United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS N CUNNINGHAM (Representative) Free Representation Unit 4th Floor Peer House 8-14 Verulam Street London WC1X 8LZ
For the Respondent	MR M WINTHROP (Solicitor) Instructed By: Messrs Short Richardson & Forth Solicitors 4 Mosley Street Newcastle-upon-Tyne NE1 1SR


 


MR JUSTICE LINDSAY (PRESIDENT):

1. We have before us by way of a full hearing the appeal of Mrs J.S. Monaghan in the matter Monaghan -v- Close Thornton. Today Ms Cunningham has appeared for Mrs Monaghan and Mr Winthrop of Short, Richardson & Forth, Solicitors, for the Respondent, Close Thornton, a firm of Solicitors.
2. On the 13th September 1999 Mrs Monaghan presented an IT1 for unfair dismissal and disability discrimination. She had been employed from September 1995 until the 2nd July 1999 as a legal secretary and audio typist. In April 1999 she had gone on sick leave and had remained on sick leave. On the 3rd June 1999 she had been given notice of dismissal, not having returned to work in the interim. She claimed she was disabled within the Disability Discrimination Act.
3. On the 19th October 1999 the Respondent firm, a three-partner firm, put in their IT3. So far as concerned contract they asserted that the contract contained a term that enabled them to terminate employment once an employee had been absent from work for any reason for a period in excess of 56 working days in any period of 12 months. They gave the recent history of Mrs Monaghan's sickness in their paragraphs 4, 5 and 6 of their IT3, where they said:-

"4. On Thursday the 8th April 1999 the Applicant's husband rang to say that the Applicant had been signed off work for 4 weeks due to arthritis.

5. Towards the end of the 4-week period the Respondent telephoned the Applicant and was told that there was no cure for her condition. It was necessary for her to rest with her legs up as much as possible.

6. On or about the 23rd April 1999 the Applicant produced a further sick note signing her off for another period of 4 weeks.

7. At the end of this period the Respondent again rang the Applicant and was told by the Applicant's husband that the Applicant's prognosis was poor and that she had now been signed off for 13 weeks.

8. In view of the above the Respondent decided that it was necessary to terminate the Applicant's contract of employment. On the 3rd June 1999 the Respondent gave notice to the Applicant that it was terminating her employment with one month's notice to expire on the 2nd July 1999."

No admission was made as to disability.

4. On the 12th and 13th July 2000 there was a hearing at the Tribunal at Newcastle-upon-Tyne and on the 6th November the decision was sent to the parties. It was the decision of the Tribunal under the Chairmanship of Mr N.W. Garside and was unanimous. It was that the Applicant was unfairly dismissed but that she was not a disabled person as defined by the Disability Discrimination Act. Her claim of discrimination contrary to that Act was therefore dismissed. This decision, the liability decision, is not the subject of the appeal. We must therefore accept both its conclusions and the facts there found as being incontrovertible. Amongst those matters are that Mrs Monaghan's duties had been mainly of typing; that Mr Harrison, whose secretary she had been, needed a full-time permanent secretary; that she had been signed off unfit up to the date of dismissal; that the firm had been advised that Mrs Monaghan had an arthritic condition which would not improve and that her absences were causing difficulties. At the liability hearing the Tribunal held that Mrs Monaghan could type for only a short period; the arthritis had spread. The Tribunal held that there had been a complete lack of consultation underpinning the dismissal. The issue of whether there should be a "Polkey" reduction was left over to the remedy's hearing.
5. The remedies hearing was on the 11th October 2000. The decision of the Tribunal was sent to the parties on the 6th November. It was, again, unanimous. Close Thornton were ordered to pay the sum of £1,007.74 to the Applicant. On the other hand, Mrs Monaghan was ordered to pay Close Thornton costs of "today" limited to £500. That was, therefore, an order for costs relating only to the costs of the remedies hearing.
6. The remedies hearing made it clear that there had been agreement as to the basic award of £860. As for the compensatory award, the Employment Tribunal read section 123 of the Employment Rights Act into their decision and must have therefore noted that the loss which they were required to assess was (with our emphasis) loss "sustained by the complainant in consequence of the dismissal "insofar as that loss is attributable to actions taken by the employer". They made a number of findings. They said:-

"As far as we can see from the evidence provided to us [Mrs Monaghan] will continue to be on incapacity benefit for the foreseeable future. Her osteoarthritis is progressive. In all probability she is going to suffer more than she is suffering at present."

A little later they add:-

"She has made no attempt to date to try and obtain such employment."

That is a reference not to ordinary employment but to therapeutic work. The quotation continued:-

"It could be said that she is doing some therapeutic work in typing and filing for her husband when she is able to do so. But she is able to do that within the comfort of her own home. We have had no evidence to support the contention that she is capable of work."

The Tribunal continued:-

"The Respondents do not seek to argue, with any great force, that if the Applicant had not been dismissed when she had she would have been employed for a period of less than 16 weeks."

Continuing with that point they went on:-

"We accept that after the 16 weeks the Applicant, Mrs Monaghan, would not have received any payments from the Respondents. They were under no duty to make any payments and she would therefore have been in receipt of whatever benefits she could obtain from the State. The difference between the disability benefit and the SSP for the 16-week period is £147.20 which is the sum that we award as loss of earnings."

As to statutory rights the Tribunal dealt with that in their paragraph 10 as follows:-

"We have to deal with loss of statutory rights. In normal circumstances the loss of statutory rights would be an award that would be made by the Tribunal. The award would only be made if there was in the foreseeable future the possibility of an applicant being able to return to work. Because of the reasons already stated we can see no possibility of Mrs Monaghan returning to work and accordingly we do not make an award for loss of statutory right."

7. So far as any claim for loss of pension rights was concerned, the pension which Mrs Monaghan was looking to was non-contributory so far as the employer was concerned; she paid for it wholly herself. Thus she could not claim loss on that account; whatever loss that would be suffered there would be subsumed within her claim for loss of wages. The Tribunal said that the pension claim had been fanciful.
8. The respective figures put forward to the Tribunal for total loss had been hopelessly at variance the one with the other. The employers had been suggesting an award in the order of £800, Mrs Monaghan had in mind something of about £40,000. The award eventually made consisted of a basic award of £860.54 and a compensatory award of £147.20. As for future earnings the Tribunal said:-

"The claim for loss of future earnings as indicated in our original decision has to be considered in the light of the position where the applicant is in receipt of and continues to be in receipt of incapacity benefit. She is therefore unable to work and being unable to work she has no ability to earn and therefore she has not suffered any loss."

9. At the remedies hearing, at its conclusion, the Tribunal orally indicated the nature and amount of the award which they were making. After that but as part of the same hearing the Respondent firm asked for costs on the basis of their having earlier offered £1500 to Mrs Monaghan on the 22nd September in order to procure a settlement. That offer had met with a rejection on the part of Mrs Monaghan's advisers, the Darlington Citizens' Advice Bureau. They had said:-

".... Should your clients be prepared to increase their offer to around £8,000 we are instructed to consider such offer."

The Tribunal reminded themselves of the particular terms of Rule 12 of the Employment Tribunal Rules. Speaking of the offer which the Respondent firm had made the Tribunal continued:-

"A reasonable offer was put forward to settle in September. It is, in our view, a very reasonable offer which should have been accepted. By making the Respondents come to the Tribunal today we consider that the Applicant has acted unreasonably and therefore we make an award of costs of £500.

16. We do make that award with the caveat that we consider that in the circumstances of this particular dismissal it is insulting to Mrs Monaghan for the Respondents to seek costs against her for today. Taking into account the award that we have made and what they had or were prepared to offer and it may be that consideration will be given to those who are instructing Mr Winthrop today and who are not present that the costs order might not be enforced. It is, of course, a matter for their own discretion. We do say that the offer made by the Respondents should have been accepted at the time that it was made."

10. On the 2nd January 2001 a Notice of Appeal was presented on behalf of Mrs Monaghan. On the 23rd May 2001 there was a preliminary hearing at the Employment Appeal Tribunal; leave was given for an amended Notice of Appeal and directions were given as to obtaining Chairman's Notes of Evidence on some subjects and the material relating to Social Security applications which had been before the Employment Tribunal was required to be laid before the Employment Appeal Tribunal at the full hearing.
11. The Notice of Appeal raises five main points. Ms Cunningham's thoughtful argument has very much followed the lines set out in the amended Notice of Appeal which she had settled for Mrs Monaghan.
12. The first ground relates back to that passage we had cited earlier where, in their paragraph 8, the Tribunal said:-

"We have no evidence to support the contention that she is capable of work."

It is asserted that the Tribunal by so saying implicitly placed the burden of proof on Mrs Monaghan to show that she was capable of work. We do not read the sentence as indicative of an onus one way or another; as it seems to us the expression is neutral in terms of onus.

13. The second ground of appeal is that it was wrong of the Tribunal in any event to say that it had heard no evidence to support the contention that Mrs Monaghan was capable of work. Here Miss Cunningham refers to Mrs Monaghan's witness statement. Her witness statement does assert that she could have done some work and that she believed that she could have worked on a part-time basis. She believed, she said, that adjustments could have been made to enable her to continue working. It is not, says Miss Cunningham, that the Tribunal assessed such evidence as she gave as to her capability and then rejected it but rather that they treated the matter as if there had been no evidence that she was capable of doing work at all. That, urges Miss Cunningham, is error of law. However, it seems to us that the reference as to there being no evidence to support the contention that she was capable of work meant, in context, no evidence of her capability of doing such work as would be required of an employee in an office to the extent to which either part-time or full-time employees in offices could be expected to have to work. That she could do some work is quite plain from the immediately preceding sentence in which the Tribunal had said that it could be said that she was doing some therapeutic work in typing and filing for her husband when she was able to do so. But whether she could do that sort of work was not relevant to the assessment of loss with which the Tribunal was concerned. As to that, there were many passages in the oral evidence which threw some light on what was understood at the time.
14. Thus, for example, the senior partner of the Respondent firm, Mr Wiper, had said:-

"I did not believe she was fit to work and was told that she could not work in any capacity."

............ All the information I had was that she was not able to return to work

............

........... I was told that it was a progressive condition."

Mrs Monaghan herself had said:-

"I have been told that the condition is progressive and it would get worse.

At this moment in time I could cope with some work.

I cannot say how many hours.

........

Had difficulty when working with Mr Harrison in respect of retrieving files.

........... I was having problems with stairs, I did have to go up and down the stairs to see clients.

.......... I got incapacity benefits since dismissal.

In some respects my condition has worsened.

......... The arthritis has now spread to different joints which effects all of my body - getting worse.

......... I cannot give a date to say when I will be fit for work.

I would have returned to work if I had known my job was in jeopardy. I would like to go back to work.

..........

I can type for short periods of time about ½ hour. If I had known my job was at risk I would have gone back to work.

I did not think I was fit enough.

Part-time work - I am not sure what hours I could have coped with."

15. Mr Harrison, the solicitor to whom Mrs Monaghan had been secretary, gave written evidence as well as oral evidence and in his written evidence he said, inter alia:-

"Jennifer told me that the side effects of the medicine that she was taking were worse than the arthritis. She was now on pain killers and needed rest. She told me that she had been told there was no actual cure for her condition, and that she had to keep her legs up as much as possible, which meant she couldn't sit at a desk to do any typing. I do not remember Jennifer ever asking me about working part-time."

Mrs Monaghan, in answer to the Chairman's questions at the Tribunal, said that she accepted Mr Harrison's evidence. All that was evidence at the liability hearing. At the remedies hearing Mrs Monaghan added:-

"My abilities to do clerical work and typing - I cannot say how much I could do.

.............

I have been on invalidity benefit all of the time since dismissal.

I help my husband in typing and filing. I have looked in the paper every week for suitable jobs. I have done no work just helping my husband. I have been looking for jobs but I have not applied for any.

..........

I agree that the Respondents could have dismissed me on medical grounds."

On the 11th June 1999 Mrs Monaghan had applied for incapacity benefit and, in the course of that, in answer to the question "Do you know when you will be well enough to work again?" she had answered "No". In giving brief details of her sickness she had said that she was no longer able to type for long periods of time, carry large bundles of files or cope with stairs.

16. The Tribunal also had in front of it at the remedies hearing an "Incapacity for work questionnaire" which Mrs Monaghan had completed on or about the 15th November 1999. It said, inter alia, that she could not sit comfortably for more than 30 minutes without having to move from the chair, that she could not get up from sitting or standing without holding on to something, that she could not stand for more than 10 minutes without having to move around, that she could not put either arm behind her back as if to put on a coat or jacket and that some days were worse than others.
17. One is bound to feel considerable sympathy for Mrs Monaghan who was plainly suffering from frequent and prolonged bouts of pain but on the basis of the evidence before them we see no error of law in the Tribunal's conclusion that they had no evidence to support the contention that she was capable of work if, as seems to us correct, the Tribunal was talking of capability of doing work within the context of employment. We thus see no error of law in this second ground. Ms Cunningham complains that as Mrs Monaghan's condition was progressive and worsening the Tribunal should have taken care sufficiently to discount the evidence of Mrs Monaghan's capabilities at dates later than the point of dismissal to ascertain what had been the position at that earlier time. No doubt had the need for a careful exercise of that kind been supported by evidence (and perhaps expert evidence) the Tribunal would have embarked on it but in the event they were left having to do their best on the evidence presented to them. They cannot be faulted for doing that.
18. The third ground concerns the ability of the Appellant to have had the position of part-time working adequately considered first by the employer and secondly then by the Tribunal. The Tribunal make no express finding as to Mrs Monaghan's ability or inability to do part-time work beyond the passage we have mentioned as to the Tribunal having no evidence to support the contention that she was capable of work generally. However, in their paragraph 10 the Tribunal said "Because of the reasons already stated we can see no possibility of Mrs Monaghan returning to work."; the language of the Tribunal was there sufficient to comprehend both part-time and full-time working. Moreover, as we have seen, a number of passages of the evidence relate to an inability to type other than for short periods, an inability to say how long she would have been able to work and an inability to say when she could return to work. It is to be remembered that her condition was progressive. The evidence which we have already cited from the oral evidence does not paint a picture of a woman who could be expected to be offered clerical or secretarial work even part-time nor of a person who, were that to be offered, could cope with the demands of an office job of that character for more than the very shortest of periods. The fact (as she asserted) that Mrs Monaghan would have returned to work if she had known her job was at risk adds very little if, consistently with the Tribunal's view of all other evidence, she could not have lasted for any measurable period in her old job or even in a part-time one. We see no error of law in the third ground.
19. In the fourth of her grounds Mrs Monaghan asserts that the Tribunal wrongly treated her receipt of incapacity benefits after 16 weeks as conclusive of her being incapable of work thereafter. That the Tribunal looked carefully at Mrs Monaghan's application for incapacity benefit and to her questionnaire seems to us entirely proper. If the Tribunal had jumped from the fact that she was in receipt of incapacity benefit to a conclusion that she was on that account unable to work that would have been not justified by the Incapacity Benefit Rules. The Social Security (Incapacity for Work) (General) Regulations 1995 at Regulation 25 show that what the benefit system is concerned with is a form of deemed incapability for work which is not necessarily an actual inability to work. Miss Cunningham shows us, for example, that a person who cannot walk at all is to be deemed for the purposes of those Regulations to be incapable of work even though, as is, of course, possible, he or she is holding down a full-time job. The Tribunal provides some fuel for Mrs Monaghan's argument. In a passage we have already cited they continue, after mentioning that Mrs Monaghan was in receipt of and continued to be in receipt of incapacity benefit, as follows:-

"She is therefore unable to work ..."

But we find it difficult to accept that an experienced Tribunal would believe that merely because of the receipt of incapacity benefit there was, in necessary consequence, an inability to work. In context we see the "therefore" as meaning no more than "in all the circumstances we have described". As such it is a legitimate finding of fact supported by evidence. We must remember that it is the Employment Tribunal that is the master of fact. If there is some evidence in favour of a conclusion which the Tribunal comes to, that conclusion is invulnerable in law even had there been some evidence to the contrary. Understood in the sense we have described, the passage complained of represents no error of law.

20. Accordingly, drawing together the four aspects of the Notice of Appeal which relate to the substantive part of the remedies decision, we find no error of law and we dismiss the appeal thus far.
21. That leaves us with the decision on costs, the fifth matter raised. The Tribunal has, of course, a broad discretion on costs. That makes it difficult for an appellant to point to some error of law. However, as is the case with all discretions which have to be exercised judicially, the discretion is exercised in error of law if, in the course of making it, the Tribunal either leaves out of account that which properly should have been taken into account or takes into account that which should not have been taken into account.
22. Two things cause us concern about the award, viewed in that light. First, by its saying:-

"By making the Respondents come to the Tribunal today we consider that the Applicant has acted unreasonably and therefore we make an award of costs of £500."

the Tribunal seems not have had it in mind that it is not enough merely to point to the Applicant having acted unreasonably to justify the exercise of the discretion. The fact that the Applicant has acted unreasonably justifies only the existence or availability of the discretion. The sense of that sentence seems to overlook that an award of costs is properly a two-stage exercise; first the question is whether the discretion under Rule 12 has arisen. That was answered affirmatively. But the second question, which the Tribunal should then have gone on to, is whether that discretion should be exercised by making any and if so what award of costs. That seems not to have been considered. Instead the Tribunal moved directly from the existence of the discretion to the award without any intervening pause to consider whether the exercise was appropriate.

23. A second point that concerns us is the curious remark we have cited from paragraph 16 of the Tribunal's decision about it being insulting to Mrs Monaghan for the Respondents to seek costs that day and the expression that consideration might be given to the costs order not being enforced. That curious remark in the context of the Tribunal just having awarded costs can, as it seems to us, be explicable only as being the Tribunal wishing to put some pressure on the employer not to seek costs by their taking into account in making the order for costs that what they awarded might not be enforced.
24. Either or both of these concerns seem to us to represent errors of law in relation to the award of costs. We set therefore aside that award.
25. We do not remit the question of costs afresh; proportionality alone provides a good ground for not remitting to the Tribunal a question which is only as to costs and which cannot concern more than £500. Moreover we confess to some unease about the consequence of the use of what was, in effect, a Calderbank offer in the Employment Tribunal context. We do not doubt that where a party has obstinately pressed for some unreasonably high award despite its excess being pointed out and despite a warning that costs might be asked against that party if it were persisted in, the Tribunal could in appropriate circumstances take the view that that party had conducted the proceedings unreasonably. But this was far from being an extreme case of that nature. The offer of £1500 was made on the 22nd September 2000, relatively shortly before the remedies hearing on the 11th October. The award, as we have seen, was of £1007. Whilst we would not want to deter the making and the acceptance of sensible offers, if it became a practice such that an applicant who recovered no more than two thirds of the sum offered in a rejected Calderbank offer was, without more, then to be visited with the costs of the remedies hearing or some part of them, Calderbank offers would be so frequently used that one would soon be in a regime in which costs would not uncommonly be treated as they are in the High Court and other Courts. Yet it is plain that throughout the life of the Employment Tribunals the legislature has never so provided. It can only be that that was deliberate. Miss Cunningham rightly distinguishes the Employment Tribunal costs regime from that applicable in the High Court and County Court where costs commonly follow the event, where a Calderbank letter can in turn be given particular significance and where a system of payment into Court is long established. Given our view that the order for costs was made in error of law in this particular case and that proportionality alone would suffice as a ground not to remit the question of costs, we say no more as a matter of decision but we do not leave the case without adding that, if the rejection of Calderbank offers in far from extreme cases is intended by the legislature to lead to substantial liability in costs by those who reject them, then it would be greatly preferable that that should be done clearly by the legislature and not unclearly and, no doubt, with little uniformity by the exercise of the discretion under Rule 12. Accordingly, so far as concerns costs, the appeal succeeds and we set aside the award of £500.