United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR J BENSON (of Counsel) Messrs Pannone and Partners Solicitors 123 Deansgate Manchester M3 2BU
For the Respondent	MR D TATTON-BROWN (of Counsel) Messrs Forbes & Partners Solicitors Rutherford House 2-8 Wellington Street (St Johns) Blackburn BB1 8DD


 


JUDGE JOHN BYRT QC: This is an appeal from a majority decision promulgated on 17 November 1997 of an Employment Tribunal sitting in Manchester. By their decision they held that the employee, Mr King, had been unfairly dismissed. Against that decision the employers, Goss Graphic Systems Limited, appeal.

The facts as found by the Employment Tribunal are as follows. Mr King had been employed by the Appellants for something like 30 years and enjoyed an unblemished record. On 24 March 1997 he was summarily dismissed, his employers being of the belief that he had defrauded them of certain computer equipment to the value of some £7,000. During his 30 year service Mr King had risen to the position of being Purchasing Manager for the Appellants' business which had offices and operations throughout Europe employing some 800 staff.

In 1996 there was a major refurbishment of the Company's premises. Not only were the premises themselves refurbished but also there was an upgrading generally of the computer equipment. A Mr Owens was the Project Manager handling that refurbishment. The contract for the refurbishment was given to a firm called Tom Finney Acoustics and Mr Worthington of that Company was the Contract Manager.

Early in 1997 Mr Worthington told Mr Owens, the Appellants' Project Manager, that Mr King had ordered from him a computer modem and printer. Mr Owens was suspicious and took the matter to his own superior, the Operations Director, a Mr Lancaster. The suspicion was due to the fact that the computer, which was said to have been delivered to Mr King, could not be found on the Company's premises. Mr Lancaster launched an enquiry and Mr Worthington confirmed to Mr Lancaster that the computer system had been delivered to Mr King at his home in late December, the year before. This information had been provided by a Mr Seavers of Fujitsu, who had in fact supplied the computer equipment.

On 24 March, Mr King was summoned to Mr Lancaster's office and he was told that he had obtained a computer for his own use supplied by Acoustics which was unauthorised. Right from the start, it is fair to say, Mr King denied any such acquisition. During the course of the day Mr King seems to have been seen on several occasions and indeed, his home was searched. In due course, that day, Mr Lancaster declared the meeting to be a disciplinary hearing.

Mr King was told he could have a friend to assist him in dealing with the enquiries but he declined the offer. At approximately 2 o'clock in the afternoon the full charge was put to Mr King and he was told that Mr Lancaster was satisfied that he, Mr King, had obtained the computer equipment by fraudulent means and had attempted to conceal the fact by asking the contractors to falsify their invoice. Mr King was told the employers were of the view that he was guilty of gross misconduct and that the proposed penalty would be summary dismissal. He was asked if he had anything to say. It is recorded in the Extended Reasons of the Tribunal that Mr King thereafter sought, for a period of something like half an hour, to persuade the Company to accept his resignation rather than dismiss him. His resignation was refused.

The Industrial Tribunal made certain findings about the procedures, adopted at the disciplinary hearing. They concluded that Mr King had been informed orally as to the nature of the allegations. Although no written statements had been produced for his scrutiny, he was told that the information was acquired from named persons. He was aware that he was accused of obtaining equipment from Tom Finney Acoustics for his own use; that the equipment had indeed been delivered to his own home.

There was also a peripheral matter which came up or was raised for the first time at the hearing before the Employment Tribunal. Mr King suggested that there had been a meeting on 24 March following the search of his home, between himself and Mr Lancaster, when he, Mr King, informed Mr Lancaster that he thought that Mr Owens, his subordinate, had obtained the equipment for himself. Mr Lancaster disputed that there had been any such meeting or that Mr King had made any such allegations at the time. It was the unanimous finding of the Employment Tribunal that there had been no such meeting. The Extended Reasons go on to record that, where there was a conflict between the evidence of Mr King and that provided by the Appellants' witnesses, they preferred the evidence of the Appellants' witnesses.

In their Reasons, the Employment Tribunal record that part of their decision which was unanimously agreed. It was agreed that at the time of dismissal Mr Lancaster had a reasonable belief Mr King had obtained the computer for himself; that he had acquired it dishonestly from Tom Finney Acoustics; that it had been seen by Mr Seavers of Fujitsu at Mr King's home because he had repaired it there and despite Mr King's denials to the contrary, the Industrial Tribunal were unanimous in finding that the employers had a reasonable belief throughout that Mr King's possession of this computer was without any authorisation.

It is at that point that the findings of the Tribunal members divide. The charge prepared against Mr King was not only that he secured the computer dishonestly but that he did so fraudulently at the expense of the Company, to whom false invoices were produced to hide the cost.

The minority member was satisfied on the evidence that the employers had a reasonable belief that the computer had been obtained by a fraud on the Company. He contended that there was the evidence of Mr Worthington to that effect and that the employers were entitled to rely upon that evidence. He was satisfied that the charge had been put to Mr King that the computer had been obtained by means of a fraud on the Company and that Mr King had said nothing in reply which might explain how this had happened. He simply denied that he had anything to do with the computer and, in the view of this minority member, the employers were entitled to rely upon the evidence of Mr Worthington. Furthermore, he was of the view that the limited response made by Mr King, when the charge of fraud was put to him, exonerated the employers from the need for further investigation to corroborate Mr Worthington's evidence.

The majority of the Tribunal were of the view that, in the first instance, there was no evidence of fraud. That, I think, was modified as one sees later on in the Extended Reasons in that they thought that such evidence as there was, was insufficient in that, the employers had to rely entirely on what Mr Worthington had said and they took the view that a reasonable employer would have investigated the matter further in order to ascertain whether there was corroboration for what Mr Worthington had said.

Before us, Mr Tatton-Brown for Mr King, supported the majority approach in this case. He reminded us that first there was a need to identify the reason for dismissal, to be specific about it so as to be able to satisfy ourselves that the tests appropriate to Section 98 (1) (2) and (4) had been complied with. Here, the essential element of the charge had been fraud. Mr Tatton-Brown's next point was that, when considering that charge and having identified the reason as fraud, one had to be satisfied that one was just considering the evidence which was before the employers at the time of the dismissal and was not looking at the matter on the basis of the evidence which was before the Employment Tribunal. And he suggested that, at the time when the employers were considering the matter, there was no documentary evidence to support the evidence of Mr Worthington. There was just his say so in the matter.

Then he says, "It is right that Mr King simply denied the charge". He said that it was implicit in such a denial that he was also denying that he had been guilty of fraud in any way. In effect, he was putting the employers to proof of fraud. And when it comes to proof of fraud he says this has to be proved by proper evidence, that is the best evidence. Bearing in mind the seriousness of the charge, the size of the Company, their resources and the length of good service given by Mr King, no reasonable employers would he submitted have been satisfied that fraud had been committed without such further investigation.

Mr Benson's arguments for the Appellant Company was that the majority of the Tribunal fell into error in a number of ways. The first point he made was that, of course, there was evidence of fraud. There was the evidence given by Mr Worthington himself and he says, the employers at the time of their investigation and inquiry were entitled to evaluate his evidence and the information that he gave and act upon it if they thought that appropriate. He furthermore says that it is not strictly right to say that Mr Worthington's evidence was unconfirmed in any respect. There was a letter dated 17 January 1997 written by Mr Worthington to Mr Owens in which he recorded the detail of the sale. The Chairman's notes of the evidence record Mr Lancaster as saying he had had that letter before him at the time of his enquiries.

Mr Benson stressed that it is not for the Employment Tribunal to assess the quality of the evidence which was tendered before the employers and accepted by them. He cited the case of British Home Stores v Burchell [1980] ICR 303 and the passage in particular at page 304 at E, where it is said, that it is not right for the Tribunal to assess the quality of the evidence. The test is whether it was reasonable for the employer to have acted upon that evidence.

In this particular case it was for the employer, and more specifically Mr Lancaster, to evaluate the worth of Mr Worthington's evidence and he was entitled to act upon it should he be so minded. Mr Benson stressed that in the circumstances it was not accurate to say that there was no evidence of fraud. He then dealt with the latter proposition advanced in the Extended Reasons that there was insufficient evidence of fraud and, in dealing with that point, he referred to the evidence given by Mr Worthington and the supporting corroborative letter of 17 January 1997. He suggested that what happened in this particular case was that the majority had substituted their view of the reliability of Mr Worthington's evidence regarding it as they did as being without corroboration and substituted that for the evaluation made by the employer. He says that that was the error that the Tribunal majority fell into.

Furthermore, he said that the employers were entitled to regulate the manner and the extent of their investigation, having regard to the employees' response to the charge when it was put to him. Where it was a simple denial, without any explanation which might account for the apparent facts of the case otherwise suggestive of fraud, they were entitled to curtail their investigation and limit it to that of the evidence of Mr Worthington. That was their privilege and they were entitled to do so.

Mr Benson also relied on a charge of perversity. He said that no reasonable Tribunal could reject the employers' case; that they entertained a reasonable belief that fraud had been committed. He stressed the fact that it was a unanimous finding of the Tribunal that the employers had a genuine and reasonable belief that Mr King had obtained the computer to which he was not entitled to, for his own use, had concealed that fact and therefore he was guilty of dishonesty. Added to that there was the evidence from Tom Finney that they had paid for the computer and that the cost had been hidden in the cost of the invoice presented to the employers. He asked the question why Tom Finney Acoustics should have been so magnanimous. Was it a gift to Mr King ? - he asked rhetorically, and the answer had to be that that was a fantastic supposition. He also asks, what was in it for Mr Worthington? Why should he have concocted the story he presented to the employers? He then went on to conclude it was an irresistible inference that a fraud had indeed been committed and that no reasonable Tribunal should have come to a contrary conclusion.

So as far as we are concerned, we accept Mr Benson's submissions in this matter. We are satisfied that Mr Lancaster had evidence of fraud. It was substantiated by the evidence of Mr Worthington. We are satisfied that should an employer, having heard what Mr Worthington had to say, coupled with the information provided by the other people from whom he made enquiries, should he wish to rely upon that evidence, it was perfectly reasonable for him to have done so.

It is plain that the Employment Tribunal, as indeed Mr Lancaster had, relied upon the evidence of Mr Worthington to establish Mr King's dishonesty. One might ask why should they not accept the evidence he gave that fraud had been committed? We are satisfied that the majority of the Tribunal in this case fell into error in that they attempted an evaluation of the quality of Mr Worthington's evidence and furthermore, in saying that it was unreasonable for the employers to accept that evidence without corroboration.

It is to be noted that the Employment Tribunal heard Mr Worthington's evidence and heard him under cross-examination and that, at no time is there anything in their commentary or Extended Reasons to suggest that his evidence should not have been accepted in any particular respect. There are no reasons advanced as to why there was a need for further corroboration before his evidence was accepted.

In our view, the error the Tribunal committed was that they substituted their own evaluation of the worth of the evidence of a crucial witness in this case and, as a result of that, came to a decision which amounted to a substitution of their own decision for that of the original employer.

So far as perversity is concerned, having found unanimously that Mr King had been guilty of dishonesty, it is difficult for us to see how any reasonable Tribunal could have come to the conclusion that the fraud had not been proved. Mr King had been told that the cost of the computer had been hidden in the overall contracts which had been presented by the contractors to the Appellant Company. He had come forward with no explanation and we ask ourselves how this could be the case. How, when he had the computer in question in his own home, there had been no explanation about how its cost had been met.

The finding of the majority members is one which logic persuades us to be plainly wrong. We are satisfied that the finding of the majority in this instance was, in effect, perverse. Accordingly, we allow the appeal.