United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 562_95_1201

Appeal No. EAT/562/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 12th January 1996

Judgment delivered on 15th February 1996

HIS HONOUR JUDGE SMITH Q.C.

MR K M HACK JP

MR S M SPRINGER MBE

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W H SMITH LTD          APPELLANTS

D KITE          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR P ROSE

(of Counsel)

Messrs Evershed Wells & Hind

Solicitors

14 Fletcher Gate

Nottingham

NG1 2FX

For the Respondents MR J LIVESEY

(of Counsel)

Messrs Clement Jones

Solicitors

286 High Street

Bangor

Gwynned

LL57 1UL


 


JUDGE SMITH Q.C.: This is an appeal by W H Smith Ltd against the decision of an Industrial Tribunal sitting in Bristol on 17th March 1995 when it decided that the Respondent, Mr David Kite, had been unfairly dismissed from his position as Deputy Night Manager at the Bristol Wholesale House on 16th September 1994; awarded him compensation and ordered that he should be re-engaged on or about 17th May 1995.

Before coming to the submissions of Counsel on each side of this appeal, which have been well made, it is necessary for us shortly to set out the background to the matter and the circumstances giving rise to the Respondent's dismissal.

Before joining the Appellant company in 1989 the Respondent had had a career in the Army for many years rising to the rank of Sergeant. It transpires that by November 1989 he was on "garden leave" as it is called while investigations of alleged irregularities were being conducted by the Army authorities. In 1989 he applied for and obtained in employment as a part-time packer with the Appellants. In January 1990, he had to return to the Army to face the investigations we have mentioned above. Thereupon he was charged at Court Martial with a substantial criminal offence of false accounting in connection with accounting irregularities arising from his management of a retail shop as part of his Army service where he was responsible for substantial sums of cash, stock, and security. He was convicted and sentenced to nine months imprisonment. It is right to say that he maintained that the irregularities were as a result of stress and overwork, but the fact remains he had that criminal conviction for that serious offence.

After serving his sentence he re-applied for permanent work with the Appellant and in July 1990 he was accepted for employment as a full-time packer. He was not asked to disclose his conviction and did not do so at that time. In March 1993 he applied for the post of Deputy Night Manager at Bristol. This was a position of considerable responsibility as is apparent from the job description at pages 9-11 of the exhibits bundle. The Bristol Wholesale House receives newspapers and magazines from publishers and then sorts and packs and delivers them to W H Smith newsagent customers. At times the Respondent would be on his own in charge with substantial security responsibilities for valuable stock, equipment, transport, cash, and gratis copies of magazines.

As part of the process of making an internal application for this post the Respondent completed the Internal Job Application Form as exhibited at pages 5 and 6 of the bundle, and was then interviewed by the Appellant's manager responsible for the appointment, Mr Rodney Clarke. It is clear from Mr Clarke's witness statement what transpired at that interview and in particular it is apparent that of especial importance to Mr Clarke was what the Respondent told him about the Respondent's responsibilities in the Army when he was in charge of managing a retail unit having 40 staff. According to paragraph 31 of Mr Clarke's witness statement, the Respondent told him that the unit for which he had charge had a turnover of 70K DM which he had built up to 250K DM and, according to Mr Clarke, the Respondent led him to believe that he had carried out this job satisfactorily and had not encountered any problems. Thus it was that Mr Clarke came to write on the application form:

"Ran a retail shop ... responsible for cash, stock, and security."

Mr Clarke said in evidence before the Industrial Tribunal that a major factor in his decision to appoint the Respondent was the Respondent's recent responsibilities in the Army.

Unknown to Mr Clarke, it was, of course, directly in connection with irregularities in his duties in such a capacity that the Respondent had been court martialled and convicted of false accounting and sentenced to nine months imprisonment in a case involving a deficiency of some £16,000 which the Respondent ultimately repaid.

However, the Respondent was not required either by the terms of form he had to complete or verbally by Mr Clarke to disclose whether he had any criminal convictions and, because he was not so asked, he did not volunteer such information. This was a deficiency which then existed in the Appellants' procedures for job recruitment which we understand has now been rectified. It was the Respondent's evidence that had he been asked to disclose his conviction he would have done so, but, believing himself to be within his rights in not disclosing it unless asked, he deliberately did not do so.

The Respondent was duly appointed and carried out his duties satisfactorily as Deputy Night Manager, as the Industrial Tribunal found at paragraph 12 of its decision. On 13th July 1994 an anonymous letter was received by the Appellants making various allegations against the Respondent of which only one is of any relevance namely, that he had, as it was put in the letter:

"neglected to inform (Smiths) of his criminal record and the fact that he was court martialled from the Army."

There followed the inevitable enquiry and disciplinary procedure which is comprehensively documented in the papers before us and which culminated in a decision being taken by Mr Clarke, at the end of the disciplinary meeting held on 16th September 1994, to dismiss the Respondent as recorded particularly in paragraph 11 in the record of that meeting at page 23 in the bundle, and as confirmed in the letter of even date sent to the Respondent confirming the dismissal, paragraph 3 of which read:

"At the heart of the issue is the question of the trust we have in our employees and especially those we employ to manage our business. Trust and integrity are fundamental principles and I am afraid that that trust has now irrevocably broken down."

The appeal procedure followed, and there is no complaint as to the procedures which were carried out by the Appellants and ultimately after two appeals the dismissal was upheld and it was in those circumstances that the matter came before the Industrial Tribunal.

Although in many ways this could be described as a straightforward case, in the sense that the facts are, as the Industrial Tribunal pointed out, largely agreed, we have not found its so straightforward with regard to the application of the relevant principles of industrial relations law. On the one hand it is in our judgment clearly established that there is no duty laid upon a job applicant to volunteer unspent convictions if he is not asked to do so, whilst on the other hand there is the very important principle laid down by Cumming-Bruce J., as he then was, in Torr v British Railways Board [1977] ICR 785 at 789 at H viz.:

"It is of the utmost importance that an employer seeking an employee to hold a position of responsibility and trust should be able to select for employment a candidate in whom he can have confidence. It is fundamental to that confidence that the employee should truthfully disclose his history as far as it is sought by the intending employer."

Thus it is clear in our judgment that at least where the employer is appointing to a position of trust a job applicant must disclose previous convictions if he is asked so to do. But in our judgment the position is not by any means as clear where a job applicant who knows that he is being considered for a position of responsibility and trust puts forwards experience he has had in the past where he has held a similar position in support of his application but does not, because he is not asked so to do and does not believe that he is obliged so to do, disclose that he was convicted of serious wrongdoing in connection with his discharge of such responsibilities. Of course, provided that the employer has in place a proper system requiring such information to be divulged by an applicant applying for such a post there is no problem, but the situation in this case perhaps illustrates the difficulties which can arise if there is no such system in place. It is plain, in our judgment, that all employers who employ persons in positions of trust should ensure that they have such systems.

The practical difficulty which the difficult interaction and inter-relationship between the above principles has given rise to in this appeal is that it is the Appellants' case that at all times before the Industrial Tribunal the Appellants were maintaining that the reason for the dismissal was not misconduct on the part of the Respondent (since they accepted that he was entitled not to disclose the conviction) but rather the reason for dismissal was "some other substantial reason" namely the complete breakdown of trust and confidence between the parties and that the Industrial Tribunal decision is fundamentally flawed because it failed:-

(a) to identify what the reason given by the Appellants for the dismissal was;

(b) to decide whether it was or was not the true reason for dismissal; and

(c) whether it was reasonable in all the circumstances to dismiss for that reason in accordance with the well understood requirements of Section 57(1)(2)(3) of the Employment Protection (Consolidation) Act 1978.

It was the Appellants' case that it was made clear to the Industrial Tribunal by the solicitor then representing the Appellants, that the essential reason for dismissal relied upon was the breakdown in trust and confidence which had been brought about by the discovery of the criminal conviction rather than any misconduct of the Respondent. To the extent that reliance was placed upon deception or concealment of the conviction such, so it was alleged, was no more than a constituent part of that breakdown of that trust and confidence since it was part of the Appellants' case on that point that when discussing his career with Mr Clarke the Respondent left the Appellants with the impression that he had a clean record when he did not and thus was well-suited to the post. In other words it was part of the Appellants' case and only a part, that once he embarked upon giving a history of a previous position of trust he had held to support his application he was bound to paint the full picture by disclosing the conviction. It is the Appellants' case before us that the Industrial Tribunal failed to understand the way the Appellants were putting the case and failed properly or at all to identify the reason for the dismissal or to consider or make findings in relation to the submissions being made to them on behalf of the employers in order to show what the reason for the dismissal was. The Appellants go on to submit that had the Industrial Tribunal properly understood the Appellant's case they would have been bound to find that the Appellants had shown that the reason for the dismissal was a breakdown in trust and confidence (i.e. a species of "some other substantial reason") and having so found on any reasonable application of Section 57(3) they would have been bound to find, applying the very well-known criteria for construing that sub-section, that the decision to dismiss was very well within the parameters of a decision which a reasonable employer could reasonably treat as a sufficient reason for dismissing the Respondent.

It was the Appellants' submission that having failed properly or at all to understand the Appellants' case and to identify the reason for the dismissal the Industrial Tribunal equally failed properly or at all to make necessary findings relating to their consideration of Section 57(3).

As further alternative ways of putting this submission Counsel for the Appellants argued that the decision was flawed in that it did not enable the parties to see why they had won and why they had lost respectively and thus contravened the requirement for sufficiently intelligible reasons to be given as laid down by the Court of Appeal in Meek. In the further alternative Counsel for the Appellants submitted that, on the assumption that the Industrial Tribunal had correctly understood the Appellant's case, their decision was perverse on Section 57(3).

In a realistic and well-argued submission, Counsel for the Respondent, Mr Livesey, submitted that, on their proper construction, the submissions made by the Appellants' legal representative to the Industrial Tribunal fell to be to construed as a case being put forward by the employers based not upon some other substantial reason namely a breakdown of trust and confidence arising from the discovery of the conviction, but rather as a case based squarely on misconduct, namely the deception, concealment, and misrepresentation on the part of the Respondent in failing to disclose the conviction.

Alternatively, he submitted that the way the case was put to the Industrial Tribunal lacked focus and was blurred in the sense that it lacked clarity on a matter of fundamental importance, namely, whether the reason which the Appellants sought to establish was based upon some other substantial reason or was based upon misconduct. Counsel submitted that, once this was appreciated, although he accepted that the Industrial Tribunal's decision was by no means a model of clarity, he submitted that it was sufficiently clear that the Industrial Tribunal (rightly in his submission) considered that they were dealing with a case based upon misconduct which he submitted they rightly rejected as unreasonable in reliance upon the principle that unless asked so to do an employee is not bound to disclose previous unspent convictions. He submitted that the Industrial Tribunal had rightly and correctly distinguished the instant case from the situation in Torr where the job applicant had untruthfully falsified an application form.

Mr Livesey, accepted in argument, without formally conceding the point, that had the case been put forward, as he says it was not, squarely on the basis of breakdown in trust and confidence, then the Appellants would have succeeded in establishing the fairness of the dismissal.

Both sides relied upon a type-written note placed before us which was made by Mr Livesey of the submissions made by Mr Hardcastle, the solicitor representing the Appellants before the Industrial Tribunal, and which had been agreed by Mr Hardcastle as an accurate note of the submissions which he then made.

Having considered these submissions made to us we are unanimously of the view that the decision of the Industrial Tribunal is defective in that it fails sufficiently or at all to identify the reason for the dismissal, or to address the arguments which were made to it by the Appellants. In our unanimous judgment at least this much is clear from the submissions made by the Appellants before the Industrial Tribunal, namely that the Appellants were at least arguably seeking to put forward a case based upon breakdown of trust and confidence, arising from the discovery of the serious conviction recorded against the Respondent. We find it necessary to record a difference in view between us on this point to this extent only, namely that whilst the experienced members in the majority take the view that it was not clear whether the Appellants were seeking to establish a reason based upon conduct or some other substantial reason, it is the view of the Chairman in the minority that it is clear that the only case the Appellants were relying upon before the Industrial Tribunal was that of breakdown of trust and confidence, of which the non-disclosure of the conviction was no more than an integral part.

However that may be, we are unanimously of the opinion that the Industrial Tribunal erred in law in failing adequately or at all to identify the true reason for the dismissal. Since in our unanimous judgment the wording of paragraph 14 of the decision namely:

"they have sought to rely on the second allegation, namely the court martial and conviction as being sufficient grounds for dismissal."

It begs the question as to what the reason for the dismissal was in the view of the Industrial Tribunal.

We also accept the submission of Counsel for the Appellants that the Industrial Tribunal have in consequence failed adequately to make the necessary findings under Section 57(3) since having failed to find the reason for the dismissal in the first place they have done more than state a bald conclusion in paragraph 18 of the decision without, having identified the true reason for the dismissal or deciding:

(a) whether it was a true reason;

(b) whether the Appellants acted within the bands of reasonableness in treating it as a reason for the dismissal.

We agreed with Counsel for the Respondent that the Industrial Tribunal appear to have treated the reason for dismissal as being based exclusively on misconduct and have made their other findings consequential upon such a conclusion. But in our unanimous judgment, they have failed to make the crucial primary finding as to what was in fact the true reason for the dismissal in the first place.

We further accept the alternative submission of Counsel for the Appellants that for the reasons set out above the decision of the Industrial Tribunal lacked the necessary clarity to enable the parties to know why they had respectively won or lost, and accordingly it fell foul of the principle in Meek.

For this reason we are of the unanimous opinion that the appeal should be allowed.

In the circumstances we do not need to decide the arguments addressed to us on the issue of whether it was wrong in law for the Industrial Tribunal to have ordered re-engagement.

Having decided that the appeal should be allowed, we turn to consider what Order we should make and in particular whether this is one of those cases where we should substitute our own decision for that of the Industrial Tribunal. We were strongly pressed to do this by Counsel for the Appellants on the basis that:

(a) it was clear that the Appellants were all along seeking to rely upon the irretrievable breakdown of trust and confidence between employer and employee arising from the discovery of the conviction, as the reason for the dismissal; and

(b) that once this is accepted, it follows inescapably that the dismissal was fair.

It is pointed out to us by Counsel for the Appellants that the basic facts are not in dispute and that accordingly the Appeal Tribunal has all the material in front of it to substitute its own decision that the dismissal was fair.

For the Respondent it was submitted that it is only where all the necessary findings of fact have been made by the Industrial Tribunal that, exceptionally, this Appeal Tribunal should substitute its own decision and that there remains an issue as to what was the true reason for the dismissal.

In the judgment of the majority of the Appeal Tribunal, the proper order is to remit this case to a different Tribunal for a re-hearing since the majority take the view that it remains open for argument as to what was the true reason for the dismissal was. The majority do not find the contemporary documents, the letter of dismissal, or the arguments of the Appellants before the Industrial Tribunal clear on this point.

In the minority view of the Chairman, it is clear from the contemporary documents, from the letter of dismissal, and from the arguments put forward on the Appellants behalf before the Industrial Tribunal that the reason upon which the employers relied was a breakdown in trust and confidence, and accordingly he would have substituted a finding of fair dismissal on application of Section 57(1)(2) and (3) of the Employment Protection (Consolidation) Act 1978.

However, the decision of the Appeal Tribunal, by the majority, is that the appeal is allowed and that this case should be remitted to a re-hearing before a freshly constituted Industrial Tribunal, and accordingly the appeal is allowed on that basis.