United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 801_93_0602

Appeal No. EAT/801/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 6 February 1995

Before

HIS HONOUR JUDGE D M LEVY QC

MRS M L BOYLE

MR J A SCOULLER

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MR H G CHESTER          APPELLANT

MRS L A MANNING & MRS L CALVERT          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR D TYZACK

(Of Counsel)

Greenways

19 St Michaels Road

Newquay

Cornwall

TR7 1LL

For the Respondents MR M EVANS

(Of Counsel)

Woollcombe Young

22 Queen Anne Terrace

North Hill

Plymouth

PL4 8EH


 


JUDGE LEVY QC: Mrs Lesley Manning and Mrs Lorraine Calvert were in the employ of Mr Harold Gerald Chester in betting premises which he owned. A time came when Mr Chester had grounds for believing that Mrs Manning and Mrs Calvert had been improperly processing bets. He suspected that they were putting betting slips in the system after a greyhound race had been commenced or even concluded. He went into the shop and dismissed them. They complained in due course about their dismissal which took place on 2 January 1993; during or following a meeting ("the Meeting") immediately after he had dismissed them, Mr Chester handed them a letter dated 2 January 1993, which reads as follows:

"You will remember that on the introduction of the security camera in September, I provided each employee with a memo explaining that a close monitoring of the procedures and general operation of the shop was taking place and would continue. At the same time, I confirmed again the absolute prohibition upon staff betting which had previously been made clear during a morning meeting called specifically for that purpose.

With reference to the above statement, it is now apparent that a series of irregularities have occurred which, by their pattern and their persistence, requires strong and immediate action in order to avoid severe damage to the business. A very large body of (timed and dated) evidence is available and other aspects remain within the area of investigation.

As these irregularities occur regularly within the compass and the time of your work and as no acceptable explanation has been received, it is my duty to terminate, immediately and irreversibly, your employment with Hilltop Racing.

You may wish to appeal this dismissal and the machinery for appeal is in place and available to you but I should advise you that I have already taken care to assure that neither your rights or my own are infringed. This action has been confirmed by private Legal Advice and by the advice of a number of interested Agencies.

You have received payment in full to date for whatever services you have provided in relation to your work and I am not, at this time, prepared to discuss the matter further except to say that statements, contacts or actions on your part which can be interpreted as damaging to me or to the business will be treated as an unfriendly act warranting further action. You should now surrender anything in your possession which is the property of Hilltop Racing and/or H.G. Chester.

While it is not my immediate intention to take this matter beyond its present stage, I do not personally control all options. In view of your wide experience in the industry, you are sure to understand the seriousness of this matter and agree that there are substantial grounds for suspicion of wrongdoing, whoever might be responsible".

We pause only to emphasise two paragraphs of that letter. One is the passage which makes reference to the opportunity for explanation, that is "as no acceptable explanation has been received" and the second is to refer to the paragraph which makes mention of the experience of both the recipients of the letter. They had, in fact, both been in the employ of others in the betting industry before they came into Mr Chester's employ.

The husband of Mrs Manning ("Mr Manning") who is a police constable was on the firm's premises when Mrs Manning and Mrs Calvert were dismissed. He had had some conversation with Mr Chester but it seems to us that such conversation occurred after the decision to dismiss had been put into effect, and throws little (if any) light on the dismissals or the reasons for it.

On 5 March 1993 Mrs Manning and Mrs Calvert complained to the Industrial Tribunal. It is, we think, useful to read out how each of them framed their complaints. There might have been slight differences in each of their accounts, but by and large they ran their cases in tandem. Paragraph 10 of their complaint reads (and I read from that of Mrs Manning):

"On 2nd January 1993 at approximately 4.45 pm Mr Chester and friend entered said Bookmakers, at approximately 5.30. He (Mr Chester) came behind the counter holding a folder and several forms. As we were about to leave he handed me a betting slip asking what we could tell him about this, whereupon I noticed the bet was mistimed but quite legal as far as we could ascertain. We were not allowed to check this so called error to give him an explanation whereupon he handed us a letter of dismissal for irregularities. At about the same time my husband knocked on the door he was let in to find out that we had been dismissed. On speaking to Mr Chester, Mr Chester stated in front of witnesses that we had been, in his words "in cohoots" with several customers for our own personal gain. He had several betting slips in his possession which my husband looked at, one of which was when Mr Chester was working there with cashier.

Since then we have received a letter from his advisor (solicitor) that we were now sacked for "in house betting", which is the third time he has changed his mind about our dismissal".

The Notice of Appearance was duly entered by Mr Chester on 24 March and it is perhaps desirable to read paragraphs 3 and 4 of what he says:

"3. After the installation of the camera I had no further cause for concern until further problems of a similar nature arose on greyhound racing. These bets were always in the unknown handwriting of the customer and always the last bet made before the off slip, yet this never occurred if either I or the regular cashier were on duty and received and paid out such a bet. So I decided that despite my warnings in house betting was taking place on a very irregular basis against the rules so I dismissed Mrs Manning and her co-manager Mrs Calvert on the 2nd of January 1993 and handed to them a letter explaining why I had done so.

4. From September 1992 as a result of my investigations into the operation of the betting system at my office I became increasingly concerned not only was Mrs Calvert betting against my strict instructions not to do so, the timing of the betting slips also gave me cause for greater concern and when after the installation of the security camera these betting problems moved from horse racing to greyhound racing the timing is so much shorter that my concern was such that her employment had to be terminated forthwith".

After the Notice of Appearance had been entered Mrs Manning and Mrs Calvert requested discovery of a number of documents. Among the documents is a copy they requested: "Copies of processed "in house" camera, installed following letter dated

21st September 1992 to include 21st December 1992 (Monday)". That was understood to be a request for copies of all photographs taken by a camera placed in the shop after 21 September 1992. In a letter dated 16 April 1993, the Assistant Secretary of the Office of Industrial Tribunals at Exeter, wrote to Mrs Manning as to that request, "I do not see the relevance, nor do I understand how this can be provided".

It is common ground from counsel who has appeared before us today that there was an interlocutory hearing between the three parties on 25 May 1993. We do not know what happened at that hearing, but we do know that nothing was done about pursuing that request following that interlocutory hearing. The hearing took place before the Industrial Tribunal at Exeter on 13 and 14 July 1994, when evidence was given by Mr Chester, his cashier, Mrs Manning and Mrs Calvert.

We have the notes of evidence of the hearing. Mr Chester gave evidence on the first day and during his evidence-in-chief he gave evidence about clocks. We should say that Mr Chester was represented by counsel below but not by the counsel who appears before us today. We should also say that it is apparent to us, on the hearing of this appeal, that there are three clocks in Mr Chester's shop. (One of them is not material to this decision). One was a clock by the till which is set by managers; it showed minutes and hours only. Another was a time clock, photographed by the camera to which reference has already been made. That ran in minutes and seconds.

In his evidence-in-chief, Mr Chester said:

"The timing device on the red till does not work. It shows 1.01 constantly.

The other clock is correct. The clock is set by the managers. This is done to the telephone or to the screen clock. I discontinued using the till where the clock did not work when I was at the shop. This caused no inconvenience".

Further in his evidence-in-chief, Mr Chester said that, prior to the Christmas of 1992, he had in his possession documents which he thought were very damaging to the Respondents. He had held his hand because of the Christmas break and he did not wish in any way wish to be unfair to them. He went on to give his evidence of what had occurred when he wished to tackle the Respondents about their conduct.

"On 2/1/93 the meeting was at the shop at 4.45. It was a Saturday. There were customers there, about to leave. The shop closed at 5.00 pm. I had someone else there - Brian Lintern - as a witness. Mrs Manning and Mrs Calvert were there. Both husbands too and some of their children.

I went behind a screen private to the staff. One of them was about to start settling fixed odd football coupons.

I said `I'll do those'. They collected their handbags etc. I said I would like a discussion about things I would like explained. I had with me a folder of betting slips.

I pulled some out and asked them to explain the irregularities. They looked at them cursorily. No, they couldn't explain they said. I thought they were aware of what was going to happen. I said if you can't explain have the folder to examine. They more or less rejected this. I said if you're not going to explain I've no choice but to dismiss you. I'd had a letter typed up earlier in case that's how it turned out".

Mr Manning cross-examined Mr Chester on behalf of both Respondents. At page 63 of our bundle the cross-examination reads:

"Question: The till clock that works has no seconds".

Answer: Yes.

Question: Sideways number 1 in the till is the year.

Answer: Yes.

Question: So part of the time is not working.

Answer: Yes.

Question: Ladbrookes and Corals have tills with seconds.

Answer: Yes".

And then a little further

"Question: Prior to this they (Ladbrookes and Corals) have similar equipment to you (Mr Chester).

Answer: Yes.

Question: Prior to this Ladbrookes made the till 1 minute faster to safeguard the business and to safeguard the question about seconds.

Answer: I don't know.

Question: Do you set the till 1 minute fast?

Answer: No.

Question: Do you take bets after the off now?

Answer: Not unless it's in my cashier's hand".

And then, in answer to the Chairman, who asked about the camera film, Mr Chester said, "I've never had the camera films developed so I've researched each race".

In re-examination; there is this passage:

"Question: The time on the till, how often was it set or checked?

Answer: Every time I'm there, it doesn't need adjusting very often".

Later on on the first day of the hearing, the Tribunal heard evidence from Mrs McIlvar, the cashier. Her evidence has nothing to do with the matter on which this appeal is based, save for a passage in re-examination, at page 74 of our bundle.

"Question: How often stacking bets from the bell to the off. How many in a day or a week?

Answer: It was a frequent event, say three times a week. It could be two or three people each time.

Question: After the bell and before the off?

Answer: You take the slip and keep the yellow and repeat. You put the slips through then the off slip and then you take the money from the punter".

On the second day, Mrs Manning started her evidence-in-chief.

We pause there because part of the complaint that Mr Tyzack makes for Mr Chester is that he suffered an "ambush" defence below. He says that not until Mrs Manning gave her evidence was Mr Chester able to appreciate that the defence of Mrs Manning and Mrs Calvert was that one of the clocks was regularly kept one minute fast and therefore bets were not placed late. The clock kept fast was that without a second hand and was not recorded by the camera. But, says Mr Tyzack, the fact that at no time till Mrs Manning gave evidence and Mr Chester knew that was their explanation for the times on betting slips, prevented him from properly presenting his case to the Tribunal.

What is clear is that there were attempts by Mrs Manning and Mrs Calvert to obtain documents which were, we think, discoverable by Mr Chester in any event. Very early on in her evidence-in-chief Mrs Manning said in answer to the question:

How did you correct the time on the till?

Answer: If you add minutes and then turn the key on the side of the till, remove the orange key and the blue key as well it is a maximum 20 minutes. If it is ahead you have to turn it of (and then the important words). The till is always a minute fast".

She went on to give evidence about particular bets and having been asked to look at a particular betting slip said:

"Answer: If the clock is one minute fast the bet is in time".

In her cross-examination, there is this passage:

"Question: Mr Chester says the bets are the reason (for dismissal) and you say that as an easy answer the clock is one minute fast.

Answer: Yes.

Question: Why did you not say so in January 1993?

Answer: Mr Chester's attitude. I could not speak to him at all.

Question: You knew he thought that there were irregularities in the betting slips?

Answer: Yes.

Question: He had a folder. Your husband got slips out?

Answer: I did not know what it was.

Question: Did you know he had slips?

Answer: Yes".

The reference to Mrs Manning taking out slips referred to actions he took after Mrs Manning and Mrs Calvert had been dismissed and the letter handed to them which set out that they had given no satisfactory explanation.

Later, the Chairman asked:

"Question: Did Mr Chester know the clock was 1 minute fast?

Answer: I don't know".

Later in cross-examination, Mrs Manning is again asked:

"Question: Look at off slip 2.

Answer: This was done on for Saturday on the Friday otherwise they were done the same day by Mrs McIlvar. They were written by different people different days. I checked the clock on Saturdays. It is usually one minute fast.

(Chairman's note - Should this not be the true time if Mr Chester's account is correct?)".

And then just at the end of Mrs Manning's evidence there is a note:

"In response to Chairman's questions it was agreed by both applicants and respondent that Ladbrookes do use clocks that run one minute fast".

Mrs Calvert gave her evidence at 11.16 am and at 11.42 her cross-examination started. The second question asked of her was this:

"Question: Did you keep the clock in the shop one minute fast?

Answer: No.

Question: Would you notice if it was one minute out?

Answer: Yes, this was just a policy that I followed.

Question: Mrs McIlvar must have known the till was running one minute fast, if that was so?

Answer: Why?

Question: If the ticket was out she would know?

Answer: She had been trained at Ladbrookes.

Question: He - that is Chester - must have known.

Answer: I don't believe he checked the till.

Question: What about the punters?

Answer: They don't worry.

Question: So the clock in the till explains everything?

Answer: I can't see nothing wrong with the bets.

Question: It's always the one before the off slip, that's odd isn't it?

Answer: No. Many customers rush up".

That last answer reflects a practice which those in the industry know as familiar, that shortly before a race is about to start many customers go to place their bets at the till. Almost the final question in her cross-examination, is this:

"Question: Why didn't you explain about the clock in the till?

Answer: I didn't know what the problem was".

Further evidence from a Mr Hopkins and Mr Pyke before the time came for both parties to make their final addresses to the Tribunal. Mr Manning, apparently, declined to sum up for the Respondents, but counsel for Mr Chester made his closing submissions in some detail and he said this regarding the evidence about the clock being one minute fast.

"Mr Chester was asking for an explanation, so why didn't they give one? One minute fast explains quite a lot but not everything, "it's the clock, why are you fussing?" They should have said. This is an excuse that they picked up and it is nonsense for this hearing".

And further down:

"In any case does it matter? (because he goes on to say) I can't prove to criminal standards that they defrauded Mr Chester, but Mr Chester suspected on reasonable grounds that that was the case and that is all I seek to show".

Then the Tribunal apparently retired. Their decision encapsulated both the procedural hearing and the remedy hearing was relayed to the parties on 29 July 1993. The decision was that the Applicants were dismissed for a reason connected with their conduct and those dismissals were unfair. There was an award to Mrs Manning the sum of £2,679, subject to the Recoupment Regulations and to Mrs Calvert the sum of £5,437, subject to the same regulations. We turn to the final paragraph of the Reasons:-

"11 We have documents before us, they are not necessarily the ones that Mr Chester had at the time of the dismissal, but they reflect the tenor of his concern and of the information at his disposal at the time. He thought it unlikely that there could be an innocent explanation for what was revealed. This was that the times for the offslips and bets were after the start time so that even on the most favourable basis the time showed betting well into the race or even after the result. He found a bet (document 25) which is before he told the Applicants not to bet. This showed a race in Newcastle at 6.15 pm on 26 June 1992. But the race started at 6.20 pm and took 61.53 seconds; that is, it finished at 6.21 pm. The offslip is numbered 5430 and timed at 6.22 pm. The bet was timed at 6.25 pm and numbered 5432. The implication is obvious.

12 The explanation given now is that the bet was not put through by the cashier until later and a fraudulent bet was unlikely to have the name written on it. At this point we observe that putting through bets in this way is (at its most charitable) unwise. Be that as it may at the beginning of July no more betting was allowed. In January 1993 the incident was stale and in the light of the explanation offered now (as it would have been in January 1993) it could not have been in the band of reasonable responses of an employer to dismiss for it. Other bets in December are the real reason advanced by the Respondent for the dismissal. ....".

We pause there to say that that must have been the reason why Mr Chester decided to dismiss Mrs Manning and Mrs Calvert and that finding was well within the bounds of the evidence which the Tribunal heard. Paragraph 12 continues:

"We have considered the hypothesis that the dismissal was to save wages and we reject that hypothesis. It is quite clear to us that the Respondent dismissed for a reason connected with conduct specifically suspicion of either or both enabling clients to bet post race or defrauding the employer by doing it themselves. Here we remind ourselves that the test we apply is not whether this happened but whether the employer had reasonable grounds for this belief and genuinely believed it to be true.

13 The crucial meeting took place on 2 January 1993 to have this out. The Respondent says that the employees would not listen and the Applicants say that they had no chance to explain. We find that there is no obligation on the Respondent to give advance warning of this meeting, for there is justification in these circumstances to take the Applicants by surprise. There is however, an obligation to spell out the allegation clearly and to give clear opportunity to the Applicants to respond. Both immediately and if necessary after time. A letter of dismissal was typed up and given to the Applicants on 2 January 1993. The Respondent says that it was in case no explanation was given, but we find that he offered no real opportunity to the Applicants to explain.

14 Since we find that there was no reasonable opportunity to explain, the procedure is necessarily unfair and that necessitates a finding of unfair dismissal".

We break off the reasons given there to say that those paragraphs which we have just read out are absolutely within the bounds of what an Industrial Tribunal could have found, and were absolutely justified on the evidence which they heard. We have gone into the evidence at some length as to what happened at the dismissal stage, because it seems to us that that must be paramount in the events which we will shortly be coming to describe. The Reasons continue:

"15 We then have to consider what is the chance of the dismissal being fair if the correct procedure had been followed. If all the parties had sat down to discuss these slips the question of the clock would immediately and inevitably become apparent. The Respondent says that the clock was set at the correct time, the Applicant says that it was set one minute ahead precisely because it does not show seconds and they learnt that procedure when they were with major bookmakers. By affording the Applicants no opportunity to respond, when not spelling out the allegation and giving them a chance to reply the Respondent had deprived himself the Applicant and this Tribunal of the knowledge as to which of those stories is true for the till could have been checked then and there at that time. So we cannot know now for certain.

16 Our decision has two limbs to it. First that it is the Respondent's unfairness that has caused the doubt to arise. The benefit of the doubt on this question has to go to the Applicants. Secondly, we find as a fact in any event that the clock was not altered often by anyone though it was checked frequently by the Applicants. On the balance of probabilities we find that it was set one minute ahead. That of course puts the slips one minute in favour of the Applicants. There has to be in that case doubt as to whether the slips disclosed are suspicious. It has been a policy to allow bets after the off if the slip is in or nearly in the cashiers hand. These things being so, dismissal has to be outside the range of reasonable responses of the employer. He had little management control over the business and the outside range of the reasonable responses in this case is a final warning as to when bets may be taken after the off. It necessarily follows that while we have some degree of doubt about whether the Applicants acted entirely properly we cannot find that they could have been fairly dismissed.

17 We then have to consider contributory conduct. The Respondent has not shown on balance of probabilities that the Applicants wrote these slips or colluded with the customers of the betting shop, or that there was post race betting. ....".

After the hearing, Mr Chester consulted Vetabet Bookmakers' Security Service and obtained a report from Mr K.G. Brooks Jones, which was amplified in correspondence, which has been read to us today. This correspondence led to an application to the Industrial Tribunal for further evidence to be admitted. There was also a further application to the Industrial Tribunal. This was refused. In the course of correspondence with the Industrial Tribunal, on 28 September 1993 the solicitors acting for Mr Chester said:

"2. He will certainly produce the film and if possible the necessary equipment to view it.

3. He is relying not only on the report but on the examination of the film".

Then the letter continues:

"Our client informs us that the film is in many parts. It contains approximately 24,000 photographs of bets. It is therefore in all many hundreds of feet in length. He only has the original copy and if Mrs Manning and Mrs Calvert wish to have copies themselves our client would be happy to have copies made but feels the expense should be theirs and not his.

One cannot examine the film without the necessary equipment to view it because each picture are of a minute size.

We are today communicating with the expert that examined the film in order to ascertain if it is possible for him to bring the viewing equipment with him to the Tribunal. Hopefully this can be arranged".

There followed an order from the Tribunal, which we think does not really matter here, but in due course the matter came to the Employment Appeal Tribunal. At a preliminary ex parte hearing on 15 March 1994, the EAT granted leave to the Appellant to amend the Notice of Appeal and to include a ground seeking to introduce fresh evidence. The amended Notice of Appeal at page 43 of our bundle reads as follows:

".... The appeal is on the two points of law set out hereunder:

(1) Fresh evidence is available to the Appellant not reasonably available to him at the time of the hearing.

(a) The Appellant's evidence was that winning betting slips in unknown handwriting were being accepted after the off time for many races and was countered at the hearing by the Applicants who said that the clock on the till was regularly set one minute ahead of true time.

(b) The Appellant was taken entirely by surprise by this evidence and had no opportunity to rebut it.

(c) Security camera microfilm has since the hearing been developed and analysed, supports the Appellant's case as to the timing of the clock till and the betting slips and therefore resolves a doubt by evidence in favour of the Appellant which the Industrial Tribunal resolved, in the absence of direct evidence, in the Applicants' favour".

As to ground (b), though represented by counsel below, no application was made to seek an adjournment or to seek leave to introduce evidence in rebuttal.

"(2) The finding that the Applicants had no reasonable opportunity to explain their actions is perverse and one to which no reasonable Tribunal could come on the evidence before it.

(a) Even on their own pleaded case the Applicants noticed that the slip proffered by the Appellant was `mistimed'.

(b) An explanation could have been given there and then without checking or delay that the clock on the till was always set one minute fast, as this fact later was revealed to be the main feature of the Applicants' case.

(3) Further, it was perverse for the Tribunal to believe the Applicants evidence that the till clock was set one minute ahead in the absence of any such explanation being disclosed before; a reasonable Tribunal properly directing itself would have asked itself the question - could such an explanation have been disclosed at an earlier stage, if it was the truth? Further a reasonable Tribunal would have offered, the Appellant, an opportunity to rebut the Applicants said evidence before believing the same".

The main part of the hearing before us has been a sustained and, if we may say so, a well directed attack by Mr Tyzack, to encourage us to permit fresh evidence to be admitted, the fresh evidence being that of Vetabet's report which would need to be amended. We take account of what has been said in correspondence by Mr Brooks Jones since that report was written. In support of his contention, Mr Tyzack referred us to Ladd v Marshall [1954] 1WLR 1489, a well known case to all of us which is applicable to Appeals in this Tribunal, see Wileman v Minilec Engineering Ltd [1988] ICR 318. The headnote in Ladd v Marshall reads:

"Leave to adduce further evidence on appeal will only be granted (1) if it is shown that the evidence could not have been obtained with reasonable diligence for use at the trial, (2) if the further evidence is such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive, and (3) if the evidence is such as is presumably to be believed".

Mr Tyzack referred us to some footnotes in the Supreme Court Practice 1995, which puts some gloss on those principles. We turn to the three headings in Ladd v Marshall. First: "if it is shown that the evidence could not have been obtained with reasonable diligence for use at the trial": Mr Tyzack has suggested an ambush; Mr Evans has submitted that the documents which Mr Chester now relies on, were all in his hands before the trial commenced and therefore, there are not the exceptional circumstances to show that the reasonable diligence was not for use at the trial. We accept Mr Evans's submission that these documents could have been produced by Mr Chester at the hearing below. Accordingly, we rule that it is not really necessary for us to consider further whether the other grounds in Ladd v Marshall are made out.

However, we have spent quite some time today looking through Vetabet's report and commentaries and we are far from satisfied, having regard to Mr Evans's careful submissions on them, if all the betting slips had been produced and had been subject to the scrutiny of both parties, the evidence on them would probably have been an important influence on the result of the case, though it might not have been decisive. If there had been evidence from Mr Brooks Jones, we are not able to reach any decision as to the weight it would have accorded after all relevant evidence had been heard.

That said, it seems to us that what really determines this appeal is the findings in the paragraphs of the Reasons which we have already set out. Unfortunately for him, at the moment of dismissal, Mr Chester failed to go through procedures which would have been proper in any case to have made the dismissal of Mrs Manning and Mrs Calvert fair. Given all the circumstances of this case, we do not find the decision of the Industrial Tribunal on the evidence before them, perverse in any way; indeed, we think it is a decision which was well open to them to reach on the evidence, which we have considered.

We wish to pay tribute to the sustained argument of Mr Tyzack, which have made our minds go to and fro in the course of the hearing but we conclude that the proper course to take is to dismiss this appeal.