United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS R WEDDERSPOON (of Counsel) Instructed by: Bolton Metropolitan Borough Council Legal Services Town Hall Bolton Lancashire BL1 1RU
For the Respondent	MR K SCRANAGE (the Appellant in Person)


 


HIS HONOUR JUDGE J BURKE QC

The Facts

1. Mr Kevin Scranage was employed by Bolton Metropolitan Borough Council ("the Council") as a Trading Standards Officer from September 1991 until his dismissal in February 1999. In 1996 he and his father, who also was Mr K Scranage, had accounts with the National and Provincial Building Society. To put it very briefly, Mr Scranage was in dispute with that building society. That society then merged with the Abbey National; and when this occurred Mr Scranage's account was erroneously merged with that of his father. Despite protests, this problem was not resolved.
2. In December 1996 the Abbey National issued a passbook to Mr Scranage which showed a balance in his favour in the region of £12,000. Mr Scranage was aware that most of this £12,000 was not properly his but was his father's and that the Abbey National were perpetuating earlier errors, based on confusion between his and his father's accounts, in apparently treating this money as his. He closed his account and transferred the money to an account in his own name with the Halifax Building Society and then to another account in his name with the National Westminster Bank. He did not inform his father of what he was doing.
3. Eventually the Abbey National reported what had happened to the police; and Mr Scranage repaid the money to the Abbey National through his solicitors. There was an ongoing dispute as to how much he had to repay; but that is of no materiality for present purposes. Mr Scranage was charged with obtaining a money transfer by deception.
4. He was suspended in April 1998 pending the outcome of his trial. On 6 January 1999 he was convicted at Bolton Crown Court of the offence charged. On 25 January 1999 the Council held an investigatory meeting which led, a week or so later, to a disciplinary meeting, at which Mr Scranage was dismissed. He appealed against that dismissal. Thereafter the Crown Court gave him a custodial sentence.
5. In September 1999 the Council's joint dismissal appeals panel met and resolved to defer the decision upon Mr Scranage's appeal against his dismissal pending the outcome of the Respondent's appeal against his criminal conviction.
6. On 26 April 2001 the Court of Appeal quashed Mr Scranage's conviction. As a result the joint dismissal appeals panel was reconvened. It met on 22 August 2001 and resolved that the appeal be dismissed.
7. It is important to note that Mr Scranage's defence to the criminal charge, according to the judgment of Kay LJ, who gave the judgment of the Court of Appeal Criminal Division (which judgment was before the Employment Tribunal as it is before us), said that:

7 "When interviewed about the matter by the police [Mr Scranage] did not dispute the factual basis of what had occurred. He described himself as having been naïve and unwise."

and that, in his evidence, Mr Scranage admitted again the factual basis of the prosecution's case. His defence was that he had not acted dishonestly but that:

8 "…he and his father had had so much trouble with the bank and the building society that he had determined to teach them a lesson…

9 Thus the issue for the jury to decide was a very straightforward one: whether or not Mr Scranage's conduct could properly be described as dishonest."

8. The conviction was quashed because the learned trial judge had failed properly to give to the jury the necessary direction as to Mr Scranage's previous good character. Kay LJ said in his judgment, at paragraph 18, that while the case was certainly a strong case against Mr Scranage, it was impossible to say that if the jury had been given a proper direction they might not have arrived at a different verdict; and for that reason the conviction was unsafe.
9. By this time Mr Scranage had presented an Originating Application to the Employment Tribunal claiming that he had been unfairly dismissed and also that he had been a victim of sex discrimination. The Employment Tribunal, chaired by Mr G R Little and sitting at Manchester, in a decision sent to the parties with Extended Reasons on 2 July 2002, the hearing of Mr Scranage's complaint having obviously been deferred until after the restored hearing of his internal appeal, decided, firstly, that Mr Scranage had been unfairly dismissed by the Council, secondly, that Mr Scranage had contributed by his conduct to his dismissal to the extent of 60% and, thirdly, that there had been no discrimination.
10. The Council appealed against that decision of the Tribunal on several fronts. However, their appeal against the conclusion that Mr Scranage had been unfairly dismissed was dismissed at the Preliminary Hearing stage on 4 November 2002. Their appeal against the absence in the Tribunal's decision of any reduction in the award to Mr Scranage on the basis of what is familiarly known as the 'Polkey principle' and against the Tribunal's conclusion that Mr Scranage had contributed to his own dismissal only to the extent of 60%, were permitted to proceed to a full hearing.
11. Miss Wedderspoon of Counsel has argued those grounds of appeal before us today with clarity and succinctness. Mr Scranage has, in his Respondent's Answer, put forward what amounts to a cross-appeal against the reduction in his award for contributory fault by 60% and has primarily relied today upon the arguments set out in his Skeleton Argument and a further revised version of his Skeleton Argument, both of which we have treated as setting out his case and which we have read with care. He has submitted that no reduction (or at least a lesser reduction) should have been made. He has also made a number of points by way of oral submission which we have of course taken fully into account.

The Tribunal's Decision

12. It is necessary to examine first the reasons on which the Tribunal based their conclusion that the Council had unfairly dismissed Mr Scranage. Originally, before the conviction was quashed, the Council relied upon the conviction itself, taking the view that there was no basis for re-opening the conviction and that the detailed facts which led to the conviction did not need to be examined. Their case was that a Trading Standards Officer had to have impeccable standards of honesty and integrity for reasons of public confidence and that, as a result of his conviction for deception, it had been demonstrated that Mr Scranage did not achieve those standards and could not continue to work as a Trading Standards Officer.
13. After his successful appeal to the Court of Appeal and when, in the light of the quashing of his conviction, his appeal against his dismissal was reinstated, Mr Maslivec, the head of the Council's Environmental Protection Unit, had a lengthy meeting with Mr Scranage in which, the Tribunal found (and it may not have been in dispute), Mr Maslivec indicated to Mr Scranage that there might well be no difficulty in his returning to his role as a Trading Standards Officer with the Council.
14. Mr Maslivec subsequently approached Mr Scranage's former line managers to ask if they would be happy to have him back; and they replied that they would. However, the Tribunal found, Mr Maslivec then read a transcript of the judgment of the Court of Appeal and appears to have changed his stance, perhaps because he took the view that the quashing of the conviction was based on a technicality. As the Tribunal appreciated, that was not a correct interpretation of the Court of Appeal's judgment.
15. In any event, he put forward the Council's case at the hearing of the internal appeal on the basis that impartiality, honesty and integrity were crucial to the role of a Trading Standards Officer, that a Trading Standards Officer had to exercise judgment in the public interest and should not take part in personal crusades, by which meant not crusades for personal motives, for Mr Scranage had always said that what he did he did in the public interest to demonstrate the shortcomings of the bank or the building society; but crusades undertaken personally. The Council's case was that Mr Scranage had plainly acted inappropriately, deceptively and with a serious lack of judgment and that that cast doubt on his integrity and made him not fit to be a Trading Standards Officer; and thus his appeal should fail.
16. Mr Scranage in his defence relied, among other points, on the fact that Trading Standards Officers in their work are required to act in a manner which was not dissimilar, as he saw it, to that in which he in his personal capacity had been acting in relation to the Abbey National, for example, by organising a test purchase by a child under the required age of a packet of cigarettes from a shop or matters of that type.
17. The appeal was dismissed by a majority of three to two. The appeal having been dismissed, Mr Scranage's Tribunal claim again became live; and it was heard in the manner and on the dates we have described.
18. The Tribunal concluded, so far as material for present purposes, firstly, that a reasonable employer would have reached the conclusion that Mr Scranage had not sought personal gain in what he did, indeed they found as a fact that he did not seek personal gain in what he did. Secondly, they concluded that a sanitised view of the role of a Trading Standards Officer had been put before the Tribunal and that it was part of the work of a Trading Standards Officer that they should seek to test people and to trick them, for example, in the manner which we have just described. Thirdly, in paragraph 11 of their judgment, they said this:

11 "Accordingly we take the view that in the context of the Applicant's conviction having been quashed, the way in which the appeal panel should have considered the matter as a fair employer was to consider whether, giving measured consideration to the peculiar circumstances of the case, the Applicant's behaviour in his private life was significantly different from the aspects of "controlled" deception which were an inherent part of the enforcement and investigatory role of the Trading Standards Officer. That they failed to give the matter consideration in this context was due in large measure, we find, to the "spin" applied by management's case albeit in circumstances where at first blush and indeed evidently in the view of 11 members of the jury in Bolton and the Court of Appeal, there had been some "bizarre behaviour"…We take the view that management's cased had the effect of suppressing the evidence by failing to acknowledge the perhaps rather grim realities of the Trading Standards Officer's role.

12 In all the circumstances we consider that the response of a reasonable employer in the circumstances of this case would have been to commute the dismissal to a final written warning and perhaps even considering some form of demotion to facilitate retraining."

The Tribunal then went on in paragraph 13 to criticise the employers for having failed to consider re-deployment into an alternative role.

19. Earlier in the decision, at paragraph 9, the Tribunal had also found that the Council had adopted unfair procedures in relation to the appeal hearing. They rightly held that it was the appeal panel which really took the effective decision which they had to examine because the original decision to dismiss was taken in wholly different circumstances when Mr Scranage was a man convicted of an offence of dishonesty. That, of course, was not at all the position which was before the appeal panel some two years later.
20. The Tribunal were critical of the employers in particular for failing to provide Mr Scranage or his union representative with a copy of the case put by management until the hearing date, particularly in the light of the fact that Mr Maslivec had led Mr Scranage to believe that the Council would, or at least might, well take a different line, because Mr Scranage's character witnesses were not called and for other reasons which it is not necessary to go into. It was after they had identified these procedural defects that the Tribunal went on to consider and made their findings as to the substance of the employer's case to which we have referred.
21. Finally, in paragraph 14 the Tribunal set out their findings on the issue of contributory fault. They said this:

14 "Quite clearly the Applicant was to a substantial degree the author of his own misfortune. He put himself in a difficult and dangerous position and whilst we are satisfied that he did not seek any personal gain in connection with the Abbey National Account monies, nevertheless his silence and his removal of monies from that account albeit to prove a point must be regarded as deceptive in the sense that they did not involve telling the truth, pointing things out to the Bank or doing anything to rectify the mistake they had made. Failing to realise that acting on his own account in this way and, for instance without the benefit of legal advice that would no doubt have been available to his employer when he was considering how far it could go as an agent provocateur, the Applicant was showing lack of judgment. Whilst for the reasons we have set out we do not think that that breached the duty of trust and confidence we nevertheless think that in order to achieve justice and equity that must be reflected by the view that we take on contribution. This is that we find the Applicant contributed some 60% to his own dismissal and accordingly will only be entitled to 40% of the remedy otherwise due to him."

The "Polkey Principle"

22. It may be helpful in the context of this case, however well known what is regularly called the "Polkey Principle" is to those who are familiar with employment law to set out that principle and to examine its derivation.
23. Its derivation is the decision of the House of Lords in Polkey v A E Dayton Services Ltd [1987] 3 AER 974. In that case the employers had dismissed the employee van driver for redundancy reasons without any prior consultation or warning. The Tribunal found that he would have been dismissed in any event if there had been appropriate consultation and, therefore, the dismissal was not unfair. The employee's appeal against that decision failed in the Employment Appeal Tribunal and the Court of Appeal but succeeded in the House of Lords.
24. The principal speech with whom all of their Lordships agreed was given by the Lord Chancellor, Lord MacKay of Clashfern. He said, at page 976H:

"Where there is no issue raised by ss 58 to 62" [he was referring to sections in the Employment Protection (Consolidation) Act 1978] "the subject matter for the Tribunal's consideration is the employer's action in treating the reason as a sufficient reason for dismissing the employee. It is that action and that action only that the Tribunal is required to characterise as reasonable or unreasonable. That leaves no scope for the Tribunal considering whether, if the employer had acted differently, he might have dismissed the employee. It is what the employer did that is to be judged, not what he might have done."

25. At page 978D the Lord Chancellor quoted Viscount Dilhorne in W Devis & Sons Ltd v Atkins [1977] AC 931 as follows:

"It does not follow that non-compliance with the code necessarily renders a dismissal unfair, but I agree with the view expressed by Sir John Donaldson P in Earl v Slater & Wheeler (Airlyne) Ltd that a failure to follow a procedure prescribed in the code may lead to the conclusion that a dismissal was unfair, which, if that procedure had been followed, would have been held to have been fair."

The Lord Chancellor went on:

"So far, the current decision is entirely in accordance with the views I have expressed, but the Tribunal in the present case were bound by a stream of authority applying the so-called British Labour Pump principle (see British Labour Pump Co Ltd v Byrne [1979] ICR 347)."

26. The Lord Chancellor then addressed various authorities including British Labour Pump v Byrne which, by this decision of the House of Lords, was expressly overruled. The Lord Chancellor said at page 983A:

"In my opinion, therefore, the additional reasons given by the Court of Appeal in the present case for supporting the British Labour Pump principle involve an impermissible reliance on matters not known to the employers before the dismissal and a confusion between unreasonable conduct in reaching the conclusion to dismiss, which is a necessary ingredient of an unfair dismissal, an injustice to the employee which is not a necessary ingredient of an unfair dismissal, although its absence will be important in relation to a compensatory award."

27. Lord Bridge said, at page 983J:

"Employers contesting a claim of unfair dismissal will commonly advance as their reason for dismissal one of the reasons specifically recognised as valid by s. 57 (2)…of the Employment Protection (Consolidation) Act 1978. These, put shortly, are: (a) that the employee could not do his job properly; (b) that he had been guilty of misconduct; (c) that he was redundant. But an employer having prima facie grounds to dismiss for one of these reasons will in the great majority of cases not act reasonably in treating the reason as a sufficient reason for dismissal unless and until he has taken the steps, conveniently classified in most of the authorities as 'procedural', which are necessary in the circumstances of the case to justify that course of action. Thus, in the case of incapacity, the employer will normally not act reasonably unless he gives the employee fair warning and an opportunity to mend his ways and show that he can do the job; in the case of misconduct, the employer will normally not act reasonably unless he investigates the complaints of misconduct fully and fairly and hears whatever the employee wishes to say in his defence or in explanation or mitigation; in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation. If an employer has failed to take the appropriate procedural steps in any particular case, the one question the Industrial Tribunal is not permitted to ask in applying the test of reasonableness posed by s57 (3) is the hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been taken. On the true construction of s57 (3) this question is simply irrelevant."

Later, Lord Bridge pointed out that the question of the effect of taking the appropriate procedural steps should be considered at the stage of assessing compensation.

28. From this origin has developed the principle, applied daily up and down the country, that where a Tribunal concludes that a dismissal was unfair the Tribunal may thereafter, if appropriate, consider whether, had the factors which caused the dismissal to be unfair been absent, the employee would have been fairly dismissed in any event.
29. The Tribunal may find that a fair dismissal would have occurred in any event, that it would not have occurred, that it might have occurred or that it might have occurred but at a later time. No doubt other permutations are open. Sometimes this exercise is undertaken at the end of what is usually described as the liability hearing. Sometimes it is not undertaken at the liability stage of a hearing of an unfair dismissal but at a remedies hearing. Liabilities and remedies are both dealt with together at the same hearing, then the exercise, if appropriate, will of course be undertaken in the course of that hearing.
30. However, the principle applies only in circumstances in which it is open to the Tribunal to consider whether, had the factors which have caused the Tribunal to conclude that the dismissal was unfair been absent, the employee would or might in any event have been fairly dismissed.
31. In practice such factors will, inevitably, or so as not to exclude circumstances which at the moment it is not possible to envisage but may not have been canvassed before us, almost inevitably, be procedural errors; for if the Tribunal come to the conclusion that the dismissal of the employee was what is often called substantively unfair, for example that there was no reason for the dismissal falling within section 98 (1) or (2) of the Employment Rights Act 1996, or in a redundancy case that there was no redundancy situation or that the employee did not fall within the relevant pool for selection or had in a selection exercise such marks that he was higher than the cut-off point for selection or, in a misconduct case, that the employers could not reasonably have believed in the guilt of the employee on the basis of the information open to them, or that dismissal was not a reasonable response to the misconduct alleged, then there could have been no fair dismissal on the facts of the case and the Polkey principle would not apply. In reality, the Polkey principle applies normally, and perhaps exclusively, to a case in which one of the essential procedural safeguards which protects an employee against unfair dismissal has not been complied with.
32. The Employment Appeal Tribunal in the case of Bolton & Paul Ltd v Arnold [1994] IRLR 532, to which we have been referred, clearly regarded the Polkey principle as applying to circumstances in which the unfairness arose from the failure of the employers to follow proper procedures.
33. In the present case the Tribunal expressly found at paragraph 12 of the decision that the response of a reasonable employer to the circumstances of this case would not have been to dismiss at all but would have been to have given a final written warning, perhaps coupled with some form of demotion to facilitate retraining. That is to say, they concluded that dismissal, on the basis of what Mr Scranage had done, was not within the range of reasonable responses.
34. In the face of such a finding, the issue as to whether, if the employer had acted fairly there would have been a dismissal in any event, simply did not arise, because the Tribunal found that, if the employers had acted fairly, there would not have been a dismissal at all. The reason why the Tribunal did not say anything about the Polkey principle in their decision, beyond a reference to its having been raised on behalf of the Council, is quite clear. It is that there was no call for the application of that principle in the light of the finding which the Tribunal had expressed in paragraph 12 of their decision.
35. It is of course strictly correct that the Tribunal should, if their decision was (to use an expression which has now had the approval of the Court of Appeal) "Meek compliant", have explained why the Polkey principle did not arise. But the reasons are, in our judgment, plain from the decision when the decision is read as a whole, and it would be pointless for us to remit the point to the Tribunal when the reasons why they made no decision to reduce compensation on the basis of the Polkey principle clearly appear from the rest of the decision. If they were asked to reconsider the application of the Polkey principle in the light of their earlier findings, they could only possibly reach one result; namely that there should be no reduction at all pursuant to that principle.
36. Miss Wedderspoon on behalf of the Council submitted that we should pay heed to the words of the Lord Chancellor in Polkey itself at page 976J, where he said: -

"On the other hand, in judging whether what the employer did was reasonable it is right to consider what a reasonable employer would have had in mind at the time he decided to dismiss as the consequence of not consulting or not warning.

If the employer could reasonably have concluded in the light of the circumstances known to him at the time of dismissal that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code. Failure to observe the requirement of the code relating to consultation or warning will not necessarily render a dismissal unfair."

37. We would make three points in relation to that submission. Firstly, there the Lord Chancellor is talking not about a warning as a penalty for misconduct but about the procedural requirement of warning in a redundancy case. Secondly, there has been no suggestion that in this case there was any evidence that the employers had considered warning as an alternative and had decided that a warning would be useless or futile. Miss Wedderspoon has not suggested that there was any such evidence; and none is referred to in the Tribunal's decision. But, most important of all, that quotation relates entirely to the circumstances in which a Tribunal can or cannot find that a dismissal was unfair.
38. The Council's appeal against the Tribunal's decision that the dismissal was unfair has itself been dismissed and the question as to whether the dismissal in this case was or was not unfair is no longer live. We see no reason, based on the passage to which we have referred, or any other passage in Polkey, or for that matter in Bolton & Paul v Arnold to conclude that there was or might have been a basis for the application of the Polkey principle on the Tribunal's factual findings in this case.
39. Accordingly there is no need for us to go into Miss Wedderspoon's submissions as to why, had the Polkey principle been considered, there should have been a 100% reduction. In the light of the Tribunal's findings this was, for the reasons we have set out, not a case in which the Polkey principle arose.

Contribution

40. Miss Wedderspoon accepts that the Tribunal's decision on the issue of contribution was one of fact and that in order to succeed in persuading us that the Tribunal were wrong to assess contribution at 60%, rather than at the figure of 100% for which she contends, she has to establish that their decision was perverse, that is to say that it was one which no reasonable Tribunal properly directed could reach. It has not been suggested to us that the Tribunal in reaching their decision failed to take into account any relevant matter of fact which should have been taken into account or took into account any matter of fact which was irrelevant for the purposes of assessing contribution.
41. Miss Wedderspoon reminds us, correctly, that in considering contributory fault the Tribunal had to consider only the conduct of the employee (Parker Ltd v Slack [1992] IRLR 11) and that, as Sir Hugh Griffith, presiding over the National Industrial Relations Court said in Maris v Rotherham Corporation [1974] 2 AER 776 at page 784B:

"'The matters to which the complaint relates' in the sub-section are words of wide import and bring into consideration all the circumstances surrounding the dismissal, requiring the Tribunal to take a broad common sense view of the situation and to decide what, if any part the Applicant's own conduct played in contributing to his dismissal, and then in the light of that finding decide what, if any, reduction should be made in the assessment of his loss."

42. She also correctly points out that, as a matter of law, as established authority shows, it is open to a Tribunal to find that there should, in an individual case, be an assessment of contributory fault at 100%. However, Miss Wedderspoon has not suggested that paragraph 14 of their decision in any way reveals that the Tribunal were unaware of those principles or that they had, in any identifiable respect, failed to apply them to the facts of this case. Her submission is that the findings of fact as to Mr Scranage's conduct are that he was, to a substantial degree, the author of his own misfortune, had put himself in a difficult and dangerous position and had acted deceptively, in the manner described by the Tribunal.
43. She submitted that Mr Scranage had been carrying out a personal crusade and doing it in the manner which the Tribunal described and that in so acting he was plainly and irretrievably acting in breach of the standards which an employer is entitled to require of a Trading Standards Officer. Thus his integrity, his judgment in a job where high standards are essential had been irretrievably damaged.
44. We are not persuaded by these submissions. These are the submissions as to fact which were, of course, put before the Tribunal. The Tribunal made their findings of fact; and we have set them out. Having done so, they reminded themselves expressly as to the need to assess contribution on the basis of what they regarded as just and equitable; and they proceeded to assess contribution on that basis at 60%. There is nothing to suggest that they failed to take into account the seriousness of what Mr Scranage did.
45. The assessment of the correct level of contribution on the facts was one for the Tribunal to make. They applied the correct principles; and we see no basis on which it could properly be said that they reached a decision which no reasonable Tribunal could have reached or which was perverse in any other way.

The Cross Appeal

46. Mr Scranage has put forward, in effect, the opposite submission to that put forward by Miss Wedderspoon on behalf of the Council. He submits, in the documents which we have described, that he was not blameworthy at all. He accepts that with hindsight it can be seen that he acted unwisely; but he was carrying out what he saw as a public duty in the public interest to bring to the attention of the bank or the building society their own inefficiency and incompetence in dealing with members of the public.
47. He submits, as he did to the Tribunal, that the Council failed to take into account his good motives and acted only on the facts, of which they knew very little in any event, of what he had done and did not take into account why he had done what he had done. He was doing, he submits, no more than what a Trading Standards Officer is regularly expected to do in the course of his professional life.
48. We have considered carefully everything which Mr Scranage has set out in his Skeleton Argument and in his answer. Much of what he has set out goes back to the facts which led him to be before the Crown Court and to the way in which his case has been dealt with at various levels. We do not propose to set all of that out or indeed to say any more about the grounds on which Mr Scranage puts forward his cross-appeal because they are all in writing and, as we have said, we have considered them and given them all full value.
49. We have already said, in relation to the Council's appeal, that the assessment of contribution is a matter of fact for the Tribunal and we are not here to reconsider or make any finding on the facts or to express any opinion as to what would have been our conclusion on the facts had we been a first instance Tribunal and not an appellate Tribunal.
50. In Mr Scranage's case, as in the case of the Council, we can see no basis on which it could be said that the 60% assessment of contribution which the Tribunal, made in the light of what they had plainly found was blameworthy conduct, was one which no reasonable Tribunal properly directed could reach. For those reasons we also dismiss the cross-appeal.

Conclusion

51. Accordingly the appeal and the cross-appeal are dismissed.