United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR MARTYN WEST (Representative) Peninsula Business Services Ltd Stamford House 361-365 Chapel Street Salford M23 5JY


 


JUDGE PETER CLARK: These are appeals by the employer, R Reids Electrical Distribution Ltd, against first, the substantive decision of the Lincoln Employment Tribunal sitting on 15th December 1997, upholding the employee, Ms Coulson's complaint of unfair dismissal and awarding her compensation of £4,895.63 ["the first decision"]. That decision was promulgated with extended reasons on 8th January 1998. Secondly, against that same tribunal's decision on review, promulgated with extended reasons on 14th May 1998, following a hearing held on 20th April 1998 ["the review decision"].

Ms Coulson commenced employment with the appellant on 28th November 1988, working her way up to the post of Office Administrator. She was dismissed with effect from 20th June 1997 by reason of redundancy. The tribunal found that dismissal to have been unfair due to lack of consultation by the appellant with Ms Coulson and because her selection for redundancy was unfair. They went on to find in the first decision that there was a one in three chance that had the appellant approached the matter fairly she would have been dismissed as redundant anyway. Accordingly they reduced the loss calculated under the head of the compensatory award by one-third in accordance with the principles laid down in Polkey v A E Dayton Services Ltd [1987] IRLR 503. She had already received a redundancy payment equivalent to the basic award and so the tribunal was concerned only with the compensatory award.

As to that, the tribunal found at paragraph 25 of the first decision reasons, that Ms Coulson was given eight weeks notice of termination on 16th May 1997. She left by agreement on 20th June. On 23rd June she commenced new employment undertaking clerical work with a construction company, Nugent, at a salary £15,600 p.a. gross; that is a 40 hours week at £7.50 per hour. On the evidence which the tribunal heard from Ms Coulson on 15th December 1997, the tribunal accepted that the Nugent job ended on 27th July 1997, that is, after some five weeks, because the new employers told her that they could not afford to keep her. They further accepted that that employment was initially on a trial basis. Thereafter she was unemployed from 27th July until 7th September 1997; she then obtained temporary work from 8th September to 27th October at an average net weekly wage of £100. On 27th October 1997 she obtained further employment at a salary of £10,750 p.a. gross, in which work she remained as at the date of the first hearing.

It was submitted by Mr Brown, who represented the appellant below, that the first job with Nugent broke the chain of causation. The tribunal was referred to four decision of this tribunal namely:

Ging v Elward Lancs Ltd [1978] 13 ITR 265

Courtaulds Northern Spinning Ltd v Moosa [1984] ICR 218

Fentiman v Fluid Engineering Products Ltd [1991] IRLR 150

Lytlarch Ltd v Reid [1991] ICR 216

from which cases it derived the principle that the chain of causation may be broken by new permanent employment, or new employment which was expected to be permanent. It found that the Nugent job did not break the chain of causation. The tribunal accepted Ms Coulson's evidence that the new employer wanted it on a trial basis and asked her to "give it a whirl" doing that job. On later reflection those employers concluded that they could not afford it. She was therefore in that job for five weeks.

Accordingly, the tribunal assessed her loss to the date of the first hearing, based on a net loss figure with the appellant of £236.25 per week, giving credit for monies earned during that period, together with a future loss period of 39 weeks at the continuing partial loss rate of £5,000 p.a. gross, netted down for tax and National Insurance. After adding awards for loss of use of a company car and loss of statutory rights, and reducing the total sum by one-third in respect of the so-called Polkey deduction, they arrived at a final compensatory award of £4,895.53.

Following promulgation of the first decision the appellant both appealed to this tribunal and applied to the Employment Tribunal for a review.

The basis of the review application was, first that new evidence had become available. Employment Tribunal Rules of Procedure Rule 11(1)(d); alternatively the interests of justice required a review under Rule 11(1)(e).

The appellants had made enquiries of Nugent following the first hearing, and from correspondence received from that company, it appeared to be said that Nugent had lost confidence in Ms Coulson's ability to do the job, and she had been dismissed after three weeks. Further, it was said that had she been capable in the post of accounts person, then the position would have been permanent. Ms Coulson, on the other hand, produced her dismissal letter from Nugent dated 21st July 1997, which referred to her employment being terminated due to restructuring of the administration within the company.

The tribunal applied the well-known test for admitting fresh evidence on review to be found in Wileman v Minilec Engineering [1988] ICR 318. They found that new evidence had become available since the first hearing, but were not satisfied that its existence could not have been reasonably known of or foreseen prior to the hearing, of if the appellant, through Mr Brown, was taken by surprise by Ms Coulson's evidence as to the trial basis with Nugent, he could and should have asked for an adjournment to deal with it. Douglas Water Miner's Welfare Society Club v Grieve (EAT/487/84). On that basis the tribunal refused to admit the Nugent evidence. It further declined to allow the review under Rule 11(1)(e) on that ground.

The second ground related to two authorities not cited at the first hearing. The first was an unreported Court of Appeal case, Mabey Plant Hire Ltd v Richens (6th April 1993); the second was a decision of this tribunal on which I sat, Whelan v Richardson [1998] IRLR 114, that latter case was reported after the first tribunal hearing in this case. The tribunal considered both those cases in their review decision reasons.

The tribunal reviewed its first decision in the light of Whelan and concluded, on the facts as originally found, that the chain of causation was not broken by the Nugent employment, which was on a trial basis.

The third ground for review was an agreed variation to the net monthly earnings figure with the appellant. On that ground only the review succeeded, and the compensatory award was reduced in total to £4,578.04.

There are effectively two points taken in these appeals. The first is that, on review, the tribunal ought to have admitted the Nugent evidence. The second is that the tribunal misapplied the law in finding that the chain of causation was not broken by the Nugent employment.

As to the first point, Mr West, who appears on behalf of the appellant at this ex parte preliminary hearing, accepts that prior to the first tribunal hearing the appellant was aware of Ms Coulson's employment with Nugent, a company with which the appellant traded. She was released from working out her notice with the appellant in order to take up the employment with Nugent. At the first hearing Mr Brown was not in a position to challenge Ms Coulson's evidence that her job with Nugent was temporary. Her evidence to that effect came as a surprise. It is said that she would not have broken her notice period in order to take up fresh employment with Nugent if that employment was only temporary.

Dealing with that last point, we do not think that that follows necessarily. It seems to us that Ms Coulson was taking all reasonable steps to mitigate her loss by taking up a job opportunity which became available to her whilst she was working out her notice with the appellant.

Secondly, Mr West relies on the decisions in Mabey and Whelan for the proposition that where a new job is taken on a permanent basis, the fact that it lasts for only a short period will not prevent it from breaking the chain of causation.

We can deal with those points quite shortly.

In our judgment the tribunal was quite entitled to find on the review application, that the Nugent evidence could, with reasonable diligence, have been led at the first hearing by the appellant, if necessary, after an adjournment. Accordingly the tribunal was right not to admit it on review under Rule 11(1)(d). However, Mr West goes on to submit that having decided to review their first decision under Rule 11(1)(e) in order to consider the cases of Mabey and Whelan, the tribunal ought to have admitted the Nugent evidence, even if it did not pass the Wileman test under Rule 11(1)(d). We disagree. Assuming, without deciding, that the tribunal was entitled to hold a review under Rule 11(1)(e) purely for the purpose of considering the application of the two further authorities, it did not follow, in our judgment, that it was bound to re-open the factual issue as to whether the Nugent employment was permanent or not. Having rejected the first ground for review under Rule 11(1)(d) it was entitled to carry out the Rule 11(1)(e) review on the basis of the facts as originally found in the first decision for the purpose of considering the application of the cases of Mabey and Whelan.

Secondly, the guidance which we gave in Whelan has, in one respect, been subsequently corrected by the Court of Appeal in Dench v Flynn & Partners [1998] IRLR 653. In Whelan, at paragraph 46 of the report, this proposition appears:

"(5) As soon as the applicant obtains permanent alternative employment paying the same or more than his pre-dismissal earnings his loss attributable to the action taken by the respondent employer ceases. It cannot be revived if he then loses that employment eight through his own action or that of his new employer, neither can the respondent employer rely on the employee's increased earnings to reduce the loss sustained prior to his taking the new employment. The chain of causation has been broken."

Commenting on that proposition of law, Beldan LJ said this at paragraphs 19 to 21 of the report in Dench:

"I consider that statement needs qualification. No doubt in many cases a loss consequent upon unfair dismissal will cease when an applicant gets employment of a permanent nature at an equivalent or higher level of salary or wage than the employee enjoyed when dismissed. But to regard such an event as always and in all cases putting an end to the attribution of the loss to the termination of employment cannot lead in some cases to an award which is just and equitable.

Although causation is primarily a question of fact, the principle to be applied in deciding whether the connection between a cause, such as unfair dismissal, and its consequences is sufficient to found a legal claim to loss or damage is a question of law. The question for the industrial tribunal is whether the unfair dismissal could be regarded as a continuing cause of loss when she was subsequently dismissed by her new employer with no right to compensation after a month or two in her new employment. To treat the consequences of unfair dismissal as ceasing automatically when other employment supervenes is to treat as the effective cause that which is simply closest in time.

Causes, in my view, are not simply beads on a string or links in a chain, but, as was said many years ago, they are influences or forces which may combine to bring about a result. A tribunal of fact has to consider the appropriate effect of the wrongful or unfair dismissal and the effect of the termination of any employment which is subsequently obtained. That is a function which an industrial tribunal is called upon frequently to perform and, provided it does not regard itself as rigidly bound in every case to take the view that a subsequent employment will terminate the period of loss, it seems to me that it will be able, fairly and equitably, to attribute to the unfair dismissal the loss which has been sustained."

It is right to say that the approach of the Master of the Rolls in Mabey to be found at pages 14 to 15 of the transcript of the judgments given in that case, does not, on the face of it, appear entirely consistent with the approach of Beldan LJ as we have set it out. However, we prefer to follow the most recent considered decision of the Court of Appeal in Dench. In any event, it seems to us that, having found that the tribunal was entitled to carry out its review in the light of the cases of Mabey and Whelan on the basis of its original findings of fact, it was equally entitled to conclude that the chain of causation had not been broken, a view which is, if anything, reinforced by the words of Beldan LJ in Dench.

In these circumstances, we have concluded that this appeal raises no arguable point or points of law to go forward to a full hearing, and it must be dismissed at this stage.