United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 1113_94_0303

Appeal No. EAT/1113/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 3 March 1995

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MISS A MACKIE OBE

MR R TODD

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GLOBAL SECURITIES LTD          APPELLANTS

MRS P SOLLARS          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised


 


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APPEARANCES

For the Appellants MR J FAIRBAIRN

(Solicitor)

Nenton Hall

Regency Court

206-208 Upper Fifth Street

Milton Keynes MK9 2HR


 


MR JUSTICE MUMMERY (PRESIDENT): This is the preliminary hearing of the appeal against the decision of the Industrial Tribunal held at Cardiff on 6 May and 13 June 1994. The Tribunal heard the claim for unfair dismissal brought by Mrs P Sollars against her former employers, Global Securities Ltd. For Full Reasons entered on the Register and Notified to the parties on 19 October 1994, the Tribunal unanimously decided that Mrs Sollars was unfairly dismissed. They also found that she had contributed to her dismissal to the extent of 50 per cent. The question of Remedies was adjourned.

Global Securities appealed against the decision on liability by a Notice of Appeal served on 9 November 1994. The appeal is solely on the question of a procedural unfairness which the Tribunal found in the dismissal.

In order to understand the detailed arguments presented by Mr Fairbairn on behalf Global Securities it is necessary to look at the question the Tribunal was asked to decide. Mrs Sollars was employed from October 1988 until 4 October 1993 as an administrator company secretary with Global Securities which carries on the business of managing and letting residential properties owned by two Jersey companies controlled by Mr Michael Pascoe, a director of Global Securities.

Mrs Sollars' complaint was that she had been unfairly dismissed for the alleged offence of setting up a letting agency business. Her complaints centred on the disciplinary hearings which led to the decision to dismiss her. We will return to the details of that later.

The response of the Employer was that the reasons for Mrs Sollars' dismissal was that she was responsible for carrying on a letting agency business during company time without the knowledge or consent of the company, when she was aware that such activity was not permitted. That created a clear conflict in her obligations with the company. They also alleged that she had used company staff, stationery, premises, vehicle and other facilities belonging to the company in running her business without knowledge and consent of the company. She had deliberately held herself out as an agent of the company without authority, and had represented the company as landlords through letting business with the knowledge that the representation was untrue.

The employers said that the dismissal was fair for that reason. The decision to dismiss had been reached after a thorough and vigorous investigation. They referred to an informal meeting held on 20 September 1993 between Mrs Sollars and Mr Simon Pascoe, the son of Mr Michael Pascoe. Mr Simon Pascoe was a director of the company. The purpose of the meeting was to gather together all the information relevant to the issues of misconduct which had come to light. As a result of that meeting and of interviews with other members of the staff. Further information was gathered. A formal disciplinary hearing was held on 4 October 1993. At that hearing Mrs Sollars was unable to satisfy the company that the various allegations of serious misconduct were not well founded. The dismissal was confirmed and notified by letter sent on 6 October 1993.

The decision of the Tribunal goes into detail about the nature of the employer's business and about the activities of Mrs Sollars that led to her dismissal.

The Tribunal found the facts set out in paragraph 3 of the Decision. They found that from 1991, jointly with Mr Russell Waters, the Managing Director of Global, Mrs Sollars set up and operated a letting agency which managed properties owned by private landlords, other than those owned by Mr Michael Pascoe and his company. They found that the work of that agency was carried on during her working hours as an employee of the company. Because of the active participation of Mr Waters they found that the company had full knowledge of agency and its activities. They found that in February 1993 the activities of the letting agency came to the attention of Mr Michael Pascoe. A bank account had been opened in the name of the company, Global Securities Ltd Property Management to which Mrs Sollars and Mr Waters were signatories. Mr Pascoe took the view that the activity of the agency was in direct competition with Global's business and in conflict with Mrs Sollar's obligations to market and manage properties owned by him and his company. He accordingly gave an instruction that the agency should be wound down and ceased, a process which he envisaged would take a few months to achieve. Simultaneously in February 1993 Global disciplined Mr Waters for his conduct by demoting him to position of general manager.

Mrs Sollars sought advice from Mr Woodward as to how she should manage the affairs of the agency she had set up with Mr Waters. Mr Woodward advised her to open a bank account in her own name. She did that. She was aware she had been instructed by Mr Simon Pascoe to wind down and cease the agency business, but she failed to do so. On the contrary, at the time of her dismissal, the activities of the agency had not diminished.

In September 1993 Mr Michael Pascoe placed the matter into the hands of his son, Simon who went to investigate at Swansea. He was provided with a report compiled by Mr Woodward. On 4 October he interviewed Mrs Sollars. Her main contention was that the company Global knew of and condoned her activities and she had not been instructed to cease. Mr Michael Pascoe had briefed Mr Simon Pascoe, but was not available to be interviewed in Swansea so as to refute this Mrs Sollars contention. However, Mr Russell Waters, who had been involved with her in the running of the agency, was available, but was not interviewed on the point.

The Tribunal then reviewed the facts. They concluded that Mrs Sollars, an experienced businesswoman, appreciated that what she was doing was in conflict with the requirements of her employment. They were satisfied that it was quite proper for Mr Michael Pascoe to instruct her to wind down and cease her unauthorised activity. Indeed, they thought it would have been surprising if he had not done so. They were satisfied that Mrs Sollars did not wind down and cease her activities as she was instructed. They were satisfied that she had had made out against her a potentially fair reason for dismissal, namely misconduct.

The remainder of the decision was concerned with two matters, the procedure for investigation that was followed, and the question of contribution. We need only deal with question of procedure.

The Tribunal's conclusions on procedure were dealt with in paragraphs 5 and 6 of the Extended Reasons. The Tribunals views were these:

"5. Mr Michael Pascoe was the person who had "hands-on" control of the respondent company although was no longer a Director. The Directors themselves has no knowledge of the company's affairs. That was itself a matter of some surprise to us. We formed the clear impression that Mr Michael Pascoe was the effective controller of all that went on in his group of companies which for these purposes includes the respondent company and that the Directors were little more than figureheads. Consequently it was a matter of some surprise that the investigation of the matter was placed in the hands of one of those Directors, Simon Pascoe, who was forced to rely extremely heavily on the briefing he was given both by his father and by Mr Woodward through the latter's report. In the result there was only one substantive point to be decided by Mr Simon Pascoe; namely whether the applicant had been instructed to wind down and cease here activities and had continued them in contravention of such instruction or, whether, as she contended, the respondents knew of and condoned her activities even after February 1993 and had not instructed her to cease them. Mr Simon Pascoe went to Swansea to investigate having been briefed by his father with a particular version of events. When he interviewed Mrs Sollars she presented him with another version of events. ... there was other evidence available in Swansea on the question of whether or not an instruction had been given ... namely the evidence of Mr Russel Waters. He was not interviewed on the point. ... "

Mr Waters had been present at the hearing before the Industrial Tribunal, but he was not called to give evidence.

The Tribunal stated in paragraph 6 these important conclusions on the matter of investigation and I shall read these in full, because it was by reason of these matters that they found that the dismissal to be unfair, even though there was a potentially fair reason for dismissal.

"6. We cautioned ourselves with care not to speculate as to what witnesses who had not been called might have said had they been called. However, we were left with the distinct feeling that Mr Simon Pascoe did not approach the matter of the investigation in an impartial way. We do no think it was reasonable to conclude that central matter of dispute which we have already identified against the applicant, as Mr Simon Pascoe did, without attempting to gather any further evidence on the point either from Mr Russel Waters, who was immediately to hand, or from Mr Michael Pascoe who was in Jersey. We were not satisfied that it was sufficient for Mr Simon Pascoe to rely upon his initial briefing from his father as a substitute for full investigation.

We pause there to comment: we regard that as another important conclusion of the Tribunal. The Tribunal then said:

"In our judgement in the respect and to the extent that we have indicated the investigation of this complaint against the applicant by Mr Simon Pascoe fell short of what was required of a reasonable employer. Accordingly we find the dismissal to be unfair."

Mr Fairbairn has criticised the decision in a helpful comprehensive skeleton argument and has developed his arguments in some detail by reference to further authority in his oral submission.

We do not think it necessary to deal with all the detailed points which he has presented by reference to the facts of the case and some of the documents. We shall give our reasons for dismissing the appeal on the basis of his summary in his conclusion in which he makes three points. Firstly, that the Industrial Tribunal imposed to high a standard to what was required to carry out an investigation for matters leading to dismissal and, in the light of that high standard, decided that there was procedural irregularity. In our view, there is no point of law raised by that criticism. The Tribunal in paragraphs 6 applied the correct standard; the standard of a reasonable employer. To repeat from the decision, "they said the investigation of the complaint fell short of what was required of a reasonable employer."

Tribunals may differ from one to another on the facts of particular cases of what is required of a reasonable employer. It is for the Tribunal to decide, as a matter of fact and degree, what a reasonable employer would have done by way of investigation. This Tribunal cannot review the decision of an Industrial Tribunal on that matter, unless a case is made out that the conclusion of the Tribunal on the matter of investigation is perverse, one that no reasonable Tribunal could have reached. It cannot be said that this was perverse. The Tribunal were not applying to the case any different standard than that which is laid down in such cases as British Home Stores - v - Burchall. We find no point of law in the first contention.

We will deal next with the third point that the Industrial Tribunal's findings as to the necessity of calling Mr Waters and to the extent of the briefing provided to Simon Pascoe by Michael Pascoe were perverse and unsupported by the facts. We have been unable to detect from any of the material before us or from any part of the decision that there was perversity in that conclusion. We therefore find no error of law on that point.

That leaves point two, which has caused us more thought than the other two. It is put in this way: having decided that there was a procedural irregularity the Industrial Tribunal failed to consider whether, in the light of the other evidence known to the employer, it was reasonable for the employer to conclude that further investigation would be utterly useless, and that accordingly the employer had nevertheless acted reasonably, despite the alleged procedural irregularity.

Over a number of pages in the Skeleton Argument, and in the course of oral submission, Mr Fairbairn took certain passages in the speeches of the Lord Chancellor and Lord Bridge in Polkey - v - A E Dayton Services Limited (1987) IRLR 503. And he fortified his submissions on that second point by referring to the more recent decision of the Court of Appeal in Duffy - v -Yeomans & Partners Limited (1994) IRLR 642. He drew our attention particularly to the comments of the Court of Appeal on the decision of the House of Lords in Polkey and the conclusions in the judgement of Lord Justice Balcombe at paragraph 13 where he says:

"13 In my judgement there is no warrant for the proposition that there must be a deliberate decision by the employers that consultation would be useless, with the corollary that in the absence of evidence that such a decision was made, a finding by an industrial tribunal that a dismissal for redundancy was reasonable is necessarily wrong in law. There is nothing in the wording of s.53(3), or in its exposition by Lord Mackay, to lead to such a result; if and in so far as that is the effect of Lord Bridge's speech, then I agree with the judgement of Ralph Gibson LJ, cited above, that we must give effect to the principles formulated by Lord Mackay, with which all the other Law Lords agreed."

"14 As counsel for the respondent employers put it succinctly in the skeleton argument: the industrial tribunal is asked to judge what the employer did and not what it might have done. It is what the employer (as a reasonable employer) could have done which is required to be tested; so the tribunal must ask whether an employer, acting reasonably, could have failed to consult in the given circumstances. I agree, and I reach this conclusion without reluctance, since I fear there a grave danger that this area of the law is being over-sophisticated, and that there is an attempt to lay down as rules of law matter which are no more than factors which an industrial tribunal should take into account in reaching its decision whether the employer acted reasonably in the circumstances of the particular case.

Mr Fairbairn sought to translate those comments, dealing with consultation in relation to redundancy, to reasonable investigation in relation to a dismissal for misconduct. That is an analysis of the law which is binding on the Tribunal. We do not question it. We fail to see, however, how it can assist Mr Fairbairn in arguing that there was an error of law in this decision. His best point, on this argument, is that the Tribunal do not, in so many words, address the question - whether a reasonable employer could have concluded that it was useless to carry out any further investigations. But it is not necessary for an Industrial Tribunal, when reaching a decision, to spell out every aspect of its reasoning in support of their decision.

The Tribunal stated in paragraph 6 in the clearest terms that the investigation of this complaint by Mr Simon Pascoe fell short of what was required of a reasonable employer. In those circumstances it is difficult to argue that they failed to consider whether a reasonable employer in the light of other evidence known to the employer, could have concluded that further investigation would be utterly useless.

The Tribunal have asked themselves the correct question and that is "what investigation was required of a reasonable employer?". They have answered it. We do not know and we are not necessarily entitled to know all the reasons why they have come to that conclusion. There is, however, a strong indication earlier in paragraph 6 as to one of the important findings of fact which did lead them to that conclusion. That was the statement in paragraph 6, second sentence:

" ... we were left with the distinct feeling that Mr Simon Pascoe did not approach the matter of the investigation in an impartial way"

They went on to refer to the briefing he had received from his father which was dealt with in more detail earlier in the decision, in particular paragraph 5.

In the light of the findings of fact in the decision, we have reached the conclusion that, even on the basis of the Court of Appeal decision in Duffy - v - Yeoman & Partners Ltd there is no reasonable prospect of an appeal against this decision being overturned for error of law.

In brief, we are satisfied that this Tribunal came to the conclusions of fact which it was entitled to reach on the evidence before it. It correctly applied the test of the reasonable employer in determining the fairness of the dismissal for misconduct.

We add that nothing we have said has any effect on the question of Remedies. That has been adjourned. It will be open to Global, on the Remedies hearing to deploy all the arguments available to it on the decision in Polkey in order to meet any claims that Mrs Sollars has for compensation. Nor does anything we say affect the decision which the Tribunal reached as to the extent of her contribution. For all those reasons this appeal is dismissed.