Appeal No. UKEAT/0636/11/ZT
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX
At
the Tribunal
On
12 July 2012
Judgment handed down on 6 August 2012
Before
THE
HONOURABLE MR JUSTICE SILBER
MR J MALLENDER
COMMERCIAL
MOTORS (WALES) LTD APPELLANT
MR
M HOWLEY RESPONDENT
Transcript of Proceedings
JUDGMENT
SUMMARY
UNFAIR DISMISSAL – Compensation
In a hearing on remedies for
unfair dismissal, the Employment Tribunal held that
the Respondent employer had to pay compensation for, inter alia, the losses
suffered by the Claimant employee, who as a result of his dismissal was
deprived of the use of the car, the mobile phone and the fuel allowance
provided by the Respondent employer.
The Respondent appealed on the
basis that the chain of causation for the Claimant’s loss had been broken
because the Claimant had been working for a short period after his dismissal
with the consequence that his subsequent losses were not attributed to his
dismissal by the respondent.
Held:
1. The
Employment Tribunal was entitled to hold that the fact that the Claimant had
been working did not prevent it from holding that subsequent losses incurred by
him were attributable to his dismissal by the Respondent and that the chain of
causation had not been broken (Dench v Flynn & Partners [1998] IRLR 653 applied).
2. The
remaining appeals and cross-appeals were dismissed, subject to some
recalculations
THE HONOURABLE MR JUSTICE SILBER
Introduction
1.
By a decision dated 25 May 2011 (“the Liability Decision”), an
Employment Tribunal sitting in Cardiff held that Mr Mark Howley (“the Claimant”)
had been unfairly dismissed by Commercial Motors (Wales) Limited (“the Respondent”).
This Employment Appeal Tribunal dismissed the appeal by the Respondent. By a
further decision of the Employment Tribunal sitting in Cardiff dated 4 November
2011 (“the Remedies Decision”), the Employment Tribunal also sitting in Cardiff awarded the Claimant a total of £44,579.02.
2.
The Respondent appeals against parts of that award and in particular on
the grounds that the Employment Tribunal: -
(a) Should
not have awarded the sum of £3,993.36 and £300 respectively for (i) the loss
of use of the executive car during the three-month contractual period to which
the Claimant was entitled; and (ii) the loss of fuel allowance during that
period;
(b) Should
not have awarded the sum of £96 in respect of the loss of a mobile telephone
during the three-month contractual period to which the Claimant was entitled;
(c) The
Employment Tribunal failed properly to apply section 123 of the Employment
Rights Act 1996 (“ERA 1996”) and so made a material error of law; and that
(d) The
award in respect of loss of earnings was excessive and one which no reasonable
Tribunal could have reached.
3.
The Claimant cross-appeals on the grounds that the Employment Tribunal
erred by: -
(a) Failing to award
him the sum of £840 for the cost of a training course;
(b) Refusing
to award him compensation under section 123(1) and/or section 123(2)(b) for the
loss of a company car, fuel allowance and the loss of a company mobile beyond
the notice period;
(c) Failing
to apply the principles applied by the Court of Appeal in Chagger v Abbey
National plc [2010] IRLR 47; and
(d) Failing to consider the mitigation issue correctly.
4.
Mr Anthony Korn, counsel for the Claimant, stated that if the decision
of this Appeal Tribunal is not to remit the case to the Employment Tribunal in
respect of any of the grounds put forward by the Respondent, then in those
circumstances he would not be pursuing grounds (c) and (d) of his cross-appeal.
Mr Christopher Over, the advocate for the Respondent, has explained in respect
of his grounds of appeal that if he succeeds on any of them, then this Tribunal
should itself make the changes to the award rather then remitting it to the
Employment Tribunal. I should explain that it was initially agreed that this
appeal should have been heard by the same members of Employment Appeal
Tribunal, who heard the appeal from the liability decision, but this was not
possible because Baroness Drake of Shene was unfortunately taken ill shortly
before the hearing. Both advocates then sensibly agreed that this appeal could,
in those circumstance, be heard by only two members, and that is what has
happened.
The decision of the Employment Tribunal
5.
The background to the decision under appeal is that the Claimant
commenced his employment with a predecessor company of the Respondents. There
had been an effective transfer of the Claimant’s contract of employment under
the Transfer of Undertakings Protection (Employment) Regulations 2006 to
the Respondent and the Claimant was then dismissed on 3 February 2009. At the
Remedies hearing, the Claimant received in respect of his loss during the three
month contractual notice period to which he was entitled, (i) £3,993.36 in
respect of the loss of an Executive car; (ii) £96 in respect of the loss of a
mobile phone; and (iii) £300 in respect of the loss of a fuel allowance during
this period. He was also awarded a compensatory award in the sum of £20,010.75
which was net of the 50% Polkey reduction, as well as the sum of
£6,003.23 in respect of the 30% increase to be applied to the compensatory
award because of the Respondent’s failure to complete the statutory procedures
set out in Part 1 of Schedule 2 of the Employment Act 2002. It will be
seen from this that the Claimant had both contractual and statutory claims.
Ground 1 of the appeal: the claim for loss of a car and fuel
allowance
6.
In the Liability decision, the Employment Tribunal found that:-
“he was entitled to an executive car plus fuel under his
contract of employment. Whether that finding gives rise to a quantifiable head
of loss for the claimant is a matter that will be returned to the Remedy
hearing.”
7.
The Employment Tribunal concluded at the Remedies hearing that the Claimant
had been provided with a Mercedes 220 CDI motor car with a market value of
around £26,000 and as a result of the wrongful dismissal he had lost the use of
the car.
8.
Mr Over contends that the Claimant is not entitled to recover more than
he has actually loss as all that the Claimant had lost was the use of a pool
car supplied from one of the other companies belonging to Mr Williams, who is the
owner of the Respondent, but that the availability of such a vehicle from one
of Mr Williams’ other companies ended on 6 January 2009, when the group of
companies owned by Mr. Williams went into administration. So he says that the Claimant
should not recover the benefit of the use of a car from that day onwards.
9.
In our view, this submission fails to appreciate that the Employment
Tribunal at the liability hearing had found that the Claimant was entitled to
three months’ notice and that he had the right to the use of an executive car.
Thus the Claimant is entitled to be compensated for that three-month period
subject to the points set out in the next paragraph.
10.
It is common ground that the Claimant had the benefit of an Astra SRI
together with fuel for a period when he was working for W G Davies but the
Employment Tribunal stated that the Claimant was employed by that firm “for
approximately 2 months … the precise dates of this employment were difficult to
discern” (Paragraph 11(vi)). There are invoices in the bundle which show
that the Claimant made claims for the Astra from 1 March 2009 to 9 April 2009.
In our view, he is not entitled to make claims loss of the executive car and of
the fuel allowance for that period which is approximately four-ninth of the
period claimed. In those circumstances, we conclude that the sums awarded for
loss of the executive car and of the fuel allowance of £3993.36 and £300 will
have to be reduced by four-ninth to £2218.50 and £166.65 respectively. We have
explained that the parties agreed that we should make the reductions ourselves
rather than remit it to the Employment Tribunal.
Ground 2
of the appeal: the claim for the loss of a mobile phone
11.
The Respondent contends that the finding that the Claimant must be
compensated for the loss of the phone was perverse and that it was not
supported by the evidence.
12.
The Employment Tribunal found that the Claimant had a contractual
entitlement to a company mobile phone and as a result of his wrongful
dismissal, he was deprived of the use of it because he was asked to return it.
The case for the Respondent was that the Claimant was offered an alternative
phone, but it was implicit in the finding of the Employment Tribunal that they
rejected this point.
13.
It is true that this finding was not
expressly stated in the Employment Tribunal’s decision, but it is settled law
that, as Bingham LJ explained in Meek v City of Birmingham District
Council [1987] IRLR 250, an Employment Tribunal’s decision:-
“should contain an outline of the story which has given rise to
the complaint and a summary of the Tribunal’s basic, factual conclusions” [but
the reasons are] “not required to create an elaborate product of refined legal
draftsmanship.”
14.
In addition, Donaldson LJ said in Union of Construction, Allied Trades and Technicians v Brain
[1982] IRLR 22 that:-
“I think it would be a thousand pities if these reasons began to
be subjected to a detailed analysis and appeals were to be brought upon any
such analysis. This, to my mind, is to misuse the purpose for which reasons
are given.”
15.
The application of those principles means that decisions of an
Employment Tribunal should be construed as meaning that a replacement phone was
not offered to the Claimant. In any event, the finding of the Employment Tribunal
on this issue does not go anywhere near reaching the high standard for
perversity as set out in Yeboah v Crofton [2002] IRLR 634, in which Mummery LJ famously said in a passage, which has
frequently been followed in respect of appeals based on perversity, that: -
“Such an appeal ought only to succeed where an
overwhelming case is made out that the Employment Tribunal reached a decision
which no reasonable tribunal, on a proper appreciation of the evidence and the
law, would have reached.”
16.
The case for the Respondent falls a long way short of
satisfying that requirement, as there was adequate material to justify the
conclusion of the Tribunal.
Ground 3 of the appeal: the Tribunal failed properly to apply
section 123 ERA and so made a material error of law
17.
The background to this is that after the Claimant left his employment he
worked for a short period for W G Davies before leaving that employment. The
case for the Respondent was that the employment by the Claimant with W G Davies
should act as an automatic guillotine of the Claimant’s claim for damages,
because of the wording of section 123 of the Employment Rights Act 1996
,which provides in so far as is material, that: -
“123 Compensatory award
(1) Subject to the provisions of this section and sections
124, the amount of the compensatory award shall be such amount as the tribunal
considers just and equitable in all the circumstances having regard to the loss
sustained by the complainant in consequence of the dismissal in so far as that
loss is attributable to action taken by the employer…
(6) Where the tribunal finds that the dismissal was to
any extent caused or contributed to by any action of the complainant, it shall
reduce the amount of the compensatory award by such proportion as it considers just
and equitable having regard to that finding.”
18.
The case of the Claimant, as set out in his second witness statement,
was that he was engaged on a short-term two-month consultancy with W G Davies
and that he received £2.456.01 for this engagement. The Employment Tribunal
rejected the Respondent’s case that this work with W G Davies broke the chain
of causation and it was “15…satisfied… that the primary cause of the
claimant’s ongoing loss of earnings after leaving W.G Davies was his dismissal
by the …respondent”. The Employment Tribunal gave credit for the sum
received from W G Davies in paragraph 12 of the Remedies Decision.
19.
This approach is consistent with the leading case of Dench v Flynn
& Partners [1998] IRLR 653, in which Beldam LJ explained at page
655 that: -
“19…No doubt in many cases a loss consequent
upon unfair dismissal will cease when an applicant gets employment of a
permanent nature at an equivalent or higher level of salary or wage than the
employee enjoyed when dismissed. But to regard such an event as always and in
all cases putting an end to the attribution of the loss to the termination of
employment, cannot lead in some cases to an award which is just and equitable.”
20.
He continued by saying that:-
“20 Although causation is primarily a question
of fact, the principle to be applied in deciding whether the connection between
a cause, such as unfair dismissal, and its consequences is sufficient to found
a legal claim to loss or damage, is a question of law. The question for the
Industrial Tribunal was whether the unfair dismissal, could be regarded as a
continuing course of loss when she was subsequently dismissed by her new
employer with no right to compensation after a month or two in her new
employment. To treat the consequences of unfair dismissal as ceasing
automatically when other employment supervenes, is to treat as the effective
cause that which is simply closest in time.”
21.
Mummery LJ agreed, as did Sir Christopher Staughton, who
also added that the test was:-
“That is the ordinary common sense test of the
common law. Was the loss in question caused by the unfair dismissal or by some
other cause? The tribunal must ask itself and answer that question, and then
ask what amount it is just and equitable for the employee to recover. Rules
will no doubt help as guidance in the process, but that is the task which
ultimately has to be undertaken.”
22.
The approach of the Employment Tribunal was wholly
consistent with what was said in that case, especially as the Claimant was
engaged on a short-term two-month consultancy with W G Davies and not as a
permanent employee as envisaged in Dench. Indeed,
it noteworthy that Dench has been followed in many other cases,
such as Cowen v Rentokil Initial Facility Service Ltd ([2008]
UKEAT 0473), in which Elias P held that when the claimant, who had been
unfairly dismissed, took a job for a limited period, the chain of causation
arising from the loss caused by the original dismissal had not been broken.
23.
We therefore reject this ground of appeal.
Ground 4: the award of loss of earnings
was excessive and one no reasonable Tribunal could have arrived at
24.
The case for the Respondent is that the award is
excessive not only for the point relating to W G Davies, which we have already
dealt with in the previous paragraph, but also because (a) the Claimant held
himself out as a Sales and Marketing Director for Forward Employment Services
Ltd from 2010; (b) he “had a limited company called Howley Car and Truck
Limited”; and (c) the Employment Tribunal had found that the Claimant had not
made genuine efforts to find alternative employment.
25.
As to (a), it is correct that this was the way in which
the Claimant described himself on a job application form, but the Claimant in
his witness statement for the Employment Tribunal hearing explained that he “was
involved on a ‘commission only’ basis with Forward Employ”. He then said
that he had received £431.85 commission. In the remedies judgment, the
Employment Tribunal accepted the Claimant’s account, and that was a decision
open to it as an industrial jury. There is no error of law in that reasoning
and the Employment Tribunal was correct not to have reduced the compensation
payable to the Claimant by the sum of £431.85, which was received by him from
Forward Employment Services Ltd as it was all payable in respect of the period
after the compensation period came to an end in February 2011.
26.
As to (b), there was no evidence that the Claimant had
received any income from Howley Car and Truck Limited and so that ground of
appeal has to be rejected.
27.
As to (c), the Employment Tribunal held that the Claimant
had not mitigated his loss and that if he had done so, he would have obtained
employment within 12 months of his dismissal and returned to his pre-dismissal
level of earnings within 2 years of his dismissal. There is no reason to
consider that this was not a decision open to the Employment Tribunal, and this
shows that the Tribunal did not make an error of law in dealing with this
issue.
Cross appeal ground 1: the recovery of the
Claimant’s costs of training
28.
The contention of the Claimant was that the Employment
Tribunal erred by not awarding him £840 for the cost of a training course for
Internet design, which lasted two days. The Employment Tribunal had held that
it was too remote.
29.
Mr Korn submits that this sum should have been
recoverable under section 123 (1) of the ERA 1996 as expenses reasonably
incurred by the Claimant in consequence of his dismissal. This argument was
rejected by the Employment Tribunal, and they were entitled to do so. This
ground of cross-appeal fails.
Cross appeal ground 2: the refusal of the
Employment Tribunal to compensate the Claimant for the losses after the end of
the notice period of the executive car, the fuel allowance and the loss of the mobile
phone
30.
Mr Korn submits that there was no reason why these
claims should only have been upheld by the Employment Tribunal for the duration
of the Claimant’s notice period and indeed, it should have awarded them after
the notice period.
31.
The Employment Tribunal rejected these claims for the
post-notice period because it considered that: -
“17…. there was simply insufficient information
before the Tribunal for the view to be taken that it was just and equitable to
include those claims within the compensatory period.”
32.
The reason for that conclusion were that: -
“There was no evidence before the Tribunal that the claimant’s
private annual mileage would have continued at pre-dismissal levels. There was
evidence that he had acquired an alternative vehicle, albeit not an executive
car, but there was no evidence from the claimant as to why the loss of a
prestigious vehicle was of any particular value to him. In respect of the loss
of use of the company mobile phone, there was no evidence at all as to how many
minutes per month the claimant used his company mobile for private calls prior
to his dismissal and no evidence as to the usage made by the claimant of his
own mobile phone for private calls after his dismissal. It was accordingly
impossible for the Tribunal to calculate the ongoing loss of the mobile phone,
after the 3-month contractual notice period, in a meaningful way and
accordingly the submission that the compensatory award should reflect, in some
way, the loss of use of the company mobile phone was rejected.”
33.
We consider that these conclusions were open to the
Employment Tribunal, which had the responsibility for determining facts. So
there is no error of law in those conclusions.
34.
As we have explained, Mr Korn accepts that, as we will
not remit the case to the Employment Tribunal in respect of the Respondent’s
grounds of appeal, he does not in those circumstances wish to pursue grounds
(c) and (d) of his cross-appeal, and so we will not say anything more about
them.
Conclusions
35.
For the reasons we have set out, the appeal is allowed
solely to reduce the compensation awarded to £2218.50 and £166.65
respectivelyfor the use of the car and of the fuel allowance
during the period in his notice period when he was provided with the Astra
motor car and a fuel allowance. All the other grounds of appeal and the
cross-appeal are dismissed. We cannot part with this appeal without expressing
the hope that this case is now regarded by all parties as finally determined
and that no further expense is incurred in more court appearances.
