United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 556_93_1705

Appeal No. EAT/556/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 17 May 1995

Before

HIS HONOUR JUDGE SMITH QC

MISS J W COLLERSON

MR E HAMMOND OBE

---

KWIK SAVE GROUP PLC          APPELLANTS

MRS M ARKELL          RESPONDENT

---

Transcript of Proceedings

JUDGMENT

Revised


 


---

APPEARANCES

For the Appellants MR DAVID RICHARDSON

(of Counsel)

Messrs Bullivant Jones & Company

State House

22 Dale Street

Liverpool L2 4UR

For the Respondent MR D BROWN

(of Counsel)


 


JUDGE C SMITH QC: This is an appeal by the employers, Kwik Save Group Plc, against the reserved decision of an Industrial Tribunal which had sat in February 1993 at Liverpool, which they promulgated on 3 June 1993, whereby the Industrial Tribunal decided that the employee, Mrs Arkell, had been unfairly dismissed by Kwik Save.

Mrs Arkell was employed as an office and cash supervisor at the employer's store in Ince Lane, Chester and was obviously in a position which carried a considerable degree of responsibility. She had been employed since 1978. She was dismissed by the Respondents on 30 April 1992 by a letter stating that she was being dismissed for gross misconduct, namely, serious breaches of company procedures and misappropriation of company monies.

The background to the matter is that as a result of information received by the management, relating to Mrs Arkell, the employers carried out a "test found property exercise" in relation to Mrs Arkell between 13 and 21 April 1992. This involved, put shortly, a member of staff, Mrs Bagnall, taking on the role of a customer and handing in to Mrs Arkell a £5 note, which Mrs Bagnall said that she had found in the shop. Had correct procedures been followed Mrs Arkell should have completed a "found property form" straightaway or within a very short period, quite a detailed form, it appears, because we have seen a copy of one at page 27 in the Respondent's bundle. There is no need for me to describe the document further because it speaks for itself. Then, if the money was not claimed within a few days, the procedure required that it be paid into the Bank under a procedure known as "sundry banking" and there again the documentation relating to that is at page 28 in the bundle of the Respondent's documents.

It was plainly the employer's case, if the letter of dismissal is to be believed, against Mrs Arkell that, having received the £5 note, she deliberately failed to comply with the procedure, failed to bank the note and, accordingly, since it was clear that the money had not been put into the till, that she had in that way misappropriated the money.

What happened was that on Tuesday, 21 April, the matter was investigated by Mr Samson, the security manager, and there is no doubt that after he had carried out the necessary checks, as he felt them to be, that Mrs Arkell, having been spoken to about the matter, was suspended.

There was an issue in the evidence before the Industrial Tribunal as to whether she had been suspended by Mr Samson or by Mr Wilkie, who was the store manager, and perhaps an issue as to whether Mr Wilkie had authority so to suspend, if he had suspended, it being clear that Mr Samson did not have such authority. Having been suspended and in accordance with the letter of suspension which is referred to in the Industrial Tribunal reasons, a disciplinary hearing was conducted on 24 April by the area manager, Miss Ince, at which Mrs Arkell was represented by a Union representative.

After hearing evidence on both sides, as we understand the matter, Miss Ince found the case against Mrs Arkell had been proved and, having reserved her decision, decided that Mrs Arkell should be dismissed for gross misconduct and a letter of dismissal was sent to Mrs Arkell dated 30 April 1992. Miss Ince gave evidence before the Industrial Tribunal, as is clear from the notes of evidence, to the effect that it was her belief that the Applicant, Mrs Arkell, never intended to bank the money.

There followed an internal appeal, which amounted seemingly to a rehearing and which took place on 21 May 1992, which was presided over by the operations manager, Mr Jones. Mr Jones gave evidence before the Industrial Tribunal that he believed that the Applicant had had the £5 and failed to account for it. During the course of this hearing it appears that Mrs Arkell, once again being represented by her Union representative, was given the opportunity to question the member of staff, Mrs Bagnall, who had allegedly handed her the £5 note, as part of the exercise but, after taking advice from her Union representative, that was not taken up. Mr Jones upheld Miss Ince's decision and so the dismissal stood.

That is the background to the matter in outline only. The Industrial Tribunal held in paragraph 11 of their decision that in all the circumstances the employers had not acted reasonably in dismissing Mrs Arkell for the reasons which they set out in paragraph 11 of their decision.

The Appellant's employers accept before the Appeal Tribunal, as was plainly the case, that the Industrial Tribunal had set out the legal tests or the law correctly in paragraphs 5 to 9 of its decision and had correctly identified s.57(3) of the 1978 Act and the legal principles to be applied in construing s.57(3) by referring to the case of Iceland Frozen Foods Ltd v Jones [1982] IRLR 439 and, of course, particularly by reference to British Home Stores Ltd v Burchell [1978] IRLR 379 and the classic passage as it can I think properly be described in the judgment of Mr Justice Arnold, which they set out in extenso in paragraph 8 of the decision.

However, it is the essence of this appeal on behalf of the employers that, despite having set out the correct legal test in the earlier paragraphs, in paragraph 11, which is the decision-making paragraph, the Industrial Tribunal wholly failed to apply the approach which it had correctly characterised, to the evidence before it in this particular case.

Thus, the submission was, taking it fairly shortly and taking the matter by stages, that the Industrial Tribunal should first have asked themselves whether the employers, in fact, believed that Mrs Arkell had been guilty of gross misconduct, namely, misappropriation of the £5. The Appellants submit that looking at paragraph 11 it is apparent that the Industrial Tribunal failed to make any clear finding in that regard. That, in effect, they fudged their finding in relation to that matter. Thus, it is submitted, although they found that the employers believed that Mrs Arkell had been guilty of some misconduct, they omitted to find as a fact one way or the other whether or not the employers believed that she had misappropriated the money. It is the submission of the Appellant employers that they should have made a clear finding one way or the other in that regard, especially in the light of the terms of the dismissal letter and the evidence before them from Miss Ince and Mr Jones.

Next it is submitted that the Industrial Tribunal should have gone to find, as a fact, whether the employers had in their minds reasonable grounds for such a belief but it is submitted that, looking at paragraph 11, they simply did not address that question. They contented themselves by saying that there was no "direct evidence" of such misappropriation and that to find an employee guilty of theft is a very serious finding but, it is submitted, they failed totally to review the evidence which had been presented before Miss Ince and to make findings as to whether the employers had reasonable grounds for believing that Mrs Arkell had stolen the money. They simply did not carry out any such review and the Appellant employers point out that there was ample circumstantial evidence of misappropriation.

Finally, with regard to the third question posed by Burchell, in Mr Justice Arnold's judgment, namely, whether in all the circumstances the employers had carried out a reasonable investigation of the matter, it is submitted that here, once again, the Industrial Tribunal failed properly to address that question.

It is submitted that what it came to was that the Industrial Tribunal appears to have made three criticisms of the procedure, namely: (a) the delay between the 14 and 21 April; (b) the fact that the suspension was or may have been by the wrong person and, lastly, (c) the fact that the suspension letter referred to breaches of Company procedure whereas the dismissal letter referred to serious breaches of Company procedure and misappropriation of the Company's monies but the Appellant submits that the Industrial Tribunal failed properly to review the evidence relating to any of these stated criticisms in any sufficient detail and that, again, in this way, they have failed to apply the Burchell test to the evidence. They note, particularly, with regard to the alleged delay, that the evidence was that the banking procedure would not have occurred until 19 April and that the investigation took place on the next working day, 21, and, indeed, it is clear that the Industrial Tribunal recognized this themselves in subparagraph 10(iv) when they noted that the procedure would take several days.

With regard to the Industrial Tribunal's use of the expression that the Applicant was suspended at the behest of Mr Samson, the submission was that the Industrial Tribunal simply did not resolve the conflict of evidence as to who had, in fact, carried out the suspension and, indeed, if it were Mr Wilkie, the store manager, whether he had authority.

It was submitted that all these matters plainly cried out for proper findings of fact to be made. In addition, the Appellant employers submitted that it did not, in fact, or in reality, make any difference one way or the other who suspended, since there were plainly grounds for suspension in any event and, with regard to the difference in wording between the two letters, the letter of suspension on the one hand and the letter of dismissal on the other, the submission was that it was quite apparent from Mrs Arkell's evidence before the Industrial Tribunal that she was fully aware of the substance of the allegation against her, so the wording of the letters could have had no bearing on the reasonableness of the dismissal.

Those were an outline of the submissions that were made by the Appellant employers. By way of answer to those submissions, Mr Brown, Counsel for the Respondent employee, submitted that on a fair reading of paragraph 11, the Industrial Tribunal did, in fact, apply Burchell sufficiently to the evidence before them. With regard to the first question, Mr Brown submitted that it is clear, if one looks at the way they worded it, that they did not accept that the employees had formed a belief that the money had been misappropriated. Although there is no express finding in that regard, it is submitted that if one looks at the way in which the Tribunal phrase certain of their sentences in paragraph 11, that is the inference that can reasonably be drawn.

With regard to the second question, whether it was a reasonable belief, it is submitted that there is material there which indicates in paragraph 11 that the Industrial Tribunal were holding that there were no reasonable grounds for such a belief, having regard to the delay and the lack of any direct evidence.

With regard to the third question, the reasonableness and sufficiency of the investigation, it is submitted in answer that the fact that the Industrial Tribunal were concerned at the difference between the letter of suspension and the letter of dismissal and the fact that they referred to the suspension being at the behest of Mr Samson, indicate that there was evidence before them to which they applied the proper test and the Respondent sought to rely as well on part of the statement made by Mr Samson in response to the enquiry by Mrs Arkell as to whether she was being accused of theft to the effect that he was merely investigating the facts relating to the Company procedure as indicating that there was material upon which the Industrial Tribunal could have reached the conclusion that they did.

Those are the submissions on each side. We have reminded ourselves that we must not substitute our decision for that of the Industrial Tribunal and we must look to see whether the decision was one which was within the range of reasonable decisions which an Industrial Tribunal could make. The decision has to be plainly and obviously flawed and wrong in some significant and material respect before we can upset it. We note particularly that the Industrial Tribunal stated and posed the correct test and legal principles involves at very considerable length and obviously that predisposes us to expect them to have applied those legal tests properly. But, nevertheless, we are quite satisfied as a matter of law that it must be clear from their decision that they have applied the tests properly to the evidence before them and made the appropriate findings of fact on the evidence by reference to the legal tests involved. Without taking a pedantic or nit-picking approach to their decision, one must be able to find within that decision sufficient material to show that they have properly applied the legal tests to the evidence in front of them.

In our judgment here the Respondent employers' submission is correct, firstly, in submitting that the Industrial Tribunal regrettably simply did not make the necessary finding as to the reason for the employers' decision to dismiss. In our judgment, in the circumstances of this particular case, it was plainly incumbent upon them so to do in clear terms, particularly where the employer is considering and dealing with inter-connected allegations of failure to comply with procedure, on the one hand and misappropriation of money, on the other. In our judgment such a situation necessitated a clear decision as to the first matter which is required to be decided in accordance with the Burchell test, namely, whether the Respondents did believe what they had said in the dismissal letter. It is as plain and straightforward as that. That is what calls for decision, whether the employers did believe, not only that there had been a breach of Company procedures but also misappropriation of Company monies.

In our judgment it was plainly necessary for the Industrial Tribunal, if they were not accepting the genuineness of the employers' reason as set out in the dismissal letter, to say so in clear terms which, with respect to them, they completely failed to do. They should have made findings one way or the other as to whether they accepted or rejected the evidence given to them by Miss Ince and Mr Jones. In our judgment, it is just not sufficient to deal with the matter in the oblique and opaque way in which they purported to deal with it and we find that what they had to say about this first issue if it is, indeed, where they are dealing with the first issue, really begs more questions than it answers.

On this point alone, in our judgment, the appeal should be allowed. However, in our judgment, the matter does not rest there because it is next plain, in our view, that having got off on the wrong foot, so to speak, the Industrial Tribunal did not then go on to review, in any sufficient way, whether the employers had reasonable grounds in all the circumstances for such a belief. They had placed themselves in great difficulty, of course, by their failure, in our judgment, to reach any clear finding as to what the employers' belief was but, in our judgment, they failed to carry out any sufficient review in accordance with the second requirement in Burchell. They simply said and contented themselves by saying that it was a very serious allegation to make, namely, that an employee had been guilty of dishonesty and there was no direct evidence of it. With respect to the Industrial Tribunal, that is no kind of a review as to the reasonableness of the employers' decision and once again begs questions rather than answers them. They should have examined the evidence before them and decided whether the employers had reasonable grounds for their belief. They should have made an assessment, however shortly, of the nature of the evidence, which the employers had in front of them, including no doubt any point about delay but also including the decision taken by the Applicant and her adviser not to require Mrs Bagnall to be called to give evidence during the disciplinary process. All those matters should have been looked at by the Industrial Tribunal.

We take the same view with regard to the sufficiency of the investigation process itself and the way in which the Industrial Tribunal dealt with that matter. Once again, we must conclude that this was simply not reviewed by the Industrial Tribunal. The only matters which perhaps touched upon it, as referred to by the Industrial Tribunal, were their criticisms of the suspension being at the behest of Mr Samson, the alleged delay and the difference between the wording of the suspension letter and the letter of dismissal. We regard the points made in relation to those points made by Counsel for the Appellant as being well made and correct. In any event, all those matters, amongst many others, should have been properly reviewed and they simply were not so reviewed by the Industrial Tribunal in this case, in our judgment.

We should say that it is our view that even if the suspension was by Mr Samson or by Mr Wilkie without authority, and that must remain unclear because there was no findings by the Industrial Tribunal one way or the other, we would not consider as a matter of law that such a breach of the procedure could possibly be characterized as a significant contractual and jurisdictional failure within the meaning of that expression, as used by the President in Cabaj v Westminster City Council [1994] IRLR 536. In our judgment there is all the difference in the world between a wrongly constituted appeal body, on the one hand, and a suspension for good reason but without proper authority, on the other. At the end of the day, we are obliged here to take the view, particularly bearing in mind the opening sentences and the closing sentences of paragraph 11 of its decision that in this particular case regrettably the Industrial Tribunal not only failed properly to apply the legal tests set out in s.57(3), Iceland and Burchell cases but also, in so failing, in effect substituted their own decision for that of the employer contrary to the principle most clearly laid down, perhaps, in Iceland.

We have concluded, therefore, that the proper course for us to take is to allow the appeal and remit the case to a rehearing before a freshly constituted Tribunal.