United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR P ELIAS QC The Solicitor West Sussex County Council County Hall West Street Chichester PO19 1RQ
For the Respondent	MR J SWIFT (of Counsel) Messrs Thomas Eggar Verrall Bowles 5 East Pallant Chichester PO19 1TS


 


MR JUSTICE LINDSAY: We have before us an appeal from a decision given by the Industrial Tribunal on 30 January 1996 in the matter of Gatehouse against West Sussex County Council. The unanimous decision of the Industrial Tribunal was that Mrs Gatehouse had been unfairly dismissed but that she, by her conduct before dismissal, had contributed towards that dismissal and that it was just and equitable that the basic and compensatory awards should be reduced by 30 percent.

Mrs Gatehouse was first employed by the County Council in October 1974 and she continued through to 23 June 1995. In October 1984 she became administrative assistant in the County Careers Office. She was then promoted to the position of Senior Administrative Assistant (Projects). Her job description was as follows:

"To have overall responsibility for the development of projects and initiatives to improve the image of the Careers Service and to generate additional income."

That part of her job description has played little part. Going on:

"The postholder will also have overall budget responsibility for the Careers Service including some administrative responsibilities.

A little further, her duties under "Finance" are said to be:

"to control and monitor income and expenditure on all aspects of the budget and advise the County Careers Officer of the up to date situation, identifying areas of over- and under-spending that need to be actioned."

Her Section Head was the County Careers Officer and she had a Grievance Officer as well.

The County Careers officer, Mr Westcott, was a strong personality, it appears. He was dismissed in February 1995. Inquiries were made in connection with that and the Applicant was suspended from April 1995. There was a disciplinary hearing on 21 June 1995. Mrs Gatehouse was summarily dismissed on 23 June and there was an appeal hearing on 12 October and her appeal was rejected.

The reason given for her dismissal by the County Council when they dismissed her was that she was to be dismissed for gross misconduct and we have seen a quotation from the letter (which we have not, in fact, seen in full) which says:

"Mr Monger was satisfied that you accepted a leased car, in the full knowledge that you were not entitled to it, and that you knowingly authorised inappropriate expenditure as detailed in the Audit Report. Further he was satisfied that you continued to enjoy corporate membership of Goodwood Park Country Club, despite knowing that the expenditure had been certified on the basis of a misleading description."

Those were the grounds of dismissal. It will be noted that although the expression:

"in the full knowledge that you were not entitled to it"

was used, the leased car was not so much taken as merely accepted and, although there was knowing authorization of inappropriate expenditure, it is not suggested it was for Mrs Gatehouse's own personal benefit.

In that quotation from the letter it has to be said that there is no mention of fraud or deceit or, specifically, of dishonesty. Whether or not the full knowledge and knowing authorization and so on amounted to dishonesty could perhaps be debated but those terms were not used.

The matter came before the Tribunal and before the Tribunal Mr Monger said that there were three matters that justified the dismissal of the Applicant. I am looking now at paragraph 8 of the Industrial Tribunal's decision:

"Firstly, she had accepted the use of a car on lease purchase arrangements which had been arranged by Mr Westcott and herself. Secondly, she and her husband had enjoyed membership of Goodwood Park Country Club for three years despite her knowing that the expenditure was made under a misleading description. Thirdly, she had drawn up the certification of expenditure which was clearly inappropriate but was nevertheless presented for approval by Mr Westcott."

Again, in its presentation to the Tribunal, the County Council seems to have fought shy of an out-and-out clear description of the activity as being dishonest or fraudulent. At all events, so far as the Industrial Tribunal understood them, those three grounds were then gone into separately by the Industrial Tribunal and a point which Mr Elias for the Appellant County Council strongly makes is that it was found that the Applicant, Mrs Gatehouse, had made no payment for private mileage in the car which she had accepted in full knowledge that she was not entitled to it as a leased car. She previously, it would seem, had had a pooled car. In relation to the pooled car she was required to make, or did make, payment for private mileage but in relation to the leased car she made no payment for private mileage. She told the Tribunal that she did pay herself for some of the petrol used on business mileage; that was the answer that she made to the Tribunal when faced with the allegation in relation to the car.

So far as concerns the membership of the golf club and the misleading description under which entries relating to the expenditure were put into the County Council's books, that was dealt with by the Tribunal. I should say that the outgoings on that score were put in the books as follows:

"February 1993 training course £1,975

February 1994 training course £2,175

February 1995 sponsorship event £2,400"

She told the Tribunal that she had at first seen nothing unusual in the Careers Service having a corporate membership of the Country Club and that she had cleared it when it came up for renewal in 1995 but that she had been instructed by Mr Westcott to renew the membership. That was her answer in respect of the golf club allegation.

So far as concerns the third head of the complaint, knowingly authorizing inappropriate expenditure, it was said against her that she permitted Mr Westcott to approve the payment of expenses which were quite clearly not permissible expenses and that they went to a friend of Mr Westcott. Her answer to that was that she was instructed by Mr Westcott to make the payments and she made them.

The Industrial Tribunal then made a number of findings critical to a greater or lesser extent of Mrs Gatehouse. They say at paragraph 15 that:

"There is no doubt that the Applicant could properly be censured for following the instructions from Mr Westcott without demur and allowing him to authorise expenses which clearly appeared to be out of order."

It will be seen there that he presumably required the expenses to be authorized. It was a question not so much of her independently authorizing the expenses but the complaint was that she allowed him to authorize the expenditure.

A little later, relating to the car, it was said by the Tribunal that they found the Applicant in her capacity as Senior Administrative Assistant:

"should have exercised more control over what her line manager was authorising"

and it went on - and this was a passage that Mr Elias particularly relied upon:

"and she was certainly unwise to accept the lease of the car that she was told by Mr Westcott was a new project prior to privatisation. In particular, the Tribunal finds that she must have appreciated that she was in default in not making any payment for private mileage."

That shortcoming, to use a rather neutral term as to Mrs Gatehouse's conduct, was most heavily relied upon by Mr Elias because that, he says, is quite plainly an event of dishonesty. She must have appreciated that she was in default in not making any payment for private mileage.

The Tribunal turned to what one might call exculpatory factors. They took the view that the local authority had been lax in its arrangements (although they took the point that Mrs Gatehouse should have made a complaint about Mr Westcott's instructions to her). They held that she was not alone not having complained about Mr. Westcott and she had made reports to others. It was held by the Tribunal that the Applicant was clearly in default and should have been censured but then, in an important phrase they say:

"to dismiss her was not within the range of responses of a reasonable employer".

They had earlier, in paragraph 15, said:

"What the Tribunal had to decide was whether dismissal was within the range of responses of a reasonable employer."

That question about the range of response is twice mentioned and, as we indicated at the outset, ultimately it was found that there had been an unfair dismissal but that Mrs Gatehouse was, to the extent already mentioned, herself a contributor.

It is in these circumstance that the County Council by Mr Elias appeals to us and, first, an important point that he takes is that the Industrial Tribunal has, so to speak, diluted the nature of the case against Mrs Gatehouse. They have, to use a word that has been used in the course of the case, trivialized it. It begins, he says, as a plain allegation of a form of dishonesty (and there he most particularly relies on the findings in relation to the petrol and private mileage in the car) and, having then diluted the nature of the complaint that the employers had found justified, the Tribunal then went on to rule that that diluted complaint was not sufficient to lead to dismissal.

It is an unusual feature of the case before us that what one might call the Burchell test by reference to the well-known case of British Home Stores Ltd v Burchell [1978] IRLR 379 before Mr Justice Arnold and two Members is not in issue and was not in issue in front of the Tribunal. In relation to dismissal for misconduct that three-part test poses the questions - did the employer believe the employee to be guilty of misconduct, did the employer have reasonable grounds to support that belief and had the employer conducted such an investigation into the circumstances as was reasonable. All that is not disputed in this case and so what chiefly becomes the area of dispute in the case is the content of section 98(4) of the Employment Rights Act 1996 which I should read:

"Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) -

(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case."

We would accept that if it had clearly been shown that the Tribunal had indeed misled themselves and diluted the nature of the misconduct which the employer had found and had given as the reason for the dismissal it would be at least the basis of an argument that there had been an error of law. It is not for the Industrial Tribunal to recharacterize - to use a word that Mr Elias has used - the reason found by an employer where the Burchell test has been fully satisfied but it is at the centre of Mr Elias's case that there was such a recharacterization in that what began as dishonesty in the eyes of the employer was, he says, watered down to merely being unwisdom and default so far as the Tribunal was concerned. We do not find that there is that dilution. If an employer wishes to make a case out in dishonesty he has to nail his colours to that mast. Expressions such as "You had full knowledge that you were not entitled to it" or that there was "knowing authorization of inappropriate expenditure" and matters of that kind can, as it seems to us, fall short of dishonesty when full regard is had to all surrounding circumstances. It thus does not seem to us to follow that there has been a dilution when the Tribunal speaks of the unwisdom of accepting the lease of the car and the default in not paying for private mileage, so that we do not accept this first dilution and mischaracterization argument.

Once that has gone, the argument becomes this; Mr Elias says that where an industrial tribunal sees dishonesty as having been the ground for the dismissal and where the Burchell test is satisfied, one gets to a position in which it must be within the reasonable responses of a reasonable employer to dismiss. It cannot in such a circumstance be the case, he says, that no reasonable employer could have dismissed. This argument requires us to leave aside that the Tribunal did not find dishonesty expressly and that the employer had not in terms described that as the reason for dismissal. Assume for the moment dishonesty was found.

Assuming that does throw up difficulties. It is undoubtedly the case that the function of the Industrial Tribunal is properly describable as being that of an industrial jury. It is, in this area of the law, a familiar expression and one sees it, for example, in Moorage v Electrolux Ltd [1991] IRLR 89 at paragraph 11 where Lord Justice Balcombe, reading the judgment of the Court, says, as the fifth of descriptions of function:

"the function of the Industrial Tribunal, as an industrial jury, is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted."

There was reference also to the well-known passage in the British Leyland UK Ltd v Swift case [1981] IRLR 91 at page 93 where Lord Denning says:

"It must be remembered that in all these cases there is a band of reasonableness, within which one employer might reasonably take one view: another quite reasonably take a different view. One would quite reasonably dismiss the man. The other would quite reasonably keep him on. Both views may be quite reasonable. If it was quite reasonable to dismiss him, then the dismissal must be upheld. as fair: even though some other employers may not have dismissed him."

That relates to reasonableness at the employer-employee level but it illustrates the breadth of the concept also as at the Tribunal level.

Once one recognizes the breadth of "reasonableness" and recognizes that the function of the Industrial Tribunal is, so to speak, that of an industrial jury, and once one speaks also of "permissible options", which is another expression one finds repeated in the cases, then it is exceptionally difficult for there to be identified a point of law as opposed to some error, if anything, of fact. Where, as here, the Burchell tests are not in issue, it then becomes the case that Mr Elias has to identify on behalf of the County Council some conclusion arrived at by the Industrial Tribunal that could not, without perversity, have been arrived at by it as the industrial jury. Thus he urges that where there is dishonesty the employer must be acting within the proper range of responses if he dismisses.

But it does not seem to us to follow, even assuming dishonesty, that every single case of dishonesty must necessarily justify dismissal. There has been talk in the case about an extreme example where an employer dismisses for the theft of some drawing pins. Mr Elias rightly says that each case has, to some extent, to depend on all its circumstances, but once, as it seems to us, one has to add a rider as to that, then one has made it a jury question. We do not say that we would have come to the same conclusion as this particular Industrial Tribunal. Indeed, it could have been difficult to do so, but whether it was difficult or not and whether we would have done the same is neither here nor there. The proper question is this: can it be said that the Tribunal's conclusion that on the facts of this case dismissal was not within the range of responses of a reasonable employer was so manifestly wrong that no industrial jury properly instructing itself could have come to that conclusion? We do not feel able to go that far. Having failed to see sufficient in Mr Elias' first ground - the recharacterization and dilution ground - and having found, so far as concerns the second ground, that one cannot say that dishonesty without more necessarily and in all cases justifies dismissal then, even were this to have been shown to be indubitably and expressly a case of dishonesty, (which it was not) we would have felt unable to uphold the argument of the County Council. Accordingly, we dismiss the appeal.