United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 952_93_1110

Appeal No. EAT/952/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 11 October 1994

Before

HIS HONOUR JUDGE HULL QC

MISS J W COLLERSON

MRS E HART

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A J STEPHENS & SON           APPELLANTS

(1) MRS V DIXON

(2) MR J DIXON          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR PHILLIPS

(OF COUNSEL)

Messrs Beaumonts

Offa Street

Hereford

HR1 2LJ

For the Respondents MR J HOSKINS

(OF COUNSEL)

E Ann Davies & Davies

Dol y Coed

18 Castle Street

Hay-on-Wye

Hereford

HR3 5DF


 


JUDGE HULL QC: In this case Mr Stephens, representing his firm, Stephens & Son, appeals to us from part of a Decision of an Industrial Tribunal sitting, under the Chairmanship of Dr Rachel Davies with two industrial members, at Hereford on 14 September 1993.

Mr and Mrs Dixon, the Respondents, were employed by a firm. The firm's business is the installation of air-conditioning and both Mr and Mrs Dixon worked at Kington in Hereford. Mrs Dixon began employment as secretary in 1987. It is clear that, as so often happens, she was given duties far wider than those of some secretaries and she had to deal with accounts and all sorts of other matters.

The next year in April/May 1988 Mr Dixon began employment as an engineer (or pipefitter as it was rather less politely called) and he is a skilled man who works on air-conditioning. Each of them was employed, although Mr Dixon did not have an office and went around with a van attending to the actual installation and maintenance and so forth.

There came a most unhappy incident in 1992. According to Mr Stephens, he went into the office, looked at the accounts and found two matters in the accounts which he thought ought not to have been there. There was ordered on behalf of the firm a briefcase and there had also been some building materials ordered, which, it was admitted in due course, were for some private building which Mr and Mrs Dixon were doing at their home.

Mr Stephens immediately leapt to a conclusion that was later shown to be quite unjustified, which was that this amounted to theft and that the firm's money and facilities were being used to benefit Mr and Mrs Dixon. On the strength of a very short phone call with Mrs Dixon in which she said that she intended to pay for the briefcase - and also I think for the building materials - he dismissed both Mr and Mrs Dixon for theft. They complained to the Industrial Tribunal on 21 July 1992 of unfair dismissal and when Mr Stephens put in his Answer on behalf of his firm, he again accused them of theft.

That was the issue so far as (so to speak) "liability" was concerned. There was a hearing which did not come to anything on 19 April 1993 and then on 14 September 1993, the Industrial Tribunal sat at Hereford under Dr Davies and heard the case. They heard Mr Stephens who gave a good deal of evidence to them. Mr Stephens was represented by a solicitor, Mr Almond. Mrs Dixon then gave evidence and was cross-examined.

It was, of course, for Mr Stephens to show what was the reason for dismissal and then the question of "reasonableness or otherwise" would arise. He having put it shortly as theft, the Industrial Tribunal was right to look for proof and they were quite unsatisfied about that. Having heard Mrs Dixon's evidence they said that they did not need to hear Mr Dixon - nor did they. They then went on to say that they were satisfied that the dismissal could not be justified. They held that the dismissal was unfair and went on to consider the question of compensation.

What had happened was that Mr and Mrs Dixon had had in mind for some time that they would go into business on their own account, in the same line of business. Being dismissed in this unfortunate way, they did, in fact, go into business on their own account and at the time of the hearing, over a year after the dismissal, the business had not got off the ground and they were earning an average of only £19 a week. The evidence Mrs Dixon gave was that they thought it would take about two years before the business started to take off as they hoped it would and there would be no profit before that time.

There was also a good deal of evidence that Mr Stephens' business was in a difficult state. Apparently, Mr and Mrs Dixon had been financing the business; they had been paying bills out of their own money and only getting recompensed later. That, of course, was part of their case, which was evidently accepted, for saying that there was no question of any dishonesty here.

The Industrial Tribunal, having said it did not need to hear Mr Dixon, went straight on to the question of compensation. They approached it like this: they took the £19 per week (previously mentioned) and apportioned it equally between Mr and Mrs Dixon; Mr Almond said that he wanted to see the figures and he was shown a piece of paper. He was, apparently, considerably shocked by the way the hearing had gone against him, as he had hoped to cross-examine Mr Dixon and he had had no opportunity to do that. To put it very mildly he had not seen eye to eye with Dr Davies during the hearing and he had had, what is familiar to all experienced advocates, "a fairly rough passage" so far as his case was concerned. There was no complaint of misbehaviour; it was just that he had failed to secure the ear of the court and make the favourable impression which he had hoped that he would.

They went on to consider the question of the right amount for the award. They calculated the compensation as follows: Mrs Dixon had been paid £120 gross and £100 nett. They gave 61 weeks to date by way of compensatory award and multiplied £100 nett by 61. They deducted £9.50 per week for earnings but not for the whole 61 weeks, and arrived at a figure of £498 for the deduction. They allowed 24 weeks' future loss of earnings, making a calculated deduction again for the £9.50, and they arrived at a nominal figure of £100 for loss of statutory industrial rights, which is customary, and the grand total was £8,474.

With Mr Dixon they made a similar calculation. They multiplied his nett earnings in the same way; they made the same type of deductions; and they arrived at the grand total of £11,800 for him.

Mr Stephens appealed to this Appeal Tribunal complaining on the basis that those calculations are matters of law. This Appeal Tribunal gave leave to proceed on a basis which is very largely falsified. Mr Phillips, as he candidly told us, had said that by the time of the Industrial Tribunal's hearing Mr Stephens' business had ceased to trade and so inevitably by then, if the same factors had applied as they probably would, Mr and Mrs Dixon would have lost their jobs. To back it up Mr Phillips had referred to certain VAT documents suggesting that trading ceased in July before the hearing; but it has emerged that that is not so.

The Employment Appeal Tribunal fastened on that and said that it was fairly clear that that matter was not taken into consideration at all by the Industrial Tribunal in arriving at their calculation; and said that this appeal should proceed. They also dealt with another matter. They said that the Dixons were proposing to get employment anyway and they might have got out and found other employment. That matter does not seem to have been taken into consideration either. So on that basis too they said that the appeal should be allowed to proceed.

It now appears that in fact Stephens & Sons did indeed continue to trade and were still trading at the time of the Industrial Tribunal hearing. There is a letter to a Mr Starkey, an employee, saying that "due to the lack of work that we have undertaken over the past few months we are

having to make you redundant", and that is dated 17 September 1993. So part of the grounds on which this Appeal Tribunal allowed the matter to proceed has been falsified by events and Mr Phillips, quite innocently and on instructions, has had the misfortune to say something to this Appeal Tribunal which turns out to be incorrect.

However, he says that in spite of those matters he wants to make certain points. He says that there is no allowance in the 24 weeks which the Industrial Tribunal looked at for the increase which was likely in the £9.50 per week. That point if it stood by itself would clearly, in our view, not be enough because by limiting the period to 24 weeks it might be said that the Tribunal was taking a very robust and short view of it by saying that "we will not give them the whole of the two years, we will give another 24 weeks which is about half what they are claiming and we will cut it down accordingly".

Mr Phillips also says that it really would have been more appropriate to adjourn at this point. He admits that Mr Almond did not ask for an adjournment and says that Mr Almond was rather shocked at the way things had gone. But here was the Tribunal dealing in substantial sums of money, because these are not trivial awards, in a very summary way and a broad-brush approach might be justified if one is talking about hundreds, or even a few thousands, but there are limits to such an approach. It really would have been better to have adjourned for a short while to allow the parties to make submissions and to allow the Tribunal to set out its reasoning on these various imponderables in a rather more clear way.

Then he said, and this we think most important, this award on the face of it seems to take no account of the fact that this business was in a truly parlous financial state. It was even offered for sale to Mr and Mrs Dixon by Mr Stephens and he says that even if they had not been dismissed, with the burden of their salaries and with the laying off which the letter of the 17 September evidences, what were the prospects of their going through that period without being dismissed (quite fairly) for redundancy? The failure to consider this, he says, is a matter of law. That is one of the grounds on which the Employment Appeal Tribunal, under the Chairmanship of Waterhouse J, gave leave to appeal.

He says that we ought now to remit the case to the Industrial Tribunal to consider this. To appreciate this point one has to look at the notes of evidence. There are many references to the state of the business. At page 36 Mr Stephens said:

"the business was going through hard times financially.

I had the option of selling, or closing or struggling on."

"struggling on" might well be a correct description. At page 41 cheque stubbs were referred to showing £20,000 paid by Mr and Mrs Dixon on behalf of Mr Stephens and Mr Stephens agreed that that had been paid, not all at once and not without recompense. He said they paid urgent cheques until the firm had more money - obviously, a highly exceptional state of affairs between employer and employee. At page 50 a further passage was referred to when Mrs Dixon was giving evidence:

"Were you aware of the business's bad patches

Yes

Were you aware of what Mr Stephens intended to do with the business

No

Had you negotiated to buy it

Only 10 days prior I took equipment into Hereford but couldn't find Mr Stephens at the site. I went to a friend's house and he [Mr Stephens] came out and asked me in the street if we'd be interested in buying. That was the beginning of July. I was stunned. ......... My husband and I looked at the figures available and what I'd been asked to pay and decided it wasn't a feasible proposition, and declined. But we expressed an interest in buying one van. ....... In the next few days Mr Stephens told me he was going to see his accountant about winding up the business and going into voluntary liquidation."

At page 57 Mrs Dixon was asked:

"Why did you offer to pay for the brief case?"

Mrs Dixon's evidence had been that she was going to use it in the business to take papers from the office to her home where she often worked on papers. Mrs Dixon replied:

"Because he was closing the office. I felt that I could use the brief case. Mr Stephens knew we'd start up our own business if things went wrong. We'd had a big meeting in the October prior and we'd said we'd rather stay in the business with him than go on our own. But when he took the keys of the office I knew we'd have to go in business on our own so I offered to pay so I could use it in the new business"

She was asked: "Did you start your business immediately after being dismissed?"

She replied: "Yes"

There is plenty of evidence there to support Mr Phillips' submission that this business was in a parlous condition - in a very difficult and pathetic situation - and might be closed down at any time. The Industrial Tribunal, of course, is in a far better position than we are to assess and, indeed, we have no right to assess that evidence, as a matter of fact it was for the Tribunal. Did they assess it? Industrial Tribunals do not have to state every imponderable that comes into their minds but here was a very important factor and people are entitled to know the main grounds on which a Tribunal has proceeded so that, in fairness, they know the basis on which, for example, a substantial award is made against them.

Mr Phillips points out that there really is no evidence that this Tribunal considered that very important factor at all. They may have done; they do not say that they did; they certainly did not adjourn to hear submissions; they certainly do not say that in arriving at the figures they took into account this important matter. They treated it as if it had been a case with a substantial employer where as a matter of overwhelming probability the employment would have continued if it had not been terminated by one party or the other. They therefore applied the sort of multiplier one would expect in those circumstances.

It may be that they did consider the matter and said "we think that it is a matter of probability that the business would have gone on", but there is no indication that they did. If something as important as that is omitted, then one is left with a very strong suspicion that they did not think about it and we have all come to the conclusion that we are not happy with this situation. We do not know whether they did consider it or did not consider it. If they did consider it they should have said so and Dr Davies and her colleagues, however shortly, should have stated their conclusion on that matter.

It may be that it would have to be, as in other contexts, on a percentage basis. For example, "We think there was a 50/50 chance that the business would have continued". It may be that they feel sufficiently sure about it to say "on balance of probability we really feel that we should assess this on the basis that it would have continued", but they do not say that. We think that they should be given an opportunity to do so; we think there should be no embarrassment in that, and if they have already considered it they will say so and explain how they reached their conclusion. They may have made an omission in failing to consider that important matter, in which case they should now consider it and say in what way and to what extent it affects their conclusion.

We have all come to the conclusion that the Decision on quantum should not survive in the form that it is and that this Industrial Tribunal should be asked to continue their hearing and either give reasons for the quantum which they did arrive at or reopen the whole matter, give reasons again and arrive at a decision after hearing the parties further. How the Tribunal proceeds in those circumstances must be, first and foremost, a matter for them. We think, almost inevitably, they will think it right to hear the parties again if the parties wish to be heard.

We therefore remit the case on that basis and the appeal is allowed to that extent.