United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 1181_94_3001

Appeal No. EAT/1181/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 30 January 1996

THE HONOURABLE MR JUSTICE MUMMERY (P)

MISS C HOLROYD

LORD GLADWIN OF CLEE CBE JP

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MR T J 0'KANE          APPELLANT

ENFIELD & ST ALBANS CO-OP          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant APPELLANT IN PERSON

For the Respondents MR B LORD

(Solicitor)

Brian Lord & Co

Solicitors

New Century House

Manchester

M60 4ES


 


MR JUSTICE MUMMERY (PRESIDENT): This appeal is in proceedings between Mr T J O'Kane and Enfield & St Albans Co-op. The dispute between them was the subject of the decision of the Industrial Tribunal held at London (North) on 16 September 1994. The Tribunal heard a claim of constructive dismissal brought by Mr O'Kane who had been formerly employed as a Deputy Group Personnel Manager by the Respondent. He had started proceedings against the Co-op in October 1993, claiming that he had been employed from 7 January 1990 and that that employment had terminated on 16 July 1993. He gave details of his complaint. He had been involved in a series of events in which the Respondent employers had made his position untenable, and which entitled him to claim for unfair constructive dismissal. The claim was resisted by the Co-op on the basis that he had not been dismissed at all. They said he had been employed since January 1991 and his employment ended on 16 July 1993 in consequence of his resignation.

That was the issue for the Tribunal. At the Tribunal hearing Mr O'Kane was represented by Mr Miller, a lay representative, and Mr Wilkinson, an Industrial Relations Adviser, represented the Co-op. The Tribunal heard evidence from Mr O'Kane, and, at the end, upheld a submission made by Mr Wilkinson on behalf of the Co-op, that there was no case to answer. They dismissed Mr O'Kane's case and explained their decision in the extended reasons sent to the parties on 25 October 1994.

Mr O'Kane appealed by a Notice of Appeal, which has subsequently been amended, and was listed for a Preliminary hearing to determine whether it raised a point of law that was reasonably arguable. Mr O'Kane appeared in person at the Preliminary hearing on 13 February 1995. The Tribunal directed the appeal to proceed to a full hearing, which has taken place today; gave leave to amend the Notice of Appeal and directed the Chairman to produce his Notes of Evidence.

It does not follow from the fact that this Tribunal at a Preliminary hearing directs the case to proceed to a full appeal, that the Appellant will win. All that is decided is that there is a reasonably arguable case. In the facts of this case, it is not surprising that the Tribunal directed this matter should go to a full hearing, because the Industrial Tribunal had adopted an unusual course in deciding the case after hearing one side only.

In general, a submission of no case to answer is out of place in Industrial Tribunal proceedings. As has been said by judges in this Tribunal, it is better practice, on the whole, to allow both sides to present their cases, giving evidence and making submissions, before reaching a decision. But there is no doubt that, as laid down in decisions of this Tribunal, in an appropriate case, an Industrial Tribunal can say at the end of hearing the Applicant's case, that there is no need to go on, because, even accepting all his evidence and even listening to all his arguments, he had failed to establish what he must establish in order to succeed. The effect of the decisions on the practice of Tribunals is helpfully summarised in Volume 4 of Harvey on Industrial Relations and Employment Law paragraphs 892 to 895. It is a matter for the discretion of the Tribunal. We only interfere with that if the Tribunal was legally wrong in adopting this procedure.

It was prudent, in our view, for the Employment Appeal Tribunal at the Preliminary hearing to require the Chairman's Notes, to see the evidence given by Mr O'Kane. On the basis of that evidence the Tribunal concluded that his claim was bound to fail, even if it was uncontradicted by any evidence from the Respondents. The hearing today has been conducted by Mr O'Kane in person, with the support of a very full citation of legal precedents and arguments in the Notice of Appeal and in his Skeleton Argument. We are indebted to him for the care that he has taken in preparing his case under three headings. We are also grateful to Mr Lord for the arguments which he has presented in his Skeleton Argument of 25 January and for his oral submissions on behalf of the Co-op.

The question we have to keep in our minds throughout is: where is there an error of law in this decision? An error of law is one which involves a misinterpretation of the law, or misapplication of it to the facts, or a decision on the evidence which no reasonable Tribunal, properly directing itself on the law and the evidence, could have reached. The issue before the Tribunal was whether Mr O'Kane was constructively dismissed or whether he resigned. That is essentially a question of fact, but it can be reviewed on appeal, if it is demonstrated by the unsuccessful party that the Tribunal reached its conclusions as a result of misinterpreting or mis-applying the law.

What did the Tribunal decide? In the extended reasons they correctly identified the issue. There has been no criticism of the summary in paragraph 2 of their extended reasons of the relevant legal principles. They had already said at the end of the first paragraph of the decision that they were aware that they were taking an unusual course in acceding to a submission of no case to answer. They said that the "following reasons" would explain why they had done that. In paragraph 2 they correctly referred to the definition of "dismissal" in Section 55(2) of the 1978 Act which in sub-section (c) includes constructive dismissal: that is, termination of the contract by an employee in circumstances such that he is entitled to terminate it without notice by reason of the employer's conduct. They then referred to the well-known decision of Lord Denning in Western Excavating E.E.C. Ltd v Sharpe [1978] IRLR 27 for the test of constructive dismissal. They said that Mr O'Kane had to show that the employers were guilty of conduct which was a significant breach going to the root of the contract, showing that the employer no longer intended to be bound by one or more essential terms of the contract. The conduct must be sufficiently serious to entitle the employee to leave at once. It is for the employee to establish that there was a fundamental breach of contract, and that it was that breach which caused the employee to resign.

Mr O'Kane's complaint is that in the ensuing paragraphs they mis-applied that principles of law to the facts of the case. He submitted that the Tribunal had misconstrued, in the context in which it was given, a memorandum dated 2 July 1993, handed to Mr Balfour, the Co-op's Regional Chief Officer, on the afternoon of 5 July 1993. He said that they were wrong to construe that as a resignation on his part. They should have held that it was not a resignation. They committed two further errors. They erred in failing to have regard to the whole course of the Co-op's conduct, in relation to his case of constructive dismissal. That was conduct not only preceding the meeting he had with Mr Balfour on 5 July 1993, but also conduct which followed that meeting and continued down to 15 July, when he finally left his employment with the Co-op. The Tribunal also were wrong in their assessment of the evidence given by him as being only consistent with resignation by him.

In order to see whether those arguments are legally sound, we shall first summarise the reasoning of the Tribunal and the findings of fact to which they applied their reasoning. As evident from the dates, Mr O'Kane worked for the Co-op for less than three years. His contract terminated in mid-July 1993. He received a net payment of about £55,000 under the terms of a voluntary severance agreement. The Co-op were engaged in a major reorganisation. Three formerly independent entities were merged. It was agreed with the unions that there would be no compulsory redundancies. Following reorganisation Mr O'Kane was offered a new appointment to the new business. He was offered an increase in salary. He was offered a Society car of a certain category. He accepted the appointment, but subject to a twelve month trial period. He would be based at the Enfield Branch and his department would consist of a secretary and an assistant, Miss Argent, a long-serving employee. Within a short period Mr O'Kane discovered certain matters of concern to him: delay in actioning a pay rise due to him; an indication in a letter from the General Manager that a mistake had been made in advising him of what choice of car would be available to him; and a discovery by him that he had been referred to in a letter from his Chief Officer to members of controlling committees as Assistant Group Personnel Manager, a lower status than that of Deputy Group Personnel Manager.

He acknowledged to the Tribunal that separately these events would not have caused him concern, but taken together, he was concerned that the Co-op were appointing him to a post which they were now set on down-grading. That was the inference he drew. According to the Tribunal he accepted that he did not address the Co-op directly on any of these matters of concern.

The Tribunal referred to the relationship between him and Miss Argent, the Assistant, and the disagreements between them, that led to the matter being raised with senior management, both by Miss Argent and by Mr O'Kane. Mr O'Kane was concerned that, among other things, Miss Argent had circumvented the appropriate procedures. His concern about these matters led Mr O'Kane to draft on Friday 2 July 1993 two documents. They are at the heart of this case. The first is a memorandum, bearing that date, from him as Personnel Officer to Mr A S Balfour, as Regional Chief Officer. This is the document that was handed by Mr O'Kane to Mr Balfour at the meeting in about the middle of the afternoon on the following Monday 5 July. The memorandum says this:

"In view of the fact that you are going on holiday, I consider that it would be discourteous of me not to advise you in advance of my intention to leave the Society. I have advised Mr.Mantle and written to Mr Bingham accordingly.

You will appreciate that my career in Personnel began nearly twenty years ago as Assistant Personnel Manager and I do not now feel my new role is compatible with my needs and aspirations. I no longer feel that I can exercise responsibility or influence and it is with considerable regret, therefore, that I have decided to leave.

I would take this opportunity to thank you for your consideration in the past. I have very much enjoyed my experience with Enfield & St.Albans. Finally, I wish both yourself and your good wife very best wishes for the future.

NB Needless to say, I wish to invoke the terms of the N.A.C.O. Agreement at the time of the merger!"

He had prepared another letter dated 2 July addressed to the Co-op's General Manager, Mr V N Bingham. This, according to the evidence, was posted on 7 July, but it does not appear that the terms of it, as sent, were any different from as written on the previous Friday. That said:

"Dear Mr.Bingham,

After very careful deliberation, it is with considerable regret that I must advise you that I feel unable to continue in my new role and wish to invoke the terms of the N.A.C.O. Agreement established at the time of the merger.

You will appreciate that I began my career in personnel nearly twenty years ago as Assistant Personnel Manager and I do not now feel my new role (locally designated as Assistant Group Personnel Manager) is compatible with my needs and aspirations. I no longer feel that I can exercise responsibility or influence and it is with considerable regret, therefore, that I have decided to leave.

I would stress that this decision has not in any way been influenced by the appointment of Howard Mantle.

Whilst I fully appreciate that I could have remained in situ for some considerable time to further "test the water" I do not consider my decision would have changed. I believe, therefore, that this would not be helpful to Howard, the Society or the development of the Personnel Department.

Needless to say I will, during the period of my notice fulfil my contractual obligations.

Finally, I would take this opportunity to thank you for your consideration in the past."

On a reading of the terms of those two letters, it might well be asked, why was there not a resignation by Mr O'Kane? Both the memo handed to Mr Balfour on Monday 5th and the letter sent to Mr Bingham on Wednesday 7th, appear to us, in clear and unambiguous terms, to be letters of resignation. There is no mention in either document of any specific breach of contract by the Co-op, which had led him to make the decision and alleged to constitute constructive dismissal. The Tribunal said in paragraph 5 of the decision that neither of these documents was sent immediately. Both indicated an unequivocal intention to resign. Neither made direct reference to any one of the concerns which he then felt. In our view, that is an accurate assessment of the legal and factual position at the date when those documents were prepared by Mr O'Kane.

The Tribunal then made findings of fact about the crucial meeting with Mr Balfour on 5 July. They said this:

"6 Mr O'Kane devoted much of the weekend to preparing his statement. His father was then terminally ill and Mr O'Kane felt himself under considerable personal pressure. At the commencement of the meeting with Mr Balfour, Mr O'Kane handed to him the memo which he had prepared on 2 July and which indicated his intention to resign. The memorandum was not qualified in any way nor did Mr O'Kane make it clear to Mr Balfour that the resignation was intended to take effect only if the matters of concern were not properly dealt with. Mr O'Kane acknowledged that he expected a response from Mr Balfour and was taken aback when it was not forthcoming. Mr Balfour did not seek to dissuade Mr O'Kane but indicated that it was in everyones best interests for Mr O'Kane to leave immediately without working out his contractual notice. Thereafter, Mr O'Kane sought in vain to obtain a copy of Miss Argent's statement of complaint although he made clear his wish to defend himself against her allegations. In a compromise reached with his manager, Mr O'Kane left his employment on 16 July."

Those findings of fact cannot be appealed from, unless it is shown that there was no evidence to support them or were contrary to uncontradicted evidence. We have seen the Notes of Evidence made by the Chairman. In our view, the Tribunal were entitled to come to the findings of fact in paragraph 6.

In paragraph 7 of the decision, they asked themselves correctly, whether Mr O'Kane had put forward an arguable case on constructive dismissal. They referred to the two breaches of contract which he alleged. The first was that the Co-op were planning to demote him by downgrading his job from Deputy Group Personnel Manager to Assistant Group Personnel Manager. The second was that they had failed to deal promptly or at all with his grievance about Miss Argent and that the failure to do that amounted to a breach of the obligation of trust, confidence and support to which he was contractually entitled from his employer. The Tribunal's conclusion on these two alleged breaches of contract were that his claim was hopeless.

On the demotion question, they said Mr O'Kane had not shown any reasonable basis for the fears that he had expressed. He had failed completely to address his employers on those points of concern. If he had done so, he might have been quickly reassured or his concerns might have been given added weight. No breach had occurred and the Co-op had not acted in such a way as to lead a reasonable person to conclude that they did not intend to fulfil a material part of the contract.

On the second claim, they also thought Mr O'Kane's arguments were hopeless. They said that, if he had waited, it may have been that the Co-op would have indicated by words or conduct that they would not deal properly with the grievance. The problem was that Mr O'Kane had not given them any opportunity to demonstrate their intentions one way or the other. At the commencement of the meeting, which was to be the Co-op's first opportunity to demonstrate their intentions, Mr O'Kane tendered his letter of resignation. He did not wait to see what they would do. It may well be that he expected there would be an attempt to dissuade from the course he had indicated. It may be that some employers, before accepting a resignation, would have sought an opportunity to enquire into the circumstances. The Tribunal concluded that the Co-op were under no contractual duty to do that when they were faced with, and accepted, an unqualified unambiguous letter of resignation.

There is a well-reasoned decision. They have correctly stated what the law is. They have thrown out Mr O'Kane's case, because they say he resigned, not just in disputed recollection of what was said orally, but he had handed a clear memorandum to Mr Balfour one day, and two days later had sent an equally clear letter to Mr Bingham. On the question of constructive dismissal, whether the resignation was really involuntary and that he was forced to leave by breach of contract, they found clearly, as a matter of fact, that there was not a breach of contract under either of the heads complained of by Mr O'Kane.

On the face of it, therefore, there does not appear to be any error of law or any mis- application of the law to the facts. In his arguments, Mr O'Kane demonstrated to us that he had done a lot of research into this case. He has certainly worked hard in preparing his arguments. We have to ask whether these arguments are sound. We can deal quite briefly with each of his three points.

His first point was that the Tribunal had misconstrued the memorandum handed over on 5 July. He said he had not resigned on that day. He accepts that he resigned on 7 July. He resigned then as a result of the cumulative conduct of the Co-op, not only preceding 5 July but also in what happened after the meeting with Mr Balfour. This had been ignored by the Industrial Tribunal. The memorandum could only be properly construed by looking at it in the context of the facts and circumstances that existed at the time when he handed it over to Mr Balfour. On its proper construction, in these circumstances, the memorandum was not a resignation document. It had what he called the "element of futurity" about it. He had only reduced it to writing because Mr Balfour was going on holiday. He had made it clear in his meeting that he did want an opportunity to defend himself in relation to the allegations made by Miss Argent. He had made it clear that he was not intending to resign on 5 July. On this aspect of the case, Mr O'Kane referred to the decision of the Court of Appeal in Sothern v Franks Charlesly & Co [1981] IRLR 278, a case which deals with the difference between an unambiguous resignation in such terms as "I resign", "I am resigning", or "I am resigning now", which amount to a resignation in law, and cases where the words used indicate a future rather than a present intention, such as "I shall be going in due course" or "I shall be giving you my two weeks notice (or whatever it is) pursuant to the contract".

It is clear from the judgments in that case that, as explained by Lord Justice Fox in paragraph 18 of the judgment, every case turns on the particular facts and words used and the circumstances in which they are mentioned. Comparison with other decided cases is of limited value. The proper approach is that you consider the language used and ask was that clearly, on its true construction, language which meant a resignation. The test is, whether the words are unambiguous and whether they amount to words of resignation and whether they are so understood by the employers. It is not correct to ask what a reasonable employer might have understood. One looks at the words used and then decide as a fact what the employers understood the words to mean.

Applying that test, we agree with the Industrial Tribunal that the memorandum did show an intention to resign there and then. It is not qualified in any way. Mr O'Kane did not qualify the clear effects of the document he handed over by contradictory or qualifying oral statements. Having handed over the document in these clear terms to the employer's representative, Mr Balfour, the employer's representative was then entitled to accept it and to act on it, unless there were circumstances which showed on the evidence that he had agreed to accept the document on a different basis than that which it evidently was on the face of it. We have explained to Mr O'Kane that, if Mr Balfour had refused to accept the document, or had taken the document read it and then handed it back, or when he took the document said "Well, let us talk about this on the basis that you have not yet made up your mind" or on some other basis which indicated that he was not treating this as an unequivocal resignation letter, then it may be possible for a tribunal to conclude that Mr O'Kane had not unconditionally and unequivocally resigned. It might be inequitable or give rise to some estoppel on the part of the employers if Mr Balfour had acted in a way inconsistent with what he had agreed, or had led Mr O'Kane to believe was the position on 5 July.

In this case, it simply is not enough for Mr O'Kane to say "this is not a letter or memorandum of resignation because I said I was not intending to resign" or "I wanted an opportunity to defend myself against allegations made by a subordinate". In those circumstances, the first ground fails. The second point is that the Tribunal should have looked at the conduct not only before 5 July but also after. In our view, there was no error of law on this point. As is said by Mrs Justice Lane in her judgment in the Sothern v Franks Charlesly & Co case, if you come to the conclusion that someone has resigned and the resignation has been accepted, in general what happens after that is irrelevant to the determination of the issue of constructive dismissal. There are exceptions as pointed out by Mr O'Kane. He is correct in submitting that, in certain circumstances, there may be conduct by the employer, during the period of notice, which may give rise to a constructive dismissal, even though the employee has already given notice terminating his contract. Mr O'Kane produced a striking example of this in support of his general proposition in Ford v Milthorn Toleman Ltd [1980] IRLR 30. In that case the Tribunal held that the employee had been unfairly dismissed when, after the giving of notice by the employee, the Respondent employer found out that he was going to join a competitor and promptly removed him from his duties as laid down in the contract, (that of a Sales Manager) and proposed to change the basis of his remuneration.

The Tribunal held that the employee was entitled to treat the demotion and the reduction in his remuneration as a repudiation of the contract, which he would then be entitled to accept as amounting to a constructive dismissal. In this case, Mr O'Kane says "Well, it's similar. There was constructive dismissal because after the meeting on 5 July, the Co-op acted in breach of contract. This was a continuing matter that related to the two heads I have mentioned concerning demotion and the grievance involving Miss Argent". He said on this point that the cases showed that an employer owes a duty not to conduct himself in a manner which is calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee, Woods v WM Car Services (Peterborough) Ltd [1981] ICR 666 at page 670. He also said that the Court of Appeal decision in Lewis v Motorworld Garages Ltd [1986] ICR 157 showed that, in deciding whether there has been a breach of that term of trust and confidence, the employee may rely on a series of actions on the part of an employer which cumulatively amount to breach of that term, though each individual incident may not do so. In such a case it is the last action of the employer which leads the employee to leave. That need not itself be a breach of contract, as was made clear in the judgment of Lord Justice Glidewell at page 169G. The question is: do the cumulative series of acts together amount to a breach of that implied term? That is described as the "last straw" situation. Mr O'Kane argued that that was the situation here. It had started to build up by the way the employers behaved before 5 July and continued after then. The Tribunal erroneously just looked at 5 July in isolation, and had refused to examine the substance of this cumulative conduct by the Co-op. If they had looked at the cumulative impact of the Co-op's behaviour, they would have concluded that, when he did resign in the letter posted on 7 July, it was as a result of these breaches of contract and they were fundamental.

The argument was supported by reference to a number of cases. Lewis v Motorworld Garages Ltd and also Associated Tyre Specialists (Eastern) Ltd v Waterhouse [1976] IRLR 386. We have considered these arguments, but they do not identify an error of law in the Tribunal's decision. The Tribunal's decision was quite simply as we have mentioned, that Mr O'Kane resigned in unambiguous terms on 5 July. None of the matters of which he was complaining amounted to a breach of contract. They said there was no basis on which it could reasonably apprehend a breach of contract. From what we have seen of the findings of fact and the Notes of Evidence, there is no legal error in the Tribunal's conclusion on that point. The Tribunal correctly decided that Mr O'Kane had not proved, by his own uncontradicted evidence, that there was any breach of a fundamental term by the employers under the two heads he advanced.

His third and final submission we can deal with briefly. He said that the Tribunal erred in law in regarding his uncontradicted evidence as consistent only with a resignation. He sought to go over in some detail the findings of fact by the Tribunal and to compare them with the Chairman's Notes of Evidence. On this part of the case he concentrated on the Tribunal's findings and conclusions in paragraph 7, and said it was not correct to say that they were only consistent with resignation. We can say little more than this, that the Tribunal's conclusions on this point were fully justified by the evidence they heard from Mr O'Kane, considered in the context of the uncontradicted documents in the bundle placed before the Tribunal. This was clearly a case of resignation when the matter is looked at objectively. Mr O'Kane may still believe in his own mind that he never intended to resign and did not communicate an unqualified intention to resign until 7 July. When the matter is looked at objectively, not just in the light of the evidence he gave, but the documents which he drafted and which he handed over, particularly the document on 5 July, in our view, the only conclusion that can be drawn is that he effectively resigned on 5 July. He has not demonstrated on the evidence that that resignation was caused by any proven breach of contract by his employers before then. The evidence does not establish that they committed any breach of contract of the kind alleged after then.

In those circumstances we accept the submissions made by Mr Lord on behalf of the Co-op. There really is very little to add to what has already been said by way of comment on Mr O'Kane's submissions. Mr Lord's argument, which we accept, is that the Tribunal were, in the unusual circumstances of this case, entitled to accept the submission that Mr Wilkinson made of no case to answer. The Tribunal, it was clear from the decision and this is even clearer now we have the Notes of Evidence, well understood the issue, they had to decide, constructive dismissal or resignation. They correctly summarised the law on constructive dismissal. They correctly interpreted the letter, and concluded that it amounted to a resignation. They were entitled on the evidence before them to come to the conclusion that there was no repudiatory conduct by the Co-op which supported Mr O'Kane's case of constructive dismissal. It is not necessary, to dispose of this appeal, to examine the submissions on either side in any more detail. The Tribunal came to a conclusion that they were entitled to reach on the evidence. They reached a result by a correct interpretation and application of the law. They correctly dismissed his case without hearing any evidence from the Co-op. For those reasons we dismiss the appeal.