United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR M SUTTON (of Counsel) Instructed by: Messrs Osborne Clarke OWA Solicitors 50 Queen Charlotte Street Bristol BS1 4HE
For the Respondent	THE RESPONDENT IN PERSON


 


MR JUSTICE WALL

1. In this case there is an appeal and cross-appeal, arising out of Decisions of the Employment Tribunal held at London South, initially in relation to the liability aspects of this case on various dates, between 5 July 1999 to March 2000, with Extended Reasons being given on 14 September 2000. Secondly, we have the remedies hearing, heard on 2 and 4 October 2000, with Extended Reasons given much later, for reasons I will explain in a moment, on 11 October 2001.
2. IPA Systems Limited appeals against the primary Decision of the Employment Tribunal, namely that it, as Respondent to the proceedings unfairly dismissed the Applicant, Mr Oberoi, and Mr Oberoi cross-appeals against the award made to him in the second remedies hearing.
3. By the time the hearing of the remedies issue had taken place on 4 October 2000, the Respondent, IPA Systems [the Respondent, that is, in the Tribunal below and I will henceforth call them "IPA Systems"], IPA Systems had filed a Notice of Appeal dated 25 October against the liability Decision and following the preliminary hearing of that Decision, the Registrar of the Employment Appeal Tribunal requested the Chairman to produce Extended Reasons for the Remedies Decision which are dated 11 October 2001.
4. The Decision, however, on the remedies aspect was issued initially in 17 November 2000, and that date is important because as at that date, the powers of the Tribunal to award costs, subject that is to a taxation in the County Court, were limited to the sum of £500, that being the sum that was awarded to Mr Oberoi on the costs issue.
5. The Tribunal identified four issues for the first hearing in their Extended Reasons. Firstly, a point taken by IPA Systems: was Mr Oberoi's contract of employment illegal so as to remove the case from the jurisdiction of the Tribunal? That they took as a preliminary issue. Secondly, what was the reason for Mr Oberoi's dismissal, and did the company act reasonably or unreasonably in treating that reason as a sufficient reason for dismissal? Thirdly, was Mr Oberoi owed money in respect of commission and/or expenses arising out of the contract? And fourthly, was the company owed money by Mr Oberoi for the receipt of advances against expenses and/or the retention of a mobile telephone and laptop computer? There were other issues between the parties which were to be litigated elsewhere and with which we are not concerned.
6. Having identified the issues which it had to try, the Tribunal listed the witnesses whom it had heard on both sides, and early in the Reasons, as part of paragraph 5, made this very important finding:

"The evidence put forward by Mr Oberoi, and that put forward by Mr Ponzi, in particular, clashed on a number of points. Where there were such conflicts, the Tribunal preferred the evidence of Mr Oberoi. It had greater internal consistency, was inherently more credible, and was in accord with the contemporaneous documentation to a greater extent."

In our judgment, that is an important finding, one which the Tribunal was plainly entitled to make on the issue of credibility, and one for which, in our view, it gives three wholly appropriate and acceptable reasons.

7. Mr Ponzi was clearly a man of considerable power and influence within IPA Systems. The Tribunal records in paragraph 8 that he was:

"…the person who appointed Mr Oberoi to the staff of the Company. Although Mr Ponzi had no formal managerial title, he was the representative of the shareholders in the parent company. It was clear that he was the controlling influence in the Company, and was effectively in managerial charge of its operations."

As Mr Baker [the Company Secretary who is a solicitor] put it in evidence on behalf of IPA Systems, and again, this is a quote which the Tribunal makes from Mr Baker's statement:

"I ….have …always accepted Mr Ponzi as the effective shareholder [of Cromas]"

[that was the parent company or the company which Mr Ponzi had created]

"and accepted his instructions as the instructions of the shareholder in all matters relating to the IPA Group ….Mr Ponzi insists on reserving decisions on staff matters to himself so that no employee can be recruited at any level without Mr Ponzi's express consent, nor can any employee be disciplined or dismissed without Mr Ponzi's approval. Likewise he makes all decisions regarding salary and salary reviews"

Although it is not directly germane to our consideration of the appeal, the position in relation to the argument on illegality was based primarily on the fact that Mr Oberoi was allowed four return flights a month at the company's expense to Italy, where he lived, and he also had the advantage of staying in a flat owned by IPA in England. His evidence was (and it was evidence accepted by the Tribunal) that he was not aware that these were expenses that were taxable, and would have to be taxed as benefits. He was also entitled to commission under the contract. Once again, where there was a conflict of evidence in relation to the payment of commission, and whether or not the sums amounted to commission, the Tribunal heard the evidence and accepted the evidence of Mr Oberoi in relation to it.

8. The Tribunal then went on to discuss a number of events during the course of Mr Oberoi's employment, including a number of occasions where he had been offensive to various members of the company and to members of staff. His case was that this was done on the instructions of Mr Ponzi, on one or two cases, in order to try and persuade employees to leave. The Tribunal found as a fact that Mr Oberoi acted as he did at the instigation of Mr Ponzi.
9. The catalyst, it appears, for Mr Oberoi's dismissal was that he had been rude to a relative of Mr Ponzi, Mr Ponzi's nephew, Alessandro. It was suggested that he had sworn at Alessandro in the office. This was used as a pretext to dismiss Mr Oberoi in somewhat short order, because when he returned from a holiday to the company, it appears he was met by three security guards, or officials, who promptly removed him from the premises. In these circumstances there is little doubt that the dismissal was procedurally unfair.
10. The crucial incident for the purposes of this appeal is something which IPA Systems say they discovered after Mr Oberoi had left, and it involves an organisation called "Athena Associates" which was one of the distributors of IPA's products. The Tribunal made its findings about Athena in paragraphs 23 of its Reasons, and we think it important that they should be set out in their entirety, so I read the whole paragraph.

"One of these distributors was Athena Associates. They were sold pre-press equipment between December 1997 and September 1998 at the standard cost price for distributors. One of the directors of Athena Associates was Mr John Cundy, who was employed by the Company. It was alleged on behalf of the Company that these transactions were carried out in order to provide Mr Oberoi and Mr Cundy with a secret profit. Mr Oberoi claims that the arrangements in question had been sanctioned by Mr Ponzi, on condition that the arrangement was totally confidential, and that no discount was given to Athena, despite the fact that it was customary for distributors to be given a discount. The purpose of the arrangement was to top up Mr Cundy's salary without providing a precedent for other engineers and prevent Mr Cundy from resigning. We find that Mr Oberoi's account of the reasons for the arrangement is essentially truthful, and that his actions did not in the circumstances constitute the sort of impropriety which would justify dismissal."

11. Mr Oberoi's version of events, as accepted by the Tribunal, was supported by Mr Cundy, who provided a statement dated 21 July 1999, from which I only propose to read two paragraphs, b) and c).

"b) In mid 1997 (July/August) I expressed my concerns to Mr Oberoi about the financial aspects of my employment to the effect that I felt I was being underpaid for the tasks I was expected to carry out. I have a private income from a pension for the 24 years I served in Her Majesty's Royal Air Force long before I joined IPA. The pension plus the income from IPA had placed me in the Inland Revenue's higher tax regime but not high enough for me to see any real benefit in continuing to work for IPA.

c) Mr Oberoi said he would talk to Mr Ponzi about this matter. Within a few weeks Mr Oberoi informed me that he had spoken to Mr Ponzi and that Mr Ponzi had said he could not give me an increase in salary. However, it would be acceptable if I formed a distributorship that did not conflict with any existing MSL distributors; would only be able to have the standard cost price from MS: for distributors, not to expect any special prices and that this arrangement would be in the highest confidence between myself, Mr Oberoi, himself (Mr T Ponzi) and Mr T Thorne who act as the shipping agent. There would be no written distributors contract but just the verbal agreement. Because I had worked for Mr Ponzi on many other confidential tasks, I did not find this unusual."

The reference there to Mr Thorne introduces the character whose evidence forms the principal basis upon which Mr Sutton attacks the Tribunal's Reasons. Mr Sutton, we should say, has conducted this appeal with great ability, economy and fairness and has taken every point that can properly be taken on behalf of IPA Systems. Mr Thorne begins to feature with the reference I have just made and we need to look at Mr Thorne's evidence for reasons which will rapidly become apparent.

12. In paragraph 12 of his statement for the Tribunal, Mr Thorne said this:

"On Friday 15^th May 1998 Mr Oberoi instructed me to ensure that a consignment for a distributor named Athena Associates was shipped that day. Mr Oberoi told me that the consignment was to be sent to Germany where it would be collected by an engineer who would take it to Nigeria for installation there. I had heard of the name Athena as a distributor but I had no knowledge of who they were or of any of their representatives. I certainly did not know that they operated from the residential address of John Cundy. I knew John, of course, as he also worked under Mr Oberoi. If I had known that Athena was operating from John Cundy's home, I would have regarded it with suspicion and would have felt obliged to mention the matter to someone in authority."

During one of the adjournments of the substantive hearing, documents were produced by Mr Oberoi which made it plain beyond peradventure that the paragraph I have just read out was untrue. We have the notes of Mr Thorne's evidence, as recorded by the Chairman of the Tribunal and they are in these terms. First of all, the evidence which he gave on 7 July 1999. The statement from which I have just quoted was read and signed by him as his evidence in chief. He was then cross-examined.

"I see paragraph 12 of my statement."

He is on record as saying

"It relates to Athena. It surprises me to hear that Mr Ponzi gave his blessing to the arrangement."

I interpolate that, of course, as being Mr Oberoi's case.

"I explained international sales paperwork to Cundy. He was interested. He would occasionally have to despatch parts himself. I was not aware he was working for Athena."

He then goes on to deal with other matters. He was recalled to give further evidence on 3 December 1999 and Mr Sutton, entirely properly as one would expect, told the Tribunal that Mr Thorne indicated that he wished to retract some of his earlier evidence. He had spoken to Mr Sutton's solicitors but not to Mr Sutton himself. When examined in chief by Mr Sutton, this is what he said:

"I see paragraph 12 of my statement. It was not correct to say I was unaware of the connection. I was unaware of Mr Oberoi's association. He advised that Athena was owned by Cundy. I didn't think it was common knowledge. I thought it was confidential. I received reward from Oberoi in the course of my job. It ranged from cigarettes to cash. I got it because I was handling shipping for Athena. The gifts were for me to continue and to keep it confidential. Ponzi did not feature in this. I felt under duress. I was told Ponzi wanted to sack me and the inference was Manbir Oberoi would protect me. I took it very seriously."

13. He was then cross examined by Mr Oberoi, who by that stage was acting in person as, indeed, he has today before us:

"I agree that my version was changed after Mr Cundy's statement was sent to the Respondent's solicitors on 29 November 1999…..I was shown the documents. Then I changed my mind about what I should say. I heard you gave Mr Lawrence gifts. I know you gave other employees gifts. I didn't know why. I agreed we have worked at night. You occasionally ask me to stay. A lot of the time I wanted to stay. You did tell me I could go home.

Mr Oberoi: How much money did I pay?

You paid by cash. I did not register the payments. I was not put under pressure to retract or to say I was not put under pressure. I did lie on oath. You did not put pressure on me.

Mr Oberoi: It is a total lie, isn't it?

Not true. I did lie the first time to protect my position and that of colleagues. I am also trying to protect my position now. But I'm not lying.

Mr Oberoi: To keep your job?

Not true this time. I did not expect to have a job at the end of this Tribunal.

Mr Oberoi: So this is your last straw?

No. I made a grave error of judgment to protect my position and that of my colleagues. I obviously now have to withdraw.

Mr Oberoi: did I give gifts to you and other colleagues for working late?

That is possible. You could be generous. You also gave me cash. It varied from £200 to £500. I can't say how many times. I did not declare it in my tax returns."

Mr Thorne was then asked questions by two members of the Tribunal. In answer to Ms Foster-Norman, he said, or is recorded by the Chairman as having said:

"Manbir Oberoi is my line manager. I did not consider telling anyone. It was futile. Action would be taken against me. Ponzi or Baker would have dismissed me in preference to Manbir, for some other reason. I don't believe there was any money fraudulently removed from the company. Things were sold at distributors prices and you are not interested in end user. I was aware I was telling lies last time. I left without changing it. The document presented by Manbir was shown to me. It showed paragraph 12 to be untrue. It is a fax with my writing on it. I saw the document yesterday. I did not see it as a document in this case until Mr Sutton showed me. I believe I would have been dismissed in preference to Oberoi. I knew about some of Oberoi's language and behaviour. He could be generous and volatile and forceful. People vary - he shouted and screamed. It was never aimed at me."

And then questioned by the other member, Mr Vincent,

"I did not ask why I was asked to do something confidentially. It did not come to my notice until it became clear we were selling to a distributor abroad. We were denied sales we could get through a third party. We had a subsidiary in that country. Their sales were very poor. It was IPA in France. They did not obtain orders. We lost a number of colleagues over the years, people who had been with the company a long time. They were vulnerable to dismissal if they were old monotypes. I was an old monotyper. I was protected from dismissal."

In a re-examination, he said he would like to apologise for his earlier incorrect statement and he realised the seriousness of it.

14. It is, perhaps, worth pausing for a moment to express some puzzlement over parts of this evidence. The initial statement that he was unaware of Mr Oberoi's association is itself puzzling, but perhaps what is important, apart from anything else, is that not only is it clear that Mr Thorne lied on oath, but that even in relation to what he was now saying, he did not believe there was any money fraudulently removed from the company.
15. It is also relevant to note although, very properly, it does not appear that the Employment Tribunal used this, as it were, as part of their thinking in the remedies hearing, but it is, nonetheless, interesting to note that Mr Thorne also gave evidence at the remedies hearing in relation to an allegation against Mr Oberoi that he had walked off with a company laptop, and that was one of the claims being made against him. The Tribunal cleared Mr Oberoi of that allegation in these words:

"There was no direct evidence in rebuttal of Mr Oberoi's evidence that he did not take the laptop referred to in paragraph 4(g) above. We bore in mind that Mr Oberoi had been escorted off the premises by men hired by the Company. We were not prepared to accept the evidence of Mr Thorne as contradicting Mr Oberoi's evidence on the laptop for two reasons. First, Mr Oberoi's evidence was clear, credible and related to matters within his direct knowledge. Second, Mr Thorne had previously (during the liability hearing in this case) admitted lying to the Tribunal on a point of major substance."

Therefore it is clear from that that at the primary hearing, the Tribunal had formed the view that Mr Thorne had perjured himself and by plain implication was an unreliable witness.

16. We turn to look, therefore, at the conclusions which the Tribunal reached in relation to the primary hearing on liability. They firstly held that the contract under which Mr Oberoi was employed was not illegal in such a way as to remove the case from the jurisdiction of the Tribunal. They acquitted Mr Oberoi of any dishonesty in relation to the benefits received. Paragraph 44 deals with the question of dismissal, and in view of the discount they applied, I propose to read it.

"The Company alleged that it dismissed Mr Oberoi for behaving in a rude and abusive manner to certain other employees. We concluded, however, that the Company had not shown that it carried out a reasonable investigation into those allegations, nor did it form a belief based upon reasonable grounds that the allegations in question were true. We decided that the Company did not show that there was a fair reason for Mr Oberoi's dismissal. Further, we concluded that the Company acted unreasonably in dismissing Mr Oberoi. We considered whether Mr Oberoi's dismissal would have been inevitable, even if a fair procedure had been followed. We concluded that it was not. We considered, however, that he was himself in some degree culpable and had played some role in causing his own dismissal. We concluded that it would be just and equitable to reduce both the basic and the compensatory award by 25 per cent. We considered whether complaints about alleged illicit transactions in relation to the companies Athena and Pre-Press which were said to have been discovered after his dismissal, were such as to amount to gross misconduct and hence reduce his compensation because of the inevitability of dismissal. We concluded that such evidence as was put forward was not sufficient to persuade us that he was guilty of gross misconduct."

17. Against that background, Mr Sutton takes what was in essence only one substantive point in this appeal. He submits that the allegations contained in Mr Thorne's evidence were fundamental to any decision made about the Athena allegation. He submits that that allegation needed to be dealt with by the Tribunal; findings needed to be made about it and a conclusion drawn from it. Mr Sutton says that the absence of any specific reference in the Tribunal's Reasons on this aspect means that the Decision is not, if I may use this phrase, "Meek- compliant" (Meek -v- Birmingham City Council [1987] IRLR 250). He submits that the Reasons are inadequate; the company does not know why it lost and therefore the conclusion is unsound. Mr Sutton does not shrink from the inevitable consequence of that line of argument which must be that the case would have to be remitted to a differently constituted Tribunal to be re-heard.
18. It is not disputed that an Employment Tribunal is entitled to have regard to subsequently discovered misconduct and to make a reduction in any compensation awarded on that basis. That is the case of W Devis & Sons Ltd -v- Atkins [1976] IRLR 16, to which we were taken by Mr Sutton. I do not think it necessary to recite any passages from that judgment. The difficulty about its application in the instant case, of course, is that on the findings made by the Tribunal, as to Mr Ponzi's knowledge, this was not conduct on behalf of Mr Oberoi which was discovered later. It was, of course, known to Mr Oberoi throughout the whole affair and not used as a basis upon which he was dismissed. Nonetheless, the proposition remains, and Mr Sutton is entitled to make the point, that if there is going to be a discount for misbehaviour on behalf of the employer on the Devis -v- Atkins principle, it is necessary for the Tribunal to set out its reasoning clearly and in some detail.
19. We were also referred, as I have already implied, to Meek -v- City of Birmingham District Council. This is, of course, a very well known case and it contains essentially two limbs. The first is that the Decision of a Tribunal must contain sufficient particularity and make sufficient findings of fact so that the reasoning of the Tribunal can be understood and that the party who loses understands why she or he has lost.
20. The second limb of Meek is, of course, that one does not expect decisions of Employment Tribunals to be works of art, or necessarily carefully honed judicial masterpieces; it is sufficient if they adequately explain the facts and their conclusions. It is not for us to trawl through the judgment or the Reasons below, picking out any minor discrepancy or unimportant point. The same point is made in the other case which Mr Sutton referred to us, Levy -v- Marrable & Co, a Decision of this Tribunal presided over by Mr Justice Waite, as he then was, and from the headnote we read:

"Where there has been a conflict of evidence in an industrial tribunal hearing on a significant issue of fact, the tribunal's view of the evidence had to be plain from a reading of the tribunal's decision as a whole; and that, since no such finding on conflicting evidence in the present case was expressed in or could reasonably be implied from the tribunal's decision, the tribunal had erred in law and the case would be remitted to another industrial tribunal for hearing"

In our judgment, if we ask ourselves what we might call the Meek question, why did IPA Systems lose both on the Athena issue and on the question of compensation for unfair dismissal? The answer we think, with great respect to Mr Sutton, is perfectly clear - it lost, that is IPA Systems lost, because for the reasons which they give which are sound, the Tribunal believed Mr Oberoi and disbelieved Mr Ponzi.

21. It follows inevitably from that finding that Mr Ponzi had sanctioned Athena, knew all about Athena and, it has to be said by implication, lied to the Tribunal about it. It also follows, inevitably, that the Tribunal accepted Mr Oberoi's explanations that these transactions were not unlawful or a breach of his contract of employment. Those are findings which the Tribunal is entitled to make, particularly in view of the very serious allegations of fraud which were being made, and which it does not appear were supported even by Mr Thorne. We agree with Mr Sutton that it would have been preferable if the Tribunal had dotted the 'i's and crossed the 't's by setting out in terms what it thought about Mr Thorne's evidence on the point, but as the Tribunal had dotted the 'i's and crossed the 't's by setting out in terms what it thought about Mr Thorne's evidence on the point, but the Tribunal did make clear that he had perjured himself. He was, accordingly, a discredited witness. Indeed, he had lied about the very issue under discussion, one which the Tribunal refers to in terms as "an important issue".
22. In these circumstances, it seems to us that, applying appropriate judicial discretion, very little weight could be placed on his evidence in any event and it is, of course, noteworthy, as I have already pointed out, that his evidence in the remedies hearing or the Tribunal's assessment of his credibility in the remedies hearing resulted in the Tribunal rejecting his evidence over a much more minor issue: the retention of the laptop.
23. It follows, therefore, that in our judgment, this case falls within the second limb of Meek, namely that the Tribunal's findings are reasonably clear on the essential issue. The reasons they gave for those findings are sufficient, and it is not for us to trawl through them with a fine toothcomb. We therefore do not think the Tribunal committed any error of law in reaching its Decision on the liability findings and IPA Systems' appeal against that aspect of the case will be dismissed.
24. We turn, much more shortly, to the remedies hearing and the awards made by the Tribunal at the remedies hearing. This is an area which I am sure Mr Oberoi appreciates is very much one in the discretion of the Tribunal. They saw and heard him; they made their assessment of him, which in evidential terms was favourable. They had to assess what his loss of earnings could be and they had to assess what they were going to give him by way of compensatory award.
25. Mr Oberoi has today put in a very lengthy cross-notice in which he criticises the low level of award made to him, and we have no doubt that certainly in relation to the issue of costs, he would have spent a good deal more than the £500 which the Tribunal awarded him. But to deal with that point first, the position is, as I indicated earlier, that the Decision was on 17 November 2000. At that point, £500 was the maximum figure the Tribunal could award, and that is the figure that it awarded. That was an exercise in discretion which in our view is unimpeachable. They give their reasons for it and we can do nothing about it, even if we wanted to. The same applies to the other aspects. Mr Oberoi's document speaks volumes of the very high emotions that have been generated by this case and the very substantial degree of bitterness which he plainly feels for the way in which he has been treated.
26. We may have some sympathy for that view, but we are not a Tribunal of fact. We are a Tribunal of law, and where an Employment Tribunal has made its assessment of the figures for loss of earnings, and other aspects, in the calculation which appears at paragraph 17, and where the Tribunal makes a discount of 25% on the basis of the facts that it has found, these are all matters which, in our view, are wholly and completely within the discretion of the Tribunal; and it follows that on this aspect of the case we agree with Mr Sutton that the awards made by the Tribunal are within their discretion. In places, he submits, the heads of compensation were not before the Tribunal. But in any event, our view can be simply stated that these are not areas with which we feel we can properly interfere, and we will not do so. It follows that the cross-appeal will also be dismissed.
27. Permission to appeal to the Court of Appeal was refused.