about his departure from the firm by saying:

"After 12 years' continuous and loyal service to the Company I claim that [Mr Newton's] summary dismissal amounts to an act of unfair dismissal".

There was a claim against Mr Bagg that is not relevant for the purposes of this Appeal. Mr Newton contested the claim. He said the reason for the dismissal was misconduct by Mr Moreland.

In the Notice of Appearance dated 16 January 1991, he took a number of points. The first was that Mr Moreland had not been continuously employed by him for a continuous period of at least two years prior to his dismissal. There was no transfer of an undertaking. He was not therefore entitled to claim unfair dismissal. Alternatively, there had been a break in continuity. Finally, he alleged this:

"..... bearing in mind the size of his undertaking [Mr Newton] was justified in dismissing the Applicant summarily following unauthorised absences from work on 9 and 12 October and for the whole of the working week culminating in the decision to dismiss him on 19 October at a time when the Applicant full well knew that his presence was vital to the continued well being of the business".

Mr Bagg put in a Notice of Appearance which is not relevant to this Appeal. Those documents crystallised, quite clearly, over three years ago what was the disagreement. What has happened since is not a favourable reflection on the operation of the system which is intended to provide cheap, effective and informal resolution of employment disputes. This is the third time that this dispute has been brought before this Tribunal on appeal from the Industrial Tribunal.

We need not go into the details of the first decision of the Industrial Tribunal. There was a hearing at Nottingham on 29 July 1991. For reasons notified to the parties on 13 August 1991, the Tribunal unanimously decided that Mr Moreland's claim of unfair dismissal should not be dismissed on the ground that his Contract of Employment with Mr Bagg constituted a fraud on the Revenue. At that Hearing there was legal representation of Mr Moreland and Mr Newton. Mr Newton appealed against that decision. The matter came before Mr Justice Tucker on a Preliminary Hearing. He found that there was an arguable case and directed that the Appeal should proceed to a full hearing.

In the meantime there was another hearing before the Industrial Tribunal. That resulted in the decision which is under appeal in this case. That hearing took place on 27 March 1992. On 2 July 1992, Mr Justice Wood presided over a Tribunal which made an Order that the earlier Appeal should be dismissed, neither of the parties appearing. The Appeal was dismissed because Mr Newton wished to discontinue the Appeal.

Now we come to this Appeal. In order to appreciate the arguments on each side, it is necessary to look at what was decided. In the Full Reasons for the decision the Tribunal set out the facts. These were that Mr Moreland had worked for Mr Bagg from 1978 to September 1990 when the business collapsed. Mr Newton took over the business after negotiations. Mr Moreland was taken on as an employee. Mr Moreland was employed as what was described as "a loose pattern moulder". He was a key man in the business.

The events which led up to the dismissal started in the week beginning 8 October. On 8 October Mr Moreland asked Mr Bagg, who was no longer the owner of the business but was still in charge, for a day off to see a solicitor. Mr Bagg granted permission. Mr Moreland was away from work on the Tuesday, the 9th. He came back to work on the Wednesday and saw Mr Newton. He asked for another day off, Friday the 12th. He wanted to see a man from the Gas Board about repairs to his gas installation. He had to be there. Mr Newton granted permission, but made it clear that that was on the understanding that it was for the last time. Trouble brewed up the next week when, on Monday, 15 October, Mr Moreland arrived early, but not to work. He said he would not be working because the builders were coming to carry out extensive restoration and renovations to his house. Mr Moreland said he needed to be there because furniture had to be moved and there was no one else in the house. He was off for the rest of the week.

On 19 October Mr Newton sent the letter terminating his employment. He gave evidence that Mr Moreland was a key man who knew the financial position of the Company. Mr Newton had addressed the employees of the Company the day he took it over and told them it was a critical three months ahead. It was necessary for everyone to work as hard as they could. He gave evidence to the Tribunal that, as Mr Moreland proved to be unreliable and had taken time off without permission, he could not afford to employ him any more. So he dismissed him.

Mr Moreland said that, in his view and in view of his long work record with Mr Bagg, this was unjust. The Tribunal said in paragraph 6:

"Mr Moreland admitted that he had no permission to take the week off, and agreed that the onus was possibly on him to telephone Mr Newton to ask permission".

There were four workers in the firm. Mr Moreland held the senior position and indeed had been in charge of it from time to time when Mr Bagg was not on the premises. The crucial parts of the Tribunal's decision on which most of the argument was based on are the final two paragraphs which I shall read in full. They are both brief. The Tribunal said:

"8. There was, however, no final warning by Mr Newton that if Mr Moreland did not return to work he would be dismissed. It is a small firm, only four people, and in view of its size, the Tribunal feel that such a step should have been taken. We do not accept that the words used the previous week "it must be the last time" was in fact a final warning. Our conclusion is, therefore, that the dismissal was unfair".

In paragraph 9 the Tribunal dealt with the Applicant's claim for compensation for his unfair dismissal.

"It is our view that the conduct of the Applicant was such that he wholly contributed to his own dismissal. Although the method of dismissal was unfair, we find that in fact he is not entitled to compensation because of his 100% contribution".

On the appeal the request for the Chairman's notes was made and granted. The notes were supplied to the parties in March 1993. At the opening of this Appeal an application was made by Mr Kibling, on behalf of Mr Moreland, for leave to adduce in evidence an affidavit sworn this morning relating to evidence given to the Tribunal. The application was opposed by Mr Oldham, on behalf of Mr Newton, on grounds that the affidavit had been produced at the last moment, that there had been no satisfactory explanation for not seeking to adduce it earlier, and that, in any event, the affidavit contained inadmissible material. We were inclined to agree with all those objections, but, before we were asked to rule on the matter, Mr Kibling prudently withdrew his application.

What of the arguments on the appeal? We have heard full arguments with considerable citation of authorities. It is impossible to do full justice to the detail of the arguments. It is probably unnecessary to attempt to do so.

Mr Oldham's arguments in support of dismissing this Appeal were that the Tribunal had provided in its decision adequate reasons for its finding of contributory fault. He referred to the parts of the findings dealing with the circumstances in which Mr Moreland was away from work. He said that the facts were adequately set out. The Tribunal was not under an obligation to set out in detail all the reasons for conclusions on the facts or the law. There was no obligation to provide greater detail than the Tribunal in fact provided. On that part of the case he referred to the well-known passage in the Judgment of Lord Justice Eveleigh, Varndell v Kearney & Trecker [1983] ICR 683 at 693 where he said that it seemed to him that the arguments put forward by the employees in that case required of the Tribunal not a statement of reasons, but an analysis of the facts and arguments on both sides, with reasons for rejecting the arguments of the employees and reasons for accepting the facts relied on in support of the Tribunal's decision. This is not necessary. He went on to say there was evidence to support the findings and conclusions. There was no right of appeal on a question of fact, so what use, generally speaking, is it to have a detailed recitation of the evidence? The conclusion of fact, with which the Court of Appeal or the Appeal Tribunal might disagree, provided it is justifiable on the evidence, gives rise to no ground of appeal. There is no obligation upon the Tribunal to state the facts in detail. They may choose to do so. It is a matter for them. He went on to give an example to illustrate the general proposition that there was no obligation on the Tribunal to set out the matters of evidence and fact in as much detail as was contended by the employees in that case.

Mr Oldham also disputed the criticism that this decision was perverse. He said there was evidence that Mr Moreland did not have permission to take time off. He referred to passages in the notes of evidence in support of that. It could not be said that the decision on contributory fault was flawed. (Mr Oldham has not sought to attack or criticise the finding against his client that there was unfair dismissal. There was no cross-appeal. His position on that is that there was no question of law arising from that decision which would be appealable). He then came to the crunch of his case, the question of the 100% reduction in compensation for contributory fault. That reduction was made, though these provisions were not expressly cited, under the provisions of Section 73(7)(B) of the 1978 Act in relation to a Basic Award. That provides:

"Where the tribunal considers that any conduct of the complainant before the dismissal (or, where the dismissal was with notice, before the notice was given) ... was such that it would be just and equitable to reduce or further reduce the amount of the basic award to any extent, the tribunal shall reduce or further reduce that amount accordingly".

There are similar provisions in relation to contributory fault in the calculation of a compensatory award under Section 74 sub-section 6 where it is provided:

"Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding".

On this point Mr Oldham submitted that the assessment of contributory fault was a finding of fact. It was not open to this Tribunal to interfere, unless it could be said that the finding was perverse in the sense that there was no evidence to support such a finding. Under Section 136 of the 1978 Act this Tribunal only has jurisdiction to entertain Appeals on points of law. As authority for the proposition that a finding on contributory fault is a finding of fact, Mr Oldham referred to the decision of the Court of Appeal in Hollier v Plysu Limited [1983] IRLR 261. In his judgment at paragraph 26 Lord Justice Fox said:

"The matter I think was essentially one for the Tribunal of fact which was the Industrial Tribunal. They reached a very definite conclusion upon it. Having heard her and observed her there was in my view evidence on which they could do so as far as we have the evidence before us at all in the facts that I have mentioned".

We must conclude therefore that there are no grounds upon which the Appeal Tribunal can interfere with the conclusion of the Industrial Tribunal. On the question of perversity Mr Oldham referred to the speech of Viscount Dilhorne in the House of Lords in W Devis & Sons Ltd v Atkins [1977] AC 931 on pages 957 to 958 from which it appears to be Lord Dilhorne's view that there was no inconsistency in, on the one hand, a finding of unfair dismissal and, on the other hand, a decision of contributory fault resulting in a conclusion that it was just and equitable to make an award of no compensation. He emphasised, on that basis, that there was no presumption of inconsistency or perversity in assessing contributory fault at 100%. He pointed out passages in evidence that there was ample material to support a finding of 100% contributory fault and that the Tribunal was entitled to come to the conclusion by the evidence which Mr Moreland himself gave in cross-examination, as well as other evidence, that his behaviour was blameworthy.

There were two other points which Mr Oldham briefly dealt with. They arise from criticisms of the Tribunal's decision made by Mr Kibling on behalf of Mr Moreland. I will deal with those briefly. I agree with Mr Oldham that neither of these two final points have any substance in them. The first was, as is correct, the Tribunal did not expressly consider the Basic Award and Compensatory Award separately. The power of the Tribunal to reduce an award on the ground of contributory fault is dealt with in two separate sections. We agree with Mr Oldham that the general principle is that, if contribution is found, on principle it should be in the same proportion both in the Basic Award and in the Compensatory Award. The authority for that is in Chaplin v H J Rawlinson Ltd [1991] ICR 553 and 563 (B) to (C). There was no material before this Tribunal which would indicate that a different approach should have been taken by the Industrial Tribunal to the reduction under one heading of payment as opposed to the other. The second point on which we find it unnecessary to dwell on in any detail was a point made by Mr Kibling that there had been a failure by the Tribunal to perform its duty under Section 68(1). That section of the 1978 Act imposes a duty on an Industrial Tribunal that finds a ground of complaint well-founded to explain to the complainant what orders for reinstatement or re-engagement may be made under Section 69 and in what circumstances they may be made. It should ask him whether he wishes the Tribunal to make such an order and, if he does express such a wish, the Tribunal may make an order under Section 69, the section under which the Tribunal can make orders for reinstatement or re-engagement. All we need to say on that point is that in this case it is clear from the Originating Application that Mr Moreland was only interested in payment of compensation. There was no request for reinstatement or re-engagement. It does not appear that he changed his mind subsequently. The failure to incant Section 68(1) would have had no relevant effect on the correctness of the decision. It might have been a failure of the Tribunal in their statutory obligations not to incant the section, but we are unable to see any link between that failure and any alleged legal flaw in the decision.

What is the legal flaw in this decision? We agree with Mr Kibling that there is an error of law and that the Appeal should be allowed. Mr Kibling has put the matter in a number of ways. It really comes down to his first point, that the Tribunal has not satisfactorily explained in the decision, either by reference to the facts, or by providing reasoning on why they have reached a decision of contributory fault to the extent of 100%.

The result is that the reaction of this Tribunal on reading this decision is very much the kind of reaction described by the Employment Appeal Tribunal in East Berkshire Health Authority v Mattadine [1992] IRLR 336. In that case there is a full review of the situations in which this Tribunal can interfere with a decision of the Industrial Tribunal, where it is satisfied that the decision of the Industrial Tribunal is one that cannot stand. The reaction can be described in various ways, such as "My goodness that was certainly wrong", or "That must be wrong" or "That cannot be right" or "That it is so clearly wrong that the decision cannot stand" or the decision offends reason, or in more legalistic terms, the 100% contributory fault was not a permissible option to the Tribunal on the findings of fact in the decision on the evidence appearing from the notes of evidence and from their own reasoning.

We agree with Mr Kibling that in this case the Tribunal erred in law in failing to provide in the decision basic factual conclusions and reasons which led to the view that 100% contributory fault justified the award of no compensation. He referred to well-known decisions, such as Meek v City of Birmingham District Council [1987] IRLR page 250, and emphasised that the decision must, where there was oral evidence given which revealed a possible conflict, refer to or summarise the evidence tendered, or at the very least, resolve any conflict or inconsistency in the evidence. It is not necessary to go through the details of the evidence. Mr Kibling pointed to the failure of the Tribunal to make any reference in the decision to the evidence given by Liza Bagg or Brian Whitehead. The Tribunal's decision makes no reference to evidence given to Mr Bagg about discussions with Mr Moreland on 15 October 1990. There was no real attempt in the decision to explain by reasons why 100% contributory fault was found.

Mr Kibling went further and said this was a case of perversity. We think that this is one of those rare cases where perversity has been established. Prima facie, there is an inconsistency in the decision which does require explanation, fuller than the Tribunal gave. On the one hand, the Tribunal found that the dismissal was unfair because a reasonable employer would have given a warning to Mr Moreland rather than dismiss him for the absence that occurred in the week of 15 October. On the other hand, the Tribunal held that Mr Moreland was 100% to blame for his dismissal. We agree with Mr Oldham that, depending on the facts of a case, it is possible to have both a finding of unfair dismissal and a refusal to award any compensation on the grounds of contributory fault, but it is a rare and unusual combination. Because of its rare or exceptional combination it requires justification by reference to evidence and requires the giving of reasoning. All that has been done in this case is that the Tribunal have said, in what may be called "the killer sentence" of the decision so far as Mr Moreland is concerned, that, although the method of dismissal was unfair, he is not entitled to compensation because of his 100% contribution. That refers simply to the previous sentence which says:

"In our view the conduct of the Applicant was such that he wholly contributed to his own dismissal".

That conduct, we agree with Mr Oldham, refers back to the facts found earlier in the decision. The facts found earlier in the decision are first, that in the absences from work in the week beginning 8 October, two days off were both with permission, once from Mr Bagg and once from Mr Newton and the absence in the week of 15 October was without the permission of Mr Newton. But, it appears from the evidence of Mr Moreland, it was with the permission of Mr Bagg. There was no clear finding of fact in the decision rejecting the evidence of Mr Moreland. There are insufficient materials in the decision to justify the conclusion, particularly when read in the light of the notes of evidence which reveal important matters of evidence which were not taken into account although they were relevant to the question of contributory fault.

We accept Mr Kibling's submission that in this case no reasonable Tribunal would have concluded, from the findings of fact made in the decision and from the evidence before the Tribunal, that contributory fault justified a reduction of both the Basic Award and the Compensation Award by 100%. As appeared from the decision of Sulemanji v Toughened Glass Limited [1979] ICR 799 at pages 800 to 802, that is an exceptional course to take and, if that course is adopted, it must be justified by facts and reasons set out in the decision.

For those reasons we shall allow the Appeal. We say no more about the points made on Section 68(1) or on the failure of the Tribunal to draw a distinction between the Basic Award and the Compensatory Award for the purposes of contributory fault.

There was some discussion in the course of the Hearing as to what course we should take if the Appeal was allowed. The question arose as to whether we should remit only on the question of contributory fault or whether we should remit the whole matter. Counsel have now told us that they are agreed that, if the Appeal is allowed, the proper course is to remit the whole matter. We agreed that that is a sensible course to take. There would be potential unfairness to Mr Newton if the only matter that were remitted was the question of contributory fault. In view of the criticisms of the Tribunal decision the proper course is to remit the whole matter. That course is justified by authority in the case of Irvine v Presscold Ltd [1981] IRLR page 281.

We would add that, in view of the time which has passed and also in view of the comments we have made on this particular decision, the case should be remitted to be heard by a different Industrial Tribunal. The Order is to allow the Appeal and remit the whole matter to a different Industrial Tribunal.

Our parting words with the case is that we were told, during the course of the hearing, that there were "without prejudice" discussions between the parties. We know nothing of those discussions, nor should we. As we made clear at the end of the morning session we are concerned about the consequences of our decision. We said we were not happy with the Tribunal's decision. We added that we were not happy with the consequences of coming to a conclusion which means that, nearly four years after Mr Moreland was dismissed, the matter will go back. Unless the case is compromised the matter will go back to an Industrial Tribunal to start all over again. We would urge the parties, in their own interests, to try to avoid a further hearing. It is not our job to conciliate or compromise cases, but, if there is a possibility of a sensible compromise in this case, we would be the first to encourage it.