United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	The Appellants in person
For the Respondent	No appearance or representation by or on behalf of the Respondent


 


JUDGE PETER CLARK

1. This is an appeal by Mr and Mrs Boughton, the Applicants before an Employment Tribunal sitting at Exeter over ten days, against that Tribunal's Decision, promulgated with Extended Reasons on 15 August 2000, dismissing their claims of unfair dismissal and breach of contract against their former employers, the Respondent Audio Group International Ltd.
2. The critical finding by the Tribunal, for present purposes, was that neither Appellant had resigned in response to the Respondent's repudiatory breach or breaches of contract. At a preliminary hearing held on 21 March 2001 a division of the EAT permitted the appeals to proceed on certain specified grounds only. We shall consider each of those grounds and no others after briefly reciting the relevant facts as found and conclusions reached by the Employment Tribunal. The Respondent company is now in liquidation and is not represented before us today, although we have a Skeleton Argument prepared by Counsel, Mr Oulton, who appeared for the Respondent below.
3. In March 1988 Mr and Mrs Boughton acquired a small business, Heybrook Hi-Fi Ltd. It employed about eight people, including Mr and Mrs Boughton, who were respectively Managing Director and Sales Director of the company. The business of the company was the manufacture and sale of loudspeakers.
4. In March 1998 the Appellants agreed to sell the business of Heybrook to the Respondent. The sale was effected under the terms of three written Agreements, summarised by the Tribunal at paragraph 5 of their Reasons in this way:

"1 Heads of Agreement (dated 16 March 1998) which provided that each applicant was to be given an initial two year fixed term contract of employment with the respondent - with an option to renew for a third year - and

"They are to perform duties commensurate with current duties in their capacities as Directors of Heybrook within the AGI group as a whole"

They were also to remain as directors of Heybrook.

2 A Sale Agreement (dated 24 April 1998) which, inter alia, provided that the applicants would forfeit a proportion of the purchase price if they left voluntarily within the first year; and that payment of 30% of that purchase price was subject to turnover achieved in each of the first three years after completion.

3 Service Agreements (also dated 24 April 1998) in which it was expressly agreed that they would be employed by, and would serve, AGI as directors of that company. The duties which they were required to perform under their Service Agreements were expressed to be such as "the Board may from time to time properly assign to (each of them) in connection with the business of the company and …… its associated companies."

5. In short the relationship between the Appellants and Respondent did not work out, and on 10 July 1999, both Appellants resigned from their employment with the Respondent with immediate effect. The question for the Employment Tribunal was whether they resigned in circumstances amounting to what is known colloquially as "constructive dismissal".
6. The principal issue was whether or not the Respondent was then in repudiatory breach of either or both of the following terms of the contracts of employment:

(1) An express term that they were to be employed and would serve the Respondent as directors of that company (AGI).

(2) The implied term of mutual trust and confidence.

As to the first, the Tribunal rejected a contention by the Respondent that the term of the Service Agreement that each Appellant would be employed by and would serve the Respondent as directors of that company was inserted by mistake. They found that the Appellants never were appointed directors of the Respondent and that accordingly the Respondent were in breach of that express term of the Service Agreement. However they went on to conclude, first that the Appellants, being aware of the breach by October 1998 waived that breach and secondly that such breach did not cause the Appellants to resign in July 1999.

7. As to the implied term of mutual trust and confidence, the Appellants identified five particular matters which, individually or cumulatively, amounted to a repudiatory breach of that term. Those matters are set out at paragraph 20 of the Tribunal's Reasons and their findings on each at paragraph 26. None were found, individually, to constitute a breach of contract. The Tribunal's overall conclusion on this aspect of the case is set out at paragraph 27 thus:

"Accordingly, it is our clear judgment that the applicants have failed to establish any conduct on the part of the respondent which sensibly and objectively viewed in the context of the acquisition of Heybrook could be reasonably regarded as a breach of the implied term of trust and confidence. At best, it might be said that the respondent displayed a lack of sensitivity towards the position of the applicants and the difficult adjustments which they were required to make but, in our judgment, their conduct did not amount to a repudiatory breach of contract."

8. The claims were dismissed. Further, Mr Boughton was held to be precluded from bringing a complaint of unfair dismissal in any event by reason of his age. That finding is no longer open to challenge before us in light of the judgment delivered by Mr Recorder Langstaff QC at the preliminary hearing held on 21 March 2001.
9. The specific issues which do arise for argument at this full hearing are, we think, accurately formulated by Mr Oulton for the Respondent in his Skeleton Argument, as Mr Boughton accepts before us, based on the preliminary hearing judgment. They are:

"(a) ….there was no variation in the terms of the Appellants' contracts of employment which was affirmed by the Appellants by October 1998 at the latest."

The issue is whether:

"the terms of engagement remained in contractual, if not actual, force."

(b) …(since they were employed as directors/senior employees) there was no acceptance by the Appellants of a requirement that they should conduct clerical tasks"

as the EAT thought on the last occasion

"allegedly required of them in the meeting on 26 April 1999."

The question being that

"Such a requirement would normally be regarded as repudiatory conduct."

"(c) Although it appears that the Tribunal did consider the Appellants' complaint based on [their] treatment as junior members of staff, there is no obvious recognition of the fact that the reduction to status of clerical officer allegedly imposed at the meeting of 26 April 1999 was considered in this context. That may have been the last straw.

(d) Even if not sufficiently serious a matter on its own, there is no clear indication that the Tribunal looked at the combination of circumstances rather than events in isolation."

10. In determining whether or not the Tribunal erred in law in their conclusion that neither Appellant had been constructively dismissed we remind ourselves of the principles laid down by the Court of Appeal in Pedersen v London Borough of Camden [1981] IRLR 173 and Woods v W M Car Services (Peterborough) Ltd [1982] IRLR 413. The question as to whether or not the employee resigned in response to a repudiatory breach of contract by the employer and did so within a reasonable time (see Western Excavating (ECC) Ltd v Sharp [1978] IRLR 272) is essentially one of fact for the Employment Tribunal. We can only interfere where it is shown that the Tribunal has misapplied the law or reached a conclusion which may properly be described as perverse in the legal sense. It is not enough that we ourselves would have come to a different conclusion on the primary facts as found. We should repeat that this case has not been permitted to proceed to a full hearing on the general ground of perversity, but only on the limited specific grounds, which we have earlier identified. We shall not go outside those grounds.
11. Turning then to the four grounds of appeal before us:

(a) It seems to us that the Tribunal found that in October 1998 the Respondent unilaterally varied the express terms of the Service Agreement by declining to appoint the Appellants to the board of the Respondent company AGI, or otherwise to treat them as directors of that company, as opposed to Heybrook. That amounted to a breach which the Tribunal found was a repudiatory breach of the contracts of employment. However, the Tribunal found and, in our judgment, were entitled to find that:

(i) the Appellants affirmed the contract, by continuing in employment, thereby consenting to the unilateral variation, and/or

(ii) that, on Mr Boughton's evidence, the Appellants did not resign in response to their non-appointment, or non-treatment, as directors of AGI. In either of those events the Tribunal's conclusion as to breach of the express term is sustainable, given their findings that such breach had been acquiesced in, and in any event did not contribute to the eventual resignation.

(b) On a fair reading of the Tribunal's reasons they were not persuaded, as a matter of fact, that at the meeting held on 26 April 1999 the Respondents then announced their intention for the first time to require the Appellants to carry out clerical tasks. On the evidence, including the evidence of the Appellants, they had, without objection, been carrying out what may be termed "clerical tasks" since the takeover by the Respondent in March 1998, and the nature of their duties had been agreed, so the Tribunal found at meetings of the board of Heybrook, held in 1998, at which the Appellants attended and took a full part. In these circumstances there was no material change in their duties, as from 26 April 1999.

(c) & (d) It is clear to us that the Tribunal were alerted to the "last straw" doctrine, articulated by the Court of Appeal in Lewis v Motorworld Garages Ltd [1985] IRLR 465. Counsel for the Respondent below specifically drew attention to that case in his closing written submissions. Further, at paragraph 10 of their Reasons, as Mr Boughton points out, the Tribunal referred to his evidence that although a lot of his complaints were trivial, they amounted to a constant drip of water on a stone.

12. However, it should first be remembered what Lewis actually decides, namely that a succession of non-repudiatory breaches of contract, taken together, may amount to a repudiatory breach of the implied term of mutual trust and confidence.
13. In the present case this Tribunal was not persuaded, as a matter of fact, that any of the matters, taken individually, amounted to a breach of contract. Then, looking at the picture as a whole, they were wholly unpersuaded that the Respondent was shown to be in breach of the implied duty of mutual trust and confidence, let alone a repudiatory breach. It seems to us that in reaching that conclusion the Tribunal had very much in mind their obligation to look at the whole of the picture presented by both sides, in order to form a overall judgment.
14. We have also looked carefully at the overall picture, having perhaps a rather fuller picture than that before the EAT at the preliminary hearing, and having considered the written argument presented on behalf of the Respondent, although no oral argument has been presented, we are ourselves unable to detect any error of law in the Tribunal's reasoning, applying the principles in W M Cars and in Pedersen. In these circumstances we must dismiss this appeal.