United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR BRIAN NAPIER (of Counsel) Instructed by: Mr P J Burns 2 Grange Farm Mews Main Street South Muskham Newark Nottinghamshire NG23 6EE
For the Respondents	MR G R HOWARD (Representative) Peninsula Business Services Ltd Stamford House 361-365 Chapel Street Salford Manchester M3 5JY


 


JUDGE PETER CLARK: This is an appeal by Mr Knight, the applicant before the Lincoln Employment Tribunal, chaired by Mr J B C Blood, sitting on 12th May 1998, against that tribunal's decision, promulgated with extended reasons on 5th June 1998, dismissing his complaints of unfair dismissal and wrongful dismissal brought against his former employer, the respondent, King Edward VI Grammar School, Louth.

The Facts

1. The appellant commenced employment as the School's Bursar on 24th June 1991. He remained in that post until his summary dismissal for gross negligence effective on 2nd December 1997. His duties included negotiating and monitoring contracts on behalf of the School in accordance with laid down procedures with which he was familiar.
2. On 21st October 1997 the appellant was approached by Mr Lee, who had arrived at the School uninvited. He represented a firm of tarmac layers. He told the appellant that he had noticed that the School's drive needed resurfacing. The appellant, without entering into detailed discussions over price and the extent of the work, signed a contract on a single piece of paper in the following terms:

"We offer to supply, lay and roll 1 load/loads of Bitmacadam at a price of £25.50 per square yard of completed work.

The area of completed work to be measured upon completion and paid by cheque forthwith upon completion and measurement."

It will be noted that there was no agreement as to the area to be treated. On the basis of a price of £25.50 per square yard, and an area of drive extending to 400 square yards, the total costs would have been about £10,000.

3. The appellant accepted in evidence that he had been "conned" by Mr Lee and that his instruction to proceed with the work was contrary to laid down procedures.
4. Only the day before meeting Mr Lee the appellant had been in discussion with Mr Wheeldon, the Headmaster, about the parlous state of the school's finances, and there was to be an embargo on fresh orders until at least the end of the week.
5. Mr Lee's team did not start work on 21st October. That night the appellant had misgivings as to what he had done in placing the order with Mr Lee. The following morning Mr Lee and his men turned up to begin laying the new drive.
6. The appellant sought to prevent the work going ahead. He referred the matter to Mr Wheeldon, who realised that the work could cost the School in excess of £10,000. He telephoned the School's solicitors to seek advice on the enforceability of the contract signed by the appellant. As a result of the advice received Mr Wheeldon concluded that the contract was probably enforceable and that steps must be taken to renegotiate with Mr Lee. A heated discussion ensued; finally new terms were negotiated and agreed. The cost per square yard was reduced to £12.50; the extent of the area to be treated was crystallised; the total cost was agreed at £2,583. Later that day a further ugly scene arose over when Mr Lee would receive payment. The contract provided for payment "forthwith upon completion and measurement". The police were called; Mr Lee left the site and then returned the following day, 23rd October, to be told that a cheque would be in the post that weekend.
7. On 23rd October Mr Wheeldon wrote to the appellant calling him to a formal disciplinary hearing under the School's written disciplinary procedure on 5th November. Meanwhile he was suspended on full pay.
8. The School had an arrangement with Personnel Consultants, Peninsula Business Services Ltd ["Peninsula"]. Mr Wheeldon took advice from Peninsula. Following the meeting held on 5th November he referred the matter to the Staff Committee of the Governing Body with a recommendation that the appellant be dismissed.
9. On 1st December the Staff Committee met. The appellant attended that hearing. A decision, confirmed in writing the next day, was taken to summarily dismiss him.
10. Against that decision the appellant appealed to the Governing Body's Appeals Committee on staff dismissals. That Committee sat on the evenings of 7th and 8th January 1998. The appeal was rejected. He was paid up to the date of the letter notifying him of his appeal being rejected, that letter being dated 9th January 1998.
11. On 20th January he presented his complaints of unfair dismissal and wrongful dismissal to the Employment Tribunal.

The tribunal decision

12. The tribunal found:

(1) that the reason for dismissal related to the appellant's conduct, alternatively was for some other substantial reason.

(2) The dismissal was fair. A fair procedure had been followed. Dismissal fell within the range of reasonable responses open to the employer.

(3) The appellant's action in signing the contract with Mr Lee amounted to serious negligence constituting gross misconduct. Summary dismissal without notice was justified at common law. He was paid up to the determination of his appeal in accordance with his terms of service.

The complaints failed.

The Appeal

13. The first point taken by Mr Napier is that the Chairman wrongly prevented the appellant's advocate, Mr Burns, a solicitor, from pursuing a line of questioning of Mr Wheeldon in cross-examination, relating to the advice which he, the Head Teacher, had received from Peninsula. The point arose in this way, drawing on the affidavits sworn in this appeal by Mr Burns and Mr Patrick Curbishley, a Personnel Consultant who advised the appellant from an early stage in the internal disciplinary proceedings and who also attended the tribunal hearing, and from the comments of the Chairman on those affidavits contained in his letter to the EAT dated 10th September 1998.
14. Mr Wheeldon gave evidence to the effect that he contacted Peninsula for advice on 4th November 1997. They commented that the appellant's offence merited a final written warning but there was a good chance that it would be even more serious than that. In his written evidence Mr Wheeldon referred to further discussions with Peninsula centring on the question of penalty. Apparently they said at one stage that they felt that a final written warning was probably too lenient but they were not sure to begin with whether dismissal would not be too severe.
15. Mr Burns wished to explore the nature of the advice received by Mr Wheeldon from Peninsula which led to his recommendation to the Staff Committee of dismissal.
16. However, shortly into that line of questioning, to which the respondent's solicitor, Mr Howard, did not at the time object, the Chairman intervened and raised the question as to whether that advice was privileged, so that further questioning should be stopped. He invited Mr Howard to object and he formally did so.
17. Mr Burns then puts the matter in this way at paragraph 11 of his affidavit:

"11. Given that the Chairman had shown himself to be predisposed to the Respondent, by effectively ruling on the point from the Chair, of his own volition, without any reference to any other members in the room, there was no point in my objecting to his decision. Had I successfully objected, I cannot see how the Chairman having shown his hand to the effect that he did not regard this as a proper line of cross-examination thereafter taking anything which I subsequently said on the point seriously."

Mr Burns then moved on to other matters.

18. It appears to be common ground that Mr Burns did not challenge the Chairman's ruling that the communications between Mr Wheeldon and Peninsula were privileged.
19. Mr Napier submits, correctly on the authority of New Victoria Hospital v Ryan [1993] ICR 201 (Employment Appeal Tribunal, Tucker J presiding) that communications between an employer and a firm of personnel consultants do not attract privilege. They are not akin to legal professional advisers. That proposition is not challenged by Mr Howard.
20. In these circumstances, submits Mr Napier the Chairman fell into error in his ruling and that error prevented the appellant from advancing a case that the real reason for dismissal was not the offence with which he was charged, but the advice received by the Head Teacher from Peninsula.
21. The principal difficulty with that submission is that Mr Burns did not challenge the ruling at the time. He did not point out that, as a matter of law, privilege did not attach to the communications between Mr Wheeldon and Peninsula. He did not pursue the matter. He accepted the Chairman's ruling.
22. In these circumstances, applying the principles most recently set out by the Court of Appeal in Jones v Governing Body of Burdett Coutts School [1998] IRLR 521, we shall not permit this new point to be taken for the first time on appeal.
23. It is convenient next to take Mr Napier's criticism of the tribunal's approach to a point taken by Mr Burns below on the way in which the internal Appeals Committee approached its task in the context of the contractual disciplinary procedure.
24. It is clear from Appendix IV to the Disciplinary Procedure, which deals in detail with the Appeal Procedure, that what is envisaged is a rehearing before that Committee. Witnesses may be called on both sides. Members the Committee may question the appellant and the School's representative, normally the Head Teacher. Both sides will be given a full opportunity to ask questions of the other and to make representations. The purpose of such a procedure, following the approach of the EAT in Whitbread v Mills [1988] ICR 776, is not simply to review the staff committee decision, but, among other things, to remedy any defect below by an independent assessment of the case de novo.
25. We have been taken to the minutes of the Appeal Committee hearing and a note of their reasoning in dismissing the appeal. Looking at that reasoning it appears that the Committee took legal advice as to whether gross negligence on the part of the appellant could be an acceptable term to us as the basis for dismissal. Having satisfied themselves that it was, the Committee concluded their deliberations in this way:

"In terms of whether or not dismissal for gross negligence constituted a punishment that was disproportionate to the offence, the Appeal Committee noted that it was a body considering an appeal and that it had to decide whether or not the Staff Committee could be deemed to have acted unreasonably, on the basis of the evidence before it, in reaching the judgement that it did. The Appeal Committee concluded that on the basis of the evidence before it, the issue concerning the legal status of the offence of gross negligence having been resolved, no new evidence had been presented that showed that the Staff Committee had acted unreasonably in reaching the decision that it did."

26. In the letter rejecting the appellant's appeal, dated 9th January 1998, the Committee expressed themselves thus:

"On the basis of the evidence before the Appeal Committee, no new evidence was presented that showed that the Staff Committee had acted unreasonably in reaching the decision that it did. The Appeal Committee, therefore, resolved unanimously that the appeal be rejected and that your employment be terminated from the date of this letter."

27. The tribunal dealt with the criticism of that approach in paragraph 7(iv) of their reasons as follows:

"(iv) Some criticism was made of the appeal committee's disposal of the matter. We see no reason for that criticism. The fact that they took legal advice in the course of their deliberations when confronted with legal argument by the Applicant's solicitor was eminently reasonable and sensible. The fact that the appeal committee concluded that "no new evidence had been presented that the Staff Committee had acted unreasonably in reaching the decision that it did" does not in the opinion of this Tribunal indicate a departure from the overall purpose of an appeal which is essentially to examine whether something had gone wrong at first instance."

28. Mr Napier submits that in so concluding the tribunal fell into error. He has referred us to the Court of Appeal decision in Stoker v Lancashire County Council [1992] IRLR 75. There the contractual disciplinary procedure provided for a right of appeal against a disciplinary decision, that appeal to take the form of a rehearing as in the present case. The Council sought to limit Mr Stoker's appeal, not to a rehearing, but to reviewing the "sentence" of dismissal. An Employment Tribunal found that there was no procedural unfairness. That decision was upheld by the EAT. However on further appeal the Court of Appeal allowed the appellant's appeal and remitted the case for rehearing before a fresh Employment Tribunal. The Court held that by limiting the scope of the appeal the respondent was in breach of its own disciplinary procedure and that vitiated the decisions of the tribunals below. Neither the Employment Tribunal nor the EAT had addressed their minds to the correct question under what is now s.98(4) of the Employment Rights Act 1996, namely, whether the respondent's failure to comply with its own procedures rendered the dismissal unfair. That approach was subsequently followed by the Court of Appeal in Cabaj v Westminster City Council [1996] IRLR 397.
29. We would add that since the House of Lords decision in West Midlands Co-operative Society v Tipton [1986] ICR 192, it is well-established that in considering the overall fairness of dismissal under s.98(4) it is necessary for the Employment Tribunal to have regard to an employer's failure to grant the employee his full contractual right of appeal. Thus, the enquiry does not end simply with the original dismissal.
30. In these circumstances Mr Napier submits, first that the Appeals Committee misunderstood their function. The question for them was not whether any new evidence had been placed before them to show that the Staff Committee's decision was unreasonable. It was what, in the exercise of their independent judgment on the material before them, was the appropriate sanction for the misconduct found.
31. Secondly, he contends that the tribunal also misunderstood the true nature and purpose of the appeal provided for in the disciplinary procedure and that error constituted a fatal flaw in the tribunal's approach.
32. Mr Howard contends that the Appeal Committee properly discharged their function. He submits that the tribunal's analysis of the contractual appeals procedure was correct.
33. We prefer Mr Napier's submission. In these circumstances, on this ground alone we would allow the appeal, and, following the Court of Appeal's approach in Cabaj, remit the case for a complete rehearing before a fresh Employment Tribunal.
34. However, Mr Napier makes a further and bolder submission. He contends that the Employment Tribunal's finding that the sanction of dismissal on the facts of this case fell within the range of reasonable responses open to the employer was a perverse conclusion. In support of that submission he had referred us to the EAT decision in Lock v Cardiff Railway Co Ltd [1998] IRLR 353, Morison J presiding. He refers to the absence of reference by this Employment Tribunal to paragraph 8 of the ACAS Code of Practice, which provides:

"Employees should be made aware of the likely consequences of breaking rules and in particular they should be given a clear indication of the type of conduct which may warrant summary dismissal."

It is right to say that the precise offence for which the appellant was dismissed does not appear in the examples of gross misconduct which may lead to summary dismissal in this employer's disciplinary procedure.

35. Here, he submits, no reasonable employer could dismiss for a first offence of negligence, the consequences of which cannot be compared, for example, with the case of the airline pilot. Taylor v Alidair [1978] IRLR 82. In this connection he draws attention to the facts of Inner London Education Authority v Lloyd [1981] IRLR 394. We consider that the case of Lock should be restricted to its own facts. We are not prepared to assume that this experienced Employment Tribunal necessarily overlooked the terms of the ACAS Code of Practice. Further, in our view the conduct here complained of was capable of amounting to a sufficient reason for summary dismissal.
36. We accept that the question as to whether dismissal fell within the range of reasonable responses on the particular facts of this case is finely balanced. A reasonable Employment Tribunal could decide the point either way. In these circumstances, we cannot go as far as Mr Napier invites us to do, and say that no reasonable Employment Tribunal, properly directing themselves, could conclude that dismissal fell within the range of reasonable responses on the facts here. In these circumstances that perversity argument fails.
37. It follows that we shall allow this appeal only on the internal appeal point. We shall remit the whole unfair dismissal case for rehearing before a fresh Employment Tribunal. There is no appeal against the original finding that the appellant was not wrongfully dismissed. The question of the respondent's failure to properly apply its own appeals procedure will be a factor which the new Employment Tribunal will need to consider in the overall question of reasonableness under s.98(4).
38. Finally and for the avoidance of doubt, we should make clear that although we have not felt able to entertain the privilege point in this appeal, it not having been taken below, at the rehearing the Employment Tribunal should proceed on the basis, in accordance with this tribunal's decision in Ryan, that no privilege attaches to communications between Mr Wheeldon and Peninsula.