United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS NAOMI CUNNINGHAM (Representative) Instructed by: Free Representation Unit Peer House 4th Floor 8-14 Verulam Street London WC1X 8LZ
For the Respondent	MR THOMAS LINDEN (of Counsel) Instructed by: Messrs Bond Pearce Town Quay House 7 Town Quay Southampton SO14 2PT


 


HIS HONOUR JUDGE PETER CLARK

1. We have before us an appeal by the Applicant, Mr Tulett, and a cross-appeal by the Respondent employer, B&Q Plc, arising out of a decision of the Southampton Employment Tribunal (Chairman, Mr C Twiss), promulgated with Extended Reasons on 2 July 2001, dismissing the Applicant's claim that he was constructively unfairly dismissed.

The Facts

2. Resolving factual disputes which arose between the parties the Employment Tribunal found the following primary facts.
3. The Applicant was employed by the Respondents as a part-time conservatory salesman at their store at Purbrook Way, Havant. That employment commenced on 1 February 1994 and was terminated by the Applicant's notice of resignation given in writing on 1 December 2000 and effective on 31 December 2000. A significant part of his remuneration was commission based. On 29 August 2000 he attended a meeting with Mr Rocket, the Showroom Manager. The Respondent had reviewed its pay structure and decided that the commission arrangements should be uniform across the company. Mr Rocket communicated this decision to the Applicant and told him that in his case the new structure would result in his losing money. It was common ground that the consequent reduction in his pay would be of the order of 20%.
4. The Applicant confirmed that he would accept the changes as long as they were carried out across the whole company and further that he was not going to get upset or fight the decision. At the end of the meeting the Applicant signed a log of employee discussions, ticking – "consultation OK."
5. Based on that conversation and the Applicant's signature on the log Mr Rocket reported to the Human Resources Adviser dealing with matters at Head Office that all employees affected by the change in commission arrangements had been consulted and indicated their agreement with the new arrangements.
6. On 1 September Mr Wood, the Human Resources Adviser, handed a letter to the Applicant setting out the new commission arrangements. The Applicant signed the foot of the letter. The Respondents contended that in so doing the Applicant signified acceptance of the new commission terms. The Employment Tribunal found that his signature amounted to no more than an acknowledgement that he had seen and read the letter.
7. Approximately 1 hour later the Applicant spoke to Mr Wood. He told him that he did not agree to any change in his contract of employment. He also contended that he had not been told on 29 August that he would lose any money. The Employment Tribunal found that latter statement to be untrue; he had been told by Mr Rocket.
8. On 2 September the Applicant wrote to Mr Rocket, clearly stating his position, namely that he did not agree to the new terms or cut in his commission arrangements. On 10 September the two men met again; the Employment Tribunal, preferring the Applicant's account to that given by Mr Rocket, found that at that meeting the Applicant made it clear that he did not accept the new commission arrangements. The new commission structure was not due to come into effect until 10 December 2000. All sales invoices received before that date would attract commission under the old arrangements.
9. On 15 September the Applicant had an accident at work which exacerbated a pre-existing back injury. He was then off work sick for one week. On 27 September he wrote to the Respondents seeking early retirement on medical grounds. He was then 57 years old.
10. He wrote again on 30 September, saying this:

"I consider B&Q to be an honest and honourable company and I trust you all to look after me properly and let me leave as soon as possible with an incapacity pension increased to take account of all my possible future scheme membership."

11. On 18 October he spoke to Miss Broomfield of Employee Relations on the telephone. He told her:

"…that he was "fearful" about working at B&Q, but did not want an office job as he was a salesman. Furthermore, he said that he did not wish to carry on at B&Q in any role, having decided with his wife to leave. The Applicant went on to say that it was his intention to retire and maybe pursue a personal injury claim or a claim for enhancement on his pension direct with Kingfisher head office (Kingfisher being the holding company of the Respondents). He mentioned that he might resign on 1 December 2000 to maintain his entitlement to profits-related pay for the previous year."

12. The Tribunal regarded those communications as "highly significant". At no stage did the Applicant express unhappiness with the change in the commission structure.
13. On 1 December he tendered his resignation in writing to take effect at the end of that month.

The Employment Tribunal Decision

14. Before the Tribunal the Applicant was represented by Mr Organ, a CAB volunteer and the Respondents by Miss Archer, a solicitor.
15. At paragraph 4 of their reasons the Employment Tribunal set out this formulation of the legal tests for establishing constructive dismissal, that is dismissal as defined in section 95 (1) (c) of the Employment Rights Act 1996.

4 "To establish constructive dismissal the Applicant must show:-

(1) A breach of the Applicant's contract of employment by the Respondents;

(2) that breach must be sufficiently serious to justify resignation or it must be the last in a series of incidents which justify the resignation'

(3) the Applicant must leave because of the breach;

(4) the Applicant must not delay too long before resigning, lest he be deemed to have affirmed the contract."

16. We observe that that formulation closely follows the four conditions for finding a constructive dismissal set out by the learned editions of Harvey on Industrial Relations and Employment Law, Volume 1, section D1, paragraph 403.
17. In the particulars of his complaint, contained in an Originating Application presented to the Employment Tribunal on 2 February 2001, at which time his representative was named as Mr Organ, the Applicant's case was that in reducing his commission by 20% without his consent the Respondents had fundamentally breached the terms of his contract of employment and that was the effective reason for his resigning and leaving the employment.
18. It was the Respondents' case;

(a) that the Applicant had consented to the variation in his terms and conditions relating to commission. Accordingly the Respondents were not in breach of contract, let alone a fundamental breach.

(b) if they were in fundamental breach of contract in unilaterally reducing his commission entitlement, the Applicant had, by continuing in employment without protest until December 2000, and in seeking an early retirement pension, affirmed the contract and waived the breach.

(c) in any event the alteration in the commission arrangement was not the cause of his resignation. He resigned in order to take early retirement of his own volition.

19. In determining those issues the Tribunal reached the following conclusions:

(1) That in altering the commission arrangements without the Applicant's agreement, resulting in a 20% reduction in commission earnings, the Respondents had fundamentally breached the Applicant's contract of employment.

(2) That in continuing to work without protest about the new commission arrangements, particularly no protest being made in his letter of 30 September and the telephone conversation with Miss Broomfield on 18 October, and in seeking to take advantage of the early retirement scheme, together with his threat of proceedings for damages for personal injury and the delay in resigning, the Applicant had affirmed the contract.

(3) Implicitly, it is accepted by Ms Cunningham now appearing on behalf of the Applicant, the alleged repudiatory breach was not the effective cause of the resignation.

20. In these circumstances the Applicant was not constructively dismissed and thus his complaint of unfair dismissal failed and was dismissed.

The Appeal

21. At an ex parte preliminary hearing held before a division presided over by HHJ McMullen QC sitting on 22 March 2002 the appeal was allowed to proceed on all four grounds of appeal, with varying degrees of enthusiasm, as formulated by Ms Cunningham in amended grounds of appeal dated 29 March. The fourth of those grounds, relating to the Tribunal's finding in their reasons at paragraph 23, that the Applicant had delayed too long before resigning, is no longer pursued before us. That leaves three grounds, two of which relate to the Tribunal's finding that the Applicant had affirmed the contract notwithstanding the repudiatory breach as found by the Tribunal. Pausing there, the Respondents challenges the Tribunal's finding of repudiatory breach by way of cross-appeal. We shall return to that cross-appeal later. For the purposes of the appeal only we shall assume that the Employment Tribunal was entitled to find a fundamental breach by the Respondent.

New Points of Law

22. Mr Linden objects to both the first and second grounds of appeal being entertained on appeal on the basis that each raises a new point of law not taken below. The second ground raises a point on affirmation; the first on causation. Ms Cunningham contends that in both cases the point should be entertained on appeal. In these circumstances we first heard Counsel on Mr Linden's objections.

Affirmation

23. We begin with the second ground of appeal, which is formulated in the amended grounds in this way:

"In holding that the Appellant had affirmed his contract without making any findings as to whether and if so at what stage he was aware of his right to choose between affirmation and acceptance of the breach as terminating his contract."

The Tribunal erred.

24. For the proposition at common law that a wronged party cannot be held to have affirmed his contract after a fundamental breach unless he was aware at the material time that he had the right to treat his contract as repudiated, Ms Cunningham relies on the Court of Appeal decision in Peyman v Lanjani [1985] 2 WLR 154.
25. In the specific context of employment law Ms Cunningham accepts that this particular point has not been taken in any of the reported cases, either at Employment Appeal Tribunal or Court of Appeal level, since Bliss v South East Thames Regional Health Authority [1987] ICR 700. In that case Dillon LJ said, at page 717. D-G:

"Mr Reynolds for the plaintiff put forward a further argument on the appeal. Relying on Peyman v Lanjani [1985] Ch. 457, he submitted that as a matter of law the plaintiff could not be held to have elected to treat the contract as still subsisting and not at an end, until he knew his legal rights. He only received the relevant advice from Counsel in mid-September, and he acted very promptly after that in electing to treat the contract as repudiated. See, for example, the statement of May LJ, at page 494:

"This being so, I do not think that a party to a contract can realistically or sensibly be held to have made this irrevocable choice between rescission and affirmation unless he has actual knowledge not only of the facts of the serious breach of contract by the other party which is the pre-condition of his right to choose, but also of the fact that in the circumstances which exist he does have that right to make that choice which the law gives him."

This is a formidable argument, and the acceptance of it could have considerable repercussions in employment law. But I do not find it necessary to express any opinion in the present case and I prefer not to since Mr Reynolds candidly admitted that he did not take the point in the court below and, though Mr Playford did not object in this court to the point being taken, I am not wholly satisfied that further evidence might not have been adduced in the court below if the point had been taken."

26. It follows from that passage and for the reasons given by Dillon LJ the point was not then decided and has not since been decided. Ms Cunningham invites us to do so in the present case.
27. In objecting to this ground of appeal Mr Linden relies upon that line of authority, within this jurisdiction, stretching back to Kumchyk v Derby City Council [1978] ICR 1116 in the Employment Appeal Tribunal and culminating most recently in Glennie v Independent Magazines (UK) Ltd [1999] IRLR 719 (Court of Appeal) for the proposition that a new point ought only to be permitted to be raised on appeal in exceptional circumstances, particularly if further facts need to be found.
28. Ms Cunningham submits that this is not in fact a new point. The Applicant complained of constructive dismissal by the Respondents. It was for the Tribunal to apply the law correctly. Whilst it may be understandable that, on the current state of the authorities, the Tribunal misdirected themselves as to the law, nevertheless the Applicant was entitled to expect the Tribunal to adjudicate on his case in accordance with the law. The Respondent raised the defence on affirmation of contract: if the Employment Tribunal lacked any factual material on which to determine what we shall call the Peyman point, the fault lies with them. Further, this is a point of law of general public importance which ought to be decided in this appeal and since it has not been argued since Bliss, Mr Organ could not be expected to raise it below. These are exceptional circumstances, she submits, permitting us to entertain the point. In any event, if the Applicant succeeds on his third ground of appeal, which relates to the issue of causation, the matter will have to be remitted for re-hearing by a fresh Tribunal which can then hear evidence on the Peyman point and apply the law as we direct it to be on this second ground.
29. We uphold Mr Linden's objection for the following reasons.

(1) The Peyman point was not taken below, as Ms Cunningham concedes. It is a new point. We heard argument on the question as to whether it was for the Respondent, having raised the issue of affirmation, to negative an answer by the Applicant based on the Peyman point. In our judgment that question is immaterial. On any view it is the Appellant who now wishes to raise a point which was plainly not taken below. The normal rule in Kumchyk and the later cases in the Court of Appeal applies.

(2) If the point succeeds as a matter of law further facts will have to be found to determine the state of the Applicant's knowledge of his right to affirm the contract or accept the breach and the date on which he acquired such knowledge. It is nothing to the point that the case may have to be remitted on a different aspect.

(3) We accept Mr Linden's submission that the fact that the Peyman point is characterised by Ms Cunningham as a new and undecided point of general importance militates against our entertaining it for the first time on appeal. We should be deciding the point in a vacuum in the absence of relevant findings of fact. We do not accept Ms Cunningham's criticism of the Respondents in not conducting their case below on the basis of a point which was not then taken against them. Nor can it be an exceptional circumstance that Mr Organ, appearing below, did not take the point, not simply because he was an unqualified representative, but because the point had not been taken since Bliss.

(4) Accordingly, we consider that this objection falls fairly and squarely within the doctrine expressed in Glennie and the earlier cases. It would be wrong for us to allow the new point to be taken for the first time now. See Jones v Governing Body of Burdett Coutts School [1998] IRLR 521. It is interesting to note that in Bliss Dillon LJ observed that the point was taken by Counsel for the employee for the first time in the Court of Appeal although no objection was taken by Counsel for the employer. In the present case Mr Linden does object. That objection is upheld.

30. Accordingly we shall not adjudicate on Ms Cunningham's second ground of appeal.

Causation

31. Here, in her first ground of appeal, Ms Cunningham acknowledges that she wishes to challenge a long-established orthodoxy, at any rate in the Employment Appeal Tribunal, that it is necessary for the Applicant to prove a causative link between the repudiatory breach alleged and his resignation. She wishes to submit that on a proper construction of section 95 (1) (c) of the Act no such link is necessary.
32. We have referred to the orthodoxy in the Employment Appeal Tribunal. It is fully established in the following line of cases: Logabax Ltd v Titherley [1977] ICR 369; Walker v Josiah Wedgwood & Sons Ltd [1978] ICR 744; Jones v F Sirl & Son [1997] IRLR 493. Mr Linden reminds me that this precise challenge to the orthodoxy arose before me in O'Grady v Financial Management Group (EAT 1161/94 27 October 1995 Unreported). We rejected the challenge on that occasion.
33. Mr Linden further submits, although this is not accepted by Ms Cunningham in her substantive argument, that the necessity for a causative link between breach and resignation is clear from the Court of Appeal cases of Western Excavating (ECC) Ltd v Sharp [1978] ICR 221 and Norwest Holst Group Administration Ltd v Harrison [1985] ICR 668. We do not, at this stage, express a view on that submission, full argument not having been heard, pending resolution of Mr Linden's preliminary objection to the point being taken at all.
34. It is absolutely clear that this point on causation was not taken by Mr Organ below. Indeed the Applicant's Originating Application, presumably drafted by or with the assistance of Mr Organ, alleges in terms that the effective reason for the Applicant leaving was the fundamental breach of contract by his employer. The case proceeded on the basis of the orthodox view, more particularly set out in the third of the propositions contained in paragraph 4 of the Tribunal's reasons, themselves based, as we have observed, on the Harvey formulation.
35. However, it is also common ground that no further fact-finding is necessary in order for us to determine the point.
36. In these circumstances Ms Cunningham submits that it is unnecessary for this Employment Appeal Tribunal to find exceptional circumstances before exercising our discretion to allow the new point to be taken. We reject that submission. In our view the cases of Jones v Burdett Coutts and Glennie make it clear that whereas in a case in which further facts remain to be found (leaving aside jurisdiction points, a consideration which, it is common ground, does not arise in the present case) exceptionally compelling reasons for allowing the new point to be taken must be found, the obverse is not true; that is, that the new point may be taken without more where no further facts need to be found.

Do exceptional circumstances exist in this case?

37. Ms Cunningham advances 4 matters which she submits, if it is necessary to do so, amount to exceptional circumstances. They are:

(i) no fresh facts are needed. We have dealt with this point;

(ii) this challenge to the orthodoxy will have to be decided sooner or later. It has. By this Employment Appeal Tribunal in O'Grady;

(iii) the point could not be raised before the Employment Tribunal in view of the orthodox view in the Employment Appeal Tribunal cases which were binding on the Employment Tribunal. We disagree. The rationale behind the general prohibition on taking new points on appeal lies in the principle of finality of litigation (see per Robert Walker LJ in Jones; paragraph 29). A party must bring the whole of his case before the court at first instance, here the Employment Tribunal. Ms Cunningham submits that this Applicant did so. He put before the Tribunal all the facts in support of his case. That may be so. However, the whole of his case includes his case on the facts and law. As Mr Linden points out, a party is entitled to know what he is in for when becoming involved in litigation. Had the Respondents known that this was to become a potential test case which might go to the Court of Appeal and possibly the House of Lords, a different view of it might have been formed. We accept that submission, on a purely hypothetical basis. It seems to us that where a new legal point is to be taken in any particular case it ought, at the least, to be flagged up at the first instance stage;

(iv) it is submitted that the point ought first to be decided at the specialist Appeal Tribunal stage. It has been; see O'Grady. Further, although not strictly bound by earlier EAT decisions, we draw a distinction between a point of law on which there are conflicting authorities, see for example the very point in Jones, or the conflicting lines of authority on the meaning of redundancy considered in Safeway Ltd v Burrell [1997] IRLR 200, and a point such as this, where the law is well-settled as a matter of authority, at any rate at EAT level. A decision by this Employment Appeal Tribunal which upsets an established line of authority may have the unfortunate effect of uncertainty, about which the Court of Appeal had something to say in Post Office v Foley [2000] IRLR 827. Thus, in the interests of comity, the likely outcome following full argument on this point, is that the point would fail, in which case further litigation before the Court of Appeal may well follow.

38. In these circumstances, in the exercise of our discretion, we find that no exceptional circumstances have been made out and we shall not permit the causation point to be taken either.
39. For completeness we should record that it was not submitted by Ms Cunningham, nor could it be in our view, that because permission to proceed had been granted at the ex parte Preliminary Hearing for the appeal to proceed, the Respondents were thereby precluded from raising their objection to these new points being taken at the full appeal hearing, in circumstances where the Respondents had no locus to make representations at the Preliminary Hearing on the question as to whether or not the appeal should be permitted to proceed on some or all grounds.

The Result

40. Ms Cunningham accepts that if she is not permitted to argue her causation point then the appeal necessarily fails. Her remaining third ground of appeal, which goes to the finding of affirmation, even if successful, would not allow of the case being remitted for a re-hearing. In these circumstances the appeal is dismissed.

Cross-Appeal

41. Mr Linden has indicated that if the appeal is dismissed he does not wish to pursue the cross-appeal. In these circumstances the cross-appeal also is dismissed.