United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 722_93_2007

Appeal No. EAT/722/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 20 July 1994

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MR P DAWSON OBE

MISS C HOLROYD

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SONY (UK) LTD          APPELLANTS

MR S SAUNDERS          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR P NICHOLLS

(OF COUNSEL)

Messrs Eversheds

Solicitors

Fitzalan House

Fitzalan Road

Cardiff CF2 1XZ

For the Respondent MR P MARSHALL

(OF COUNSEL)

Messrs John Spender & Co

Solicitors

40 Station Road

Port Talbot

West Glamorgan

SA13 1JS


 


MR JUSTICE MUMMERY: (PRESIDENT) This is an appeal against the decision of the Industrial Tribunal held at Cardiff a year ago on the 16 July 1993. It was an interlocutory decision made on a submission by the Respondents to proceedings commenced against them for unfair dismissal by a former employee, Mr Stephen Saunders. Sony (UK) Ltd submitted, at the conclusion of Mr Saunder's case, that there was no case to answer. For full reasons notified to the parties on the 26 July 1993 the Tribunal unanimously decided that there was a case to answer.

Sony, were dissatisfied with that decision and informed the Tribunal that they would appeal. The notes of the Chairman disclose that, on being informed of Sony's intention, the Tribunal adjourned the hearing pending the outcome of the appeal to this Tribunal. He noted that if the appeal was dismissed the case would be resumed, and that, if the Appeal Tribunal did not refer the matter to a different Tribunal the same Tribunal would resume the hearing.

Sony carried out their intention by Notice of Appeal dated the 3 September 1993. In the Notice of Appeal three points were taken in support of the submission that the Industrial Tribunal had misdirected itself in law in rejecting Sony's submission of no case to answer. First, that the Tribunal had applied a test of whether it should accede to that submission and the test they applied was not the correct test. Secondly, the Tribunal had failed to apply the correct test to the question whether or not Mr Saunders had been dismissed; and, thirdly, the decision of the Tribunal that there was a case to answer was one which no reasonable Tribunal, properly directing itself in law, could have reached.

The submissions made on behalf of Sony today follow that broad attack on the decision of the Tribunal. In order to understand the legal arguments on the appeal it is unnecessary (and probably undesirable) to say much about the background facts which have given rise to the dispute. Mr Saunders was employed as a Implosion Protection Operator by Sony at their factory in Bridgend. He was employed from July 1989 until his employment terminated on the 20 November 1992. In his Originating Application for unfair dismissal presented to the Tribunal on the 6 January 1993 Mr Saunders set out his account of the circumstances in which he was dismissed.

The dispute with Sony arose out of his being found asleep on duty at the end of October 1992. He was suspended on full pay pending an investigation of his conduct. He admitted sleeping on duty. Various meetings took place which led to the termination of his employment.

Sony's case, as summarised in the Notice of Appearance dated the 4 February 1993, was that Mr Saunders had not been dismissed; he resigned for reasons of his own. The Notice of Appearance provides detail of the incident which gave rise to the dispute between Mr Saunders and Sony. It gives details of the interviews and meetings which took place. The details are not important for the purposes of disposing of this appeal. The essence of Sony's case was that Mr Saunders said that he wished to resign. They said that he confirmed that he had not been put under any pressure by his Union to resign; that he did not feel pressurised by Sony to resign; and Sony therefore accepted his resignation which was confirmed in writing on that same day. In those circumstances he was not dismissed. If he was not dismissed, he could not claim unfair dismissal.

The Notice of Appearance specifically denied that Mr Saunders had been put under any duress to tender his resignation. Alternatively, it is stated that, if it was found that he did not resign for reasons of his own, Sony would argue that his dismissal was for a fair reason, namely, his conduct. It was in accordance with offences identified in Sony's disciplinary and grievance code. Further, Sony would contend that the dismissal for that reason was fair and reasonable in all the circumstances, having regard to equity and the substantial merits of the case. That wording reflects the statutory provisions in Section 57(3) of the Employment Protection (Consolidation) Act 1978.

The hearing took place before the Industrial Tribunal. It is necessary to refer to a few passages of their full reasons in order to understand the legal submissions made by Mr Nicholls, (very ably if we may say so), on behalf of Sony. The reasons record in paragraph 1 that the Solicitor representing Sony made a submission of no case to answer at the end of the evidence given by Mr Saunders, who was not represented. The Tribunal dealt with the submission of no case to answer by giving a short decision in the first instance in these terms:

"While in many other jurisdictions this might be case where the submission made by Mr Du Feu" [the Solicitor for Sony] "would succeed, the Industrial Tribunal is a specialised jurisdiction in which the Appeal Tribunal has repeatedly urged upon us in cases of sex discrimination, race discrimination and constructive dismissal, that it is only in the quite exceptional case that we should accede to a submission of no case to answer. We do not think that this is such an exceptional case and accordingly we do not accede to that submission. We will give full reasons for this Decision in due course."

There then followed the full reasons. The Tribunal said:

"Despite the evidence of the applicant, the general burden of which is that he was not told, and certainly was not told in terms, "resign or be dismissed" we consider that there is a prima facie case that that is what he understood the situation to be and that his understanding was brought about by what was said to him by the respondents' Managers and by what was said to him by his trade union representatives. Two matters in particular concern us, the fact that he alleges that he asked Mr Craig about the procedure to appeal and our ignorance of what management said to the trade union representatives."

The Tribunal went into the facts which were taken largely from the Notice of Appearance. They dealt with a query raised about an appeal. They pointed out that, Mr Saunders was not represented. They said he gave his evidence with remarkable frankness. He was not very articulate. The Tribunal recorded that he had to be taken through his evidence by the Chairman doing the best he could. The Chairman noted the distress suffered by Mr Saunders during the course of the hearing.

The Tribunal went on to record the other matter that concerned them. They had not heard from the Trade Union representatives. The Trade Union representatives had been brought to the hearing by Sony. They recorded a submission made by the Solicitor for Sony that anything said to the effect that the alternatives were to "resign or be dismissed" must have been said by Trade Union representatives and could not be attributed to Sony. That was something that Sony were not responsible for. The Tribunal pointed out that they did not know what had been said in private talks between the Trade Unions and management.

The Tribunal referred to the submission which they did not accept and which has led to this appeal. They said: (paragraph 7)

"Mr Du Feu's submission was based upon the proposition that the applicant had to show breach of contract. I referred him to, and read the passage in Harvey from, the judgment of Sir John Brightman in East Sussex County Council v Walker ... Mr Du Feu said he would distinguish the case on its facts, but most of Mr Du Feu's argument was based upon this not being a case of fundamental breach of contract of the sort dealt with in Western Excavating (ECC) Ltd v Sharpe."

The crucial part of the Tribunal's decision, which is said to contain and repeat in qualified terms a misdirection of law contained in the short decision, is in paragraph 8. I read it in full:

"Our general approach to constructive dismissal cases is, normally, to hear both sides. The cases which encourage us to adopt that course are summarised in Vol.IV of Harvey, Chapter X, 61C, para.181-184. I note that the passage from the judgment of Mr Justice Phillips in Ridley's case refers to "exceptional cases" rather than, as I said in rejecting the submission, "quite exceptional cases." Nevertheless, Ridley's case is, in our view, a good prima facie guiding principle, and is in line with the other cases cited in para.182 of Harvey. In our view, it is "better to hear what everybody has to say". This is not an exceptional case. Had the respondents called evidence, the case would certainly have finished in the day. It would not have meant the expenditure of further time or money. We did not, of course, put Mr Du Feu to his election, because that, too, is our understanding of the normal practice of the Industrial Tribunals. The Tribunals should, if possible, avoid being, or appearing to be legalistic: "the fewer procedural bars there are the better".

Paragraph 9 does not add anything of significance to the reasons in paragraph 8, save that "there was sufficient evidence to justify our rejecting the submission."

What is wrong with that? The jurisdiction of this Tribunal is limited by statute to questions of law arising in decisions of Industrial Tribunals under prescribed legislation, including the 1978 Act. Where is the question of law in this case?

Mr Nicholls' submission is that there is a question of law. That is the erroneous direction which the Tribunal gave themselves about the test of whether or not there is a case to answer. He submitted that the Tribunal erred in law in holding that, in unfair dismissal proceedings, it could only accede to a submission of no case to answer in an exceptional case. The true position was otherwise. It was as stated in the case of Coral Squash Clubs Ltd v Matthews [1979] ICR 607 at 611H-612B where Mr Justice Slynn said that:

"... if the Tribunal is satisfied that the party upon whom the onus lies and who goes first has clearly failed either in law or in fact to establish what he set out to establish, then it seems to us that the tribunal is entitled to decide the case at that stage. It should, however, always bear in mind what was said by this Appeal Tribunal in Ridley v GEC Machines Ltd [1977] 13 ITR 195 and in the other cases which also deal with this point."

Working back to the decision in Ridley v GEC Machines one finds references to cases of hearing only one side being "exceptional". Ridley's case is a decision of the Tribunal given by Mr Justice Phillips. He referred to a case of Mr Justice Kilner Brown called Buskin v Vacuteck Successors Ltd where that judge stated that it seemed to the Tribunal that the duty of an industrial tribunal is to hear evidence on both sides. Mr Justice Phillips commented at 196H:

"We are told that has been interpreted as laying down an inflexible rule of law and practice, that in all cases whether of constructive dismissal or otherwise, an industrial tribunal is bound, whatever the circumstances, to hear the respondent's evidence. During the adjournment we have consulted Mr Justice Kilner Brown and he tells us that that was not the intention of the passage quoted, nor indeed, with respect, do we think that that is what the passage says.

We agree with what we think that passage is intended to mean, namely that the ordinary general practice should be to hear what has to be said on both sides. All our experience - now getting on for two years - shows that where that is not done confusion very often arises, and even if it does not, a feeling of injustice is left with one party or the other. But that passage was not intended to say, nor do we intend to say that there are no exceptions at all. There may be cases put forward which are so obviously hopeless that it would be a complete waste of time to call upon the respondents to call evidence, and thus prolong the proceedings for what may be a long time at very considerable expense. So, yes, there may be exceptional cases but ordinarily at all events it is better to hear what everybody has to say."

Mr Justice Phillips said he did not think that case was one of the exceptional cases. It would have been better and in accordance with normal practice to have heard what both sides had to say.

Mr Nicholls' submission was that it was an error of the Tribunal to rely on Ridley for the proposition that a submission of no case to answer could succeed in this case only if the Tribunal was of the view that the case was exceptional. He accepted that Ridley was relevant to constructive dismissal cases, but the case put forward by Mr Saunders was not one of constructive dismissal.

The Tribunal said that the essence of Mr Saunders' case was that he understood tht the situation was "resign or be dismissed". An employee who resigns in those circumstances is not constructively dismissed. He submitted that the true analysis was that the contract of employment had been terminated by the employee. He referred to the East Sussex County Council case, mentioned in the decision, as distinguishable.

Accordingly, the authorities dealing with submission of no case to answer in constructive dismissal cases, such as Ridley, were irrelevant. The sole question for the Tribunal was whether Mr Saunders had clearly failed to establish that he had resigned in circumstances which where Sony had said "resign or be dismissed."

Mr Nicholls had an alternative argument. That was that the Industrial Tribunal had misconstrued Ridley. The reference in Ridley to an "exceptional" case did not mean that the Tribunal had to be satisfied both that the party on whom the burden lies had clearly failed to establish what he set out to establish and that the case must be exceptional. It merely meant that the cases in which a party clearly fails to establish what he has set out to establish will be not frequent. The ratio of the case was more correctly expressed in the headnote in these terms:

"It is not an inflexible rule of law and practice that in all cases, whether of constructive dismissal or otherwise, an industrial tribunal is bound, whatever the circumstances, to hear the evidence on both sides."

He submitted that the Tribunal erred in taking into account the test to be applied to a submission of no case to answer in discrimination cases. The approach to submissions of that kind made in discrimination cases differs from those to be taken in other cases by reason of the particular difficulties facing applicants in cases of sex and race discrimination. He referred to the case of Oxford v Department of Health & Social Security [1977] ICR 884 at 887A where at Mr Justice Phillips said:

"It seems to us that that was a very proper course to have adopted."

He referred to the course of continuing to hear evidence from the other side and rejecting the submission of no case.

"We would recommend it as being adopted where it being the course which in most circumstances is the right course to adopt. It further seems to us that while the burden of proof lies upon the Applicant, it would only be in exceptional or frivolous cases that it would be right for the Industrial Tribunal to find that at the end of the Applicant's case there was no case to answer and that it was not necessary to hear what the Respondent had to say about it."

Mr Nicholls' concluding submission on this part of the case was that, if this Tribunal had asked the question whether Mr Saunders had clearly failed to establish that he had been told "resign or be dismissed", it could only be held that he had failed. Applying the proper test, there was no case to answer.

He submitted that the test as laid down in Coral Squash Clubs Ltd v Matthews was still the proper test; the Rules in force at the time of that decision (1978) provided that a Tribunal may regulate its own procedure. That Rule was repeated in paragraph 12 of the Regulations made in 1985 which were in force at the time when the Cardiff Tribunal made its decision. That Rule is to be found in the current Rules (1993) (Rule 13(1)).

He supported his argument on the relevance of these early decisions by reference to Aberdeen Steak Houses Group Plc v Ibrahim [1988] ICR 550 Mr Justice Wood observed at p.557D that industrial tribunals had always had a discretion about their procedure, and about the admission of evidence. While leaving the ultimate decision on procedure and evidence to the discretion of the Chairman, total informality and absence of generally recognised rules of procedure and evidence can be counter-productive in that parties may not feel that their cases have been fairly and appropriately dealt with. He referred in his decision at 557C-G to a number of earlier authorities still regarded as valid under the changed Rules as laying down what were fair and reasonable procedures for a Tribunal to follow in the exercise of its discretion as master of its own procedure.

In our judgment, the point raised by the submission of no case to answer could have been, and should have been, resolved by the Tribunal by express reference to the Rules. The Rules are a more certain guide to matters of procedure than earlier decisions on different Rules. Rule 8(1) of the Industrial Tribunals Rules of Procedure Regulations 1985 (repeated in Rule 9(1) of the 1993 Rules) contains this provision:

"The tribunal shall conduct the hearing in such manner as it considers most suitable to the clarification of the issues before it and generally to the just handling of the proceedings; it shall so far as appears to it appropriate seek to avoid formality in its proceedings and it shall not be bound by any enactment or rule of law relating to the admissibility of evidence in proceedings before the courts of law."

The last part of the Rule is not material to this appeal. The Rule confers on the Tribunal a wide discretion to do what it considers most suitable to the just handling of the proceedings before it. If, in the exercise of its discretion, the Tribunal comes to the conclusion that it wants to hear all the evidence before coming to a decision, then the exercise of that discretion entitles the Tribunal to reject a submission of no case to answer designed to prevent the Tribunal from hearing more evidence. If that analysis is correct, there can only be an appeal from the exercise of the discretion if it is shown that the exercise of the discretion was contaminated by irrelevant factors or by failure to take account of relevant factors or by erroneous application of principle.

We are unable to detect in the decision, and the reasons for it, any contamination of that kind. We can see nothing wrong in the exercise of that discretion by reference to the considerations stated in paragraph 8 of the decision. It is correct to state that it is normal to hear both sides in a case. That is true whether it is dismissal or constructive dismissal or race or sex discrimination. The Tribunal states that it is better to hear what everybody has to say. That is a correct statement which we would expressly to endorse in the field of industrial disputes.

The lay members of this Tribunal would add their support expressly to the comment made by Mr Justice Phillips in Ridley v GEC Machines that experience shows that both sides should be heard, since otherwise confusion may arise and a feeling of injustice may be left with one party or the other.

The Tribunal said, and this was the part most criticised by Mr Nicholls, "this is not an exceptional case". He said that was not the test. When read in context there is nothing wrong with what they said. By saying it was not an exceptional case the Tribunal were simply saying it was a case where the normal practice should apply of hearing both sides before making a decision. The tentative view formed by the Tribunal, as expressed in paragraph 2, was that there was a prima facie case that Mr Saunders understood the situation to be one of "resign or be dismissed". That was an understanding not arising from some subjective hallucination, but was, in the view of the Tribunal, an understanding which he thought had been brought about by what had been said to him by Sony's managers and what had been said to by Trade Union representatives.

We have explored the arguments at length because they were comprehensively presented. It would be possible to dismiss this appeal on the short ground, that whatever was said in the earlier decisions on the question of no case to answer, the matter is regulated by Rule and not just by authority. The Rule confers the widest possible discretion on Tribunals to handle proceedings in such way as they consider just.

We would add that the effect of making the unsuccessful submission of no case, and of not accepting the ruling of the Industrial Tribunal, has been to hold up this case for a year. As Mr Nicholls rightly points out it would not be fair to blame his clients for the delays in the Tribunal system. They are unfortunate delays. The best is being done that can be done to reduce the delays to an acceptable minimum.

But it is legitimate, we think, to repeat what is said by the Tribunal in its decision in paragraph 8. Had the Respondents called evidence the case would certainly have finished in the day. It would not have meant the expenditure of further time or money. If the submission of no case to answer had not made, or had been made unsuccessfully and accepted, this case would have been decided on the 16 July 1993. If we had been hearing an appeal at all it would have been appeal against a decision made on a full investigation of the merits, instead of an appeal against an interlocutory decision.

As a matter of general practice appeals against interlocutory decisions cause delay. They add to the time and expense of proceedings which are meant to be conducted informally, expeditiously and at low cost. Appeals in interlocutory matters of this kind should be confined to the clearest case of a Tribunal acting contrary to the Rules or to established principles or practice. There has been no contravention of established principles or practice in this case.

We can deal briefly with the other two points made by Mr Nicholls. He submitted that the Tribunal had erred in law in holding that the question whether the Trade Union representatives had acted as an agent of Sony was a matter on which Sony should give evidence. If it was Mr Saunders' case that the Union representatives act as Sony's agent in suggesting the resignation deal that was a matter for Mr Saunders to prove. He submitted that Mr Saunders' evidence did not establish in the mind of the Tribunal that the Trade Union representatives had acted as Sony's agents. Accordingly Mr Saunders had clearly failed to establish that part of his case and the Tribunal should have so held.

His third and final submission was that the Tribunal's decision was perverse, because no reasonable Tribunal, properly directing themselves in law, could have made that decision. He referred us, in addition to the authorities which we have looked at, to statements in the Tribunals decision of its reasons for its conclusion and to parts of the Chairman's notes of evidence. He submitted that, in the light of those further arguments, this was a case in which the Appeal Tribunal should allow the appeal and substitute its own finding that there was no case for Sony to answer.

We are not convinced by either of these points. It is undesirable for us to delve into the merits of the case or the question whether the Trade Union representatives acted as agent of Sony. In view of our decision on the main point this matter will now be resumed in the Industrial Tribunal in Cardiff to hear evidence. Anything that we say about these matters might be seen as influencing the decision of the Tribunal which has not yet fully investigated this aspect of the case.

We decline to examine the detailed submissions. We say no more about the matter. We are not satisfied that any misdirection of law is to be found on the Tribunal's decision. As to the allegation of perversity we are satisfied, having looked at the notes of evidence, that the Tribunal had sufficient material before it to form what is, after all, only a provisional view, that there was a prima facie case for Sony to answer.

Cases of perversity are confined to instances where this Tribunal concludes that the Industrial Tribunal came to conclusions which were not supported by any evidence, or came to conclusions which were so obviously contrary to the evidence or to common sense that one could characterise them as irrational or astounding. We cannot find perversity in this case. For all those reasons we come to the conclusion that this appeal should be dismissed.

For reasons given earlier this afternoon this Appeal was dismissed. An application has been made by Mr Marshall, on behalf of Mr Saunders, a legally assisted person, that an order for costs should be made against Sony. This Tribunal has jurisdiction to make orders for costs, though in more restricted circumstances than apply in the ordinary Courts. The relevant Rule is in Rule 34 of the 1993 Rules. It provides:

"(1) Where it appears to the Appeal Tribunal that any proceedings were unnecessary, improper or vexatious or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings the Tribunal may order the party at fault to pay any other party the whole or such part as it thinks fit of the costs or expenses incurred by that other party in connection with the proceedings.

(2) Where an order is made under paragraph (1) of this rule, the Appeal Tribunal may assess the sum to be paid, or may direct that it be assessed by the taxing officer, from whose decision an appeal shall lie to a judge."

Mr Marshall submitted that there should be an order in this case. There was no point of law arising from the Tribunal's refusal to accept the submission of no case to answer. As pointed out in Harvey, there has been no case reported in which an Industrial Tribunal's decision to stop a case, after hearing only one side, has been upheld by the Appeal Tribunal.

Mr Nicholls submitted a possible qualification to be found in the observations of Mr Justice Slynn in Coral Squash Club at p.612. Mr Marshall submitted that it might appear from the appeal that it was instituted to achieve tactical delay. Against that, Mr Nicholls argued that there was a point of law which was reasonably arguable. It was debated at length in the skeleton arguments. No case reported had dealt with the point that this matter is governed by the Rules relating to the discretion of the Tribunal, rather than to the earlier cases by analogy with orthodox legal procedures. He said there was no evidence of tactical delay.

We have considered these submissions. Although it is unusual to make an order for costs in this Tribunal, we have reached the conclusion that it is appropriate to order Sony to pay the costs incurred by Mr Saunders in connection this appeal. We are not in a position to assess the sum to be paid. We direct that, in default of agreement, it be assessed by the taxing officer.

The reason for such an order is that, in our view, it was unreasonable for Sony to conduct the proceedings by making the submission of no case to answer against Mr Saunders who was unrepresented. We think it was unreasonable for them, having failed in that submission before the Tribunal, to pursue an appeal against that interlocutory decision.

The main element of unreasonableness is seen in the comment of the Chairman that, if Sony had called their evidence, (they had their witnesses present to do so), the case would have been over that day. It was not a case where a submission of no case to answer, if successful, either before the Tribunal or on appeal, would have saved expenditure of further time and money. The effect of appealing against the ruling of the Tribunal has been to increase the costs of the proceedings and to delay a full investigation into the merits.

Having regard to all those matters we conclude that it was unreasonable to bring this appeal. We are not making the order simply because the appeal has been unsuccessful. Costs here do not follow the event. Our reasoning is based on the provisions of Rule 34.