United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR P EMERSON (of Counsel) Messrs Kanter Jules Solicitors 33 Margaret Street Cavendish Square London W1N 8JJ


 


JUDGE HICKS QC: The applicant in this case, the respondent to the appeal, Mr John Halstuk, was employed by the appellant, R Halstuk Ltd, and that company ran a small family business, the effective persons in charge of which were a Mr Mendel Halstuk and Mrs Rachel Halstuk, who are described as, variously, the uncle and aunt or step-uncle and aunt, of the applicant. It was a business dealing in fashion and fabrics, originally from premises in Brick Lane. In 1982 the applicant started his employment with that company, originally as a warehouseman, but after expansion of the business into textile imports in 1987 he became responsible for that aspect of the company's business and was made the company's general manager although, as the Industrial Tribunal found, in practice he was not particularly concerned with the retail trade, which was still run by his aunt from the original premises in Brick Lane, while he carried on the import side of the business from premises in Bethnal Green Road. Financial control and book-keeping remained with his uncle and aunt.

It is clear that he had expectations of succeeding to the effective benefit of the whole business but in 1993 to 1994, as the tribunal found and as we understand is not in dispute, relationships between them deteriorated. It became apparent that he would not be a successor. By 1995 there was what the tribunal described as a "dramatic decrease" in the deals undertaken through his Bethnal Green Road premises, the import side of the business. There was a dispute as to the reason for that. The tribunal heard competing accounts, the applicant's being that his uncle and aunt effectively prevented him from purchasing materials and putting transactions together and they saying that the reason was his loss of interest in the business. The tribunal's finding was that there were elements of truth in both of those accounts. Specifically they found that the uncle and aunt would have made life difficult for the applicant in conducting everyday business. Equally, they found that he would not be inclined to put in the effort he had in the past.

The matter was apparently brought to a head by a letter dated 15th August 1995 received by Mr Mendel Halstuk from the company's accountant, which attributed serious losses to the applicant's operation at Bethnal Green Road. That was not shown to the applicant. On the tribunal's findings nothing was immediately done about it. The uncle and aunt went to see their Rabbi, they being Orthodox Jews, in November 1995 for advice, some three months after the letter. He gave them certain advice which, as the tribunal found, was not entirely followed. The next and only event between the parties was that on 8th January 1996 a letter was written to the applicant dismissing him with immediate effect and that is taken to be the date of dismissal, although the letter did not apparently arrive for some time after that, on a date which is not specified in the decision of the tribunal.

The tribunal found that to be unfair dismissal. There is no appeal against that finding. They assessed his contribution at 75%, saying that he had to a large degree been the author of his own misfortune because of the contribution he made to the decline in the workload and because of what they found to be his aggressive attitude to the extent that, to some degree, he dominated his uncle and aunt. There is an appeal against that contribution of 75%, the appellants claiming that the contribution should have been 100%.

The tribunal had also to deal with an application for damages for wrongful dismissal. They implicitly accepted that there was a breach of contract, although they do not expressly find that, but they do find that there was no breach of contract sufficiently serious to justify immediate dismissal. As to that they say in particular:

"11. ... If there was a case for this, it would have arisen on receipt of the accountant's letter of 15 August 1995 but Mendel and Rachel Halstuk took no action in relation to this until November 1995 when they went to see Rabbi Berger and then no action to dismiss until 8 January 1996. They have not claimed in their evidence that there was a build up of behaviour on the part of the Applicant to January 1996 which led to the end of the road being reached. The fact that there was a delay of this nature strongly suggest that there was no situation which gave rise to entitlement on the part of the employer to immediate dismissal."

Finally the tribunal dealt with damages for wrongful dismissal, which are the effective measure of compensation because, apart from a basic award, the compensation for unfair dismissal was swallowed up by the much larger damages for wrongful dismissal. They awarded damages for three months on the basis that within that time the applicant should have obtained alternative employment and for that period they awarded his net salary plus bonus on the basis that, as they found, the bonus was on the history and the evidence not discretionary, but an implied term of the contract. There is an appeal against the amount, of which the most substantial ground is the inclusion of the bonus.

The first appeal is against the finding of wrongful dismissal. The way in which that is the first put by Mr Emerson for the appellants is that, on the tribunal's findings, the applicant had "ceased to function" or was "a manager who was no longer managing".

In our view that way of putting it simply cannot be sustained. The findings of the tribunal, as I have already summarised, are quite clear that it was not a question of the applicant's having ceased to function or ceased to manage altogether. There were two contributory causes to the reduction in the business of the import department of the company; his disinclination to exert himself was indeed one, and a substantial one to the extent of 75%, but it was not the only one, and there was no finding whatsoever that he had ceased to do any work, ceased to attend the premises or in any other way totally ceased to carry out his responsibilities.

The second argument advanced in relation to that head of appeal against the finding of wrongful dismissal is that the treatment of the matter of delay was an error of law.

In our judgment there is nothing in that point either. The tribunal was concerned to consider whether what, as I have said, they implicitly accepted was a breach was repudiatory. One of the matters that they took into account and, in our view, were entitled to take into account, was the delay in giving effect to what was advanced as the only crucial piece of evidence affecting the minds of the uncle and aunt, namely the accountants letter of 15th August 1995. We see no error of law on the part of the tribunal in taking that into account in reaching their conclusion that there was no repudiatory breach. In so far as that is a question of fact, which we are inclined to think it is, there is in any event no appeal. In so far as on the findings of primary fact it is a question of law whether the breach was repudiatory, we see no error on the tribunal's part.

The next matter on which the employers appeal is award of compensation. The skeleton argument says that the import division of the company had ceased to operate and therefore there was no job for the respondent left and he would not have received three months, income in any event.

Put in that bold way, that evidently cannot be right, but as developed in argument this point seemed to confine itself to the question of the bonus. That would be a relevant consideration if the bonus was truly discretionary, as indeed was plainly argued before the tribunal, but the tribunal dealt with that argument and made a finding of fact that this bonus, having been invariably paid, was not in truth discretionary but was an implied term of the contract. That is a finding which the tribunal was entitled to reach. No error of law is shown in their having done so.

The other matter advanced in relation to the amount of damages for wrongful dismissal goes to the question of mitigation. The tribunal found in the employer's favour that there was a failure to mitigate, but their conclusion from that was that with proper efforts to mitigate the applicant would have obtained alternative employment within three months. The tribunal use the word "within", as of course tribunals and courts generally and commonly do in such circumstances, but the meaning is quite plain: that by the end of the period mentioned, in this case three months, employment could and should have been obtained. That is therefore the period which should be used and was used in calculating the loss.

What is said, as we understand it, under this head, is that as the tribunal found the applicant during his employment was carrying on substantial other financial activities on his own account and simply continued to do so, and therefore did not need the income from his employment. That has only to be stated, in our view, to be seen to be fallacious. Of course, if the employers had advanced and proved a case that immediately upon dismissal the applicant either increased, or could and should have increased, the scale of his other activities to make good the loss of income that would indeed go to mitigation, but there is no finding to that effect. The argument is simply that he had plenty - indeed, it is suggested, preponderantly - much more from these other activities and therefore, as I have said, did not need this income. That is simply no answer. He was entitled to three months' notice and to pay during that period of notice. He did not have it. Mitigation goes to the question not whether other sources of income continued, but whether that source of income could and should have been replaced. The tribunal dealt with that and dealt with it properly. We see no ground of appeal there.

Finally there is an appeal on the basis of the refusal by the tribunal to accede to an application for discovery made during the course of the hearing and initially refused, but with an indication that it could be renewed, and then refused again on renewal. As is commonly the case in appeals against interlocutory decisions the information about the tribunal's reasons for those refusals is really quite brief, in the form of the Chairman's notes, apparently on the first occasion made for his assistance in giving an extempore decision ruling. On the second occasion it is not clear whether it is a note made in that way in advance for his help or a note made immediately afterwards to summarise what was said. But in both cases they are manifestly brief and most certainly incomplete.

In so far as interlocutory appeals are concerned, one starts from the position that the decision complained of is discretionary and that we have no right or jurisdiction to interfere with the exercise of that discretion unless it can be shown, to quote from the British Library case, "to have been contrary to some established principle of law or to have involved a result which no reasonable tribunal, exercising the same discretion, could have arrived." It is put again by Wood J in a later case in Adams and Draynor v West Sussex County Council as raising the questions whether the discretion has been exercised within guiding legal principles, and secondly, whether it can be attacked on what are commonly called Wednesbury principles, that is to say as being manifestly outside the bounds of what any reasonable tribunal could have decided.

In our view, no case is made out an appeal against these decisions on either of those bases. The tribunal on the first occasion took into account questions of relevance and made the point that the discovery sought, which was as to the applicant's financial dealings, would be after - acquired information. We take that to be a reference to the fact that it could not have affected the mind of the employers in making their decision. They recognised that it might be relevant to assessment, if that was reached, and that was no doubt one of the reasons why they allowed it to be renewed at the close of the hearing. They also took into account, and in our view were perfectly entitled to do so, that this application was made on the third day of a four day hearing, that it would have been proper to have brought it up before that the case had been listed for a long time and that it was not a matter that was pleaded, and all those are perfectly proper considerations to take into account when exercising a discretionary jurisdiction of this kind. We are in no doubt that these notes are incomplete and it is not for us, in our view, to assume that the tribunal took into account improper considerations or failed to take into account the considerations they should have done, simply because of that lack of completeness in the note of their reasons. We are certainly clear that those decisions cannot be attacked on the grounds of being results which no reasonable tribunal could have arrived at.

Finally, the appeal against the finding of 75% contribution seems to us to be totally hopeless. It was entirely a question of fact and degree for the tribunal to reach. They manifestly did so after careful consideration of the evidence and their conclusion is totally unappealable.

For those reasons, the appeal will be dismissed.