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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Iceland Frozen Foods Plc v Morison [1994] UKEAT 850_92_1506 (15 June 1994)
URL: http://www.bailii.org/uk/cases/UKEAT/1994/850_92_1506.html
Cite as: [1994] UKEAT 850_92_1506
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At the Tribunal
HIS HONOUR JUDGE J HULL QC
MR J A SCOULLER
MR P M SMITH
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellants MR D RICHARDSON
(OF COUNSEL)
Messrs Bullivant Jones & Co
Solicitors
State House
22 Dale Street
Liverpool L2 4UR
For the RespondentMR S VAUGHAN
(OF COUNSEL)
Messrs Steven Shepherd
& Co
Solicitors
21 Church Street
Macclesfield
Cheshire SK11 6LB
JUDGE HULL QC: Mr Morison, the Applicant in this case, and the Respondent to this appeal, is a gentleman of thirty-nine, an appliance service engineer, who was employed by Iceland Frozen Foods Ltd at first in the London area and then he went North and was based near Manchester. He began his employment with a predecessor company, Bejam, in September 1982, and worked for them, as he worked for the Appellants here, in the business of going around and servicing customers plant. Sometimes, perhaps normally, that was under guarantee arrangements. On occasion it was necessary for the company to be paid, if there was no guarantee, and therefore he would receive cheques or cash.
It is in that connection that these proceedings arose. He unhappily neglected to hand in the cheques and account for the cash in the way which he should have done. The system apparently was that at the end of each week he would be in contact with another employee of the company who came with a van, and would produce further spare parts and tools and so on, anything that he required for his job, and he would hand over to that person the documents, the cheques and the cash and they would thus duly be accounted for.
It does appear that there was no check, or no adequate check, to see that this process was happening; no internal auditing system, or anything of that sort to make quite sure that the cheques and the cash were handed over and properly accounted for at the end of each week or, at any rate, at some interval such as a month. That again appears to have been a part of the trouble.
The complaint in this case arose out of a very serious breach of duty, of that sort; from 1989 onwards Mr Morison kept cheques which he had been given by customers and also cash, and the figures are quite substantial. There were altogether cheques for £964 odd and £606 in cash, which were outstanding. There is a list which we have been shown in the documents bundle, that is document 11, and that is a list of the cheques: it starts in September 1989 and there are also records of the amounts of cash. As a result of all this, several of the cheques went missing, that he should have had. It is not suggested that that was due to dishonesty, but they did go missing. All this went on throughout 1989, throughout 1990. So there was on the face of it, a serious and substantial failure to hand over company property and account for it properly, the cheques and the money being of course the property of his employers.
Mr Morison had moved up to Cheshire in 1990 and this matter came to light at the end of 1991, more than two years after the first of the cheques were given to him. His supervisor, Mr Greenberg, came upon the matter like this: he sent for Mr Morison and a number of his colleagues, he wanted to have a conference with them and he asked them to bring receipt books and documents with them.
Of course it was obvious to Mr Morison that when he produced his book it would show these transactions and would show, of course, that he had not handed over the cheques and accounted for cash in the way that he should have done. He told Mr Greenberg about this straight away and Mr Greenberg took the matter very seriously perhaps not surprisingly. I should say that this was not the first time something like this had happened. There are letters in the Respondents' bundle. There was an occasion in 1985 when Bejam, wrote to Mr Morison saying that on the 22 October he received a verbal warning concerning the control of his paperwork. Then referring to a later occasion:
"As at the date of the disciplinary meeting you held a total of 32 receipts dating back to the 19 July 1984, that had not been processed. These outstanding receipts totalled £617.75. You admitted that you were aware that receipts had to be submitted on a weekly basis.
I advised you that your failure to correctly submit receipts greatly inconvenienced the customers concerned and adversely affected the finances of this company.
In addition you have failed to correctly submit your time sheets, stock sheets and expenses claims."
Therefore, he was rebuked and warned on that occasion. Of course, that warning had expired but this was a written warning to him following a verbal warning and it was in connection with much the same matter. Then there was another letter on 15 January 1988. It records that:
"On Tuesday 12 January 1988 you came into the office and gave the old receipt book to myself. None of the monies or receipts had been paid into Bejams and were outstanding from May 1987. The unpaid monies totalled £997.74. I then told you that we were going to have a disciplinary meeting and informed you that you could have a witness, you declined."
The letter went on a little later:
"You have failed to carry out a reasonable instruction regarding paying in Company monies weekly this is serious neglect in the course of normal work.
I asked if you had anything further to say, to which you replied "I dipped into cash because Bejam owed me £270 from late expenses". On discussing the matter further I found that you had:-
a)Not paid in receipts with customers cheques, for this there was no excuse.
b)You had two out of date cheques from Bejam made out to you for expenses incurred these totalled £114.
In view of this, I confirm that you have now been issued with a Final Written Warning. This warning will be placed on your Personnel File for the next twelve months after which time it will be deemed to have expired."
That was the situation in 1988. Then apparently there was a similar incident early in 1991, there had been a failure to return paperwork. A letter written about that is with our papers but apparently that letter was not sent, or not received by Mr Morison.
As I say, Mr Greenberg was determined to hold a disciplinary meeting. He quite clearly anticipated that he might well dismiss Mr Morison and warned him to bring his car, and he was to bring his tools and so forth, very much on the basis that he might well be dismissed and a disciplinary meeting was duly held and he was duly dismissed. A disciplinary meeting was duly held and he was duly dismissed.
Mr Greenberg, on this occasion, took a note, or it appears that he took a note, that is document 19 with our papers. There is unfortunately some doubt about this, because the Industrial Tribunal has not expressly found whether this was indeed a genuine contemporary note whose contents they accepted. But that note appears to show that Mr Morison told Mr Greenberg that he had actually made use of part of the monies. What happened was that he handed to Mr Greenberg part of the monies, this was on 15 November 1991; he brought in £380 in cash, leaving £225, and the cheques he also brought in.
According to this note, or purported note, Mr Greenberg pointed out to Mr Morison that £225 in cash was missing, and that cheques for £965 were invalid because of course they had all gone out of date, they were more than six months old, and therefore were stale cheques. He apparently asked Mr Morison if he could offer any reason for his actions and what he has Mr Morison saying, in reply, was that he had money problems and had been spending the cash that he collected to buy shopping etc. He said he got into debt while he was living in Caterham and had expected to clear his debts when he sold his house and moved north to Congleton. But due to house prices falling and expensive rented accommodation his financial position did not improve at all and later on Mr Greenberg has him saying he would pay back the money and as to the cheques that he would try and save up the money himself and pay it back; and Mr Greenberg told him that in his view it amounted to gross misconduct.
He, in due course, caused Ms Bather, the Group Personnel Controller, to write a letter to Mr Morison, which is at page 8 of the bundle, saying among other things:
"During the disciplinary interview you admitted theft of the cash and subsequent failure to follow procedures. Consequently, you were dismissed for Gross Misconduct."
The Company's Disciplinary Rules have been sent to us as an addition to the bundle with Mr Richardson's letter of 27 May 1994. They say, among other things, that:
"Gross Misconduct includes but is not limited to:
a.Theft, fraud, deliberate falsification of records, deceit or other dishonesty.
b.Any acts or omissions intended to deprive the Company of any money or property.
c.Unauthorised possession of Company property."
So that was the situation. Mr Morison had been dismissed. He chose to appeal, as he was entitled to do, and there was an appeal hearing at which he put forward a document, which has been typed up as document 9 in the bundle. In that document he said, among other things:
"The cost of moving to Congleton meant that I incurred many bills which I had not expected and meant that my resources could not meet them all. I had at that time because of the worry of the move and my busy work schedule falling behind with my paying in paperwork. Monies and cheques which I had taken for chargeable work had not been sent in to the company as I would normally have done. I took the view that as soon as I had completed my move to Congleton I would deal with this matter and correct this position immediately."
Then he said on the next page:
"Because of the long hours, my paying in paperwork fell behind even further and compounded my problems even more."
He then complained of his relationship with Mr Greenberg. Then he complained, and this is an important matter, he said:
"In your letter dated the 20 November it was stated that I admitted to theft I MOST EARNESTLY POINT OUT THAT AT NO TIME HAVE I ADMITTED TO THIS AND NOR WILL I EVER DO SO.
In the above I hope I have explained the background and the unusual build up to this problem. It was the exhaustive work load. The breakdown in trust and communication with Mr Greenberg and sheer bloody stupidity on my part for not disclosing this matter sooner. .......
As my paying in book indicates, I have logged all collectable charges on calls I have made. There is no question of my trying to falsify them or to take money from customers without issuing a receipt. All the cheques are accounted for and any monies collected are available to the company. I hope this indicates the absence of intent in any of my actions."
That appeal was duly heard on the 28 November 1991 and it is dealt with in the letter of 2 December 1991. Ms Bather heard the appeal. She sat with Mr Don Taylor, the Appliance Service Manager, and Mr Morison had a representative, Keith Wylan, there. She wrote, among other things, and this too is very important:
"You also pointed out that you had never intended or admitted to theft and I accept that the wording of your dismissal letter was inaccurate on this point."
That is in the middle of her letter. She said:
"Whilst you admitted the seriousness of your actions in withholding monies due to the Company you asked for leniency on the following grounds:
1.Your length of service with the Company.
2.The work pressures you felt you had been subjected to.
3.Your personal circumstances.
Having listened to everything you had to say, read your written statement, and after very careful consideration of all the circumstances, I regret to confirm that our decision is that your appeal was unsuccessful and your dismissal for gross misconduct stands."
She then referred to the document which I have already referred to, setting out the Disciplinary Rules.
"Your appeal fails for the following reasons:
1.You were fully aware of your actions and in fact I find from your Personnel file that you had received two warnings about the same matter in 1985 and 1988. Bejam has obviously exercised considerable leniency towards you in the past. We saw no reason to show further leniency.
2.The nature of the job you had performed for nine years of necessity involves unsociable hours and high mileage. We believe that you were under no greater strain than other Appliance Engineers."
Then she deals with the relationship with Mr Greenberg.
"Although you have now repaid all the cash payments made to you by customers, nevertheless you have deprived the Company of monies due to the value of £965.82 in cheques which cannot now be presented."
So the dismissal stood. Mr Morison complained to the Industrial Tribunal of unfair dismissal. His complaint is at page 10 of the E.A.T. bundle and he says among other things:
"I was not dismissed for fraud as I have always been honest."
and so on. He had made a mistake in suggesting that he only kept the cheques for six months, he wrote a letter correcting that and saying that it was eighteen months, some of them for longer than that, some of them for two years.
In their answer, which is at page 22 of the E.A.T. bundle the employers set out the facts which I have already referred to, the failure to produce the cheques and the cash. They say, of course, it was part of his duty to collect them. He has subsequently repaid the £225, that was the balance of the cash, he repaid that at the Appeal Hearing. But the cheques totalling £965 had expired and are now unrecoverable. In fact that was putting it too severely: £118 in cheques has in fact been recovered, apparently by referring to the customers and asking for fresh cheques, or asking them to re-date the cheques; but there is still the sum of more than £800 outstanding in cheques which have gone out of date, gone stale and therefore on the face of it there is a loss to the Company.
That was the state of affairs and the Industrial Tribunal had to consider that. We have, of course, looked at their Decision very carefully and submissions have been made to us about it. They say in their Decision, at page 6 of our bundle, that they had observed the demeanour of the witnesses and they prefer the evidence, where there is a conflict of evidence, of Mr Morison to that of Mr Greenberg and Ms Bather, who also gave evidence to them.
They set out certain of the facts and they record one matter as follows:
"The applicant made good the deficiency of £226.00 which he did not have with him on 13 November."
when he paid most of the cash back. It is on the face of it a rather unhappy omission that the Tribunal did not deal at this point with the question why "he did not have the money with him", as they put it, on the 13 November and why he did not repay it then; and to go on with that line of thought the Tribunal, although they dealt with certain matters, most emphatically did not deal with Mr Greenberg's note of what he said had passed before him on the 15 November, document 19 to which we have already referred, which made it clear as could be (if that was a correct record) that Mr Morison was admitting that he had spent the money, which he now denied. He was offering to repay it, he was explaining that he had been in financial difficulties, and so on. He was putting forward matters of mitigation but he admitted he had actually spent the Company's money. That was plainly the view of Mr Greenberg. But it was not so far as one can see adjudicated upon by the Industrial Tribunal at all. It would appear to be a serious matter, which the Tribunal should have considered. Were these employers right in their understanding that their employee had not only withheld the cash from them but had actually spent it and was in effect repaying it out of his own money when he did eventually repay it?
That was an omission from the Tribunal finding. They go on to say that:
"For the applicant, Mr Shepherd" [that is a Solicitor acting for him] "pointed out that when previous problems had arisen with paperwork and cheques they had been termed serious neglect and not gross misconduct. Mr Greenberg had acted with haste and had made it clear to the applicant before the dismissal meeting that his failings amounted to gross misconduct and that he would be sacked. The dismissal letter stated that he had admitted theft of cash and cheques when this was not the case. If it was misconduct, it was not gross misconduct. The respondent had acted both unreasonably and unfairly. For the respondents Mr Attwood" [the legal representative of the Company for the Respondents] "stated that the applicant was guilty of gross misconduct and the respondent believed that he had no intention of paying the money back."
In those circumstances, we accept the submission which is made to us by Mr Richardson, on behalf of the Appellant Company. It was necessary for the Tribunal, first of all, to decide what grounds were shown by the employer for dismissing the employee. Those are set out, as I have said, in the answer which is form IT3 to which I have already referred. Then one would expect the Tribunal to address their minds to the question in Section 57(3) of the Employment Protection (Consolidation) Act as follows:
"The determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether [in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case.]"
The cases which have been cited to us, which of course are familiar cases, show that in deciding whether the employer has acted reasonably or unreasonably, it is not the duty of Industrial Tribunals to put themselves in the position of the employer and say what they would have done. What they have to do is to consider, first of all, whether the employer in good faith did believe the grounds on which he is dismissing the employee. That may be perfectly obvious in some cases, the employer may actually have witnessed what happened. In general though, the employer will be expected to have carried out a reasonable and fair enquiry and to have reached his conclusion on reasonable grounds.
Those are the ingredients of reasonableness and in looking at that the Industrial Tribunal is not to substitute its own views but to consider what the employer has done and whether it falls within the description "reasonable". That is to say, not reasonable in the sense of what the Tribunal would have done but reasonable in that it is what a reasonable and fair employer might have done in the circumstances. As it is said, there is a wide band within which one employer may do one thing and behave in one way and another may behave in another way.
One looks to see in this Decision whether that is what this Tribunal did. They say in paragraph 5:
"For the respondent in evidence it was maintained that the applicant's behaviour fell within (a) or (b) of the definition of gross misconduct in his contract of employment. This is stated to include but it is not limited to (a) theft, fraud, and deliberate falsification of records, deceit or other dishonesty and (b) any acts or omissions intended to deprive the company of any money or property."
They might of course have looked at (c) which said unauthorised possession of property. But they go on:
"For ourselves, we do not believe that the applicant acted dishonestly or intended to deprive the company of any money or property."
That is criticised by Mr Richardson, and we think fairly criticised. It was not for them to say at this stage in their considerations what they believed and whether he had acted honestly or dishonestly. Indeed, the employers were not saying that he had acted dishonestly. What they were there to do was to consider what the employers had found and the way in which the employers had reached their conclusions and the action which they took on the faith of those conclusions. They seem to be doing precisely what the decisions on Section 57(3) say they should not do. The Tribunal went on:
"While he had failed to hand the money and cheques over promptly, there were mitigating circumstances."
That again can be criticised as an astonishing understatement. To say, of a man who has kept cheques for two years so that they have become hopelessly stale and worthless, that he has "failed to hand them over promptly" and to say of a man of whom the employers say "he told us that he had indeed used the money", that he had "failed to hand it over promptly" is an astonishing understatement. But again, it seems to be what the Tribunal think of the matter, not what the employers found. They go on:
"By his conduct, prior to the disciplinary hearing Mr Greenberg made it very clear to the applicant that he had prejudged the issue and had, whether, consciously or unconsciously shut his mind to the fair consideration of such mitigating circumstances as there might have been in this case."
It appears that the only ground for saying that was that Mr Greenberg made it clear that it was in his mind to dismiss. He had not yet heard what Mr Morison had to say about all this, he was holding the Disciplinary Hearing for that purpose. It does seem again, we are disposed to accept Mr Richardson's criticism, that to say that Mr Greenberg had made up his mind on the faith merely of what they set out here and was prejudging the matter and not approaching it fairly is going too far. Mr Greenberg had, of course, formed a view as any Company Executive responsible in this situation must of what had happened and he now was proposing to hear Mr Morison. If he was proposing not to hear him fairly and properly, that would have been a very different matter, but that apparently was not alleged and certainly was not found by the Tribunal.
To say that he had "unconsciously" shut his mind to the fair consideration of mitigating circumstances seems a strange thing to say. If parties and witnesses are expected to satisfy Industrial Tribunals about their unconscious minds, presumably they might have to call psychologists for that purpose, because nobody can say what goes on in his unconscious mind if there is such an organ.
Then they go on to say:
"He was not present [this is Mr Greenberg] at the appeal and the applicant did not have the opportunity of questioning him on this evidence before the panel."
Again, as Mr Richardson says, rather a strange criticism. It does not appear that Mr Morison asked for Mr Greenberg to be there so that he could cross-examine him and one would have thought it would be a very disturbing thing to the average Appellant to find the executive, of whom he had such an adverse opinion, sitting in there with the, so to speak, Court of Appeal.
They go on:
"Having indicated by letter dated 20 November 1991 that the applicant was being dismissed for his admitted theft of cash Ms Bather gave evidence that he was merely abusing laxity in the system."
Again, Mr Richardson criticises that. Ms Bather did, as one can see at page 28, say that she had come to the conclusion that he was abusing the laxity in the system. To paraphrase that as saying that all that had happened here was that he was abusing the system (as though it was some bureaucratic or procedural matter) is another astonishing piece of understatement, it would appear.
"While, in many cases, an appeal is an effective re-hearing of the case and can be said to cure a previous unfair dismissal this was not a re-hearing and did not cure the unfair dismissal on 15 November."
Mr Richardson says, if I may paraphrase, that taking this all together, it is apparent that this Tribunal was not approaching the matter in the way which it should have done. He says that in truth the appeal hearing was a re-hearing in the proper sense, and that Mr Morison well knew exactly what was being said against him and had a proper opportunity to deal with it in person, with the aid of his representative.
Then the Tribunal go on to say:
"The applicant contributed to his dismissal because he had failed to follow the proper procedures for processing his paperwork including cheques and cash. The percentage reduction should be 75%."
Once again, to us, this is an astonishing understatement. His contribution to his dismissal was, among other things, that he had on any view failed for two years to hand over cheques which he should have handed over, kept cash which he should have handed over and he could produce nothing but mitigation for that in the sense that he had difficult personal circumstances, including one must say the illness of one of his children and had had difficult circumstances over his finances.
The most important question, as it seems to us, whether he did indeed tell Mr Greenberg what Mr Greenberg recorded, was not apparently explored at all before the Tribunal. The Tribunal makes no express finding about that. Those notes of Mr Greenberg's, document 19, show the plainest possible admission by Mr Morison that he had spent the cash and his claim that there were mitigating circumstances and he would pay it back, as indeed he did. Were they, a thoroughly unsatisfactory record, perhaps made some time after, at any rate not a true record? This was a serious matter which should not simply have been overlooked.
Mr Richardson tells us that in the circumstances we should conclude not merely that the Industrial Tribunal were conducting their enquiry in an unsatisfactory way but that we should also be satisfied that on the admitted facts here there could be no finding by any rational Tribunal other than that there was a 100% contribution, to put it at its lowest; and it might well be, he said, that it could be said that this Industrial Tribunal could only arrive at one conclusion and that was that the dismissal in any event was fair.
We do not feel able to accept either of these latter submissions. We think that this Decision by the Industrial Tribunal is fatally flawed for the reasons which Mr Richardson put forward to us, very fairly if we may so, Mr Vaughan suggested on behalf of his Client that it was possible, in effect, to reconstruct this Decision in a way that shows that it is rational and that it leads to a conclusion favourable to his client. He rests that very largely on saying "well you should read these observations of the Tribunal which are criticised as going to the question of what in fact the employers had in their minds as the reason for dismissal". We think that that reconstruction would not be a legitimate exercise.
Therefore, to sum up, we conclude that this Tribunal have not shown in their reasons that they have approached the question of unfair dismissal in a proper way, asking themselves the questions and answering them as they should under Section 57(3). We are not satisfied that if they had done that properly, we can say what their conclusion would have been. We are not satisfied that a Tribunal would necessarily have concluded, if they had directed themselves correctly, that the contribution of Mr Morison to his own dismissal amounted to 100%. We think, in the circumstances, we have no alternative but to remit the matter to a Tribunal differently constituted who will re-hear the case, free, one hopes, from any of the mistakes which attended the deliberations of this Tribunal and will reach conclusions on all the matters to which we have referred.